Follow us

Leveraging an Effective Policy Framework to Achieve Compliance : The Start-Up Mantra

Labour law compliance and Start up

In recent times, the Indian startup landscape has made remarkable progress. Fuelled by the emergence of digital technologies and a surge in young entrepreneurs, India has established itself as the 3rd largest hub for startups globally[1]. With a flourishing economy, increasing technological innovations disrupting traditional business models and a vast reservoir of talented individuals, Indian startups have tremendous opportunities in several promising sectors like fintech, e-commerce, renewable energy, health technology, cutting-edge technology, and eco-friendly transportation. The Government of India, along with the State Governments, has played a crucial role in creating an environment conducive to the advancement of startups in the country.

In addition to addressing the concerns related to funding, resources and business scaling, startups must also pay heed to ensure compliance with all applicable legislations from the outset. Upon commencing operations and engaging employees, startups must prioritize compliance with labour law legislations, which become applicable from the outset and are a crucial but oft-neglected obligation of employers. An effective and well-thought-through policy framework, coupled with leveraging relaxations provided by the Government, holds the key to optimal compliance.

Applicability of Labour Laws to Start-ups

Start-ups are required to comply with all labour laws that are applicable to any other entity, based on the nature of activity – either a factory or an establishment. The number of laws that apply can be as many as 28 at any given point in time.

Achieving Optimal Compliance by Building an Effective Policy Framework

In addition to fulfilling the requirements of applicable labour legislations, startups should draw up and implement policies/procedures that align with the philosophy of the organization and also help the organization align with the requirements of law, including providing benefits that exceed the requirements of law. Furthermore, the appointment letter and other documents should be drafted in a manner which includes all the essential elements to protect the interests of both the organization and its employees. These need to be prepared with professional advice to obviate the possibility of any issues cropping up at a later date.

Startup companies often tend to either emulate policies of established companies or adopt policies of their global parent or holding company. However, this approach can create challenges for both the organization and its employees, as these policies may not align with local cultural values, business practices and regulations prevalent for startups in India. Additionally, adhering to global or emulated policies can result in non-compliance with local statutory requirements. In some cases, this can lead to impractical situations for startups, as they may find themselves catering to standards that are not applicable or feasible for their specific context.

The Government’s Role in Promoting the Growth of Startups

To foster startup growth and reduce compliance burdens, the Government of India has granted startup establishments the ability to self-certify compliance for the following labour legislations:

  • The Building and Other Constructions Workers’(Regulation of Employment and Conditions of Service) Act, 1996
  • The Contract Labour (Regulation and Abolition) Act, 1970
  • The Employees’ Provident Funds and Miscellaneous Provisions Act, 1952
  • The Employees’ State Insurance Act, 1948
  • The Industrial Disputes Act, 1947
  • The Industrial Employment (Standing Orders) Act, 1946
  • The Inter-State Migrant Workmen (Regulation of Employment and Conditions of Service) Act, 1979
  • The Payment of Gratuity Act, 1972
  • The Trade Unions Act, 1926

A startup is defined by the Department of Industrial Policy and Promotion “as an entity, incorporated or registered in India not prior to 5 years with annual turnover not exceeding Rs. 25 crores in any preceding financial year, working towards innovation, development, deployment or commercialization of new products, processes or services driven by technology or intellectual property”. Accordingly, entities satisfying these requirements are eligible for the self-certification schemes.

Self Certification Scheme for Central & State Labour Laws

Additionally, the Government of India has instructed State Governments to implement self-certification schemes for startups, thereby reducing the compliance burden. Consequently, State Governments across the country, including those regions hosting major IT and manufacturing hubs such as Karnataka[2] (Bangalore), Telangana[3] (Hyderabad), Tamil Nadu[4] (Chennai & Coimbatore) and Haryana[5] (Gurgaon), have extended the option of self-certification under both state-specific and central labour law legislations with enforcement authorities operating under the purview of the state government.

Under the above-mentioned schemes, startup establishments are required to self-certify their compliance status using the format provided by the central government for central labour law enforcement[6] such as the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952, the Employees’ State Insurance Act, 1948 among the 6 labour laws mentioned in the notification and respective state governments for enforcement of state labour legislation[7] such as Shops and Commercial Establishments Act (as per the applicable jurisdiction), Maternity Benefit Act, 1961 among others. Once self-certified, these establishments will be exempt from inspections by enforcement authorities for a period of 5 years. However, if any complaints regarding non-compliance with labour law legislations are received during this period, the enforcement authorities may conduct an inspection of the startup establishment.

Conclusion

The use of a strong and efficient policy framework has proven to be a potent tool to achieve the dual goals of compliance and achieving business objectives of the company, especially in an emerging market like India. The dynamic business scenario coupled with the volatility of the workforce is aptly addressed through policies that balance the employer and employee interests while allowing employees sufficient flexibility and benefits to ensure retention.

While self-certification schemes provided by both central and state governments offer a certain level of flexibility for startups, this should not be misconstrued as a license to disregard compliance with labour law legislations. Neglecting compliance obligations can potentially lead to significant non-compliance issues, which may be reported to the authorities by any concerned stakeholder. Once a complaint of non-compliance is lodged, the startup establishment could come under the scrutiny of the enforcement authorities, resulting in multiple inspections and the implementation of stringent enforcement measures. Hence, it is crucial for startup establishments to maintain a diligent and proactive approach towards adhering to applicable labour law legislations.

To mitigate the risk of such situations, startup establishments must prioritize compliance by establishing policies and procedures that align with their operational functions, such as the human resources team, finance/payroll team and others. In order to create a conducive environment within the organization, it is advisable for startup establishments to seek periodic guidance of legal professionals who specialize in labour and employment law. By doing so, the establishment can ensure that its compliance standards are effectively maintained, promoting employee satisfaction and fostering a workplace where the entire workforce is focused on productivity and profitability. An added advantage of maintaining good compliance standards is fund houses view this as a positive during scrutiny and due diligence activities. This proactive approach not only safeguards the startup establishment from potential non-compliance issues but also cultivates an atmosphere conducive to growth and success.

[1]https://hr.economictimes.indiatimes.com/news/industry/india-becoming-global-hub-for-innovation-with-third-largest-startup-ecosystem-piyush-goyal/88300554

[2]https://labouronline.kar.nic.in/Files/Self%20Certification%20LD%2024%20LET%202016%20dt_16-09-16.pdf

[3]https://startup.telangana.gov.in/easing-regulations/

[4]https://startuptn.in/wp-content/uploads/2022/11/STARTUP-TN-Policy.pdf

[5]https://hrylabour.gov.in/staticdocs/labourpolicies/labour_reforms_self_certification.pdf

[6]https://www.startupindia.gov.in/content/dam/invest-india/Templates/public/notification/notification_Self_certificationformatsforcomplianceundertheLabourLaws.pdf

[7]https://shramsuvidha.gov.in/startUp.action#

-Mohamed Faheem
 Advocate & Associate

Share This Post

Leave a Comment

Your email address will not be published. Required fields are marked *

Share:

More Posts

bcp-associates-llp-logo white-bcp-associates (Legal Audit Vendor Audit POSH Training Legal Advisory Labour Law Employment Law HR Practice Human Resource Advisory Workplace Harassment Training Digital Compliance Document Manager Digital Legal Audit wage and lobour code in Bangalore Hyderabad Chennai Mumbai Delhi NCR)

Follow us

Subscribe

Sign up for our latest news & articles. 

Scroll to Top

Archana Madan – POSH Specialist & Advocate

Archana Madan Kohli is an advocate with close to 15 years experience in in-house and law firm roles. At BCP Associates, she specialises in providing various services to clients under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 (“POSH Act”). Archana is the External Member of the Internal Committee of multiple organizations across sectors and is well versed in handling POSH inquiries. She also handles POSH queries, including drafting and reviewing policies and assisting in setting up Internal Committees.

Archana is also a trainer, delivering specialised sessions for Managers and Senior Management, Employee General Awareness sessions for all employees and Internal Committee training. Apart from English, Archana is fluent in delivering training sessions in Hindi, and Punjabi.

Archana started her career with Bharti Infratel Limited moved on to Wipro Limited, Adecco India Private Limited, Cloudnine Hospitals, Virinchi Limited and Medicover Hospitals in different capacities.

Archana holds a Bachelor of Law (LL.B.) degree from Himachal Pradesh University, Shimla. She has earned her Post Graduate Diploma in Drafting, Negotiation and Enforcement of Contracts from NALSAR University of Law, Hyderabad with distinction.

B. Chandrashekar Shetty - Advocate

Mr. Chandrashekar Shetty is a Senior Labour Law Compliance Auditor at BCP Associates and has audited multiple client companies across India. He is also a member of our senior legal advisory practice. Previously he has worked as Deputy Controller, Manager-Industrial Relations and Industrial Relations Officer in KPTCL, Bangalore for more than 30 years. Prior to this, he has dealt with Legal, Personnel and IR matters including Wage Settlements, Grievance Machinery, Manpower Study and Social Security Compliances for about 10 years. He is a Faculty member of Labour Law, HRD Centre, KPTCL Bangalore.

Mr. Shetty holds a B.Com. and L.L.B. degree, Post-Graduate Diploma in Business Administration, Diploma in Public Relations from Bangalore University and PG Diploma in Industrial Relations & Personnel Management from Bharatiya Vidya Bhawan. He is enrolled as Advocate in Karnataka Bar Council and is a Govt. Arbitrator of Chit Funds in Karnataka.

S Venugopal Rao

S Venugopal Rao is an experienced labour law and service matters expert and is a member of the senior advisory team at BCP Associates. Having joined the chambers of Mr. B C Prabhakar in 2012, he is knowledgeable and well versed in multiple employment and labour law topics.

S Venugopal Rao holds a Bachelor’s degree in Science from Karnataka University, Dharwar and Bachelor of Law from Bangalore University. He enrolled as advocate in Karantaka State Bar Council in 1976. He joined the chamber of Sri. Kolachalam Srinivasa Rao a leading civil advocate. After practicing for 6 years at Ballari, he joined Orient Paper Mills, Orissa (of G P Birla Group). He was designated as Manager (Law) under the Factories Act in 1995. In 1999, he joined Andhra Pradesh Paper Mills Rajahmundry as Manager Legal and was subsequently elevated as Dy. General Manager (Legal). As Factory Manager & Legal Head, he oversaw compliance of Factories Act and Rules there under towards safety, health and welfare, including compliance under Pollutions and Environmental laws and Explosives Act, etc. Additionally, he is well acquainted with Environment Management System ISO 14001: 2004, Occupations, Health and Safety Series 18000:1999. As Legal head in APPM he has briefed and appeared along with Senior Advocate before Appellate Authority constituted under Water (Prevention & Control of Pollution) Act. He retired from the services of Andhra Pradesh Paper Mills in 2011.

As legal head he has handled important cases both in Labour and Civil and has experience in drafting and vetting Contracts, Agreements, Lease Agreement, Conveyance Deeds, , Affidavits and scrutiny of several legal and other documents, Preparing and settling Petitions, Appeals, Plaints, Written Statements, Rejoinders, Affidavits and Written Arguments etc. for submission/pleadings for various legal proceedings.

C K Devappa Gowda - Advocate

C.K. Devappa Gowda (CKD) is an Advocate and Labour Law expert. He holds a Bachelor’s Degree in Science from the University of Mysore and a Degree in Bachelor of Law from Bengaluru respectively. He also holds a Diploma in Social Service Administration from the National Institute of Social Science, Bengaluru. After completing his studies, he had enrolled as a Advocate and initially practiced in the Civil Code attached to the office of BCP. He then worked as Personnel Officer in Chemicals and Textile Manufacturing Industries for 5 years. Thereafter took up employment in one of the largest Public Sector Bank. He has worked in different parts of the country and has extensive experience in the cross country IR domain. The significant part of his service was at corporate level overseeing and implementing HR policies and practices and management of IR. He has been a member of personnel committee of Indian Bank Association.

After retirement from service, Mr. Gowda has been working with Mr. BC Prabhakar’s firm for the last 12 years. He has expertise in all areas of people management, drafting of documents relating to service matter including the settlements under the ID Act. He has dealt with all employment laws including appearance before the Courts, Tribunal and Authorities under the different Labour Laws. Mr. Gowda is one of the senior Labour Law experts at BCP Associates.

Srijatha Ghosh - POSH Specialist & Advocate

Srijata Ghosh serves as external member on the Internal Committee of several Companies across various sectors. She handles all kinds of POSH related matters including investigations and inquiries. She provides Training on Sexual Harassment across all verticals for Managers and Senior Management, General Awareness for all employees and Internal Committee members on the legislation (The Sexual Harassment of Women at Workplace Prevention, Prohibition and Redressal Act, 2013). She also formulates Policies for Prevention of Sexual Harassment at Workplace (“POSH”) and advises Companies on setting up of their Internal Committees. Srijata is involved in providing Legal Advisory services on POSH and other labour law matters for various clients.

In her previous experience, she has extensively dealt with End-to-End Contract Management, Due Diligence, POSH Compliances, Legal Advisory, etc. Srijata worked with Companies like Accenture India Private Limited, Quess Corp., Capgemini Business Services (India) Limited and Pramata Knowledge Solutions Private Limited. Srijata has handled varied legal issues including drafting, vetting and negotiation of contracts, drafting policies of various organizations. She has resolved issues relating to employment laws and has worked closely with the HR teams. She has provided legal advisory services to senior management. She was also associated with Kolkata High Court in counselling clients with legal matters such as Property, Due Diligence etc. Srijata has worked in an LPO Service Firm, Manthan Legal Services Private Limited for Legal Research, depositions, medical summaries, demand drafting etc.

Srijata completed her B.A.LL.B from M. S. Ramaiah College of Law, Bangalore University in 2009. Srijata is a member of the Karnataka Bar Council since 2010. She is also a member of the Gender Sensitivity Sub Committee of Karnataka Employer Association (KEA).

Caroline Lobo - POSH Specialist & Advocate

Caroline Lobo has been with BCP Associates for the past 2+ years. She has been handling matters and Inquiries related to the POSH Act including conducting inquiries and trainings/awareness programmes for Senior Management, employees as well as members of the Internal Committee on the POSH Legislation (The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 (“Act”) to address Workplace Harassment of Women. She is a member of the Internal Committee for many varied companies and organisations and has reviewed and scrutinized numerous hearings and inquiries on matters relating to sexual harassment at workplace.

She has also handled matters relating to employer-employee related Enquiries, wherein she has reviewed and conducted hearings and enquired into the matters and has guided the Internal Committee and provided guidance in providing recommendations to the management. She is also a Member of the Gender Sensitivity Sub-committee of Karnataka Employer Association (KEA).

Prior to joining BCP Associates, Caroline has has a wide range of experience in corporate, commercial and contract law, mergers and acquisition and has undertaken drafting, vetting, negotiating and finalizing legal and commercial transactions. She started her career in litigation then moved onto the Corporate sector. In the span of 13 years, she has worked at Chambers of Advocate Jayashree Murali, Krishnamurthy and Co. Legal Consultants, Colt Technology Services and Oracle India Pvt. Ltd. She always had a keen interest in Women and Child related issues. She has worked with Child Welfare Committee and NGOS’s. In addition, she has worked with Swasthi Health Resource and Centre, where she was the External member to the Internal Committee (IC). She worked closely with the committee in strategizing, planning, reviewing and implementing the assigned tasks, which included building material to raise awareness against sexual harassment at workplace. Further, she has been involved in conducting inquiries into matters related to sexual harassment at workplace.

Caroline earned her Law degree from University Law College, Bangalore, from where she graduated in the year 2005.

Manoj Kumar – Senior Associate

At BCP Associates, Manoj Kumar is involved in managing and conducting labour law compliance audits of principal employer and contractors. He is also involved in client co-ordination and conducting labour law training programs for vendors. He has conducted on-ground labour law audit for factories. Manoj also provides support in advising vendor clients on labour law queries. He completed B.A., LL.B. from BMS College of Law, Bangalore in 2016.

Rashmitha Venkatachalam Das - POSH Specialist & Advocate

Rashmitha Venkatachalam Das is an advocate with more than 15 years’ varied experience including both law firm and in-house roles. As an expert on BCP Associates’ POSH team, she specialises in providing a broad range of services under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 (“POSH Act”). Currently, Rashmitha is the External Member of the Internal Committee of multiple organizations across sectors and has deep expertise in handling POSH inquiries. She also supports these organisations on a regular basis with queries related to sexual harassment, including drafting and reviewing POSH policies and assisting in setting up Internal Committees.

Rashmitha is also a seasoned POSH trainer, having delivered a multitude of specialised sessions for Managers and Senior Management, Employee General Awareness sessions, and focused training for Internal Committee members. In addition to English, she is fluent in Hindi and Kannada, ensuring meaningful training sessions and effective inquiries.

Having started her career at law firm of Krishnamurthy and Co, Rashmitha moved to in-house roles with Biocon Limited, Columbia Asia Hospitals Private Limited and Adecco India Private Limited. 

Rashmitha holds an LL.M. in Labour and Employment Laws from University Law College, Bangalore, graduating in the year 2018 with Two Gold Medals. She is also a Rank Holder at the University. She obtained her BA, LL.B. degree from Bangalore Institute of Legal Studies, Bangalore University in 2009. Rashmitha is registered with the Karnataka Bar Council since 2009 and is also a member of the Gender Sensitivity Sub Committee of Karnataka Employer Association (KEA), an industry association of employers with over 700 members.

Manisha Vidyadhar – Senior Associate

At BCP Associates, Manisha Vidyadhar is involved in managing and conducting labour law compliance audits of principal employer and contractors. She is also involved in client co-ordination and conducting labour law training programs for vendors. She has conducted on-ground labour law audit for factories. Manisha also provides support in advising vendor clients on labour law queries.  She completed B.A., LL.B. from BMS College of Law, Bangalore in 2016.

Amrutha Ananth – Principal Associate

At BCP Associates, Amrutha is a part of the Legal Advisory practice, Legal Audit practice and Labour Code Alignment Programme (LCAP). Amrutha specialises in Labour and Employment Laws and compliance having advised some of India’s leading companies for some of their most complex labour law matters.

Amrutha has more than seven years of experience in labour and employment law and has conducted several audits for both, principal employer and contractor for various leading IT/ITES companies, manufacturing sectors like pharma, automobile, construction and start-ups.

She is actively involved in drafting and reviewing employment contracts, HR policies, Employee Handbook, show cause notice, etc. for various organizations spread across diverse sectors. As a part of the Labour Code Alignment Program, she assists companies in review and alignment of their existing wage and employment policy with the provisions of the Labour Codes.

Sunil Arya – Principle Associate

At BCP Associates, Sunil Arya is part of the labour and employment law advisory and HR Policy practice and is actively involved in drafting and reviewing of employment contracts, opinions, HR policies, employee handbook, show cause notice, etc. for various clients spread across diverse sectors. He conducts training on labour and employment laws. Sunil is also involved in labour law compliance audits of principal employer and contractors and has conducted on-ground labour law audit for factories. In addition, he is engaged in knowledge creation and management of the firm and keenly writes on developments in labour and employment laws.

Prior to joining BCP Associates, Sunil has 10 years of post-qualification experience in diversified portfolios of advisory, drafting, policy analysis and dispute in the domains of contracts, general civil matters, employment law, competition law and construction arbitration matters. Sunil started his career as a Law Researcher in Delhi High Court. He moved on to be part of regulatory analysis team of CIRC, a unit of CUTS International. In addition, Sunil has been part of legal team of Jindal India Thermal Power Limited. He has also taught competition law, tax law and investment law at VIPS, Delhi.

Sunil holds LL.M. from The Indian Law Institute, Delhi. He is First Rank Holder in his thesis. He completed B.A, L.L.B. (Hons.) from I.P. University, Delhi. He also holds First Rank in P.G. Diploma in Competition Policy and Laws from The National Law University, Delhi.

Chandrakala K A – Principle Associate

At BCP Associates, Chandrakala has 12+ years of experience in conducting and managing labour law compliance audits of principal employer and contractors. She is also involved in co-ordination with many clients. She has conducted on-ground labour law audit for factories. She also provides support in advising vendors on labour law queries. Chandrakala is actively involved in research and providing valuable inputs to the firm pertaining to updation in labour law audit function.

Chandrakala started her career in litigation in chamber of Sri. Ashok where she was involved in drafting, pleading and appearance before Karnataka High Courts and lower courts on the criminal side.

Chandrakala completed B.A in Arts from Kuvempu University, Shimoga in 2003 and LL.B. from Mangalore University in 2006.