Legal

Importance & Applicability Of Labour Laws for Startups

Currently in India there are 29 labour laws which needs to be followed by all the entities. To make it more streamlined and hassle free the Ministry of Labour is under the process of consolidating all the labour laws under 4 new labour law codes (“Labour Codes”)

 

Code on Wages

Occupational Safety, Health and Working Conditions Code

Social Security Code

Industrial Relations Code

These Labour Codes are yet to be notified.

     

In India, the labour laws can be divided into compliance under central laws and the specific state laws.

We have compiled a list of central laws and examples of specific state laws herein.

Sr. No Labour Laws Applicability Registration/ Implementation Penalty for non-compliance with the applicable laws
1 Employee’s State Insurance Act, (ESI Act 1948) a) Working with the aid of power- 10 or more employees b) Without the aid of power- 20 or more      employees Section 2-A of the Act read with Regulation 10-B, registration within 15 days from the date of its applicability to them Imprisonment for a period extending up to 2 years and a fine of up to INR 5,000.
2 Prevention of Sexual Harassment of Women at Workplace (Prevention Prohibition and Redressal Act, 2013) (“POSH Act”) Applicable to all organizations, however the formation of an internal committee is applicable when there are 10 or more employees The company has to elect an internal committee and pass a board resolution for adopting the internal committee as per the provisions of POSH Act A fine of INR 50,000
3 Maternity Benefit Act, 1961 Any organization with 10 or more employees No registration required. However, an organization needs to maintain a muster roll. An organization is required to provide for first and second-time mothers, a leave of 6 months, or 26 weeks, off, which is a paid leave wherein her employer needs to pay her in full. Imprisonment which may extend to 3 months, or with fine which may extend to INR 500, or with both.
4 Payment of Gratuity Act, 1972 Any organization with 10 or more employees Form A to be filed within 30 days of registration punishable with imprisonment for a term which may extend to six months, or with fine which may extend to ten thousand rupees or with both
5 Rights of Persons with Disabilities Act, 2016 Any organization with 20 or more employees a) Form E for registration under Rule 27(3). b) Organization needs to    appoint a grievance officer as a compliance Imprisonment up to 6 months and/ or a fine of INR 10,000, or both
6 Equal Remuneration Act, 1976 No minimum applicability Form D- Register to be maintained by the employer Penalty levied may be up to INR 10,000
7 Payment of Bonus Act, 1965 Any organization with 20 or more employees In case of new establishments, for the first 5 years, bonus is payable only if the business is profitable. Imprisonment for six months or may impose a fine of INR. 1000 or both
8 The Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 Any organization with 20 or more employees Form 5 to be filled by employers for enrolling new employees for this scheme For delay in payment of PF- a)For 0 — 2 months delay – @ 5 % p.a. b)For 2 — 4 months delay – @10 % p.a. c)For 4 — 6 months delay – @ 15 % p.a. d)For delay above 6 months – @ 25 % p.a. (subject to a maximum of 100%)
List of Central Labour Laws applicable to Start-ups

State Specific Labour Laws applicable to Start-ups

Types Of Applicable Legislations For Specific States:

•State-specific shops and establishment acts

•State-specific labour welfare acts

•State-specific professional tax acts

STATE OF MAHARASHTRA AND KARNATAKA COVERED HEREIN

State Specific Labour Laws applicable to Start-ups

A. For Maharashtra

Sr. No Labour Laws Applicability Registration/ Implementation Penalty for non-compliance with the applicable laws
1 Maharashtra Shops and Establishment Act, 1948 Applicable to all organizations. Any organization with 10 or more employees needs to register. Form A to be filed for registration Fine which shall be not less than INR 1,000 but which may extend to INR 3,000 along with the prescribed registration or renewal Fee
2 Maharashtra Labour Welfare Fund Act, 1953 Any organization with 05 or more   employees Form A to be filed for registration A fine of INR 500 and/or imprisonment up to 3 months
3 The Maharashtra State Tax on Profession, Trades, Callings and Employments Act, 1975 Applicable to all organizations/ establishments Form I-I and I-II to be filled for enrollment Employer will be liable to pay a simple interest @ 1.25% of the tax payable for each month for which the tax remains unpaid.
Maharashtra Labour Laws applicable to Start-ups

B. For Karnataka

Sr. No Labour Laws Applicability Registration/ Implementation Penalty for non-compliance with the applicable laws
1 Karnataka Shops and Commercial Establishments Act, 1961 Applicable to all. Organizations with 10 or more employees have to register Registration of establishment in Form B punishable with fine up to INR 1,000 and in case of a continuing contravention, a further fine of up to INR 2,000 for every day during which such contravention continues
2 The Karnataka Tax on Professions, Trades, Callings And Employment Act, 1976 Applicable to all person working in Karnataka Registration of establishment under Sec 5 Penalty not exceeding fifty per cent of the amount of tax due. This penalty shall be in addition to the interest payable under sub-section (2) or (3) of section 11.
Karnataka Labour Laws applicable to Start-ups


The content of this document is for information purpose only and does not constitute advice or a legal opinion. It is based upon relevant law and/or facts available at that point of time and prepared with due accuracy & reliability. Readers are requested to check and refer to relevant provisions of statute, latest judicial pronouncements, circulars, clarifications etc. before acting on the basis of this write up. The possibility of other views on the subject matter cannot be ruled out. By the use of the said information, you agree that the Treelife is not responsible or liable in any manner for the authenticity, accuracy, completeness, errors or any kind of omissions in this piece of information for any action taken thereof.

Last Updated on: 8th December 2023, 01:10 pm


Disclaimer:

The content of this article is for information purpose only and does not constitute advice or a legal opinion and are personal views of the author. It is based upon relevant law and/or facts available at that point of time and prepared with due accuracy & reliability. Readers are requested to check and refer to relevant provisions of statute, latest judicial pronouncements, circulars, clarifications etc. before acting on the basis of the above write up. The possibility of other views on the subject matter cannot be ruled out. By the use of the said information, you agree that the Author / Treelife is not responsible or liable in any manner for the authenticity, accuracy, completeness, errors or any kind of omissions in this piece of information for any action taken thereof.

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