Part A: Supreme Court judgments
1. Factories Act Expanded: Laundry Work Classified as Manufacturing Process
Title: The State of Goa and Anr. v. Namita Tripathi
Brief Facts:
The respondent, a laundry business owner, was found non-compliant with several provisions of the Factories Act, 1948, following a 2019 inspection. The violations included lack of factory registration and unapproved building plans. When issued summons, the employer contended that laundry work is a service, not a manufacturing process, and thus outside the Factories Act's scope. The Chief Inspector rejected this defense and held the employer liable under the Act. The Bombay High Court quashed the summons, stating that manufacturing requires transformation into a new article, which dry cleaning does not involve. Aggrieved, the State appealed to the Supreme Court to determine whether laundry work constitutes a manufacturing process and if such premises qualify as a factory under the Factories Act.
Observations of the Court:
The Supreme Court, after interpreting the definitions of "factory" and "manufacturing process" under the Factories Act, held that any premises where ten or more workers are employed with the aid of power for activities like washing or cleaning qualifies as a factory. Applying the Rule of Plain Meaning and the Mischief Rule, the Court emphasized that washing and dry-cleaning clearly fall within the ambit of "manufacturing process" as per the 1948 Act, which had expanded its scope from the earlier 1934 law. Citing relevant case law, the Court concluded that laundry services meet the statutory definition and thus attract the Act's applicability. As a result, the SC set aside the High Court's order and reinstated the complaint against the employer.
2. Criminal Conviction Not Necessary for Forfeiture of Gratuity
Title: Western Coal Fields Ltd. v. Manohar Govinda Fulzele
Brief facts:
The case involved appeals filed by Western Coal Fields Ltd., a PSU, and the Maharashtra State Road Transport Corporation ("MSRTC") against judgments that held the forfeiture of gratuity to be impermissible under the Act. The dispute arose over whether an employer could forfeit gratuity in cases where an employee was terminated for misconduct involving moral turpitude, even in the absence of a criminal conviction or formal criminal proceedings. The employees in question were dismissed on grounds of misconduct. In the case of Western Coal Fields Ltd., the employee was found to have fraudulently misrepresented his birth date at the time of appointment. In the MSRTC case, the employees, who were bus conductors, were terminated for misappropriating passenger fares. The respondent employees challenged the forfeiture of their gratuity, arguing that in the absence of a criminal conviction, such action was unlawful. The lower courts ruled in their favor, relying on Union Bank of India & Ors. v. C.G. Ajay Babu ("Ajay Babu"), which had held that gratuity could not be forfeited without a criminal conviction.
Observations of the Court:
The Supreme Court, interpreting Section 4(6) of the Payment of Gratuity Act, held that an employer can forfeit gratuity without a criminal conviction if misconduct involving moral turpitude is established through a departmental inquiry. It rejected the earlier view in Ajay Babu, which required a criminal conviction under Section 4(6)(b)(ii), stating that such a requirement is not present in the statutory language. Emphasizing the distinction between criminal trials and disciplinary proceedings, the Court clarified that the standard of proof in internal inquiries is that of preponderance of probabilities and is a sufficient proof. Accordingly, the Court upheld the full forfeiture of gratuity in the Western Coal Fields case but, in a more lenient stance, limited forfeiture to 25% in the MSRTC case involving minor fare misappropriation, recognizing the need for proportionality in punishment.
3. Supreme Court Reinforces Labour Rights: Temporary Workers' Path to Permanency
Title: Shripal & Anr. v. Nagar Nigam, Ghaziabad
Brief facts:
The appellants, employed as gardeners by the Horticulture Department of Ghaziabad Nagar Nigam since 1998–99, carried out duties such as tree planting, park maintenance, and beautification of public spaces under the supervision of the municipal body. Despite years of continuous service, they were not given formal appointment letters and were denied minimum wages and other statutory benefits. In 2004, they raised an industrial dispute seeking regularisation, but during the pending conciliation, their services were abruptly and orally terminated in mid-2005 without any notice or retrenchment compensation. This led to several legal proceedings, resulting in inconsistent Labour Court awards, some granting reinstatement with partial back wages, others denying relief. The matter eventually reached the Allahabad High Court, which in 2019 directed the re-engagement of the workers on daily wages with pay equal to the minimum of the regular gardener pay scale, while also leaving room for future regularisation if legally permissible. Dissatisfied, both the workers and Nagar Nigam approached the Hon'ble Supreme Court through special leave petitions.
Observations of the Court:
The workers contended they had served continuously under Ghaziabad Nagar Nigam's direct supervision for over a decade, performing core horticultural duties and receiving wages directly from the department, disproving claims of contractor-based employment. They argued that their 2005 termination, during pending conciliation, violated Sections 6E and 6N of the U.P. Industrial Disputes Act, 1947, and sought full reinstatement with back wages and regularisation. In contrast, the Nagar Nigam claimed there was no direct employment relationship, citing a government recruitment ban, contractor-based hiring, and reliance on the Umadevi judgment to oppose regularisation. The Hon'ble Supreme Court rejected Nagar Nigam's arguments due to lack of evidence, affirmed a direct employment relationship, and held that the termination during conciliation was illegal. It noted the workers performed essential, perennial functions and emphasized that Umadevi could not justify long-term exploitation. Citing Jaggo v. Union of India, the Court condemned the misuse of temporary employment and, setting aside the High Court order, directed reinstatement within four weeks, 50% back wages from termination until reinstatement, continuity of service, and initiation of regularisation within six months.
4. Supreme Court of India validates exclusive jurisdiction clauses in employment contract easing litigation for employers
Title: Rakesh Kumar Varma v. HDFC Bank Limited and HDFC Bank Limited vs. Deepti Bhatia
Brief Facts:
Two former HDFC Bank employees challenged their terminations by filing suits in Patna and Delhi, despite their employment contracts containing an exclusive jurisdiction clause conferring jurisdiction solely on Mumbai courts. HDFC Bank sought dismissal of these suits, citing the clause. The Patna High Court upheld the clause, relying on Swastik Gases v. Indian Oil Corporation, ruling that parties can validly agree to exclusive jurisdiction if the chosen court has legal competence. However, the Delhi High Court rejected HDFC Bank's objection, noting that part of the cause of action including the employee's residence, employment, and receipt of the termination letter arose in Delhi. Citing Vishal Gupta v. L&T Finance, it held that the clause did not fully exclude Delhi's jurisdiction. The core issue was whether such suits were maintainable despite a contractual clause conferring exclusive jurisdiction on Mumbai courts.
Observations of the Court:
The Supreme Court upheld the validity of exclusive jurisdiction clauses in HDFC Bank's employment contracts, ruling that such clauses are enforceable provided the chosen court here, Mumbai, has jurisdiction under the law. Referring to Sections 28 of the Indian Contract Act and 20 of the CPC, the Court clarified that while agreements cannot entirely bar legal remedies, parties may restrict disputes to one among several competent courts. Citing precedents like Hakam Singh and Swastik Gases, the Court held that explicit language is not essential to infer exclusivity if the intent is clear. Since the employees' appointment and termination processes occurred in Mumbai, and HDFC Bank's head office is located there, the Court found Mumbai to be a valid forum. It rejected arguments about unequal bargaining power, affirming that employment contracts are not inherently different from others. Recognising the operational burden on pan-India employers, the Court concluded that the suits should have been filed in Mumbai, in line with the contracts.
5. Statutory 12% Interest Mandatory on Delayed Employee's Compensation Payments
Title: Shanti and Others v. National Insurance Company
Brief Facts:
The case arose from the death of a cleaner in a truck owned by his father. The deceased's mother and siblings (claimants) sought compensation under the Employees' Compensation Act, 1923. The primary legal issue was whether the mandatory 12% interest rate under Section 4A(3) of the Act applies when there is a delay in paying the admitted compensation. The Commissioner initially awarded compensation with 6% interest and a 40% penalty, payable by the insurance company.
Observations of the Court:
The Supreme Court unequivocally stated that Section 4A(3) of the Compensation Act mandates the payment of interest at a rate of 12% per annum when there is a default in paying the admitted compensation within one month from the date it becomes due. The liability to pay this 12% interest arises immediately upon the default in payment of the admitted compensation beyond the one-month period. The 12% per annum interest rate is statutory and mandatory. The court noted that any discretion is limited to imposing a higher rate, but this higher rate cannot exceed the lending rate of scheduled banks.
As the insurance company did not challenge the compensation award itself, the court upheld the claimants' plea for a higher interest rate as per the statutory provision. Consequently, the Supreme Court modified the Commissioner's award, directing the insurance company to pay interest at the rate of 12% per annum from the date of the accident, aligning with the mandatory provision of Section 4A(3) of the Employees' Compensation Act, 1923.
6. Workers in Charitable Trust Factories Entitled to Bonus
Title: The Management of Worth Trust v. Worth Trust Workers Union
Brief Facts:
The case involved a dispute over the applicability of the Payment of Bonus Act, 1965, to workers employed by Worth Trust. Worth Trust was originally established as a charitable trust (Swedish Red Cross Rehabilitation Trust) for the rehabilitation of leprosy patients and other differently-abled individuals. Over time, the trust expanded its operations to include commercial manufacturing activities, such as producing automobile parts, and generated profits from these activities. The Worth Trust Workers Union, representing the workers (many of whom were rehabilitated individuals), claimed entitlement to bonus under the Payment of Bonus Act for a period of 28 years. Worth Trust argued that it was exempt from the Bonus Act under Section 32, claiming it was similar to the Indian Red Cross Society or an institution not established for profit.
Observations of the Court:
The Supreme Court dismissed the appeal filed by the Management of Worth Trust. The Court held that the Payment of Bonus Act, 1965, does apply to the workers employed in the factories of Worth Trust. The Court emphasized that engaging in commercial manufacturing activities and generating profits subjects an organization to the Bonus Act, regardless of its charitable origins or objectives. The Court rejected Worth Trust's claim for exemption under Section 32 of the Bonus Act, clarifying that the trust did not meet the criteria for such exemptions.
The Court affirmed that the entitlement to bonus is a statutory right of employees, and that charitable activities alongside commercial manufacturing do not exempt an employer from this obligation. The Court directed Worth Trust to pay the due bonus to its workers, after adjusting for any ex-gratia payments already made.
PART B: High Court Judgements
1. Employer Cannot Withhold Gratuity Without Undertaking Proper Disciplinary Measures
The Hon'ble Karnataka High Court ("HC") in the case of Central Warehousing Corporation vs. G C Bhat and Anr. decided that the employer cannot withhold the gratuity amount payable to an employee without initiating proceedings for the recovery of losses caused by the misappropriation of funds.
In this case, the employee was dismissed in December 2013 after an internal inquiry found him guilty of financial misappropriation, causing an approximate loss of INR 1.7 crores to the employer. In response, the employer withheld the employee's gratuity to recover the loss without pursuing any other recovery action. After seven years, in 2020, the employee filed for gratuity. The Controlling Authority directed the employer to pay INR 7.8 lakhs as gratuity with 10% interest from the date of termination. Aggrieved by this, the employer moved to the Karnataka High Court in a writ petition to quash the order.
The employer argued in the High Court that the employee's fraudulent actions caused a loss of INR 1.7 crores, and they were entitled to withhold the gratuity to offset the financial loss. They also contended that awarding gratuity would reward the employee for his fraud.
The Hon'ble High Court observed that the employer had failed to initiate any recovery proceedings for the alleged financial fraud committed by the employee, which was a significant procedural lapse. It also noted that the employee had already been punished for the fraud by being terminated from his job. Merely withholding gratuity without recovery proceedings constituted illegal forfeiture, and a separate proceeding for recovering the losses should have been initiated against the employee.
Finally, the High Court observed that gratuity could only be forfeited as part of recovery proceedings. The court rejected the employer's challenge and upheld the gratuity payment order. Consequently, the employer was directed to pay ₹7.8 lakhs with 10% interest from December 12, 2013, with a deadline of January 31, 2025."
2. Limited Ground of Intervention with the Findings of the Internal Committee
In the case of HCL Technologies Limited vs. N. Parsarathy, the Madras HC determined that judicial review of internal committee ("IC") inquiry reports under the POSH Act is limited to ensuring that the inquiry was conducted fairly and in accordance with basic principles of justice. Courts should not interfere with these proceedings unless there is a failure in due process. Additionally, the HC highlighted that any unwelcome behavior experienced by a woman constitutes sexual harassment under the POSH Act, regardless of the harasser's intent.
In this case, the accused, who had been working as an associate general manager since 2016, faced several allegations of sexual harassment. The IC conducted an inquiry and found him guilty of inappropriate behavior. Subsequent complaints led to another inquiry, which also confirmed his guilt. However, the labour court overturned the IC's findings, citing the IC's failure to provide CCTV footage as the reason. The petitioner challenged this decision in the present court. The HC ruled that strict rules of evidence do not apply to IC inquiries under the POSH Act, as these proceedings require a sensitive and reasonable approach. The court emphasized that judicial review should focus on whether the IC's inquiry was conducted fairly, without delving into hyper-technicalities or minor discrepancies. Consequently, the court quashed the labour court's order and upheld the IC's findings.
3. Delay in Filing PoSH Complaint
The Hon'ble Calcutta High Court, in the case of Dr. Nirmal Kanti Chakraborti vs. X, held that a delay in filing a sexual harassment complaint can only be condoned if the series of incidents are related to sexual harassment and not otherwise.
In this case, the aggrieved woman filed a complaint of sexual harassment against the vice-chancellor of the National University of Judicial Services before the Local Committee ("LC") in December 2023, alleging harassment in April 2023. The LC dismissed the complaint on the grounds of limitation and also held that the actions described did not constitute sexual harassment under the POSH Act. The aggrieved woman challenged this decision before a single bench of the Hon'ble Calcutta HC, which set aside the LC's order, leading to the present appeal.
The court upheld the LC's decision, ruling that the complaint was filed beyond the three-month limitation period from the last alleged incident in April 2023. The court also noted that the series of incidents cited were not related to sexual harassment, thus rejecting the claim for delay condonation.
4. Obligation Of Employer to Conclude Disciplinary Proceeding in a Reasonable Timeframe
The Hon'ble Rajasthan HC, in the case of Sardar Mal Yadav vs. State Elementary Education and Ors., held that employers must conclude disciplinary proceedings within a reasonable timeframe, particularly for employees nearing retirement.
In this case, the employee, a 59-year-old woman, was served a departmental disciplinary charge sheet in September 2024, just a few months before her retirement in March 2025. Although she promptly filed her response, the slow pace of the inquiry threatened to delay her retirement benefits. Consequently, the employee approached the Rajasthan HC, seeking a directive for the expedited completion of the disciplinary proceedings.
The key legal issue was whether an employer is obligated to complete an internal disciplinary inquiry in a timely manner, especially when the employee is close to retirement.
The Hon'ble Rajasthan HC observed that employers, whether state or private, have a duty to complete disciplinary inquiries within a reasonable timeframe to prevent undue hardship to the employee. The court further noted that employers should ensure that disciplinary proceedings are concluded within six months, except under exceptional circumstances.
5. Corporate Insolvency is no Excuse for the Payment of Gratuity
The Hon'ble Calcutta HC in the case of M/s Stesalit Limited vs. Union of India and Others, held that the payment of gratuity to an employee at the end of the employment period is distinct from other liabilities under the Insolvency and Bankruptcy Code, 2016 (IBC) and cannot be discharged solely through a resolution plan.
In this case, the employee worked from 2002 to 2014 with the employer. During this period, the management of the employer underwent significant changes due to corporate insolvency resolution under the IBC. The Interim Resolution Professional ("IRP") admitted the employee's total claim for gratuity, but only a marginal part of it was actually awarded. Aggrieved by this, the employee approached the Controlling Authority for gratuity, which accepted the employee's plea and directed the IRP to pay the full amount of the gratuity. The IRP, dissatisfied with this decision, appealed to the Hon'ble Calcutta High Court.
The High Court held that gratuity obligations are separate and distinct from other liabilities of an employer under insolvency. The court further relied on Section 36(4)(a)(iii) of the IBC, which expressly excludes gratuity funds from being considered part of the corporate debtor's assets.
6. Employee Cannot be Reinstated After the Age of Superannuation
The Hon'ble Bombay High Court, in the case of M/s J Fibre Corporation v. Shri Maruti Harishchandra and Others, held that an employee who was illegally terminated cannot be reinstated if he has already passed the age of superannuation. The court further stated that such an employee is only entitled to compensation for the period between the illegal termination and the date of retirement.
In this case, the employee was working as a shift supervisor. Due to cost-cutting measures, the employee's services were terminated. The employee challenged this termination in the labour court, which ruled in his favor and ordered the employer to reinstate him, even though he had already crossed the age of retirement.
The employer appealed to the Hon'ble Bombay HC against the labour court's order. The HC observed that, despite the employer not adhering to the required retrenchment procedures, their justification for the loss of production work was sound. Consequently, rather than mandating back wages and reinstatement, the court instructed the employer to compensate the employee with a lump sum payment.
7. Courts Have Discretion to Award Interest Under Section 33C(2) Of The Industrial Disputes Act, 1947 (ID Act)
The Hon'ble Bombay HC, in the case of Deepak Vallabhdas Intwala vs. Casby Logistics Private Limited and Ors., held that the adjudicating authority has the discretion to award interest under Section 33C(2) of the Industrial Disputes Act (ID Act) in claims for outstanding dues.
In this case, the employee challenged his transfer from Mumbai to Delhi on grounds of illegality and procedural lapses under the ID Act, before the Industrial Court. The Industrial Court ruled in his favor. Subsequently, the employee approached the labour court under Section 33C(2) of the ID Act to recover alleged outstanding payments, including interest, which was rejected.
Aggrieved by this, the employee approached the Hon'ble Bombay HC. The High Court noted that although the transfer was found to be illegal, the employee was not automatically entitled to recover payments for the period during which he remained absent without leave. It further clarified that although Section 33C(2) permits claims for due amounts, the addition of interest is not automatic and depends on the court's discretion. Therefore, the employee's request for interest along with back wages was considered untenable.
8. Payment of Salary to an Employee Acquitted from Criminal Case
The High Court of Rajasthan in Nathu Lal Jaroli vs. State of Rajasthan and Ors. held that denying arrears to an employee based on an acquittal by the benefit of doubt is unfair, unjust, and arbitrary. The HC emphasized that an acquittal signifies a lack of sufficient evidence to establish guilt, and thus, the employee should be restored to their rightful position, including the payment of arrears.
In the Present case the employee, a Junior Engineer, was suspended due to a criminal case filed against him, although no departmental inquiry was conducted. After being acquitted, he was reinstated, but his salary for the suspension period was withheld. Despite submitting multiple representations for regularization of the suspension period and payment of arrears, an order was issued that regularized the suspension period but denied arrears, except for the subsistence allowance, citing his acquittal on the benefit of doubt.
Aggrieved, the employee approached the Hon'ble Rajasthan HC to quash the employer's order. The court observed that a thorough examination of the evidence revealed no incriminating material sufficient to establish criminal culpability. The court found that using the "benefit of doubt" as a reason to deny arrears was unfair, unjust, and arbitrary. An acquittal signifies a lack of sufficient evidence to establish guilt, and denying arrears contradicts the principle of restoring the employee to his rightful position as if the suspension never occurred, except for adjustments like subsistence allowance already paid. Therefore, the impugned order was set aside, and the employer was directed to pay the dues along with applicable interest as per the service rules.
9. Protecting Confidential Information from Ex-Employees
Cigma Events Pvt. Ltd. ("Company"), a prominent event management company, filed a lawsuit against former senior employees. The company alleged that these employees, who had access to sensitive information, formed a competing business and used Company's confidential data to gain an unfair advantage. Specifically, the Company claimed the employees used client lists of the Company to divert significant business opportunities. The Company also alleged breaches of non-compete agreements and a violation of trust. To protect its business, the Company sought an injunction to stop the former employees from further using its confidential information and trade secret. The key issues before the court were: (i) whether the client list of a business can be treated as confidential information or a trade secret. (ii) when could an injunction be granted against an ex-employee for breach of confidentiality.
The Hon'ble High Court held that a client list cannot automatically qualify as confidential information or a trade secret; it must possess commercial value and be compiled through proprietary means to warrant protection. Publicly available or easily accessible client details cannot be treated as confidential. Citing American Express Bank Ltd. v. Priya Puri, the Court emphasized that knowledge carried in an individual's mind is not actionable. Regarding injunctions, the Court reiterated that a prima facie case, risk of irreparable harm, and balance of convenience must be established. As Cigma Events Pvt. Ltd. failed to show that its client list had economic value or that its misuse would cause irreparable harm, the Court dismissed the injunction plea.
Part C: Recent Developments In Labour & Employment Law In India
1. Self-certification scheme for factories introduced in Karnataka to enhance labour law compliances
In January 2025, the Karnataka government introduced the Karnataka State Factories Self Certification Scheme-2024 to streamline labour law compliance for factories within the state. This initiative, effective from January 4, 2025, encourages factory owners (occupiers) to voluntarily declare their adherence to key labour laws.
Key aspects of the scheme:
- Voluntary Participation: Factory owners can choose to opt into this scheme.
- Self-Declaration: Occupiers need to submit a self-declaration (Form-I) to the Chief Inspector, affirming full compliance with applicable laws. These laws include the Factories Act, 1948, the Payment of Wages Act, 1936, and the Maternity Benefit Act, 1961, along with their respective rules.
- Registration and Security Deposit: Upon application, a registration fee of ₹10,000 and a security deposit of ₹50,000 must be paid.
- Certificate of Registration: If the Chief Inspector is satisfied with the self-declaration, a certificate (Form-II) will be issued within 30 days, registering the factory under the scheme.
- Reduced Inspections: Generally, factories under this scheme will not be subject to routine inspections. However, up to 20% of the certified factories may be randomly selected for check inspections annually. Inspections can still occur in case of accidents, complaints, or specific issues with prior written approval.
- Annual Self-Certification Return: Occupiers must file an annual self-certification return (Form-III) between January 1st and 31st of each year.
- Validity and Renewal: The self-certification is valid for five years. After this period, owners can choose to continue under the scheme or opt-out. Continuation without violations may lead to a refund of the security deposit.
- Forfeiture of Security Deposit: The security deposit can be forfeited if the factory owner fails to comply with the scheme's terms, violates the declared compliance, or withdraws before the five-year term.
- Record Keeping and Transparency: Factories must maintain all required records and display their compliance status and participation in the scheme on notice boards and, if available, on their website.
- Exclusions: The scheme is not applicable to factories involved in hazardous manufacturing processes, those employing over 250 workers, or those dealing with highly inflammable or explosive substances.
2. Amendment to the Meghalaya Factories Rules, 1980 notified
On January 16, 2025, the Meghalaya Department of Labour, Employment, and Skill Development notified the Meghalaya Factories (Amendment) Rules, 2025, amending the Meghalaya Factories Rules, 1980. This amendment, effective from the date of publication (January 16, 2025), primarily focuses on revamping the factory licensing process within the state. The amendment extends the validity period of factory licenses to a maximum of 10 years. Factory licenses, whether newly granted or renewed, will now have a validity period ranging from a minimum of 1 year to a maximum of 10 years and the license will remain valid until the end of the specified tenure. Further, the process for renewing factory licenses has been shifted online. Factory owners are now required to submit their renewal applications at least two months before the expiry date of their current license.
3. Employees' Provident Fund Organisation (EPFO) simplifies employees' provident fund (EPF) account transfer process for job switchers
On January 15, 2025, the Employees' Provident Fund Organisation (EPFO) took a significant step to simplify the EPF account transfer process for employees switching jobs. A key aspect of this simplification involves a new directive stating that online PF transfer requests will no longer necessarily need to be routed through the previous or present employer in several scenarios. This streamlined process primarily benefits employees whose PF accounts are correctly linked with their Aadhaar and Universal Account Number (UAN), particularly if their UAN was generated after October 1, 2017. Additionally, it applies when transferring between accounts with different UANs linked to the same Aadhaar, provided the employee's basic details like name, date of birth, and gender are consistent across all records. This move aims to expedite the transfer process, empowering employees with more control over their PF accumulations.
4. EPFO simplifies the joint declaration process for members and employers
On January 16, 2025, the Employees' Provident Fund Organisation (EPFO) streamlined the Joint Declaration (JD) process for members and employers to rectify discrepancies in member details. This simplification categorizes members based on their UAN and Aadhaar linkage status. Online submission is now available, with DigiLocker integration simplifying document uploads. Even for offline submissions (for those without Aadhaar validation or deceased members), employers can now submit JDs on behalf of employees or claimants. Notably, Aadhaar matching is waived for deceased members.
5. EPFO addresses policy issues on pension calculation for higher wages
On January 18, 2025, the Employees' Provident Fund Organisation (EPFO) issued important clarifications to its field offices regarding the calculation and eligibility for pensions based on higher wages under the Employees' Pension Scheme (EPS-95). These clarifications, endorsed by the Minister of Labour & Employment, address crucial aspects of pension processing for members who contributed beyond the statutory wage ceiling.
(i) Pro-rata Computation: Regarding the calculation of pension on higher wages ("PoHW"), the EPFO affirmed that it will continue to be computed using a pro-rata method, consistent with Paragraph 12(monthly members' pension) of the Employees' Pension Scheme, 1995 (EPS). The EPFO maintains that this pro-rata calculation method ensures equitable treatment for all pensioners, irrespective of whether their contributions were based on the statutory wage ceiling or on higher actual wages, has been upheld by the Supreme Court.
(ii) Criteria for Exempted Establishments: For members of exempted establishments, the eligibility for PoHW will be determined by the specific trust regulations of their respective organizations, in accordance with the Supreme Court's directives in the Sunil Kumar case. However, the EPFO specified that applications for PoHW from members of trusts that modified their rules after November 4, 2022, will not be considered.
(iii) Handling dues related to higher pension contributions: The EPFO also clarified the process for handling dues related to higher pension contributions. Eligibility for PoHW is confirmed only upon the receipt of all outstanding dues, including interest, into the pension fund. The organization explicitly stated that adjusting these dues against pension arrears is not permissible due to potential tax implications for the pensioner, as both arrears and higher pension amounts are subject to Tax Deducted at Source (TDS).
(iv) Retrospectivity of Wage revisions: Addressing the issue of retrospectively paid wage arrears, the EPFO acknowledged that these revisions often weren't due to intentional employer default. Consequently, such wages should be accounted for in the specific months they pertain to. While damages under Section 14-B will not be levied in these situations, interest on the outstanding dues may be recovered up to the employee's retirement date or the cessation of their EPS-95 membership, whichever occurs earlier.
6. Meghalaya Launches Online Single Window System (OSWS) to Simplify Business and Labour Law Compliance
In February 2025, the Meghalaya government issued multiple notifications under its Ease of Doing Business (EODB) initiative, aiming to streamline regulations and improve compliance with labor laws. Through these notifications which are effective from February 5, 2025, the Government of Meghalaya introduced the Online Single Window System (OSWS) to streamline business regulations, simplify compliance with labour laws, and promote transparency and accountability in administrative processes.
The OSWS serves as a centralized digital platform for obtaining registrations and licenses under key labour laws, including Contract Labour (Regulation and Abolition) Act, 1970, Building and Other Construction Workers (Regulation of Employment and Conditions of Service) Act, 1996, Inter-State Migrant Workmen (Regulation of Employment and Conditions of Service) Act, 1979, Meghalaya Shops and Establishments Act, 2003, etc. Through the OSWS portal, users can submit applications, make payments, track application statuses, and download certificates and licenses—all without the need for physical submissions. Applicants are notified via SMS and email at key stages of the application process.
The Government has also introduced a Single Integrated Return system, requiring contractors, principal employers, and establishments to submit annual returns for all applicable labour laws through the OSWS portal.
To further strengthen transparency and efficiency, an online dashboard will provide real-time data on application volumes, approval timelines, fees, and processing metrics. This initiative is expected to reduce bureaucratic delays, improve service delivery, and enhance compliance with labour regulations across the state.
7. Karnataka Unveils Industrial Policy 2025–2030 to Drive Investment, Job Creation, and Workforce Development
On 11 February 2025, the Government of Karnataka introduced the Karnataka Industrial Policy 2025–2030, aimed at attracting significant investments and generating approximately 20 lakh jobs over the policy period. The policy positions Karnataka as a hub for sunrise and innovation-led industries, with a strong emphasis on sectors such as advanced manufacturing, aerospace and defence, future mobility, and virtual reality. A central pillar of the policy is inclusive workforce development, with a particular focus on increasing women's participation in the labour force. To build a future-ready workforce, the policy outlines comprehensive skilling and training initiatives, including strengthening Industrial Training Institutes (ITIs) through industry partnerships, developing customized curricula with input from industry leaders and conducting skill-gap assessments in key manufacturing clusters. To promote job creation, the policy sets minimum employment thresholds for establishments to qualify for incentives, with additional benefits for those exceeding employment targets. Special emphasis is placed on supporting micro, small, and medium enterprises (MSMEs) that employ individuals from marginalized and underrepresented groups, including SC/ST, women, minorities, persons with disabilities, and ex-servicemen.
Furthermore, the policy highlights the importance of refresher training for trainers to improve skilled labour availability and ensure alignment with evolving industry needs. Through these initiatives, Karnataka aims to enhance its industrial growth, global competitiveness, and socio-economic development.
8. Effective Enforcement of Chhattisgarh Shops and Establishments Act, 2017
The Government of Chhattisgarh through a notification dated February 13, 2025, has enforced the Chhattisgarh Shops and Establishments (Regulation of Employment and Conditions of Service) Act, 2017, with effect from the same date. This enforcement repeals the earlier Chhattisgarh Shops and Establishments Act, 1958.
Key highlights of the Act include:
(i) Applicable to shops and establishments employing 10 or more workers.
(ii) Confidential, managerial, or supervisory staff are exempt; their details must be displayed and reported to the Facilitator.
(iii) Mandatory registration within 6 months of commencement.
(iv) Issuance of Labour Identification Number (LIN).
(v) Existing registrations under ESI or EPF deemed valid, subject to obtaining LIN within 6 months.
(vi) Working hours for women restricted to between 6 AM and 9 PM.
(vii) Maximum overtime capped at 125 hours per quarter.
(viii) Establishments may open all days, but a 24-hour weekly rest must be provided.
(ix) Double wages for work on weekly rest days.
(x) Leave entitlements include 8 days' casual leave per year (credited quarterly), 1 day per 20 days worked (post 240 days of work) of annual leave, leave accumulation up to 45 days and 8 paid festival holidays annually.
(xi) Crèche facility required for establishments with 30+ women or 50+ workers.
(xii) Penalties for non-compliance range from INR 1 lakh to INR 5 lakh.
9. Amendment notification under the Andhra Pradesh Shops and Establishments Rules, 1990
The Government of Andhra Pradesh issued an amendment notification on February 18, 2025, adding Rule 8-A and Rule 8-B to the Andhra Pradesh Shops and Establishments Rules, 1990. This amendment primarily focuses on streamlining the appointment of authorities and the appeal process for fines imposed under the Act. The amended penalty for violation of Rules for an employer has now been revised upto INR 10,000 for the first offence and up to INR 20,000 for the subsequent offenses.
10. Haryana Publishes Draft Rules to Enforce Transgender Rights at the Workplace
On February 11, 2025, the Government of Haryana published the Draft Haryana Transgender Persons (Protection of Rights) Rules, 2024 to operationalize the Transgender Persons (Protection of Rights) Act, 2019. The Draft Rules require all establishments in Haryana, including private entities, to adopt an Equal Opportunity Policy for transgender persons. Key provisions include:
(i) Prohibition of discrimination in employment and related benefits
(ii) Mandatory infrastructure measures such as unisex toilets and workplace safety provisions
(iii) Confidentiality of gender identity
(iv) Designation of a Complaints Officer within 30 days of the Rules' notification
(v) Complaint resolution timelines and appeal rights
(vi) Requirement to publicly display the Equal Opportunity Policy and maintain a compliance tracking system
These rules reinforce the statutory obligations under the Transgender Act, which mandates non-discriminatory practices and inclusive workplace policies.
11. Karnataka Government Issues Draft Karnataka Factories (Safety Audit) Rules, 2024
The Karnataka Government, through a notification dated February 1, 2025, has released draft Factory Audit Rules in the Official Gazette. These rules will apply, among other entities, to factories with more than 50 workers and those involved in hazardous activities. The proposed rules establish several key requirements: they specify the standards for conducting safety audits, define the necessary qualifications for safety auditors, and mandate that factory occupiers notify the relevant authorities before a safety audit begins. Furthermore, safety auditors will be required to submit detailed audit reports. To ensure thoroughness and accountability, the draft rules also include provisions for re-audits if the authorities deem the initial reports unsatisfactory. Importantly, certain establishments may be exempt from these Factory Audit Rules, though the specifics of these exemptions are detailed within the draft rules.
12. Kerala Government Permits Night Shifts for Women in Select Industries Under Strict Safeguards
On March 27, 2025, the Government of Kerala issued a notification under the Factories Act allowing women to work night shifts in specific industries. These include sectors such as food and beverage processing (e.g., milk, spices, cashew nuts), manufacturing (tea, coir, garments, electronics, rubber, plastics), medical production (pharmaceuticals, diagnostic reagents, blood bags), and certain industrial operations (aluminum extrusion, metal coating, waste segregation).
The revised regulation permits women to work between 6:00 a.m. and 10:00 p.m., with a strong emphasis on worker safety and welfare. Employment between 10:00 p.m. and 5:00 a.m. remains strictly prohibited.
Key Provisions of the Notification:
(i) Permissible Working Hours: Women may work from 6:00 a.m. to 10:00 p.m. in designated industries.
(ii) Prohibition Window: Employment of women is strictly banned between 10:00 p.m. and 5:00 a.m.
(iii) Accommodation Requirements: Separate dormitory facilities must be provided where needed.
(iv) Transportation and Security: Free transport with security personnel is mandatory for women working after 7:00 p.m.
(v) Compliance with Work Hour Laws: All legal limits on daily working hours apply, with no exemptions. Shift systems must ensure weekly off days.
(vi) Workplace Safety and Dignity: Employers are responsible for maintaining the dignity, safety, and self-esteem of women workers.
This move aims to enhance women's workforce participation while ensuring robust safeguards are in place.
13. Notification of the Maharashtra Mathadi, Hamal and other Manual Workers (Regulation of Employment and Welfare) (Amendment) Act, 2025
The Government of Maharashtra has enacted the Maharashtra Mathadi, Hamal and Other Manual Workers (Regulation of Employment and Welfare) (Amendment) Act, 2025, effective from April 28, 2025. This amendment aims to modernize the regulatory framework governing manual workers, including head-loaders (Mathadis) and porters (Hamals), to enhance worker protection and streamline employment processes. The Maharashtra Mathadi, Hamal and Other Manual Workers (Regulation of Employment and Welfare) (Amendment) Act, 2025 introduces key changes such as redefining "manual work" to cover core physical tasks, raising the minimum employment age from 14 to 18 years, revising the definition of 'unprotected worker' to include mathadi workers and hamals while excluding workers engaged in manufacturing processes from its ambit and simplifying governance by removing advisory committees. It empowers the state government to notify schemes directly, ensures better compliance through updated enforcement mechanisms, and removes certain sectors from the Act's scope. These amendments aim to enhance worker welfare and streamline regulatory implementation.
14. Tamil Nadu Introduces Draft Amendment to the Tamil Nadu Shops and Establishment Rules, 1948
On February 14, 2025, the Tamil Nadu government released a notification proposing an amendment to the Tamil Nadu Shops and Establishments Rules, 1948, which introduces Rule 16D. This new rule mandates that employers submit a combined annual return (Form ZC) to the Inspector through the Labour Department's web portal by January 31st each year, as per Section 47-A. This return, in Form-ZC, must be submitted to the Inspector no later than January 31st of each year.
15. Tamil Nadu Notifies export-oriented units and industrial units within Special Economic Zones (SEZs) as public utility services (PUS)
The Tamil Nadu government, through a March 12, 2025, Official Gazette notification, has designated all industrial units exclusively producing for export, and those located in Special Economic Zones (SEZs), as Public Utility Services (PUS) under the Industrial Disputes Act, 1947 (IDA). This designation, effective for six months from the publication date, is important because Section 22 of the IDA provides PUS with special protection, limiting employees' ability to strike unless they provide employers with the prior notice mandated by the Act
16. Andhra Pradesh Renews 5-Year Exemption for IT and ITES Establishments from Certain Provisions of the Andhra Pradesh Shops and Establishments Act, 1988
The Government of Andhra Pradesh, through a notification dated 25 March 2025, has exempted Information Technology Enabled Services (ITES) and Information Technology Establishments (ITE) from certain provisions of the Andhra Pradesh Shops and Establishments Act, 1988 for a period of five years, effective from 25 March 2025. The exemptions include provisions relating to opening and closing hours, spread-over of work hours, employment of young persons and women, holidays, and conditions for termination and service compensation. These relaxations aim to provide operational flexibility to IT/ITES employers in the state; however, they are conditional upon adherence to safeguards. The government retains the authority to revoke these exemptions if the stipulated conditions are breached or employee welfare is compromised.
17. Government of Haryana issued notification regarding the submission of the ER-1 report for the quarter ending March 31, 2025
On April 1, 2025, the Government of Haryana issued a notification concerning the submission of the ER-1 report for the quarter ending March 31, 2025. According to the notification, employers are required to submit the ER-1 report for the January–March quarter online by April 30, 2025, via the official portal on hrex.gov.in. Failure to comply with this requirement within the prescribed timeline will constitute a violation of the provisions of the Employment Exchanges (Compulsory Notification of Vacancies) Act, 1959.
18. EPFO Removes Employer Approval Requirement for Bank Account Linking with UAN
On April 3, 2025, the Employees' Provident Fund Organization (EPFO) announced a key procedural reform by eliminating the need for employer approval when linking bank accounts to an employee's Universal Account Number (UAN). This change simplifies and expedites the process for employees, allowing bank account details to be linked directly after successful verification by the concerned bank or the National Payments Corporation of India (NPCI). All Know Your Customer (KYC) requests related to bank account seeding at the employer level will now be automatically approved post-verification by the bank. This initiative aligns with EPFO's broader efforts to streamline claim processing, minimize delays, and reduce rejections—particularly those arising from missing documentation such as images of cancelled cheques or attested bank passbooks. The new process is effective immediately from the date of issuance of the circular.
19. Circular on Payment of Past Employee Contributions by Employers via Demand Draft in EPF
On April 4, 2025, the Employees' Provident Fund Organisation (EPFO) issued a circular allowing employers to settle past employee contribution dues through a one-time demand draft (DD), subject to specific conditions. This option is available only when payment through the Electronic Challan-cum-Return (ECR) system is not feasible, and prior approval has been obtained. The circular also mandates that all future contributions must be paid online. Additionally, employers must provide an undertaking for beneficiary verification, and any applicable dues, interest, and damages shall be recovered in accordance with the prevailing guidelines.
20. Jharkhand Factories (Amendment) Rules, 2025
On April 9, 2025, the Government of Jharkhand notified the Jharkhand Factories (Amendment) Rules, 2025, to amend the Jharkhand Factories Rules, 1950. The notification (numbered 165) amends several aspects of the existing rules, including the fee for transferring a license, the annual return requirements, and the schedules for fee calculation.
21. Circular regarding advance under Para 68 B (7) based on self-declaration in EPF
On April 17, 2025, the Employees' Provident Fund Organization (EPFO) issued a circular permitting EPF members to apply for advances under Para 68B(7) through self-declaration alone. This enables members to claim housing-related advances without submitting additional documentation, thereby simplifying the process and minimizing the likelihood of rejections. This declaration must confirm that the advance is being sought after a period of 60 months from the date of completion of the house and is not connected to any prior withdrawals under this paragraph.
22. Tripura Government Permits Night Shifts for Women Working in Factories
On April 22, 2025, The Tripura government has notified regulations regarding women employment in night shifts under the Factories Act, 1948. This notification prohibits women from working in factories between 10:00PM and 5:00AM., with specific exceptions and conditions.
Key highlights of the notification include:
(i) Written consent: Women may work beyond 7PM with written consent.
(ii) Safety measure: Adequate lighting and CCTV surveillance must be ensured inside and around the factory.
(iii) Transport facility: Employer must provide transport from the factory to the woman worker's residence.
(iv) Work environment: Employers must ensure a safe, healthy, and non-hostile environment for women workers.
23. Government of Haryana Issued a Circular Regarding Withdrawal of 1984 Notification
On April 25, 2025, the Government of Haryana issued a circular regarding withdrawal of 1984 notification issued under Contract Labour (Regulation and Abolition) Act, 1970. As per the circular, the Haryana Government has withdrawn the 1984 notification under Section 10 (1) of the Act after consulting with the Advisory Board. Section 10(1) grants the State appropriate Government the power to prohibit the use of contract labor for specific tasks within a given establishment.
24. EPFO Notified Regarding the Revamped Appendix-E Functionality
On April 25, 2025, the Employees' Provident Fund Organisation (EPFO) issued a notification regarding the rollout of the revamped Appendix-E functionality. This enhancement is aimed at improving data accuracy and ensuring tax compliance, particularly for Provident Fund trusts that have either surrendered or lost their exemption status. The updated functionality enables the clear bifurcation of taxable and non-taxable member balances and allows for the accurate adjustment of the Taxable Opening Balance, Non-Taxable Opening Balance, and Total Opening Balance. This change addresses prior discrepancies where Tax Deducted at Source (TDS) was incorrectly applied to the entire accumulated balance instead of solely on the interest earned from taxable contributions.
25. Circular Regarding Revamped Form 13 Functionality – Transfer Claims
On April 25, 2025, the EPFO issued a circular regarding a revamped Form 13 (Transfer-out) functionality to simplify the EPF transfer claim process. Further, the three-level processing at the transferee (destination) office has been dispensed with. It is to be specifically noted that once the transfer claim gets approved at the transferor (source) office in the revamped functionality, the provident fund accumulation and pension service of the member pertaining to the previous account will automatically get added to the present account at the transferee (destination) office without the requirement any additional processing. This revamp aims to reduce processing time and improve service efficiency by streamlining the transfer process, particularly by dispensing with the three-level processing at the transferee office.
26. Notification of the Kerala Inter-State Migrant Workmen (Regulation of Employment and Conditions of Service) Amendment Rules, 2025
On April 28, 2025, the Kerala Government has issued notification regarding amendment of Kerala Inter-State Migrant Workmen (Regulation of Employment and Conditions of Service) Amendment Rules. As per the notification, the fee for obtaining certificate of registration has been revised.
27. Maharashtra Notifies Amendment to Private Security Guards Regulation Act – Effective April 28, 2025
The Maharashtra Private Security Guards (Regulation of Employment and Welfare) (Amendment) Act, 2025 has been officially notified, with effect from April 28, 2025. The amendment introduces key changes aimed at strengthening regulatory oversight and aligning with contemporary labor standards. Notable updates include:
(i) Revised Definition of "establishment": The scope of the term "establishment" has been expanded, potentially bringing more employers under the ambit of the Act.
(ii) Enhanced Procedural Powers: Authorities under the scheme have been granted broader procedural powers to ensure more effective implementation and compliance.
(iii) Increased Minimum Age for Employment: The minimum age for employment as a private security guard has been raised from 14 years to 18 years, aligning with child labor laws and ensuring better protection for minors.
28. Draft Law for Gig Workers' Welfare Released by Telangana
The Telangana government has introduced a significant draft bill, "The Telangana Gig and Platform Workers (Registration, Social Security and Welfare) Act, 2025," demonstrating a proactive commitment to establishing a comprehensive legal framework for gig and platform workers in the state. The primary aim of this proposed legislation is to ensure the rights and welfare of this growing segment of the workforce by providing robust social security, along with essential health, safety, and welfare measures. Key provisions within the draft bill include the establishment of a dedicated Welfare Board, which will be responsible for overseeing the implementation of the Act's provisions and related schemes. The bill also mandates the registration of aggregators, the entities that engage gig and platform workers, to bring them under a regulatory purview. Furthermore, it emphasizes the maintenance and periodic updating of comprehensive databases of registered workers, which will likely be crucial for effective implementation of welfare measures and policy decisions. The Bill also lays strong emphasis on preventing discrimination within the digital platforms that facilitate gig work, aiming to ensure fair and equitable opportunities for all workers. By taking these steps, Telangana emerges as one of the leading states in India to formally address the complexities of the gig economy.
29. Extension for Filing of Annual Return under Trade Union Act in Assam
On April 30, 2025, the Assam Government issued notification extending the deadline for submitting annual returns by registered trade unions to June 30, 2025. This extension applies to the annual returns under the Trade Unions Act, 1926, for the year ending 2024.
Part D: Foreign Developments
USA: Executive Order Restricting Diversity, Equity, Inclusion, and Accessibility (DEIA) Initiatives
President Trump issued an executive order targeting diversity, equity, inclusion, and accessibility (DEIA) initiatives in both public and private sectors, revoking several long-standing directives, including Executive Order 11246, which mandated civil rights and affirmative action for federal contractors. While existing federal law prohibits employment decisions based on protected characteristics like race or sex, and properly designed DEI programmes remain lawful, the administration signaled a willingness to pursue enforcement against what it views as unlawful DEI practices. Although the order was initially blocked by a federal judge, that injunction was lifted on appeal, making the order enforceable unless overturned by the U.S. Supreme Court. As a result, U.S. employers are advised to reassess their DEI programmes to ensure compliance with federal civil rights laws.
South Korea: Expansion of Parental Leave Benefits for Greater Flexibility
South Korea has revised its parental leave policy to offer greater flexibility and financial support for working parents. Under the updated system, parents of children under 12 months can now take parental leave in up to three separate periods, each lasting between one and three months, within a total limit of 12 months per child. Additionally, the wage replacement rate for the first three months of leave has increased from 50% to 80% of the employee's average wage, capped at KRW 1.5 million per month. These changes aim to ease the financial burden on families and promote work-life balance. Employers are advised to review their leave policies to ensure compliance and plan for potential operational impacts.
Ireland: Introduces Pay Transparency Proposals Ahead of EU Directive Implementation
The Irish government released draft proposals aimed at aligning with the EU Pay Transparency Directive ahead of its June 2026 implementation deadline. Key elements include requiring employers to disclose salary levels or ranges in job advertisements and prohibiting inquiries into a candidate's pay history or current salary. While the proposals are still in the early stages, further legislation will be needed to fully implement the Directive's broader requirements. Employers should begin preparing to include pay ranges in job postings and avoid requesting pay history from applicants.
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