Navigating new labour laws in 2024: what Indian startups need to know

Starting your own venture is now easier than ever, the Government of India is actively encouraging startups in India. It focuses on developing comprehensive policies and labour laws in India that support the growing startups. In this article, we will learn about the financial assistance and tax exemptions given to startups, and we will also make ourselves familiar with the Government that encourages women entrepreneurs and protects workers' rights. 

The Reserve Bank of India (RBI) allows Indian startups to raise funds through convertible notes. Foreign investors contributing at least ₹25 lakh in a single tranche can participate. However, if the startup operates in a sector that requires government approval for foreign investments, such approval must be obtained before issuing convertible notes to non-residents.

Moreover, the Government of India has introduced the Startup India Seed Fund Scheme to support entrepreneurs in the early stages of growth. The Scheme aims to provide financial assistance to startups in India for proof of concept, prototype development, product trials, market entry, and commercialization. The SISFS Scheme ensures the financial security of startups by sanctioning Rs. 945 crore for four years starting from 2021-22.

Startups in India need not worry about heavy taxation anymore. Certain startups incorporated between the 1st day of April 2016 and the 1st day of April 2019, now extended by two more years to the 1st day of April 2021, can be exempted from income tax. Startups with a certificate of an eligible business from the Inter-Ministerial Board of Certification of the Department of Industrial Policy and Promotion can avail the benefits for three consecutive years out of 10 years since incorporation.

Startup India initiative focuses on creating various engagement models to help connect the Indian startup ecosystem to global startup ecosystems. This has been made possible through international Government-to-government partnerships, participation in international forums and hosting global events. Startup India has launched bridges with around 20 countries that provide a soft-landing platform for startups in India from the partner nations and aid in promoting cross-collaboration.

The new labour laws in India, set to come into effect in 2024, are designed to simplify and modernize existing regulations, which will have a significant impact on startups. The Government not only focuses on financing startups but has also made provisions in new labour laws to uplift workers and women entrepreneurs. 

Startups employing contract workers must ensure these employees receive benefits like regular workers, including social security provisions. While increasing labour costs, this change improves job security and could enhance worker satisfaction. Payment of Wages Act enabled payment of wages to employees by cheque or crediting it to their bank account.

According to the Unorganised Workers' Social Security Act of 2008, the Government must provide Social Security to unorganized sector workers. It should ensure the workers' good living standards by formulating appropriate welfare schemes. The schemes cover matters relating to life and disability, health and maternity benefits, old age protection, etc.

Women entrepreneurs are recognized and encouraged by new labour laws by focusing on issues faced by women in business and making laws to tackle them: 

Empowering women has always been the nation's first priority; the new labour laws prove this. They promote gender equality in the workplace by ensuring that safety concerns should not stop women from excelling in their professional careers. The laws mandate strict guidelines to prevent sexual harassment and make compliance with the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act mandatory. They also create a more secure environment for women in startups.

The Maternity Benefit (Amendment) Act, a significant part of the new labour laws, substantially benefits startups. Women employees are entitled to 26 weeks of paid maternity leave. This ensures women employees are equal participants and contributors to startups in India. This provision encourages more women to join or continue in the workforce and promotes a more inclusive and supportive work environment.

The new labour laws significantly shift the work culture, with an increasing focus on work-from-home policies and flexible hours. This flexibility allows startups in India to offer work options that are beneficial for women to balance professional and personal roles.

Startups, including those run by women, can now self-certify compliance with new labour laws for up to five years. They must run after government officials as the new rules aim to reduce business administrative hurdles, mainly by streamlining multiple labour laws of India into four broad labour codes (wages, industrial relations, social security, and occupational safety). This will ease compliance, especially for smaller startups with fewer than 300 employees, allowing them to focus on growth and innovation.

Navigating these changes can be challenging, but the experts at Lawgical India Business Developers Ltd. specialize in helping startups stay informed and compliant with the latest laws and regulations. Their in-depth guidance ensures that entrepreneurs can focus on growth while adhering to the evolving legal landscape. Partner with Lawgical India Business Developers Ltd. to leverage expert advice and turn challenges into opportunities for innovation and success.