Labour and Employment Quarterly Milestones (July-September 2026)

On 20 August 2026, a nine-judge bench of the Supreme Court delivered its decision in State of U.P. v Jai Bir Singh, reconsidering the ‘triple test’  laid down in Bangalore Water Supply and Sewerage Board v A. Rajappa (1978) (BWSSB Case) for determining whether an undertaking falls within the definition of “industry” under the Industrial Disputes Act, 1947 (ID Act). The judgment is particularly significant given that the Industrial Relations Code, 2020 (IR Code), which came into force on 21 November 2025 and repealed the ID Act, contains its own definition of “industry” .

The Court:

1. reaffirmed the ‘triple test’  laid down in the BWSSB Case for matters arising under the ID Act;
2. confirmed that the Industrial Disputes (Amendment) Act 1982, although passed by Parliament, was never brought into force and therefore has no operative effect or bearing on the scope of the BWSSB Case;
3. reaffirmed that State welfare activities are not automatically excluded from the definition of “industry” under the ID Act solely because of their public, charitable or welfare character; and
4. expressly declined to interpret the definition of “industry” under the IR Code, clarifying that it must be interpreted independently in light of its text, scheme and object.

Accordingly, the ‘triple test’  remains relevant to legacy disputes under the ID Act. However, undertakings should independently assess their activities and workforce arrangements against the definition of “industry” under the IR Code, which the Supreme Court did not interpret in this decision.

The Ministry of Labour and Employment has revised the statutory wage ceiling for mandatory employee provident fund (EPF) coverage from INR 15,000 per month to INR 25,000 per month, with effect from 17 September 2026. Accordingly, where contributions are capped at 12% of the wage ceiling, the employee’s contribution increases from INR 1,800 to INR 3,000 per month. The employer’s 12% contribution is divided between the Employees’ Pension Scheme (8.33%) and EPF (3.67%).

Employees earning between INR 15,000 and INR 25,000 who were previously excluded solely because their wages exceeded the earlier ceiling may now fall within mandatory coverage,  subject to the applicable eligibility and membership conditions. Employers should review enrolment requirements for both existing employees and new joiners against the revised ceiling. Employers should assess the employee’s wages under the applicable statutory definition and scheme rules when determining mandatory coverage and contribution obligations.

The Employees’ Provident Fund Organisation (EPFO) has clarified in its FAQs that contributions for September 2026 must be calculated separately for two periods: (a) up to 16 September, using the earlier wage ceiling of INR 15,000, and (b) from 17 September, using the revised ceiling of INR 25,000. Employers must account for both periods in a single Electronic Challan-cum-Return (ECR).

Employers should assess the impact on contribution costs, employee take-home pay and payroll systems, particularly where the revised ceiling brings additional employees into mandatory coverage or increases the wage base for contributions. They should also review the interaction with the applicable definition of “wages” under the Code on Social Security, 2020.

On 25 August 2026, the Ministry of Labour and Employment issued two notifications under the Code on Wages, 2019 (Wage Code) clarifying the eligibility threshold and calculation basis for statutory bonus in establishments for which the Central Government is the appropriate government.

Notification No. S.O. 4711(E), issued under section 26(1) of the Wage Code, specifies that employees drawing wages not exceeding INR 21,000 per month are eligible for statutory bonus under that provision. Notification No. S.O. 4710(E), issued under section 26(2) of Wage Code, specifies that, for calculating statutory bonus under Section 26(1) and Section 26(3), where an eligible employee earns more than INR 7,000 per month, the bonus must be calculated either on INR 7,000 per month or the applicable minimum wage notified by the Central Government, whichever is higher. Both notifications operate retrospectively from 21 November 2025, the date on which the Labour Codes took effect.

The Government of Karnataka notified the Karnataka Shops and Commercial Establishments (Amendment) Act, 2026 (Karnataka S&E Amendment Act) on 4 September 2026, amending the Karnataka Shops and Commercial Establishments Act,1961 (Karnataka S&E Act). The key changes are set out below.

1. Exemption for establishments registered under the OSH Code: The amendment introduces Section 3(k), which, on a plain reading, appears to exempt establishments employing ten or more workers that are registered under the Occupational Safety, Health and Working Conditions Code, 2020 (OSH Code) from the application of the Karnataka S&E Act.
2. Removal of registration renewal requirement: Registrations under the Karnataka S&E Act will remain valid until the establishment closes or ceases operations, removing the requirement for periodic renewal.
3. Requirement to issue service certificate: Employers must issue a service certificate to an employee within seven days of receiving the employee’s application.
4. Relaxation of conditions for employing women at night: The amendment omits eight conditions previously applicable to the employment of women during night shifts. These include the requirements to maintain bio-data of each driver providing transport and to deploy security guards in vehicles used for night shift transportation.

The Karnataka S&E Amendment Act seeks to address the overlap between the OSH Code and the Karnataka S&E Act. However, the Karnataka OSH Rules still remain in draft form, and the machinery for obtaining or updating registration under the OSH Code is not yet fully operational. Until the Karnataka OSH Rules are implemented and the registration framework under Section 3 of the OSH Code becomes operational, establishments should continue to assess their compliance obligations under both the Karnataka S&E Act and the OSH Code.

The Agreement on Social Security between the Government of India and the Government of the United Kingdom (UK), also referred to as the Double Contribution Convention, and its accompanying administrative arrangement, took effect on 15 July 2026.

Under this Agreement, employees of an Indian employer who are temporarily assigned to work in the UK on or after 15 July 2026 will remain subject to Indian social security legislation, provided the assignment is not expected to exceed 60 months. These employees should obtain a Certificate of Coverage (CoC) from the EPFO as evidence that they continue to pay Indian social security contributions and are exempt from paying UK National Insurance contributions. Similarly, UK employees temporarily assigned to work in India on or after this date will remain subject to UK social security legislation if their assignment is not expected to exceed 60 months.

The Agreement is expected to benefit employers whose employees move between India and the UK by avoiding dual social security contribution obligations during qualifying temporary assignments, subject to compliance with applicable requirements, including obtaining a CoC.