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Government announces labour law exemption for startups up to 3 years

To promote and incentivise the entrepreneurial ecosystem in the country, Start-ups have been exempted from nine labour laws for a period of three years

Press Trust Of India

Updated:March 9, 2016, 5:21 PM IST
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Government announces labour law exemption for startups up to 3 years
To promote and incentivise the entrepreneurial ecosystem in the country, Start-ups have been exempted from nine labour laws for a period of three years

New Delhi: Start-ups have been exempted from nine labour laws for a period of three years to promote and incentivise the entrepreneurial ecosystem in the country, Labour Minister Bandaru Dattatreya said on Wednesday.

"...Ministry of Labour & Employment has issued an advisory to the States/UTs/Central Labour Enforcement Agencies for a compliance regime based on self-certification and regulating the inspections under various Labour Laws," Dattatreya said in a written reply to the Rajya Sabha.

He said that it has been suggested that if such startups furnish self-declaration for compliance of nine labour laws for the first year from the date of starting the business, no inspection under these labour laws, wherever applicable, will take place.

As per the statement, the nine labour laws, include Industrial Disputes Act, 1947, Trade Unions Act, 1926, Building and Other Constructions Workers' (Regulation of Employment and Conditions of Service) Act, 1996 and Industrial Employment(Standing Orders) Act, 1946.

The other such laws are Inter-State Migrant Workmen (Regulation of Employment and Conditions of Service) Act, 1979, Payment of Gratuity Act, 1972, Contract Labour (Regulation and Abolition) Act, 1970, Employees' Provident Funds and Miscellaneous Provisions Act, 1952 and Employees' State Insurance Act, 1948.

He said that from the second year onwards, up to 3 year 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 minister said that the advisory to state governments is 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.

These measures intend to avoid harassment of entrepreneurs by restricting the discretion and arbitrariness. Punitive action shall, however, be taken whenever there is a violation of these labour laws, he added.

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