StartupTalky

Tag: Labour Law

  • Delhi Govt Pushes for Progress: Seeks Approval for Women to Work Night Shifts

    According to officials on 1 July, the Delhi government has taken a major step by ordering the Labour Department to make the required adjustments to let women work night shifts, but only with their permission.

    According to authorities from Lieutenant Governor VK Saxena’s office, the Labour Department has been directed to implement these precautions by revising the Delhi Shops and Establishment Act and issuing notifications under the Factories Act.

    As per the officials, instructions were also provided to change the Delhi Shops and Establishment Act to let shops and establishments operate around the clock and to raise the minimum number of employees required for the Act to be applicable from one to ten.

    Changing the Industrial Dispute Act

    The government has also issued instructions to raise the threshold of workers from 100 to 200 in the Industrial Dispute Act for requesting closure permission.

    A senior official from the Labour department further explained this by saying that at the moment, factories and companies who wish to close their doors and lay off employees must obtain permission from the relevant departments and authorities.

    However, factories with 200 or fewer workers no longer need to obtain approval before closing and laying off workers. This was done to make it easier to conduct business.

    In response to a question concerning the possible effects of the move on workers, the official stated that they would have the ability to petition the labour court.

    Currently, there is no rationale for the company to continue operations if it is unable to generate sufficient revenue to compensate its employees in the future. Thus, this contributes to the ease of conducting business.

    According to a media outlet, the government is permitting a plant or company to shut down and conduct layoffs without obtaining approval from any higher authority. Since workers will be the ones impacted and ultimately lose their positions without any employee funds or perks, legislation should also be passed to compensate them.

    Government Issued Slew of Instructions on Various Initiatives

    The L-G and Chief Minister Rekha Gupta held a high-level meeting to review the status and progress of various aspects related to the BJP government’s flagship policies, “Ease of Doing Business” and “Maximum Governance – Minimum Government,” which were announced by Prime Minister Narendra Modi.

    L-G’s office emphasised in a statement that the L-G also noted during the discussion that enterprises and economic activity had been hindered and discouraged by restrictive and outdated laws, procedures, and regulatory regimes.

    Top police officers, leaders of all relevant ministries, Delhi Home Minister Ashish Sood, Industries Minister Manjinder Singh Sirsa, and Chief Secretary Dharmendra also attended the meeting.

  • IPO-Bound Zepto Hit with Labour Complaint in Delhi Over Worker Exploitation Claims

    Alleging exploitative tactics under Zepto’s Rural Mobilisation Programme (RMP), the Rajdhani App Workers’ Union (RAWU) has filed a complaint against Zepto and its third-party vendor, Kilton Geo Engineering Pvt. Ltd., with the Delhi labour department.

    According to the union, gig workers—whom Zepto refers to as “delivery partners” and who were primarily hired from rural states—were misinformed about their pay, housing, and working conditions.

    The file was made at a time when fast commerce companies are struggling with a short-term delivery staffing scarcity because of increased demand. The issue has been forwarded to a labour inspector by the labour department. As part of the investigation process, RAWU anticipates notifying Zepto, the third-party provider, and a subset of impacted employees.

    Zpeto’s Response to Such Allegations

    Zepto explained that while it offers the technology and clear standards, store management is in charge of day-to-day operations and vendor control. According to a Zepto representative who spoke to a media outlet, the company does not have a concept for “temporary IDs” and does not provide riders with a joining bonus under RMP.

    The spokesperson went on to say that this seems to be a local problem and does not represent the RMP’s larger goals or operations. According to the corporation, an audit into the issues surrounding Kilton Geo Engineering has been started.

    Involvement of Third-Party Vendors Creates Complex Situation: Experts

    Experts point out that although Zepto considers third-party vendors to be partners, their participation creates a complicated scenario in which workers are neither truly platform employees nor expressly covered by labour regulations.

    At the moment, vendors are not considered “aggregators” or “employers” under the law. Platforms in the gig economy frequently use outside vendors to hire workers, according to a media report. There are no formal agreements between the vendor and the employees, according to Sunand, president of the RAWU, which is connected to the Centre of Indian Trade Unions (CITU).

    The Contract Labour (Regulation and Abolition) Act of 1970 forbids businesses from exporting work in order to avoid accountability and safeguards contract workers, who are frequently denied formal employment rights.

    Interstate Migrant Workmen Act

    When labourers are hired from one state to work in another, as is the case with many gig workers travelling to Delhi from Uttar Pradesh, Bihar, and Jharkhand, the Interstate Migrant Workmen Act is applicable, according to a media report.

    According to this rule, contractors must get permits and give migrant workers benefits. Even though the platform distances itself from direct hiring, it could still be held accountable because Section 18 holds the principal employer accountable if the contractor fails to fulfil these obligations.

    This development coincides with a broader delivery staff scarcity brought on by the rapid commerce industry’s growing demand.

    Deepinder Goyal, the founder and CEO of Eternal Ltd., wrote a letter to shareholders after the Q4FY25 results, stating that the growth of food delivery had slowed down for three main reasons.

    One of these was the temporary lack of delivery partners, which was caused by the high demand for delivery partners in quick commerce given the industry’s recent rapid expansion.

  • Impact of Regulatory Changes on Startups: Staying Ahead in a Dynamic Landscape

    This article has been contributed by Mr. Mahesh Krishnamoorthy, Managing Director, Core Integra.

    It is increasingly becoming evident that India will be a global leader in the Startup ecosystem with the highest number of Entrepreneurs in the next decade. To fuel this segment, there are a plethora of benefits and schemes provided by the Government, and in every budget, this segment has been a key focus area for the last few years. The added advantage is increased domestic demand and consumption of products and services along with the Make in India initiative.

    The benefits for promoting growth in this sector include reduced interest rates, collateral-free loans, tax exemptions, and protection against delayed payments, there is no discount or subsidy from the Government when it comes to adherence to Compliance. Non-compliance is viewed seriously and could result in heavy penalties including imprisonment thereby affecting the reputation and business continuity.

    Understanding the Scope of Labour Law Compliances

    It is often misunderstood that labour law compliances are restricted to workforce-related compliances alone such as compensation, benefits, work conditions, disputes, etc but actually it is far more comprehensive including Establishment compliances, Factory compliances if engaged in manufacturing, Environment, Health, Safety compliances, Contractor compliances and in recent times ESG compliances is gaining relevance. Further, there are specific compliances related to the nature of business as well. The majority of the labour law compliances are applicable to startups irrespective of the scale of operations, vintage, revenue size, or profitability. This is an important perspective that needs to be kept in mind by the leaders of such organizations.

    Key Areas of Labour Law Compliances for Startups

    Some of the important areas of labour law compliance that would be relevant to the startup organizations would include the following:

    1. Licenses and Registrations under the various Labour Laws/Acts as applicable under the State and Central Laws depending upon the nature of business of the entity.
    2. Statutory benefits such as Provident Fund, Employee State Insurance, Profession Tax, Labour Welfare Fund, Statutory Bonus, Gratuity, Superannuation, Leave encashment.
    3. Registers are to be maintained under the applicable laws of the State and Centre.
    4. Returns are to be filed on a periodic basis under the applicable laws of the State and Centre.
    5. Other important laws such as Minimum Wages, POSH, Rights of Persons with Disabilities, Engagement of Apprentices, Inter-State Migrant Workers, and Industrial Disputes.

    To begin with, a startup needs to understand the Laws and Acts applicable to the entity under State and Central Laws depending on the nature of the business and location of operations. From this emanates the next steps which involved procuring the licenses and registrations, many of which are currently available through the online portal of the respective authority. If there are any exemptions offered for startups, the same needs to be considered while checking the applicability of the Laws, Acts, and Registration/Licensing requirements. Post obtaining the requisite license and registration, the appropriate deductions and payments need to be made to respective authorities and acknowledgments need to be maintained for future records, inspections, and responding to notices from authorities, if any. Appropriate policies need to be drafted for defining procedures under labour laws, training, and education initiatives for the employees, and periodic documentation such as registers, and returns need to be maintained.

    The above-mentioned could seem to be elaborate and cumbersome, and indeed to some extent it requires diligent fulfilment which may be time-consuming, and with proper knowledge of procedures, there would also be some cost involved towards appropriate adherence to compliance. Larger organizations could afford to have a department with a set of knowledgeable resources which may not be the case with boot-strapped startups which would prefer to have their bandwidth and financial resources used for business growth rather than compliance costs. There are many professional firms and software available in the market at affordable prices that take care of a large part of labour law compliances in a efficient and simple manner. The startups may use these options to utilize their time and efforts on core business while compliances are taken care of by professionals or software.

    It is easy and important to comply with labour laws, this is critical from a startup perspective as they will at some stage of their business lifecycle want to raise capital for growth through various means, whether listing in the capital markets or through investors where the due diligence process captures every element of compliance adherence and gaps could result in issues detrimental to the growth and reputation of the entity.

    Navigating Labor Laws in India: A Comprehensive Guide to Compliance
    Dive into the intricacies of labor law compliance in India with our comprehensive guide. Learn about key legislations, why compliance matters, and how to build an effective framework for a thriving workplace ecosystem.
    StartupTalkySubham Kumar