Introduction: Labour Law Compliance
Labour law compliance is basically some mandatory rules & regulations which are
a must for a company to follow. The purpose of this compliance is for the
ethical conduct of affairs part of wealth management. It includes employee
benefits & termination, the rules & regulations set for employees, etc. The
ministry of labour & employment, with the aim to support & promote startups &
thus encouraging young entrepreneurs in setting up a new start-up venture hence
creating multiple employment opportunities.
As per the government, startups
shall be allowed to self-certify with 9 labour & environmental laws. Also, these
exemptions will provide new entrepreneurs get accustomed to the labour laws &
their implementing authorities. The policy goes on to say that for a period of 3
years, inspections will be conducted. However, in the subject to a written
complaint of violations filed startups can also be subject to inspection.
startups according to the new policy may self-certify compliance with respect to
the following labour laws:
- The Inter-State Migrant Workmen (Regulation of Employment & Conditions of
Service) Act, 1979
- The Payment of Gratuity Act, 1972
- CLRA or The Contract Labour Regulation & Abolition Act, 1970
- The Employees Provident Funds & Misc. Provisions Act, 1952
- The Employees State Insurance Act, 1948
- Industrial Employment (Standing Orders) Act, 1946
- Trade Unions Act, 1926
- Industrial Disputes Act, 1947
In the case of environmental Laws, startups falling under the white category as
defined by The central pollution control board would be able to self-certify
Statutory Compliance for HR & Labour laws 2019
Statutory Compliance in HR refers to the legal framework basically all the legal
proceedings that an organization should adhere to in dealing with all of its
employees Statutory Compliance for Hr provides for 8 statues & regulations which
every Hr must follow as per the labour laws:
- ESI or Employees state insurance as guided under The Employees State
Insurance Act, 1948 which says that all the employees working in the
factories & industries shall be insured under this act
- Provident fund or the payment to an employee after his/her employment as is
guided under the Employees Provident Fund Act & Misc. Provisions Act, 1952.
- Professional Tax or the employment Tax which is basically a state-based tax
which each & every employee receiving the pay from the revenue of the central
government has to pay. The professional tax also applies to any organization
which is controlled or owned by the central government.
- Gratuity as governed under the Payment of Gratuity Act, 1972 which is
basically an amount given to the employees after they leave a job after
completing 5 years or more
- Wages of the workers as governed under the Minimum Wages Act, 1948. The
provisions of this act provide for the fixing of the minimum rates of wages to
- The Maternity Benefit Act, 1961 which provides for the payment of maternity
benefit to all the women workers.
- The Payment of Bonus Act, 1965 imposes a liability on the employers to pay
bonuses to their employees. The act provides for the payment of minimum &
maximum bonus as per the work of the employees. This act applies to every
factory where 10 or more workers are working.
- Payment of wages to the workers as guided under the Payment of Wages Act, 1936.
The act provides the remedy to the workers who were either paid wages not in
time or unauthorized deductions have been from their wages
Compliance under labour laws
As per se, labour law compliances are a must to be followed by all the companies
& industries this new policy helps the new entrepreneurs avoid harassment by
restricting the discretion & arbitrariness. All the acts mentioned below are
statutory compliance under the labour laws which have to be followed but were
exempted for a period of 3 years so that the startups get motivated.
Other Construction Workers Regulation of Employment & Conditions Act,
1966 An act which regulates the employment & condition of service of building &
other construction workers. This act also provides for the safety of the
workers including their health & welfare measures as well.
Inter-State Migrant Workmen Act, 1979An Act which was enacted in order to regulate the condition of service of the
interstate Labourers. The sole purpose of this act is to protect the workers
whose services are outside their native states. This act was created to protect
the rights of the workers as well as to provide the employer with workers
outside the state whenever he/she faces a shortage of skills among the locally
The Payment of Gratuity Act, 1972Gratuity is basically the payment that is to be made to an employee or the
worker upon the termination of his/ her service. The act provides the employer
to pay the amount of gratuity at the rate of 15 days per year of service of the
last salary. The acts specifically say that gratuity should be payable within 30
days of last employment of that worker & is payable to the employee only after
CLRA or Contract Labour Regulation & Abolition Act, 1970The provisions under this act help to regulate the employment of contract labour
in all the factories & industries & this act also provides for its abolition
in certain circumstances. This act also provides a responsibility to with
the principal employer to provide the workers with canteens, restrooms,
first aid facilities, payment of wages, etc
The Employees Provident Funds & Misc. Provisions Act, 1952This act basically provides for the compulsory contribution of a fund for the
future of that employee post his/her retirement. However, as per the Act, the
employees’ provident fund is mandatory for all those employees earning less than
15,000 per month. Provident Fund is contributed from both sides at 12% of the
The Employees State Insurance Act, 1948The provisions under this Act provide for certain benefits which the employees
enjoy in the cases of sickness, maternity & employment injury. This act is
applicable to any factory which has employed 10 or more workers at any point in
time. This insurance fund comprises of the contributions made by the employer &
employee. As per law Employer’s contribution is 4.75% & the employees’
contribution is 1.75% of the total wages. However, there is some exception in
this act which are that this act is only for the employees whose monthly wages
are less than 15,000 INR or lesser. Another exception is that if the wages of
any employer is less than 100 INR, he/she will be exempted from making the
contribution & only the employer will be liable to make the contribution.
Industrial Employment (Standing Orders) Act, 1946The sole purpose of this act is to provide the workers with sufficient knowledge
of their work environment. The act basically requires the employers to define
with sufficient precision all the conditions of the employment the workers would
be facing after the employees under them.
Trade Unions Act, 1926This act provides for the registration of trade unions & govern all the laws
related to the registered trade union. The sole purpose of this act is to
protect & promote the interest of the workers.
Industrial Disputes Act, 1947Provisions of this act provide for the investigation & settlement of all
industrial disputes. The provisions of this act are to secure the industrial
peace & harmony by providing the machinery & procedure for the investigation &
settlement of industrial disputes by negotiations. This act also lays down the
provisions for the payment of compensation to the workmen for the unfair labour
practices on the part of the employer or a trade union.
CLRA compliance or the Contract Labour Regulation & Abolition Act which was
passed to raise the standard of working conditions & prevent exploitation of
Employees & is applicable to all the organizations employing 20 or more people.
This act ensures to provide the workers with all the basic amenities such as
access to the canteen, drinking water, restrooms, etc. A landmark Case
of Standard Vacuum Refining Company Vs its Workmen, AIR 1961 SC 895 laid to the
foundation of CLRA Act. In this case, the court issued guidelines & laid down
specific regulations which every company should adhere to now.
Labour Law Compliance is a must for all the factories & industries to follow but
it is harassment for the new entrepreneurs. So, the government with the sole aim
to support & promote the startup came up with a policy to self-certify 9 labour
laws & environmental laws for a period of 3 years so that the new entrepreneurs
may have to face some fewer problems & will get accustomed to all the labour law
compliances during the 3 year period. This is a good decision taken by the
government to promote startups in India which will actually boost the startup
sector thus giving a way to employment opportunities as well.
Written By: Kunal Jain
of Symbiosis Law School, Noida & this
article deals with the different labour law compliances for the startups in