In our August edition of Labour Law Insights, key updates include the notification of bonus calculation ceilings under the Code on Wages, 2019; the notification of final rules under certain Labour Codes by the Governments of Andhra Pradesh, Ladakh, and Rajasthan; expanded digitisation efforts by the ESIC; and continued EPFO outreach under the Amnesty Scheme 2026.
The month also witnessed important judicial pronouncements, including a significant ruling clarifying the applicability of the ‘Industry’ definition under the Industrial Relations Code, 2020. These developments have important implications for employers as they navigate compliance obligations under India’s evolving labour law framework.
Labour welfare and policy development
- The government’s focus on strengthening workforce participation and social protection remained evident through initiatives aimed at both employment generation and long-term financial security. The National Career Service (NCS) portal has expanded its capabilities by introducing AI-enabled career support tools, including resume-building functionality and access to skill development opportunities. In addition, enrolment under the PM-SYM pension scheme crossed 21 lakh young workers, reflecting increasing awareness of retirement planning among workers in the unorganised sector.
- The Ministry of Labour and Employment also pointed out the complementary aims of PM-SYM and PM-VBRY. PM-SYM is intended to provide unorganised workers with pension security, while PM-VBRY is meant to encourage formal employment by offering benefits to both first-time employees and employers who create additional jobs. Taken together, these schemes offer support to workers at every stage of their employment journey, from entering the workforce to retirement.
Labour Codes implementation gathers pace
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The central government issued two notifications that set the bonus eligibility limit and the maximum amount for calculating bonuses under the Code on Wages, 2019. The notifications are deemed to have come into force with effect from 21 November 2025:
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The first notification provides that every employee drawing wages not exceeding INR 21,000 per month shall be eligible for payment of bonus in accordance with Section 26(1) of the code.
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The second notification provides that under Section 26(2), where an eligible employee’s wages exceed INR 7,000 per month, the bonus shall be calculated as if the employee’s wages were INR 7,000 per month or the minimum wage fixed by the central government, whichever is higher. The prescribed calculation mechanism mirrors the approach followed under the erstwhile Payment of Bonus Act, 1965, thereby ensuring continuity in bonus calculations for eligible employees.
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At the state level, Andhra Pradesh has issued the final rules pursuant to the Occupational Safety, Health and Working Conditions Code, 2020. Further, in Ladakh and Rajasthan, further advances were seen as both regions published the final Rules under the Code on Wages, 2019, and the Industrial Relations Code, 2020.
State-level regulatory developments
- In the case of Bihar, the Shops and Establishments law was abolished, demonstrating the state’s attempt to streamline the compliance responsibilities under the Labour Codes. At the same time, Maharashtra revised the schedule of the Mathadi, Hamal and Other Manual Workers Act, 1969, to clarify the scope of employment activities covered and to reduce overlap with regulations governing the construction sector.
Further, West Bengal has issued a draft notification proposing major changes to its professional tax system.
Social security and digital compliance reforms
- Maharashtra clarified that educational institutions, medical institutions, and other eligible establishments are included in the ESI scheme, effective from 21 November 2025, pursuant to the Code on Social Security, 2020, without the need for separate notification.
- At the same time, the ESIC issued draft Regulations for the Employees’ State Insurance (General), 2026, suggesting a thorough digital compliance system covering the areas of registration, the submission of contribution reports, inspections, and the keeping of records.
- The ESIC has also introduced a new function for registering insured persons on an ERP system, this being integrated with Aadhaar verification and the ESIC Health Connect App, which will simplify the process of employee onboarding and enhance access to social security benefits.
EPFO intensifies compliance regularisation efforts
- Awareness and participation under the Amnesty Scheme 2026 have been increased by the EPFO through coordinated outreach with the Institute of Chartered Accountants of India (ICAI), its field offices and the Income Tax Department. The scheme provides eligible provident fund trusts with a single opportunity to retrospectively regularise their exemption status and obtain relief from certain historical compliance proceedings. The applications will remain open until 28 December 2026.
- The government has encouraged employers to make use of Vishwas 2026, a special assistance scheme designed to help businesses remedy past compliance problems via a simplified online process.
Key judicial developments
- The Supreme Court (SC) has made it clear that, in order to justify the forfeiture of gratuity under the Payment of Gratuity Act, 1972 (now subsumed under the Social Security Code, 2020), there must be credible evidence that the employer has actually suffered a financial loss. If there has been no disciplinary inquiry or no documentary proof of such a loss, the forfeiture will be invalid.
- In a significant ruling, a 9-judge bench of the apex court clarified that the interpretation of “industry” under Section 2(j) of the Industrial Disputes Act, 1947, cannot be treated as the foundation for interpreting Section 2(p) of the Industrial Relations Code, 2020.
- The Bench observed that the scope and meaning of “industry” under the Industrial Relations Code, 2020, must be determined independently in future cases based on the provisions of the Code.
- The judgement preserves legal certainty for legacy disputes while leaving the interpretation of “industry” under the new labour law regime open for future judicial determination.
- A dissenting opinion favoured retaining the broad interpretation adopted in the Bangalore Water Supply and extending its application to protect workers under evolving employment conditions.
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