Startups Exempted From Nine Labour Laws for Three Years

In order to promote and incentivize the entrepreneurial ecosystem in the country startups have been exempted from 9 labour laws for a period of 3 years as per the notification of labour ministry of India dated 12th January 2016.

The 9 labour laws are:

  1.  Industrial Disputes Act, 1947;
  2. Trade Unions Act, 1926,
  3. Building and Other Constructions Workers’ (Regulation of Employment and Conditions of Service) Act, 1996;
  4. Industrial Employment(Standing Orders) Act, 1946;
  5.  Inter-State Migrant Workmen (Regulation of Employment and Conditions of Service) Act, 1979,
  6. Payment of Gratuity Act, 1972,
  7. Contract Labour (Regulation and Abolition) Act, 1970,
  8. Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 and
  9. Employees’ State Insurance Act, 1948.

The Ministry of Labour & Employment has issued an advisory to the States/Union Territories/Central Labour Enforcement Agencies for a compliance regime based on self-certification and regulating the inspections under various Labour Laws. Startups shall furnish self-declaration for compliance of 9 labour laws for the first year from the date of starting the business, however, no inspection under these labour laws, wherever applicable, will take place.

Second year onwards, up to 3 years from the setting up of the units, such startups are required to furnish self-certified returns and would be inspected only when credible and verifiable complaint of violation is filed in writing and approval has been obtained from the higher authorities.

The advisory to State Governments shall not to exempt the startups from the ambit of compliance of these labour laws but to provide an administrative mechanism to regulate inspection of the startups under these labour laws, so that startups are encouraged to be self-disciplined and adhere to the rule of law.

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