Whether you’re bootstrapping or VC-funded, understanding which labour laws apply to your startup is key to building a compliant, credible, and employee-friendly workplace.
Non-compliance with labour laws can lead to:
Heavy penalties from labour authorities
Loss of investor confidence during due diligence
Employee dissatisfaction or disputes
Disqualification from certain government incentives
Top 13 Labour Laws Applicable to Startups in India should be aware of in 2025:
1. Shops and Establishments Act (State-specific)
Mandatory registration; governs work hours, leave, holidays.
2. Payment of Wages Act, 1936
Timely and documented salary payments.
3. Minimum Wages Act, 1948
You must pay at least the government-declared minimum wages based on role, location, and skill level.
4. Employees’ Provident Fund (EPF) Act, 1952
Mandatory if you have 20 or more employees. Voluntary below that. It helps employees save for retirement.
5. Employees’ State Insurance (ESI) Act, 1948
Mandatory if you have 10+ employees earning below ₹21,000/month. It provides medical and maternity benefits.
6. Payment of Bonus Act, 1965
Applicable if you employ 20+ people. Employees earning under ₹21,000/month are entitled to an annual bonus.
7. Payment of Gratuity Act, 1972
Mandatory once you have 10+ employees. Gratuity is payable after 5 years of continuous service.
8. Maternity Benefit Act, 1961
Provides 26 weeks of paid maternity leave and ensures benefits for expecting female employees.
9. Sexual Harassment of Women at Workplace (POSH) Act, 2013
Mandatory for every organization with 10+ employees. Requires forming an Internal Complaints Committee (ICC).
10. Equal Remuneration Act, 1976
Mandates equal pay for men and women performing the same work.
11. Contract Labour (Regulation & Abolition) Act, 1970
Applicable if you hire contractors or gig workers through third-party agencies.
12. Labour Welfare Fund (LWF) (State-specific)
Some states (like Maharashtra, Karnataka, and Tamil Nadu) require LWF contributions from employers and employees.
13. Apprentices Act, 1961
Useful if you’re hiring apprentices through NATS or NAPS programs. Encouraged but not mandatory.
Part of India’s new Labour Codes that will consolidate and replace many existing laws in the near future.
How HRMS Platforms Can Simplify Labour Compliance via automation:
Payroll compliance (PF, ESI, PT, LWF)
Leave and attendance tracking under Shops Act
Statutory reports and registers (Form C, PF ECR, ESIC XMLs, etc.)
POSH and maternity documentation
Digital onboarding with offer/appointment letters
Auto-generated payslips and tax statements
