Labour Law Insights: July 2025

Labour law updates

• Employers in Kerala, Meghalaya and Andaman & Nicobar Islands are required to follow the revised rates of Minimum Wages /Dearness Allowance as applicable to them pursuant to the notifications/orders issued by their respective labour departments. Most of these rates have been revised due to increase in the Consumer Price Index, which would support workers in these states to meet the rising cost of living. Furthermore, employers should also take into account the arrears of wages payable to the eligible employees due to changes in rates of minimum wages especially those effective from back date. This compliance becomes critical for employers because any employee dues not paid to them becomes “unpaid accumulations” under the state-specific Labour welfare Fund (LWF) Act and if not paid need to be deposited with the respective LWF authority as per law.
• Telangana has eased business norms by exempting commercial establishments (excluding shops) from daily and weekly working hour limits to promote operational flexibility.
• Establishments in Madhya Pradesh, Rajasthan and Goa, employing women during night shifts, must ensure compliance with all conditions such as consent, POSH and maternity compliances, workplaces facilities and safety conditions. This reform is anticipated to enhance employment flexibility and promote gender-inclusive growth within the retail and service sectors.
• The Delhi Government has issued rules to streamline and bring transparency in the procedures and welfare measures for transgenders. Similar notification was also issued in Haryana in February 2025. It is a progressive move to promote workplace inclusivity and guarantee equal rights for transgender individuals. Employers with establishments in Delhi are required to take note of the requirements, specifically related to Equal Opportunity Policy and Grievance Redressal Mechanism.
• In a progressive move, the Haryana Government has introduced an online, auto-approval system for exemption applications to employ women in night shifts in factories and manufacturing units as well as shops and commercial establishments.
• The Gujarat Government has granted key relaxations to boost industrial activity, attract national-level investments, and generate employment. The move reflects the state’s proactive stance in enabling economic growth while ensuring worker welfare.
• The Karnataka Government has rolled out targeted schemes under their Labour Welfare Funds, promoting transparency and delivering meaningful benefits to workers and their families setting a benchmark for inclusive labour governance. Similar schemes were also issued by the Kerala Government in the past.
• Establishments must take full ownership of their portal activities to uphold the integrity of the National Apprenticeship Training Scheme (NATS). Misuse of credentials and unauthorised actions by TPAs can lead to serious irregularities, for which the concerned Apprentice Board would bear no responsibility. TPA partners must ensure genuine apprentice enrolments and ethical practices on the NATS portal. Strict adherence to guidelines is essential to maintain transparency and avoid legal consequences.

ESIC updates

• The SPREE Scheme reflects ESIC’s proactive approach to expanding social security coverage and simplifying compliance for employers. By removing the fear of retrospective penalties, it fosters a more inclusive and transparent ecosystem.
• The ESIC Amnesty Scheme 2025 offers a valuable opportunity for employers and insured persons to resolve long-standing disputes and legal cases with simplified compliance and minimal penalties. By promoting transparency, reducing litigation, and encouraging future adherence, the scheme strengthens trust and cooperation between stakeholders and the corporation.

EPFO updates

• The ELI scheme is a bold and structured intervention to combat youth unemployment and formalise India’s workforce at scale. By incentivising both employees and employers while focusing on financial literacy and social security, the Government is laying the foundation for long-term, inclusive employment growth. With the eligibility period under the ELI scheme set to begin on 1 August 2025, which is fast approaching, it is crucial for companies to proactively prepare in order to maximise the benefits available. Key action points for organisations to maximise benefits under the ELI scheme:
  • Conduct an eligibility assessment
  • Strategically plan workforce expansion
  • Leverage extended benefits for manufacturing sector
• The circular is issued to ensure accurate reporting of gross wages in the monthly electronic challan cum return (ECR) for employees. This is crucial for determining eligibility under the employment linked incentive (ELI) Scheme. The circular refers specifically to “gross wages”, which is the total monthly wage paid to an employee. The circular does not define “gross wages” explicitly, nor does it clarify whether certain components (like performance bonuses, reimbursements, or HRA) are included or excluded. It does not provide a breakdown or components of what constitutes gross wages (e.g., basic pay, allowances, bonuses, etc.). Therefore, the clarification on the said subject is awaited from the EPFO.
• The EPFO, vide a press release (Release ID: 2146353) dated 21 July 2025, highlights a significant milestone in India’s employment landscape, showcasing its record-breaking member addition in May 2025. This surge, driven largely by youth in the 18–25 age group, reflects the positive impact of government reforms aimed at boosting job creation and formal workforce participation. The data underscores growing confidence in India’s labour ecosystem and affirms the government's commitment to building a more inclusive and dynamic economy under the vision of Viksit Bharat.
• The EPFO is prioritising conduct of a thorough and time-bound audit of Pension on Higher Wages (PoHW) application disposals. With clear deadlines set for both disposal and audit completion, the EPFO aims to ensure compliance with legal directives and internal guidelines. The coordinated efforts between audit and pension divisions, supported by training and standardised procedures, reflect a strategic approach to uphold service quality and regulatory adherence.
• The implementation of the four labour codes marks a pivotal reform in India's labour regulatory framework, aiming to streamline and modernise protections for the workforce across sectors. While the Central Government has taken proactive steps in pre-publishing draft rules and notifying select provisions, the uneven progress among states and union territories underscores the need for continued coordination and engagement. As the Government maintains its stance against amending or repealing the Codes, the focus must remain on fostering consensus and ensuring effective execution to realise the intended benefits for all categories of workers.

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Labour Law Insights: July 2025