What Labour Regulations Should my Start-up Comply With?

Last Updated at: Oct 30, 2020
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regulations for entrepreneurs
The Government has recently enforced 2 regulations, keeping in mind the interest of the labourers and employees. The Code on Industrial Relations seeks to consolidate and amend laws relating to conditions of employment in industrial establishments. The Code on Social Security, 2020 ensures the extension of social security to all employees and labourers in both the organised and the unorganised sector.

 

It is important that every start-up company should follow certain labor laws. This would ensure the safety and well-being of employees. Knowing in detail about the labor laws would help to run the organization without any legal allegations. A professional attorney would help to comply with labor laws.

All undertakings in India needs to comply with certain basic labour laws imposed by the Central and State Governments. There are over 45 labour legislations enacted by the Central government alone, besides the countless state regulations varying across states and pertaining to various aspects, such as welfare measures (such as Employees Provident Fund & Miscellaneous Provisions Act of 1952 or The Payment of Gratuity Act of 1972), payroll (For instance the Minmum Wages Act of 1948, The Payment of Bonus Act of 1965, or the Payment of Wages Act of 1936) administration(eg. The Factories Act of 1948), social measures (eg. The Contract Labour (Regulation & Abolition) Act of 1970), among others.

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Given the multiplicity of laws, it becomes significant to identify what are the specific regulations that would be applicable to a start-up in order to avoid prospective legal hassles.

The question of which labour laws would apply would primarily depend upon the nature of undertaking, whether the start-up is a factory, industry or shop etc. is a significant factor to determine which labour regulations need to be complied with.

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If the employee is a workman employed in a factory, he shall be provided special protection under the Factories Act, 1948, keeping in mind the nature of work.

Certain amenities such as providing separate washing facilities for men and women is mandatory or ensuring that the Factory Inspectorate approves of the commencement of operation of the unit under the factories Act.

If the employee is involved in Mining activities, his working conditions shall be regulated by the Mines Act, 1972, which involves certain special criteria for employment determined that is by the competency tests they conduct.

If the worker is employed in a Dock, his health, safety and welfare shall be determined by the Dock Workers Act, 1986.

The number of employees that the undertaking employs is another important consideration in determining if a labour regulation should apply.

For instance under the Factories Act, if the number of workers employed is more than 250, they need to be provided the benefit of canteen services.

If the number of workers is more than 150, suitable shelter, or lunch rooms with provision for drinking water must be provided for the workers.

Further, the company must identify whether the individual it seeks to employ would qualify as a workman.

This is important because the administrative and the managerial level employees are ordinarily not classified as workmen, and the workmen are generally offered greater protection measures under the labour legislations.

For instance, if the Industrial Disputes Act is considered, the workman includes any person who is doing any manual, unskilled, skilled, technical, operational or clerical work or persons who are employed to do supervisory work but are drawing wages that are not exceeding Rs 1600 per month while those working in supervisory capacity but drawing wages in excess of Rs. 1600 per month, are not included within definition of workmen.

Let us now consider some important labour laws:

1. Industrial Disputes Act, 1947
This Act regulates the Industrial Relations, and provides guidelines as to the steps to be taken in instances of an industrial dispute or difference between the employers and employees or among workmen which relates to the employment or non-employment, or the terms of employment or with the conditions of labour of a person. It talks about matters relating to lay-off, closure, retrenchment or change of service conditions.

2. Minimum Wages Act
This statute provides for the basis of fixing the statutory wages and guarantees all employees an entitlement to certain minimum wages. This Act contains a list of all the different kinds of employments for which the statute is applicable, which varies from non-agricultural employments to agricultural work, such employment is recognized as Scheduled Employment, including employment on the construction and maintenance of roads, employment in an oil mill or tanneries or leather manufacturing, etc.

The appropriate Government (Central or State as the case may be) needs to fix and revise, within a given time period, the minimum wages payable to the employees in respect of the Scheduled Employment. the workers employed for such purposes need to paid accordingly.

3. Local Shops and Establishments Act
The S&E Act is a state legislation and varies accordingly. These legislations generally provide for regulation of service conditions of all employees (whether workmen or not) including the hours of work, payment of wages, overtime, leave, holidays etc.

These regulations include, for instance: the number of hours required to be put in by the employee must be in accordance with the prescribed number of hours (48 hours a week). Additionally women and young persons are not allowed to work in any establishment between 9pm and 7am during summers and between 8pm and 8am during winters.

The employer needs to give notice to a one month notice to an employee, who has worked for at least 3 months continuously before termination of his or his services.

A clear overview of the labor laws as mentioned above would be of great help for start-up owners. Follow the above labor regulations like maximum working hours, salary etc so that you can avoid legal allegations on your company. Appointing a legal advisor can help to comply with the labor laws.