BLOG- LABOUR LAW ENFORCEMENT IN STARTUPS IN BHARAT- AN ASSESSMENT

Usually, the instances from ancient practices are avoided while making regulations for similar modern practices owing to their primitive nature. But these prospects influence the behavioural aspects of an individual in the long run; therefore, it becomes important to ponder upon them for forming regulatory provisions. The concept of the start-up is a flagship initiative of the government to inculcate and nurture entrepreneurial skills in an individual.  The campaign also seeks to make the young generation as independent as it can be in terms of employment and its generation. This research paper tries to seek into the historical aspect of industries in India as centuries back India was the industrial hub with the best of the conveyance on land as well as in water. The government’s move to enlarge the size of the industries byways of establishing start-ups points to the importance of the industries in the agriculture-based economy. For making this project a success government has backed it with a supportive legal system which is also the concern of this research paper.

INTRODUCTION

As K. Ramchandra Rao exclaimed once, “If Economics is bread, culture is life itself.”

The question is not whether culture has a role but how to understand this role in the context of the broader determinants of prosperity. Michael Porter

India is known for its rich varied heritage and culture which did not meddle and fade with time but got enriched and evolved as the time flung by. India has witnessed an outrage on its land by many foreign invaders who were lured by its economic stability and prosperity. This prosperity owes a lot to the culture and belief system of the natives which have a reflection on the trade practices followed by them.

The belief system cannot be rooted out from an individual, nor does the cultural values from economics. In fact, as per the holy books of Bharatiya beliefs- “Dharmasya moolaha arthah” which means “the Prosperity is the basis of Dharma”. Such an ideology which revolves around the very core of cultural belief system is very difficult to severe.

Essentially, Bharat had an agriculture-based economy and other industries were ancillary to it. There was inter-dependency of natives for economic activities, yet there was no exploitation or harassment of one by another. The Business was conducted in harmony and rivalry was never on the table.

Usually, the instances from ancient practices are avoided while making regulations for similar modern practices owing to their primitive nature. But these prospects influence the behavioural aspects of an individual in the long run; therefore, it becomes important to ponder upon them for forming regulatory provisions. The concept of the start-up is a flagship initiative of the government to inculcate and nurture entrepreneurial skills in an individual.  The campaign also seeks to make the young generation as independent as it can be in terms of employment and its generation. The need for one such campaign is delineated by the fact that it triggers individual participation of youth.

AN INSIGHT TO THE BHARTIYA INDUSTRIAL MODEL

“Udyog” is the word for “Industry” used in Bharat, Yoga being a part of this word. ‘Ud’ implies upliftment and ‘Yoga’ refers to a way of life. When work becomes the ways of life, it drives excellence in an individual. Yoga is the alignment of body, mind, intellect and spirit. Yoga in the philosophy of Patanjali and Kapila did not mean union with God, or anything but the effort, pulling oneself together, exertion and concentration.[ii] This Yogic thinking is responsible for making a huge difference. Yoga is the way to surmount all the troubles arising out of frustration, disappointments and several other limitations of life. This is exactly what a businessman does. He assumes the given market condition as it is and establishes his business within the provided framework.

In the West, a higher degree of social position stimulates a much higher degree of comfort, luxuries and other conventional and material needs. On the other hand, the Bhartiya Model rests its ideology on one standard of consumption i.e. plain living and high thinking which dominates all walks of an individual’s life.

Bharat has nurtured a system of economic organisation of society on the firm basis of social equality and justice. In the Bhartiya Industrial System, there is no master and no servant. Artisans work on their account, not at the command of any employer, or masters, or of machinery. It seeks the production of wealth by a free man. It also allows every individual to pursue economic activities of his interest in his way. No one is forced to be idle as there is no dependency on another for work. A healthy and pleasant environment provides the same labour with sufficient leisure.

The respect for a man as a man is boasting of the Bhartiya outlook of life, having a great impact on the industrial system. Hence, in this model, there is no space for hard rivalry and indecorous competition. Therefore, there is no matter of conflicts-disputes and strikes-lockouts. It disciplined the people in maintaining healthy social relations. It is because of this, the economic disorders were unknown in Bharat.

DOWNFALL OF BHARTIYA MODEL

Unfortunately, this prestigious model could not survive the barbarity of time or perhaps the envy of foreign nations and faded away with their ruthless invasions. The positive aspect of Bhartiya civilisation of assimilating the changes in its surroundings into itself resulted in the ruination of its own identity. By and by, as more invaders intruded into its land, they dropped their tenuous beliefs when they left and took Bhartiya perspective as teachings for establishing a prosperous model of life in their respective countries.

Among many of the invaders like Alexander, Chengiz Khan, Timur, Nadir Shah, Ahmed Shah Abdali and British (East India Company), the British rule lasted the longest and affected the Bharatiya civilisation to its worst.

The economy of Bharat worsened with the experience of British colonisation. Its share in the world economy when British arrived its shore was 23% and by the time they left, it was down to below 4%. Why? Simply because Bharat had been governed for the benefit of Britain. Britain’s rise for two centuries was financed by its deprivation in Bharat. The Industrial Revolution in Britain was premised upon the de-industrialisation of Bhartiya Business Model. The handloom weavers were famed across the world, whose products were exported around the world. The British came right in to smash their thumb, broke their looms and imposed tariffs and duties on their cloth and products and began to take raw materials from India and shipping back manufactured clothes to India flooding the world market. Consequently, the famed weavers became the beggars and India went from being the world-famous exporter of finished cloth into an importer of manufactured products. By this time, the Bharatiya business model had ruptured, and the country began to be identified with an English name ‘India’. By the end of the 19th century, India had become Britain’s biggest cash cow, the world’s biggest purchaser of British goods and exports and a source of highly paid employment of British civil servants. India was paying for its oppression and ruination of the economy.

STARTUPS- A FLAGSHIP INITIATIVE FOR REVIVAL OF BHARTIYA MODEL

Start-ups in India is a crucial initiative by the Government projected to establish an impregnable eco-system which promotes innovation and employment generation on a large scale that stimulates sustainable economic growth. Start-ups are aimed to offer customer delight with unparalleled resolutions.

Start-ups are defined by the Department of Industrial Policy & Promotion, as an entity,

• incorporated or registered in India not before seven years and for biotechnology start-ups, this limit I up to 10 years from its incorporation date,
• with annual turnover not exceeding INR 25 Crores in any preceding financial year,
• working towards innovation, development, deployment or commercialization of new products, processes or services driven by technology or intellectual property,
• not formed by fragmentation or re-structuring of a business which already existed,
• incorporated as a private limited company or a registered partnership firm or a limited liability partnership.

The concept of start-ups resembles a lot to the Bhartiya Model of Business, in which individual participation at their level is appreciated, where big corporate houses might not exist but every family used to have an independent source of income or where the sole purpose of business was to earn a livelihood and provide support to agricultural produce, not to end up in rivalry. An economically sound and stable society was the goal.

LEGAL INCENTIVES PROVIDED TO STARTUPS

To promote the Start-ups system in the country for encouraging and facilitating innovation and entrepreneurship among youth and thus, catalysing the creation of employment opportunities through them and for them, the Ministry of Labour and Employment[iii] allowed exemptions to Start-ups through nine labour laws which are as follows:

1. The Industrial Disputes Act, 1947;
2. The Trade Unions Act, 1926;
3. The Building and Other Construction Workers (Regulation of Employment and Conditions of Service) Act (BoCW Act), 1996;
4. The Industrial Employment (Standing Orders) Act, 1946;
5. The Inter-State Migrant Workmen (Regulation of Employment and Conditions of Service) Act (ISMW Act), 1979;
6. The Payment of Gratuity Act, 1972;
7. The Contract Labour (Regulation and Abolition) Act (CLRA), 1970;
8. The Employees’ Provident Funds and Miscellaneous Provisions Act (EPFA), 1952;
9. The Employees’ State Insurance Act (ESIA), 1948.

The Ministry vide Advisory also directed that

1. The start-ups shall not be inspected under any of given six labour laws i.e. BoCW Act, ISMW Act, Gratuity Act, CLRA, EPFA and ESIA in the first year of its establishment but will be subjected to any acknowledgement of credible and verifiable complaint of violation. To realise this benefit, an online self-declaration of compliances is a must and a pre-requisite.
2. Start-ups are permitted to submit self-certified returns.[iv] From second year onwards, up to five years of establishment, Start-ups are liable for inspection but only when a written credible and verifiable complaint of violation of these labour laws is filed and approved by at least one level senior to the inspecting officer or by CAIU.

Similar to these benefits, the Ministry of Skill Development and Entrepreneurship took actions to incentivize start-ups engaging apprentices as under the Apprentices Act, 1961 read with Apprenticeship Rules 1992. The Ministry of Skill Development and Entrepreneurship vide letter dated 15 January 2016.

This amendment provided that the start-ups are to be inspected only by Officers above the rank of Assistant Apprenticeship Advisor and no such inspection will be conducted in the first year of setting up relying upon the self-declaration. From second year onwards, up to three years, start-ups will be considered eligible for inspection upon the filing of a credible and verifiable complaint of violation and its approval by the concerned Apprenticeship Advisor.

These exemptions do not relieve the start-ups from complying with the labour laws. These exemptions are provided for the initial period of the establishment so that start-ups get habituated with labour law procedures and related enforcement authorities. Stricter and frequent inspections are seemed to be the cause of disinterest in business and hence deceleration in investments and have been seldom used to exploit the entrepreneurs. That’s why these exemptions have been provided to overcome the said pitfalls.

CONCLUSION

Bharat Civilisation is centuries old and so are its cultural values, ethics and beliefs. They might fade away in the air far-flung from the profile but they are so deep-rooted that it is not possible to defenestrate them from their followers. The initiative of the government is a testimony to its concern to the revival of Bhartiya approach of doing business and generating employment. Fundamentally, it is the presentation of India’s age-old practice of doing business with the cover of a fancy English term ‘Start-ups’ to attract the modern generation.

Since, if any action is done with the legal backing to it, its acceptance by society at large becomes slightly easy and when the law provides certain relaxation to it, it adds a layer of comfort to it. Similarly, the relaxation in terms of procedures and penalties provided to the start-ups are encouraging young entrepreneurs to become independent in terms of generating employment.

[i] AUTHOR – SHIVANI PANDEY; Student- B.B.A. LL.B-3rd Yr., Jamnalal Bajaj School of Legal Studies, Banasthali Vidyapith.

[ii] Singh Sandeep; Indian Ocean Strategy; Swadeshi School for training in Indian Knowledge; 1st Ed.; 2010.

[iii] Issued advisory to States/UTs/Central Labour Law Enforcement Agencies dated 6 April 2017.

[iv] Under Unified Shram Suvidha Portal

WEBSITE REFERRED

1. See- https://razorpay.com/blog/legal-basics-that-every-indian-startup-should-know/
2. See-http://bwpeople.businessworld.in/article/Exemptions-granted-to-startups-under-labour-laws-in-India/17-07-2018-154957/
3. See-http://vikaspedia.in/social-welfare/entrepreneurship/startup-india-1/concessions-to-startups-regarding-labour-laws

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