Employment Newsletter July-August 2025

Introduction

We welcome you to the July-August 2025 Edition of CMS INDUSLAW's Employment Corner Bulletin. In this issue, we have discussed key statutory and judicial updates in the employment and anti-corruption/anti-bribery space for the months of July and August of 2025.

On the regulatory front, the ESIC has launched the SPREE Scheme to bring contractual and temporary workers under the social security framework of the ESI Act. The Union Cabinet has notified the ELI Scheme to extend social security benefits to first-time employees. India and the UK have signed the Comprehensive Economic Trade Agreement, designed to eliminate dual social security contributions for employees working between the two countries. The SEBI has introduced comprehensive digital accessibility compliances across all SEBI-regulated entities for persons with disabilities. The Ministry of Labour and Employment has introduced the Private Placement Agency Bill to regulate the operations of private placement agencies. Several states in India, including Haryana, Delhi, Odisha, Punjab, Rajasthan, Himachal Pradesh, and Goa, have issued notifications permitting women employees to work during night shifts subject to safety conditions. For ease of doing business, multiple states like Punjab, Gujarat, Telangana and Chandigarh have revised the daily working hours, opening and closing hours, overtime hours, rest intervals, spread over, etc.

In this Bulletin, we have included a dedicated section on the anti-bribery and anti-corruption developments. This includes the implementation of the offence of failure to prevent fraud by the UK government, and the significant decision by the US Department of Justice in pressing criminal charges against Mexican businessmen for violations of the FCPA.

On the judicial front, the Supreme Court has delivered significant decisions expanding the scope of "out of and in the course of employment" under the Employees' Compensation Act; determining whether separate business units constitute a single establishment under the EPF Act; and directing States and Union Territories to complete a comprehensive survey to monitor compliance with the POSH Act.

Legal Updates

Central

ESIC Launches SPREE: One-Time Registration Window to Expand Social Security Coverage

To expand social security coverage and encourage voluntary compliance with the Employees' State Insurance Act, 1948 ("ESI Act"), the Employees' State Insurance Corporation ("ESIC") has launched the Scheme for Promotion of Registration of Employers and Employees ("SPREE"). SPREE aims at bringing unregistered employers and employees, including contractual and temporary workers, under the social security framework of the ESI Act. The SPREE is operative from July 1, 2025, to December 31, 2025.

SPREE offers a one-time registration window for employers who have not yet registered under the ESI Act despite being eligible. Employers must digitally register their units and employees through the ESIC portal, Shram Suvidha portal, or the Ministry of Corporate Affairs portal. Any registrations completed on such portals will be considered valid from the date as declared by the employer.

Employers are granted a complete exemption from past liabilities, including no contribution or benefit obligations for any period prior to registration, and no inspection demands or requirements to produce past records for the pre-registration period.

The scheme eliminates the fear of retrospective penalties and simplifies the registration process to promote voluntary compliance.

Union Cabinet Approves the Employment Linked Incentive Scheme, 2025 to Extend Provident Fund Social Security Coverage Across All Sectors

The Union Cabinet notified the Employment Linked Incentive Scheme, 2025 ("ELI Scheme") on July 1, 2025, to extend social security coverage across all sectors. The ELI Scheme will be operational from August 1, 2025, to July 31, 2027. The scheme adopts a dualapproach framework as follows:

Part A: Incentive to First-Time Employees

First-time employees registered with the Employee Provident Fund Organization ("EPFO") and earning up to INR 1,00,000 per month will be eligible for an incentive equivalent to 1 month's employee provident fund ("EPF") wage, subject to a maximum cap of INR 15,000.

Instalments will be provided on completion of 6 and 12 months of service respectively, subject to completion of a financial literacy program by the employee.

Part B: Support to Employers

Employers will receive incentives of up to INR 3,000 per month for each additional employee earning up to INR 1,00,000 per month, for a period of 2 years. For manufacturing sector employers, the incentive period will additionally include the third and fourth years.

Employers must meet minimum hiring thresholds in order to be eligible for the incentive:

1. Establishments with less than 50 employees must hire at least 2 additional employees.
2. Establishments with greater than 50 employees must hire at least 5 additional employees.

UK-India Comprehensive Economic Trade Agreement and Double Contributions Convention

On July 24, 2025, India and the United Kingdom signed the Comprehensive Economic Trade Agreement ("CETA") as part of their Free Trade Agreement, establishing a framework for enhanced economic integration. Concurrently, both countries agreed to a reciprocal UK-India Double Contributions Convention, a bilateral Social Security Agreement designed to eliminate dual social security contribution obligations for employees working between the two countries. Our note on the CETA is available at Employment law corner- UK-India/CETA.

Securities Exchange Board of India Mandate to Protect the Rights of Persons with Disability in the Indian Securities Market

The Securities and Exchange Board of India ("SEBI") issued a circular on July 31, 2025 ("Circular"), mandating comprehensive digital accessibility compliance across all SEBI-regulated entities to protect the rights of persons with disabilities. The Circular applies to registered intermediaries, including stockbrokers, mutual funds, know your customer registration agencies, and qualified registrar to an issue and share transfer agent (QRTAs), as well as market infrastructure institutions such as stock exchanges, depositories, and clearing corporations. Our note on the same is available at Employment law corner-SEBI Mandates.

Ministry of Labour and Employment Introduces the Private Placement Agency (Regulation) Bill, 2025

The Ministry of Labour and Employment has introduced the Private Placement Agency (Regulation) Bill, 2025 (the "Bill") dated August 14, 2025, aiming at regulating operations of private placement agencies ("PPAs"). The Bill is open to public consultation till September 12, 2025. The Bill applies to all private placement agencies operating in India, including domestic recruitment firms, executive search companies, overseas employment consultants, labour contractors, and staffing agencies engaged in placement activities both within India and abroad. The following are the key features of the Bill:

1. Registration Requirements: All PPAs must register with either the Central Placement Support Authority ("CPSA") or designated State Placement Support Authorities ("SPSA") before commencing operations. Agencies operating across multiple states will require central registration, while those operating within a single state may register with the respective SPSA.
   
   PPA engaged in overseas placements must additionally obtain authorization from the Ministry of External Affairs.
   
2. Regulatory Framework: A comprehensive regulatory structure is established through the constitution of a CPSA and corresponding SPSAs. These authorities will be responsible for registering, monitoring, and regulating PPAs.
3. Database Management and Compliance Obligations: Registered PPAs need to maintain comprehensive databases of job seekers and employers, which must be linked to the Integrated Career Service portal. PPAs must upload all placement details within 30 days of successful placements.

In case of violation of these terms and conditions, necessary enforcement actions shall be initiated against the PPAs including potential suspension or cancellation of registration.

State

State of Punjab and Union Territory of Chandigarh Allows 24x7 Operations for Shops and Commercial Establishments

Punjab and Chandigarh have issued a notification dated August 14, 2025, exempting all shops and commercial establishments registered under the Punjab Shops and Commercial Establishment Act, 1958 ("PSEA") from the operation of provisions of Section 9 (opening and closing hours), Section 10(1) (close day), and Section 30 (conditions of employment of women) of the PSEA.

This allows establishments to operate 24/7, subject to the following conditions:

1. Every employee must be given 1 day of rest per week without wage deduction, with a monthly schedule displayed in advance.
2. No employee shall work more than 10 hours per day or 48 hours per week. The spread over of an employee shall not exceed 12 hours in a day, inclusive of the interval for rest.
3. Establishments open after 10:00 p.m. must ensure adequate safety and security arrangements and must comply with conditions for the employment of women in night shifts.
4. Employees shall be given paid national and festival holidays.

State of Telangana Permits 10-Hour Daily Shifts in Commercial Establishments

Amidst the drive for ease of doing business in the state, the government of Telangana has issued a notification dated July 5, 2025, exempting only commercial establishments from Section 16 (daily and weekly hours of work) and Section 17 (interval of rest) of the Telangana Shops and Establishments Act, 1988.

The notification allows employees to work for 10 hours per day. The weekly limit on working hours remains capped at 48 hours, with overtime wages mandatory for work exceeding this threshold. Employees may be permitted to work beyond the standard 48 hours per week with appropriate overtime compensation, subject to a quarterly maximum of 144 hours. This is a change from the requirement of a maximum limit of 6 hours per week.

The notification maintains essential worker protections, including mandatory rest intervals of at least 30 minutes for employees working more than 6 hours daily, and ensures that total work periods, including rest intervals, do not exceed 12 hours in a day.

Any violation of these conditions will result in immediate revocation of the exemption without prior notice.

Gujarat Amends Factories Act to Increase Working Hours and Overtime Limits

Gujarat has promulgated the Factories (Gujarat Amendment) Ordinance, 2025 ("Ordinance") on July 01, 2025, to amend the Factories Act, 1948, in its application to Gujarat. The Ordinance will remain in force for a period of 6 months from the date of promulgation.

Key amendments include:

1. Extended Working Hours: The state government can extend the daily maximum working hours from 9 to 12 hours per day (inclusive of rest intervals), subject to a maximum of 48 hours in any week. This is subject to written consent from workers, and the remaining days of the week are paid holidays.
2. Rest Interval Modifications: The state government may extend the total number of working hours without an interval from 5 to 6 hours in respect of any group, class, or description of factories.
3. Increased Spread Over: The spread over period may be increased up to 12 hours, up from the current 10 hours and 30 minutes by way of notification.
4. Revised Overtime Calculation: Overtime wage calculation formula has been modified for different weekly work patterns:
   • For 6-day weeks: Overtime applies after 9 hours in a day or 48 hours in a week
   • For 5-day weeks: Overtime applies after 9 hours in a day or 48 hours in a week
   • For 4-day weeks: Overtime applies after 11 hours and 30 minutes in a day.
   • In all cases, overtime work on paid holidays is compensated at twice the ordinary rate of wages.
5. Enhanced Overtime Limits: The quarterly overtime limit has been increased from 75 hours to 125 hours, providing greater flexibility for factories to manage production demands. Additionally, workers may be required to work overtime, subject to their written consent.
6. Women's Night Shift Employment: Comprehensive provisions for employing women in factories between 7:00 p.m. and 6:00 a.m. have been included in relation to conditions for their safety.

Several States Permit Engagement of Women in Night Shifts in Factories, Shops and Commercial Establishments

Several states in India including Haryana, Punjab, Rajasthan, Himachal Pradesh, and Goa, have issued notifications under the Factories Act, 1948 and/or their respective Shops and Commercial Establishments Acts in July 2025, permitting the engagement of women employees during night shifts, subject to specific safety and welfare conditions. The common compliances for an employer include:

1. Mandatory written consent from women employees before engaging them in night shifts.
2. Safe transportation arrangements to be provided by the employer, with safety measures such as GPS tracking systems.
3. Workplace safety measures by the employer, including adequate lighting within the workplace and surrounding areas, CCTV surveillance in work areas where women are employed.
4. Compliance with the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 ("POSH Act").
5. Provision of adequate and safe sanitation and rest facilities for women employees working during night shifts.

The following are illustrative additional state-specific requirements that the employer must comply with:

1. Haryana
   • Employers can employ women between 8:00 p.m. and 6:00 a.m. in IT/ lTeS establishments, banking establishments, three-star or above hotels, 100% export-oriented establishments, and logistics and warehousing establishments.
   • Employers must apply for exemption through online portals at least 2 weeks before employing women on night shifts. Based on self certification, such an exemption will be granted in auto mode. The exemption will be valid for 1 year unless there are substantive changes to security, transportation facilities, or key personnel details that would necessitate a fresh notification.
   • During night shifts, women employees must be employed in batches of at least four, though this requirement is specifically relaxed for senior women professionals in the IT/ITeS sector who earn more than INR 1,00,000 per month and have provided their consent to work individually during night shifts.
   • Comprehensive medical facilities must be provided either by engaging an on-site doctor or female nurse during night shifts, or alternatively, through formal tie-ups with nearby hospitals that can provide emergency medical services when required.
   • Employers must submit a copy of their annual return under the POSH Act to the state's Labour Commissioner.
2. Delhi
   • Employers can employ women on night shifts (between 9:00 p.m. to 7:00 a.m. during the summer season and between 8:00 p.m. to 8:00 a.m. during the winter season) in all shops and commercial establishments except liquor shops.
   • The CCTV recording must be preserved for at least 1 month, which must be submitted on demand to the Chief Inspector of Shops.
   • Women employees must not be forced to work only night shifts, ensuring rotation of shifts where applicable and preventing permanent assignment to night hours.
   • A copy of the notification must be prominently displayed at employee entrances/exits of the establishment, ensuring awareness of the conditions and rights among all staff members.
3. Punjab
   • Women can be employed for night shifts (between 10:00 p.m. to 5:00 a.m.) in factories, shops and commercial establishments.
   • During night shifts, women employees must work in batches of at least 5 women or twothirds of the total shift strength, whichever is less.
   • All CCTV surveillance recordings of night shifts must be securely stored and maintained for a minimum period of 45 days.
   • A minimum of 2 women security personnel must be deployed during each night shift to provide gender-sensitive security support and assistance to women workers.
   • Female workers who work both regular and night shifts must have structured monthly grievance meetings with the principal employer once every 8 weeks in case of factories and once a month in case of shops and commercial establishments to address concerns of working conditions.
   • The approval process for exemptions has been streamlined through an automated online system that generates permissions within 24 hours of application submission, though authorities retain the right to revoke such exemptions with a 15 day notice period and after providing an opportunity for the employer to be heard.
   • Employers must ensure that annual self-defence workshops/training for women employees are provided.
4. Odisha
   • The Odisha government's notification permits employment of women between 7:00 p.m. and 6:00 a.m. in factories registered under the Factories Act, 1948.
   • The transportation vehicles must be equipped with GPS tracking systems and have female security guards.
   • Dedicated telephone numbers of the establishment, along with the government toll-free Helpline number for Women (181) and the Labour and ESI Department helpline number, must be prominently displayed at the establishment and in transportation vehicles.
   • Employers must ensure that such employees receive 8 consecutive hours of rest between day and night shifts.

State of Bihar Notifies the Bihar Shops and Establishments (Regulation of Employment and Conditions of Service) Act, 2025

The Government of Bihar notified the Bihar Shops and Establishments (Regulation of Employment and Conditions of Service) Act, 2025 ("Bihar Act") on August 12, 2025. This new legislation repeals the Bihar Shops and Establishment Act, 1953, and introduces significant changes to regulate employment conditions in shops and establishments across the state.

Employers must note that the Bihar Act does not take away any right or privilege a worker is entitled to under any law, award, agreement, contract, custom or usage. Where establishments provide benefits more favorable than those prescribed under the Bihar Act, such better benefits will prevail over the statutory provisions.

State of Punjab amends the Punjab Shops and Commercial Establishments Act, 1958

The Government of Punjab has notified the Punjab Shops and Commercial Establishments (Amendment) Act, 2025 on August 28, 2025, introducing significant changes to the regulatory framework for shops and commercial establishments in the state. The following are the key amendments:

1. Application Threshold: The PSEA will now apply only to establishments employing 20 or more workers. For establishments with fewer than 20 workers, only the newly inserted Section 13-A regarding intimation of business will be applicable
2. Working Hours Revision: The maximum daily working hours have been increased from 9 hours to 10 hours. The weekly limit on working hours remains at 48 hours.
3. Overtime Limit: The maximum limit for overtime during any quarter has increased from 50 hours to 144 hours.
4. Spread Over Period: The maximum spread-over period has increased from 10 hours to 12 hours.
5. Penalties: For contravention of the provisions of PSEA, the employer will be liable to pay a maximum of INR 2,000 for the first offence and a maximum of INR 30,000 for the subsequent offence.

To view the full article, click here.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.