How Labour Law Compliance is Necessary for Start-ups in India

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Start-ups have disrupted the Indian business world. They have changed the way of doing business and the scenario of employment in India. From tech, manufacturing, finance, pharmaceuticals to media, they are prevalent in every sector and contributing to the economy of our country. Although start-ups and entrepreneurs are special, they still must follow Labour Laws and be fully compliant so that their employees get an equal and safe environment to work, and the start-up ecosystem flourishes. If not compliant, they can face legal action and prosecution from authorities. 

The Government of India has given some exemptions to start-ups to help simplify their entrepreneurial journey and to gradually understand the necessity of these rules. In their first 5 years of commencement, they are given the privilege of self-declaration for compliance with 9 labour laws. However, every start-up needs to follow these laws diligently to run a legal business and provide their employees with a good and safe workplace. As written compliant of violations filed startups can be subject to inspection.

Labour law compliance becomes essential for start-ups because of the following aspects:

Minimum Wages

Although a start-up company runs with a small team and limited resources, it still needs to provide respectable pay to its employees. India’s Minimum Wages Act, 1948 makes it mandatory for start-ups to give minimum wages to all their employees. They must follow the state wise minimum wages which are updated from time to time.

Working Hours

Due to their busy working schedules and massive workload, start-ups employees might end up working long hours. Labour legislation guides the start-ups and helps the employees by specifying the maximum working hours every day so that employees do not tire out. All start-ups have to abide by these laws where a definite no. of working hours with breaks are to be adhered to.

Safety & Health Measures

Be it an office space, factory or warehouse, labour regulations make it necessary for entrepreneurs to provide a safe working environment for all their employees and workers. Appropriate safety protocols are mandatory at offices and factories so that employees feel safe and protected. 

Legal Framework for Employment

Compliance protects the start-ups as well as employees in the employment cycle. It’s vital to check employee records and provide them with standard documents such as proof of employment and relieving letters to make the business operations smooth. Entrepreneurs are also legally required to provide benefits such as PF, Gratuity, ESIC, etc. so that their workforce is taken care of. Violation of these laws can create legal problems for a start-up; therefore, compliance is necessary. 

Preventing Harassment & Discrimination

These rules are drafted to prevent any form of discrimination based on age, race, caste, colour, gender or religion. According to The Sexual Harassment of Women at Workplace Act, 2013, it is also imperative for start-ups to provide a safe working environment for women and there must be a strong policy in place to prevent sexual harassment at the workplace. Additionally, the Industrial Disputes Act, 1947 helps start-ups resolve industrial conflicts through its regulations. 

Complying with these regulations ensure that start-ups are following legal ways to run a business and providing a well-cultured and safe environment for the employees. 

We understand that Labour Laws can be complicated to understand for entrepreneurs, and they want to focus on the growth of their start-ups. Prompt has an exceptional team of labour law consultants who have expert knowledge of these regulations and are constantly updated with changing developments. We can advise and implement these laws to make your start-up fully compliant.  

Looking for a labour law advisor? Contact Prompt and understand how labour law compliance can help your start-up grow and become authentic. 


Take advantage of our HR experts, team of recruiters and labor law consultants to open avenues of growth & success for your organization. We offer Temporary Staffing, Permanent Staffing, Labour Law Compliance Management & Advisory, and many more such services.

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