Most Indian labour-law obligations are triggered not by your revenue or your funding stage, but by a single number: how many people you employ. A two-person startup and a two-hundred-person one live under very different rules, and crossing a threshold quietly converts a "nice to have" into a statutory duty backed by penalties. This lesson maps the registrations you need from day one and the headcount marks that switch on new obligations, so you can budget and hire without a nasty surprise from a labour inspector.
Start here: Shops and Establishments registration
The Shops and Establishments Act is a state law, so the exact rules depend on where your office sits (Karnataka, Maharashtra, Delhi and others each have their own version). It governs everyday employment basics: working hours, weekly offs, leave, and opening and closing times. For most founders it is the first registration after incorporation, and it doubles as proof that your entity legally employs people, which banks and clients often ask for.
In most states you must register within about 30 days of commencing business, and in many states the requirement can apply even if you have just one employee. A few states set a headcount floor: Maharashtra, for example, makes registration mandatory at 10 or more workers and voluntary below that. Check your specific state portal rather than assuming a national rule, because fees and certificate validity (from one year to lifetime) also vary by state.
What changed: the four new labour codes
India has consolidated 29 older labour laws into four codes: the Code on Wages, 2019; the Industrial Relations Code, 2020; the Code on Social Security, 2020; and the Occupational Safety, Health and Working Conditions Code, 2020. The central government brought these codes into force on 21 November 2025. However, the detailed central rules and many state rules that make them fully operational are still being finalised: draft central rules were published on 30 December 2025 for stakeholder comments, with final central and state rules to follow after the consultation period.
The practical takeaway for a founder is that this is a transition period. The familiar thresholds largely carry over into the new codes, but definitions (for example, of "wages") and state-level rules are shifting. Keep an eye on your state's notifications and treat any payroll or policy template older than late 2025 as something to re-verify.
The headcount ladder
These are the marks that matter most as you grow:
- 1 employee: Shops and Establishments registration (state-dependent, as above).
- 10 employees: Several major duties switch on at once. ESI (Employees' State Insurance) applies at 10 or more employees in most states (20 in a few), covering staff earning up to ₹21,000 per month. The Payment of Gratuity Act applies to establishments with 10 or more employees, paying eligible staff after five years of continuous service. The Maternity Benefit Act also applies at 10 or more. And under the POSH Act, 2013, you must constitute an Internal Committee for prevention of sexual harassment, led by a senior woman with at least 50 percent women members and one external member. Failure to form it can attract a fine of up to ₹50,000 for a first offence, rising for repeat offences.
- 20 employees: EPF (Employees' Provident Fund) registration becomes mandatory, covering employees with basic pay plus dearness allowance up to ₹15,000 per month.
- 300 workers: Under the Industrial Relations Code, the standing-orders requirement now applies at 300 workers (raised from 100), and establishments of this size need prior government permission before layoffs, retrenchment, or closure.
One important note on counting: for ESI, EPF, and the POSH Internal Committee, the headcount usually includes contract workers, interns, and probationers, not just full-time payroll staff. Undercounting is a common and expensive mistake.
What to do now
Register under your state's Shops and Establishments Act early. Track your headcount deliberately, and before you hire the tenth person, set up ESI, a maternity policy, a gratuity provision, and a POSH Internal Committee. Register for EPF as you approach twenty. Given the ongoing rollout of the labour codes, confirm current state rules with a labour consultant or your CA before finalising payroll structures.