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Understand labour law or regulation before start up in india

January 07, 2018


Maier vidorno Enshrined that you need to aware about labour law of india before you took step for startup.Human resources law or staffing law in India are synonymous with the labor laws and industrial laws in India.Some employers are ignorant of the labour laws, Labour laws in India govern the relationship between employer, employee and the Government and ensure that the rights and obligations of all parties are satisfied. It is important for all HR personnel to know the laws pertaining to HR practices in India and ensure there is no violation. In this article, we look at some of the main HR Laws in India that must be abided by all organizations in India. This article has been written keeping in mind a small or medium sized enterprise in the service or trading industry.Indian employment laws do not provide any rules or procedures that must be adopted while recruiting a person. Hence, it is mostly upto the organization to determine a procedure for recruiting, interviewing, screening and hiring. 

Laws pertaining to recruiting


Recruiting: No major rules or procedures. However, the organization must notify the vacancies to the local employment exchange, though there is no requirement to appoint any person forwarded by the employment exchange.

Interviewing: There are no regulations against an employer asking for information about the candidate, including personal questions relating to health, race, religion, case, et.c, However, asking such questions are deemed unethical and could lead to discrimination, which is an offense.

Pre-employment Enquiry: There are no regulations or requirement to conduct pre-employment enquiry. However, it is a common practice for employers to conduct such an enquiry. Employers are required to obtain the consent of the employee by fax/email/letter for carrying out a pre-employment enquiry or background check.



Labour Laws pertaining to employment offer letters


Indian employment and labour laws do not mandatorily require an employer to issue an offer letter, except in certain states and in certain establishments. However, it is an accepted practice in India amongst medium and large businesses to provide an offer letter.

What do you consider unique to those doing business in your country?


Some of the points mentioned above are unique to India. In addition, while Indian employment law is mainly federal in nature, most states have a Shops and Establishments Act. These statutes are similar, but not identical. Further, some states have been permitted to make amendments to central laws, with which are thus applicable in a different manner in such states.


The following key issues should be highlighted


1.A 30 to 90-day notice period applies in order to terminate ‘workmen’ (as defined in the Industrial Disputes Act, 1947) – that is, employees whose role is not primarily supervisory, administrative or managerial) for convenience, with 15 days’ pay due for every year worked.

2.Termination for cause does not include non-performance – it includes only behaviour which qualifies as misconduct.

3.The ‘last in, first out’ principle requires that the employer first terminate for convenience the last people to join the organisation in the same role. However, this requirement can be contracted out of. When hiring for the same role, workmen who were terminated for convenience should be given the opportunity to re-join the company.

4.State laws generally provide for about 15 days of earned/regular leave a year. Employees also benefit from up to 10 days of sick leave and a possible 10 additional days of ‘casual leave’. This is generally more than what most organisations would ideally like to provide.
Most state laws provide for ‘casual leave’ – the employee can opt not to come to work that day without applying for leave in advance. Many organisations find this disruptive.

5.Most state laws restrict women from working at night; if women are to work at night, specific approval must be obtained. This exemption is granted only to limited business sectors (eg, IT sector). Further, the employer must offer door-to-door transport and meet some security-related requirements.

6.Most state laws prescribe overtime for any hours worked beyond 48 hours in a week. However, this is seldom observed.

7.Indian law regulates and in some cases prohibits the use of contract workers. To engage contract workers, the contractor must hold a licence and the employer must be registered as a ‘principal employer’.

8.Non-compete agreements are not enforceable under Indian law, while non-solicitation clauses can be enforced only in limited ways.

9.While the ‘work for hire’ principle applies under the Indian copyright regime, it does not apply under the Indian patent regime; employees must thus provide formal assignments.
10.Indian laws require employers to maintain a plethora of registers and notices. Compliance with such requirements is difficult and full compliance is rare.

What can employers do with regard to background checks?

  • Criminal records
  • Medical history
  • Drug screening
  • Credit checks
  • Immigration status
  • Social media
  • Other

Is there a national minimum wage and, if so, what is it?

There is no national minimum wage. However, the central and state governments can issue notifications on minimum wages in specific industries. The federal government has set the recommended minimum wage to Rs176 per day and advised state governments to implement the same.

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