# Importance & Applicability Of Labour Laws for Startups Published: 27 Apr 2023 | Last updated: 10 Feb 2025 Author: Treelife Practice area: Legal Source: https://treelife.in/legal/importance-applicability-of-labour-laws-for-startups/ ## Summary - India currently has 29 central labour laws applicable to entities, which the Ministry of Labour is consolidating into four new Labour Codes: the Code on Wages, the Occupational Safety, Health and Working Conditions Code, the Social Security Code, and the Industrial Relations Code. - These four Labour Codes have not yet been notified, so the existing 29 central laws and applicable state-specific laws continue to govern compliance for startups. - The Employees' State Insurance Act, 1948 applies to establishments with 10 or more employees using power or 20 or more without power, requires registration within 15 days under Section 2-A read with Regulation 10-B, and non-compliance attracts imprisonment up to 2 years and a fine up to ₹5,000. - The Prevention of Sexual Harassment of Women at Workplace Act, 2013 applies to all organizations, but forming an Internal Committee via board resolution is mandatory only once an organization has 10 or more employees, with non-compliance fined at ₹50,000. - The Maternity Benefit Act, 1961 applies to organizations with 10 or more employees and entitles first and second-time mothers to 26 weeks of fully paid leave, with violations punishable by up to 3 months imprisonment or a fine up to ₹500, or both. - The Payment of Gratuity Act, 1972 applies to organizations with 10 or more employees, requires filing Form A within 30 days of registration, and non-compliance can attract imprisonment up to 6 months or a fine up to ₹10,000, or both. - The Rights of Persons with Disabilities Act, 2016 applies once an organization has 20 or more employees, requiring registration via Form E under Rule 27(3) and appointment of a grievance officer, with penalties of up to 6 months imprisonment and/or a ₹10,000 fine for non-compliance. - The Payment of Bonus Act, 1965 and the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 both apply once an organization has 20 or more employees, and EPF late-payment penalties range from 5% to 25% per annum depending on delay, capped at 100%. - Startups must also comply with state-specific shops and establishment acts, labour welfare acts, and professional tax acts, with Maharashtra's Shops and Establishment Act, 1948 cited as an example applicable to all organizations in that state. --- Blog Content Overview - [1 State Specific Labour Laws applicable to Start-ups](#State_Specific_Labour_Laws_applicable_to_Start-ups) - [2 State Specific Labour Laws applicable to Start-ups](#State_Specific_Labour_Laws_applicable_to_Start-ups-2) 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](https://treelife.in/reports/navigating-indias-labour-law-a-comprehensive-regulatory-guide-for-startups/) 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**1Employee’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 themImprisonment for a period extending up to 2 years and a fine of up to INR 5,000.2Prevention 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 ActA fine of INR 50,0003Maternity Benefit Act, 1961Any organization with **10 or more **employeesNo 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.4Payment of Gratuity Act, 1972Any organization with **10 or more **employeesForm A to be filed within 30 days of registrationpunishable with imprisonment for a term which may extend to six months, or with fine which may extend to ten thousand rupees or with both5Rights of Persons with Disabilities Act, 2016Any organization with **20 or more **employeesa) Form E for registration under Rule 27(3). b) Organization needs to    appoint a grievance officer as a complianceImprisonment up to 6 months and/ or a fine of INR 10,000, or both6Equal Remuneration Act, 1976**No minimum **applicability**Form D- **Register to be maintained by the employerPenalty levied may be up to INR 10,0007Payment of Bonus Act, 1965Any organization with **20 or more **employeesIn 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 both8The Employees’ Provident Funds and Miscellaneous Provisions Act, 1952Any organization with **20 or more **employeesForm 5 to be filled by employers for enrolling new employees for this schemeFor 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**1Maharashtra 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 registrationFine which shall be not less than INR 1,000 but which may extend to INR 3,000 along with the prescribed registration or renewal Fee2Maharashtra Labour Welfare Fund Act, 1953Any organization with **05 or more   **employees**Form A **to be filed for registrationA fine of INR 500 and/or imprisonment up to 3 months3The Maharashtra State Tax on Profession, Trades, Callings and Employments Act, 1975**Applicable to all **organizations/ establishmentsForm I-I and I-II to be filled for enrollmentEmployer 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**1Karnataka Shops and Commercial Establishments Act, 1961**Applicable to all. **Organizations with **10 or more** employees have to registerRegistration of establishment in Form Bpunishable 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 continues2The Karnataka Tax on Professions, Trades, Callings And Employment Act, 1976**Applicable to all **person working in KarnatakaRegistration of establishment under Sec 5Penalty 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** ### Related posts: - [Diversity & Inclusion Policy in India](https://treelife.in/legal/diversity-inclusion-policy-in-india/) - [De-Coding the Co-Founders Agreement](https://treelife.in/legal/de-coding-the-co-founders-agreement/) - [Tax and Returns for a Restaurant – The Complete Guide for 2026](https://treelife.in/legal/tax-and-returns-for-a-restaurant/) - [Convertible Debentures in India – Meaning, Types, Benefits](https://treelife.in/legal/convertible-debentures-in-india/) --- This is informational content from Treelife. For advice specific to your situation, contact support@treelife.in