In an effort to boost startup drive in India, the Prime Minister’s Office (PMO) has instructed the Ministry of Labour and Employment (MoLE) to make sure that all states in the country have a system in place allowing startups self-certification for at least six labour laws for a period of five years.
While the PMO has pitched a five year window, the Ministry of Labour and Employment advisory had already suggested the same last year. However, the advisory panel wanted the restriction period to just three years, instead of five years.
The six labour laws which PMO has called for self-certification are — The Contract Labour (Regulation and Abolition) Act, 1970; The Employees’ Provident Funds and Miscellaneous Provisions Act, 1952; The Employees’ State Insurance Act, 1948; The Payment of Gratuity Act, 1972; The Building and Other Construction Workers (Regulation of Employment and Conditions of Service) Act, 1996; The Inter-State Migrant Workmen (Regulation of Employment and Conditions of Service) Act, 1979.
The Ministry of Labour had already instructed states not to inspect the startups for the initial three years of their life. Instead, the companies had to submit a declaration online annually for the three year period. Now, after the instructions from PMO, this period will get extended by another two years.
Reports suggests that many Indian states like Chhattisgarh, Jharkhand, Madhya Pradesh, Rajasthan and Uttarakhand have already implemented the advisory guidelines.
The Labour ministry has also asked the state governments not to interfere in the working of the startups until and unless it is something very serious or a written complaint is made to them.
Last year, it had been suggested that if startups furnish self-declaration for compliance of nine labour laws for the first year from the date of starting the business, no inspection will happen under the labour laws, wherever applicable.
However, it must be noted that the 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. This is being done so that startups are encouraged to be self-disciplined and adhere to the rule of law. These measures are being taken with intention to avoid harassment of entrepreneurs by restricting the discretion and arbitrariness.