Laws make businesses vulnerable to going to jail for breaches of acts and rules committed knowingly or unknowingly
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Karma Global is in the business of establishment and vendor compliance management.  It has hundreds of elite clients on its excellent service dispensing list.  The expert staff on its roll deals with thousands of regulatory compliance acts on a Pan India basis ,  some of the acts being state-specific while others are enacted by the Central Government.

Karma Global, in its day-to-day compliance service operations, has to deal with several issues raised by clients that they are unable to tackle and the onus of dispensing with quick solutions and /or customized solutions, rests solely with Karma Global because it is the service provider to this client in terms of all labour and court-related services, be it notices, summons, arrest warrants, or jail.

The staff of over 200 on the rolls of Karma – direct and indirectly connected with the rendering of services to numerous clients, take good care of all the work connected with the scope of work of each client.  There is a special team dedicated to servicing the clients on the front end and this front-ending team is known as Key Account Owners since the term symbolizes unadulterated services to the clients, to keep them safe and strong from the throes of compliance breaches unknowingly committed by them.

In a report published earlier this year, there were several issues were highlighted and strong suggestions were given to bring about a change in the essentials of doing business.

The report further commented that two out of five provisions for doing business can send an entrepreneur to jail, especially given the mammoth imprisonment clauses of over 25,000 in India’s business laws.


What are the provisions of labour law?

Labour Laws  can be considered under nine broad heads:

  • Employment;
  • Individual employment relationships;
  • Wages and remuneration
  • Conditions of work;
  • Health, safety, and welfare;
  • Social security;
  • Trade unions and industrial relations;
  • The administration of labour law;
  • And some special provisions


The legislation can be categorized as follows:

1) Labour laws enacted by the Central Government, where the Central Government has the sole responsibility for enforcement.

2) Labour laws are enacted by Central Government and enforced both by Central and State Governments.

3) Labour laws are enacted by Central Government and enforced by the State Governments.

4) Labour laws enacted and enforced by the various State Governments which apply to respective States.


The Constitution of India provides detailed provisions for the rights of the citizens and also lays down the Directive Principles of State Policy which set an aim to which the activities of the state are to be guided.

These Directive Principles provide detailed provisions for the rights of the citizens and also lays down the Directive Principles of State Policy which set an aim to which the activities of the state are to be guided.

These Directive Principles provide:

  • For securing the health and strength of employees, men, and women;
  • That the tender age of children are not abused;
  • That citizen are not forced by economic necessity to enter avocations unsuited to their age or strength;
  • Just and humane conditions of work and maternity relief are provided; and    
  • That the government shall take steps, by suitable legislation or in any other way, to secure the participation of employees in the management of undertakings, establishments, or other organizations engaged in any industry.

Classification of LABOUR LAWS in India

I. Laws related to Industrial Relations such as:
1. Trade Unions Act, 1926
2. Industrial Employment Standing Order Act, 1946.
3. Industrial Disputes Act, 1947.

II. Laws related to Wages such as:
4. Payment of Wages Act, 1936
5. Minimum Wages Act, 1948
6. Payment of Bonus Act, 1965.
7. Working Journalists (Fixation of Rates of Wages Act, 1958

III. Laws related to Working Hours, Conditions of Service, and Employment such as:
8. Factories Act, 1948.
9. Plantation Labour Act, 1951.
10. Mines Act, 1952.
11. Working Journalists and other Newspaper Employees (Conditions of Service
and Misc. Provisions) Act, 1955.
12. Merchant Shipping Act, 1958.
13. Motor Transport Workers Act, 1961.
14. Beedi & Cigar Workers (Conditions of Employment) Act, 1966.
15. Contract Labour (Regulation & Abolition) Act, 1970.
16. Sales Promotion Employees Act, 1976.
17. Inter-State Migrant Workmen (Regulation of Employment and Conditions of
Service) Act, 1979.
18. Dock Workers (Safety, Health & Welfare) Act, 1986.
19. Building & Other Construction Workers (Regulation of Employment &
Conditions of Service) Act, 1996.
20. Building and Other Construction Workers Welfare Cess Act, 1996
21. Cine-Workers and Cinema Theatre Workers (Regulation of Employment) Act,
22. Dangerous Machines (Regulation) Act, 1983
23. Dock Workers (Regulation of Employment) Act, 1948
24. Dock Workers (Regulation of Employment) (Inapplicability to Major Ports)
Act, 1997
25. Employment of Manual Scavengers and Construction of Dry Latrines
(Prohibition) Act, 1993
26. Industrial Employment (Standing Orders) Act, 1946
27. Mines and Mineral (Development and Regulation Act, 1957
28. Plantation Labour Act, 1951
29. Private Security Agencies (Regulation) Act, 2005

IV. Laws related to Equality and Empowerment of Women such as:
30. Maternity Benefit Act, 1961
31. Equal Remuneration Act, 1976.

V. Laws related to Deprived and Disadvantaged Sections of the Society such as:
32. Bonded Labour System (Abolition) Act, 1976
33. Child Labour (Prohibition & Regulation) Act, 1986
34. Children (Pledging of Labour) Act, 1933

VI. Laws related to Social Security such as:
35. Workmen’s Compensation Act, 1923.
36. Employees’ State Insurance Act, 1948.
37. Employees’ Provident Fund & Miscellaneous Provisions Act, 1952.
38. Payment of Gratuity Act, 1972.
39. Employers’ Liability Act, 1938
40. Beedi Workers Welfare Cess Act, 1976
41. Beedi Workers Welfare Fund Act, 1976
42. Cine Workers Welfare Cess Act, 1981
43. Cine Workers Welfare Fund Act, 1981
44. Fatal Accidents Act, 1855
45. Iron Ore Mines, Manganese Ore Mines, and Chrome Ore Mines Labour
Welfare Cess Act, 1976
46. Iron Ore Mines, Manganese Ore Mines, and Chrome Ore Mines Labour
Welfare Fund Act, 1976
47. Limestone and Dolomite Mines Labour Welfare Fund Act, 1972
48. Mica Mines Labour Welfare Fund Act, 1946
49. Personal Injuries (Compensation Insurance) Act, 1963
50. Personal Injuries (Emergency Provisions) Act, 1962
51. Unorganised Workers’ Social Security Act, 2008

However, with the labour reforms carried out by the Government from the year 2019, many of these above acts have been subsumed into the 4 labour codes for which the assent is already given by the president, but pending execution due to some States not yet having framed the rules.  This is so because the Centre is of the opinion that execution will happen uniformly across all the States and not piece-meal.


The mammoth number of compliances and their impact on businesses: what are they and how does it impact them?

According to the report, among the 69,233 unique compliances that regulate doing business in India, as many as 26,134 have imprisonment clauses as a penalty of non-compliance.

Five States have more than 1,000 imprisonment clauses in their business laws as follows :

Gujarat (1,469),

Punjab (1,273),

Maharashtra (1,210),

Karnataka (1,175)

and Tamil Nadu (1,043)

As per some estimates, there are about 63.05 million micro industries, 0.33 million small, and about 5,000 medium enterprises in the country. The state of Uttar Pradesh has the largest number of estimated MSMEs with a share of 14.20 percent of the total MSMEs in the country.

Small and medium-sized enterprises (SMEs) employ fewer than 250 people. SMEs are further subdivided into micro enterprises (fewer than 10 employees), small enterprises (10 to 49 employees), and medium-sized enterprises (50 to 249 employees). Large enterprises employ 250 or more people.

“Excessive compliances are especially a big hindrance on MSMEs; a typical MSME, having more than 150 employees, faces 500-900 compliances that cost ₹12-18 lakh a year,” the report said.

Further, it mentioned that such regulatory overreach impacts not just entrepreneurs running for-profits, but also not-for-profit institutions where the. Non Profit making organizations are formed for social welfare or charity. They usually promote science, art, charity, commerce, or religion for social development and not for personal profit. The link between India’s underlying economic growth and pace of industrial production continues to weaken and there is a widening gap between the goods and services the country needs how the State views the entrepreneurs getting into the act of providing them is a big dilemma sitting on the heads of those in governance and businesses.

Canteens, Rest Rooms, and Wash Rooms in workplaces are a kind of an eye sore with dirtiness looming all around the premises; furthermore not updating annual reports, delays in disbursing wages, and finding ways and means to circumvent the provisions due to hassles of maintaining tedious compliances are the biggest challenges for the entrepreneurs.   Moreover,  a factory manager or an occupier is always in a vulnerable position and is constantly placed at a high risk of going to jail for several minor violations that account for 26,134 imprisonment clauses under various Indian laws have been highlighted in a report asserting the need for reviewing jail terms for non-compliance.

According to the report, The Factories Act, 1948 and Punjab Factories Rules, 1952 account for 485 of the 1,273 clauses of imprisonment for non-compliance. The report highlights violations like not cleaning a toilet can attract an imprisonment of up to three years along with a fine of Rs. 2 lakhs.


Karma’s feel-good factor for its clients   

Karma Global has always maintained a feel-good factor for all its clients on board with Karma,  for managing their compliances on a monthly basis.  Due to breaches and depending on the velocity and nature of the acts, jail term does not happen overnight and does not happen automatically.  There is a process laid down which has to be followed diligently by the Enterprises in business. 

Only when there is a shortcoming in compliances and proper adherence in terms of having valid licenses, registers, returns, and display of documents, a notice is issued asking the business heads to comply with the same within a period of 7 to 15 days.  Failing to do so, a second reminder is sent or sometimes a show cause notice is sent as to why action should not be taken against the operational heads or supervisors in charge.  Only when one ignores the same, then a summons issued, and in cases of defaulting in mandatory PF, ESI, PT & LWF contributions, there is a likelihood of an arrest warrant being issued followed by a jail term if found guilty.

In this manner, whether for minor violations or major violations, the entrepreneurs have to face strict clauses in laws and regulations, including imprisonment clauses which make it extremely difficult for doing business and then defeat the objective of reaching the milestones that have been set by various Enterprises.



The report has 10 recommendations to improve the doing business scenario, some of which are highlighted below :

  • Using criminal penalties with restraint and constituting a regulatory impact assessment committee could lay the foundation for policy reformation.
  • It also recommends rationalizing imprisonment clauses. For instance, removing criminality from procedural lapses and inadvertent omissions while retaining imprisonment for willful transgressions, including but not limited to loss of life, destruction of the environment, and evasion of taxes.
  • In addition, defining standards for legal drafting, introducing sunset clauses, and ushering all reforms under single overarching legislation could be key to infusing dignity to the entrepreneurs, businessperson, and wealth-creators


Proprietory blog of Karma Global Tech Management Firm

This blog has been compiled by the internal staff of Karma Global with the knowledge and expertise that they possess, for its monthly newsletter Issue 03 of September 2022 in case of specific or general information or compliance updates for that matter, kindly reach out to the

Marketing Team – /

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