Opening a business or establishing a company is always an exhilarating endeavor, but as an entrepreneur, it's vital to guarantee that you know and follows the rules and regulations of your country. In India, labor law compliance is an imperative aspect that startups must pay attention to run their business and organization. Failing to comply with labor laws can result in hefty penalties, which can harm the growth of your business. If you are planning to start a business, then you must talk to a knowledgeable and expert corporate lawyer in Kolkata.
This blog focuses on some of the labor law compliances for startups in India should know and take care of:
Employee Provident Fund (EPF):
According to the Employees' Provident Fund and Miscellaneous Provisions Act, 1952, employers with 20 or more employees must register for the EPF scheme. This scheme is designed to provide financial security and stability to employees in case of an emergency. Employers must contribute 12% of the employee's basic salary, and the employee also contributes an equal amount.
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Registration of business:
Before starting your business, it is important to register it with the appropriate authorities. This includes registering your business with the Registrar of Companies (RoC) under the Companies Act, 2013, and obtaining a permanent account number (PAN) from the Income Tax Department. You'll also need to register for Goods and Services Tax (GST) if your business is liable to pay GST.
Minimum Wages Act:
The Minimum Wages Act, of 1948, sets the minimum wages that employers must pay their employees. The minimum wage rate varies from state to state, and employers must ensure that they pay their employees at least the minimum wage rate applicable in their state.
Maternity Benefit Act:
The Maternity Benefit Act, of 1961, mandates employers to provide paid maternity leave to female employees. Female employees are entitled to 26 weeks of paid leave, and the employer must also provide medical benefits during the maternity period.
Employee State Insurance (ESI):
The Employee State Insurance Act, of 1948, mandates employers to register their employees for ESI. The scheme provides medical benefits, including hospitalization, to employees and their families. Employers must contribute 4.75% of the employee's wages, and the employee also contributes 1.75% of their wages.
Payment of Bonus Act:
The Payment of Bonus Act, of 1965, requires employers to pay a bonus to employees who earn up to Rs 21,000 per month. The bonus must be paid within 8 months of the close of the financial year.
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The Closing Thought:
Complying with labor laws is crucial for startups in India. Failing to comply with these laws can result in penalties, which can harm the growth of your business. Therefore, it's important to familiarize yourself with these laws and ensure that your business is in compliance. By doing so, you'll be able to provide a safe and secure workplace for your employees, which can ultimately lead to the growth and success of your business. Your interaction with the best labour lawyers can help you to know and maintain Labour law compliances for startups in India.