Concessions to startups regarding Labour Laws

Date posted: Wednesday 11 May 2016


In order to promote the Start-Up ecosystem in the country and incentivizing the entrepreneurs in setting up new start-up ventures and thus catalyze the creation of employment opportunities through them, the Ministry of Labour & Employment had issued an advisory to the States/UTs/Central Labour Enforcement Agencies on 25th April, 2016, for a compliance regime based on self-certification and regulating the inspections under various Labour Laws.

  1. The Ministry has advised that if the start-ups furnish self-declaration for compliance of 9 labour laws for the 1st year from the date of starting the start-up, no inspection under these labour laws, wherever applicable, will take place.
  2. The nine labour laws, included in this advisory are:
    1. the Industrial Disputes Act, 1947;
    2. the Trade Unions Act, 1926;
    3. the Building and Other Constructions Workers’ (Regulation of Employment and Conditions of Service) Act, 1996;
    4. the Industrial Employment (Standing Orders) Act, 1946;
    5. the Inter-State Migrant Workmen (Regulation of Employment and Conditions of Service) Act, 1979;
    6. the Payment of Gratuity Act, 1972;
    7. the Contract Labour (Regulation and Abolition) Act, 1970;
    8. the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952; and
    9. the Employees’ State Insurance Act, 1948.
  3. From the 2nd year onwards, up to 3 year from the setting up of the units, such start-ups are required to furnish self-certified returns.
  4. Such start-ups would be inspected only when credible and verifiable complaint of violation is filed in writing and approval has been obtained from the higher authorities.
  5. The advisory to State Governments is not to exempt the Start-ups from the ambit of compliance of these Labour Laws, but to provide an administrative mechanism to regulate inspection of the Start-Ups, so that Start-ups are encouraged to be self-disciplined and adhere to the rule of law.
  6. These measures intend to avoid harassment of the entrepreneurs by restricting the discretion and arbitrariness.
  7. Punitive action shall, however, be taken whenever there is a violation of these labour laws.