February Newsletter

NOTIFICATIONS

Redefinition of “Worker” Category Under Indian Labour Laws

The Ministry of Labour and Employment, Government of India, through a notification dated 30 January 2026, has significantly redefined the scope of who qualifies as a “worker” under Indian labour law frameworks. The notification clarifies that persons employed in a supervisory capacity and earning more than ₹18,000 per month will no longer fall within the statutory definition of a “worker”.

This change has wide-ranging implications, particularly for establishments that rely on supervisory staff who straddle managerial and operational roles.

Key highlights of the notification include:

• Introduction of a wage-based exclusion threshold for supervisory employees.

• Supervisory personnel earning above ₹18,000 per month are excluded from protections traditionally available to “workers”.

• The redefinition directly impacts eligibility for benefits and safeguards under various labour statutes, including:

  • Protection against retrenchment without due process

  • Statutory dispute resolution mechanisms

  • Certain welfare and social security benefits

Practical implications:

• Employers may need to reassess role classifications, wage structures, and compliance strategies.

• Employees in supervisory roles may experience a reduction in statutory labour protections, shifting them closer to managerial treatment.

• The notification may also influence industrial relations, litigation strategies, and workforce structuring going forward.

Overall, the notification signals a clear policy move towards narrowing the scope of “worker” protections based on remuneration, reinforcing wage thresholds as a decisive compliance determinant under Indian labour law.

EPFO Extends Electronic Challan-cum-Return Filing Due Date for December 2025 Wages

The Employees’ Provident Fund Organization issued a circular on 15 January 2026 granting a one-time extension for filing the Electronic Challan-cum-Return (ECR) in respect of wages for December 2025. The statutory due date, which ordinarily falls on 15 January, was extended up to 20 January 2026.

The extension was introduced in response to technical and operational challenges encountered by employers while accessing the EPFO portal and completing the ECR filing process. These issues affected the ability of several establishments to meet the original deadline, necessitating limited procedural relief.

Key aspects of the circular include:

• The extended due date applies only to ECR filings for December 2025 wages

• Employers filing the ECR on or before 20 January 2026 will not be liable to interest, damages, or penalties

• Filings made within the extended timeline will be treated as fully compliant for the relevant wage period

  
  

The EPFO has clarified that this relaxation is strictly time-bound and does not alter ongoing statutory obligations under the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952, or the schemes framed thereunder. Employers are advised to treat this extension as an exceptional measure and ensure timely filings in future months to avoid compliance exposure.

Consumer Price Index for Industrial Workers (CPI-IW)

The Labour Bureau, Government of India, has released the publication calendar for the Consumer Price Index for Industrial Workers (CPI-IW) for the year 2025. As per the schedule, the CPI-IW for December 2025 was published on 30 January 2026. While this release does not constitute a formal statutory notification, it carries substantial regulatory and practical relevance within India’s labour law ecosystem.

Key points to note:

• CPI-IW serves as a benchmark inflation indicator reflecting changes in the cost of living for industrial workers.

• The December 2025 CPI-IW data forms the basis for wage-linked adjustments across sectors.

• Central and State Governments rely on CPI-IW figures to determine:

  • Minimum wage revisions

  • Dearness Allowance (DA) increases for employees in both public and private sectors

  • Periodic wage indexation under labour welfare statutes and industrial settlements

Practical and compliance implications:

• Employers must closely track CPI-IW releases to ensure timely wage and DA revisions, where applicable.

• Trade unions and employee representatives often use CPI-IW data during collective bargaining and industrial negotiations.

• CPI-IW trends may also influence policy decisions, labour cost planning, and employment contracts.

In effect, although informational in form, CPI-IW publications play a critical role in shaping wage compliance and industrial relations across India.

NOTABLE JUDGMENTS

Uma Shankaran v. Union of India

In Uma Shankaran v. Union of India, the Hon’ble Supreme Court, examined the entitlement of an employee to back wages following a finding of illegal termination. The Court held that once a termination is declared illegal, denial of back wages cannot be routine or mechanical. In cases where the employee asserts that they were not gainfully employed during the intervening period, and the employer fails to place material on record to rebut such assertion, refusal to grant back wages would be unjustified and inequitable.

The case arose from the termination of the appellant’s services, which was subsequently held to be unlawful. While reinstatement was directed, back wages were denied without recording any cogent reasons or examining whether the employee had secured alternate employment. The Supreme Court disapproved this approach, observing that an employee who suffers illegal termination cannot be expected to bear the economic consequences of the employer’s unlawful action, particularly in the absence of evidence showing gainful employment elsewhere.

The judgment clarifies that back wages ordinarily flow as a consequence of illegal termination, unless the employer is able to demonstrate exceptional circumstances such as proven alternate employment, misconduct, or other justifiable grounds. It reinforces that the burden to deny back wages lies on the employer and not solely on the employee. By emphasizing fairness and substantive justice, the ruling strengthens employee protections in wrongful termination cases and limits arbitrary denial of monetary relief.

Premium Transmission Pvt. Ltd. v. State of Maharashtra & Ors.

In Premium Transmission Pvt. Ltd. v. State of Maharashtra & Ors., the Hon’ble Supreme Court reaffirmed the wide administrative powers of State Governments to refer disputes involving contract labour for adjudication under the Industrial Disputes Act, 1947, even in the absence of a formal demand notice or charter of demands. The Court held that the existence or apprehension of an industrial dispute is sufficient to trigger the government’s reference power under Sections 10 and 12 of the Act, except in the limited context of public utility services where prior notice is statutorily mandated. Procedural technicalities, the Court observed, cannot be used to defeat substantive labour rights.

The dispute arose from a challenge by Premium Transmission Pvt. Ltd. to a reference made by the Maharashtra Government concerning contract labour engaged at its establishment. The management argued that no industrial dispute existed as the union had not raised a formal demand nor received its rejection. Accepting this argument, the Bombay High Court had quashed the reference. Setting aside the High Court’s ruling, the Supreme Court held that the government’s role at the stage of reference is purely administrative and not adjudicatory. Questions relating to the genuineness of the contract, the identity of the principal employer, or whether the contract arrangement is a sham are matters to be examined by the Industrial Court and not by the government while making a reference.

The judgment strengthens protections for contract labour by preventing employers from stalling adjudication through procedural objections. It clarifies that access to industrial justice cannot be conditioned on rigid pre-reference formalities and underscores judicial support for timely resolution of labour disputes. The ruling signals a clear preference for substance over form and reinforces the remedial purpose of the Industrial Disputes Act.

Dr. Mohinder Kumar v. NABARD & Ors.

In Dr. Mohinder Kumar v. NABARD & Ors., the Hon’ble Bombay High Court clarified the limits of a POSH (Prevention of Sexual Harassment) internal committee’s authority when investigating workplace complaints. The case arose from allegations that the petitioner recorded female colleagues without consent to show they were gossiping and disrupting office work. The Central Complaints Committee (CCC) constituted under the POSH Act found that the conduct did not amount to sexual harassment but nonetheless recommended disciplinary action, including compulsory retirement.

The High Court held that once a POSH committee concludes that the conduct does not constitute sexual harassment under the Act, it has no jurisdiction to recommend punitive or disciplinary measures against the employee. Section 13(2) of the POSH Act mandates that if a committee finds the allegations not proved, it must recommend that no action is taken. Any suggestion of disciplinary action beyond this statutory remit is beyond the committee’s powers and must be quashed. The court also emphasized that disciplinary authorities must independently apply their minds and cannot mechanically act on such recommendations. This ruling reinforces procedural safeguards in POSH inquiries and underscores that internal committees cannot step into general disciplinary roles once they have discharged their statutory function.

Sujata Bora v. Coal India Limited & Ors.

In Sujata Bora v. Coal India Limited & Ors., the Hon’ble Supreme Court addressed discrimination in employment against a candidate with multiple disabilities and underscored that inclusive workplace practices are not optional but part of broader corporate social responsibility and human-rights obligations. The appellant, who had visual impairment alongside another disability, applied for a Management Trainee post under the reserved quota and cleared the interview, but was subsequently declared medically unfit because her combined disabilities did not fit the limited category criteria in the recruitment notification. The High Court’s Division Bench had set aside earlier relief, citing an expired recruitment panel, but the Supreme Court disagreed and restored substantive justice.

The Court held that denying appointment solely on technical grounds, unrelated to the candidate’s ability to perform essential job functions with reasonable accommodation, amounted to unacceptable discrimination. It directed Coal India to create a supernumerary post for the appellant and provide a suitable desk-based role with appropriate assistive arrangements, emphasizing that reasonable accommodation is a fundamental right under the Rights of Persons with Disabilities Act, 2016. The judgment framed disability inclusion as integral to CSR and workplace equality, invoking Articles 14, 21 and Directive Principles, and invoked Article 142 to achieve complete justice.

Indravadan N. Adhvaryu Pipala Fali Modhvada v. Laxminarayan Dev Trust & Anr.

In Indravadan N. Adhvaryu Pipala Fali Modhvada v. Laxminarayan Dev Trust & Anr., the Hon’ble Supreme Court dealt with a decades-long employment dispute involving a temple trust and the scope of the Industrial Disputes Act, 1947. The appellant, employed as an accountant by the Laxminarayan Dev Trust for over twelve years, was orally terminated without a formal inquiry. He challenged his termination before labour authorities and courts, arguing that the trust qualified as an “industry” under Section 2(j) of the Act and that his dismissal was unlawful. Both the Labour Court and High Court had held that a temple trust, being a charitable religious institution without profit motive or systematic economic activity, did not fall within the statutory definition of “industry.”

The Supreme Court declined to disturb that conclusion, observing that the trust’s temple-centred activities did not bring it within the four corners of the “industry” definition. However, the Bench recognized serious procedural lapses in how the appellant’s termination was effected, including lack of inquiry and an unwarranted transfer. Rather than remit the case for prolonged litigation over definitional questions, the Court adopted an equitable approach under its powers to do complete justice and directed the trust to pay ₹12 lakh as lump-sum compensation to the appellant within four weeks, with interest on delayed payment.

The judgment shows judicial flexibility where doctrinal fits are murky but fairness demands relief, balancing employee rights with the unique legal status of non-profit religious entities.

Bhola Nath v. State of Jharkhand & Ors.

In Bhola Nath v. State of Jharkhand & Ors. the Hon’ble Supreme Court has held that the State cannot deny regularization to contractual employees solely based on contractual nomenclature where such employees were appointed through a lawful selection process, continued on sanctioned posts for a prolonged period, and repeatedly granted extensions. The Court ruled that long and continuous service in such circumstances gives rise to a legitimate expectation of regularization, and abrupt discontinuance without cogent reasons is arbitrary and violative of Article 14 of the Constitution. Directing the State of Jharkhand to regularize the appellants, the Court reaffirmed the obligation of the State to act as a model employer.

The appellants were appointed in 2012 as Junior Engineers (Agriculture) against 22 sanctioned posts in the Land Conservation Directorate of Jharkhand, pursuant to a public advertisement and a due selection process. Although their appointments were described as temporary and contractual for an initial term of one year, they were granted uninterrupted yearly extensions for over ten years, with their performance consistently found satisfactory. Despite recommendations for regularization and continued utilization of their services on sanctioned posts, the State declared the final extension in 2023 and discontinued their engagement. The Jharkhand High Court dismissed their writ petitions and intra-court appeals, holding that contractual employees had no right to regularization, leading to the appeals before the Supreme Court.

This judgment narrows the scope for States to rely mechanically on contractual labels and Umadevi to justify prolonged ad-hocism. It clarifies that the bar on invoking legitimate expectation does not apply where contractual appointments follow a lawful selection process. The ruling reinforces that contractual clauses cannot override constitutional guarantees, nor can acceptance of such clauses amount to waiver of fundamental rights. By emphasizing fairness, dignity, and non-arbitrariness in public employment, the decision strengthens protections for long-serving contractual employees and signals judicial intolerance toward exploitative, perpetual contractual arrangements by the State.

Woodland (Aero Club) Private Limited Director v. Assistant Commissioner of Income Tax

The Hon’ble Supreme Court in the case of Woodland (Aero Club) Private Limited Director v. Assistant Commissioner of Income Tax, while issuing notice, examined whether employees’ contributions to PF and ESI deposited after the statutory due date but before the due date of filing the income tax return are allowable as deductions. The Court noted the clear distinction drawn by the Delhi High Court between employer’s contributions under Section 36(1)(iv) and employees’ contributions under Section 36(1)(va) read with Section 2(24)(x), and indicated that employees’ contributions constitute income of the employer unless deposited within the due date prescribed under the relevant welfare statutes. Recognizing conflicting High Court views on the issue, the Supreme Court agreed to consider the matter.

The petitioner challenged the Delhi High Court’s judgment which held that employees’ contributions towards provident fund and ESI, deducted from salaries, are deemed income under Section 2(24)(x) of the Income Tax Act and are allowable as deductions only if deposited within the statutory due dates under the PF and ESI laws. The High Court rejected the application of Section 43B to such employees’ contributions and distinguished Alom Extrusions, holding that it did not consider Sections 2(24)(x) and 36(1)(va). Aggrieved by the disallowance of deductions for delayed deposits, the petitioner approached the Supreme Court.

The Supreme Court’s decision to examine the issue has significant implications for employers, as it directly impacts the deductibility of delayed employees’ PF and ESI contributions. A final ruling may settle the long-standing divergence among High Courts on whether Section 43B overrides Section 36(1)(va) for employees’ contributions. The outcome will bring much-needed clarity on compliance requirements, potential tax exposure, and financial reporting obligations for employers across sectors.

Medicaps Limited Through Factory Manager v. Smt. Sanju & Ors.

In Medicaps Limited Through Factory Manager v. Smt. Sanju & Ors., the Hon’ble Madhya Pradesh High Court adopted a generous view on limitation in a labour dispute, emphasizing that procedural technicalities should not bar substantive rights, especially where pandemic disruptions played a key role in delay. The case concerned a fresh set of workmen who filed claims alleging wrongful termination following the closure of the Medicaps Limited plant in November 2019. Although the statutory limitation under Section 62 of the Madhya Pradesh Industrial Relations Act, 1960 is one year, the workmen’s application was made nearly four years later. They explained that the COVID-19 lockdown, illiteracy, and lack of awareness of legal remedies prevented them from approaching the Labour Court within time. The Industrial Court condoned the delay, applying the Supreme Court’s extensions of limitation during the pandemic, and remanded the matter for adjudication on merit. The employer challenged that remand, arguing the delay was inordinate and that the closure issue had already attained finality.

The High Court dismissed the employer’s petition, underlining that labour laws are beneficial in nature and should not be defeated by a hyper-technical approach to limitation. Noting that a substantial part of the delay coincided with pandemic lockdowns and that the workmen lacked legal literacy, the bench upheld the Industrial Court’s decision to condone delay and allow merits to be heard. The employer retains the right to raise all substantive objections before the Labour Court during fresh proceedings.

INTERNATIONAL UPDATES

US National Labor Relations Board (NLRB) upheld an employer’s workplace recording policy

A US National Labor Relations Board (NLRB) administrative law judge recently upheld an employer’s workplace recording policy, rejecting an unfair labor practice complaint under Section 7 of the National Labor Relations Act (NLRA). In the case, the judge found that the employer’s “Use of Recording Devices” rule did not unlawfully interfere with employees’ rights to engage in concerted activity for mutual aid or protection. The judge noted the General Counsel failed to show the policy could reasonably be interpreted by employees as chilling protected activity under the NLRA. The decision underscores that not all restrictions on recordings are automatically unlawful — context, language, and how a rule is written matter.

NLRB precedent generally treats blanket bans on workplace recordings with suspicion, since employees have Section 7 rights to record discussions about terms and conditions of employment or organize collectively. Past decisions struck down broad no-recording policies because they could chill those rights.

This decision shows that labour authorities are balancing two competing interests — protecting employee rights while acknowledging employers’ legitimate needs to protect confidential and trade-secret information and comply with state recording consent laws. A narrowly drafted policy that clearly limits recordings in specific work areas or times, without sweeping language that might cover protected activity, stands a better chance of being upheld under current standards.

The International Labour Organization’s Employment and Social Trends 2026 Report

The International Labour Organization’s Employment and Social Trends 2026 report points to a global labour market that appears stable on the surface but remains under strain beneath it. The ILO projects the global unemployment rate to hold steady at around 4.9% in 2026, representing nearly 186 million unemployed people worldwide. However, this headline figure does not fully capture the scale of labour market distress. A much broader measure, the global jobs gap, which includes people who want work but are unable to find it, is expected to reach about 408 million, highlighting widespread underemployment and exclusion from formal job opportunities.

Informal employment continues to dominate the global workforce, with approximately 2.1 billion people working in informal jobs that typically lack social security, income stability, and legal protections. Despite gradual improvements in some regions, working poverty remains a serious concern, with nearly 300 million workers surviving on less than USD 3 per day. Labour force participation rates are projected to decline slightly, reflecting slower job creation and demographic pressures. The report also underscores persistent inequalities, particularly affecting women and young people, with women accounting for only around 40% of global employment and youth unemployment remaining significantly higher than overall levels. Together, these findings underline the need for policies that go beyond employment numbers to focus on access to decent and sustainable work.

Albania raises its national minimum wage

Albania has raised its national minimum wage to ALL 50,000 per month (gross), up from ALL 40,000, and this increase took effect on January 1, 2026 following a decision by the Council of Ministers. The new base wage applies for a standard month of 174 working hours, which means the minimum hourly wage is about ALL 287.3. Employers, whether domestic or foreign, must pay at least this amount as the gross base salary in all employment contracts.

This change also affects related regulatory thresholds: the minimum wage now forms the legal minimum for calculating social and health insurance contributions, and it triggers corresponding adjustments in payroll declarations and compliance obligations. Employers will need to update payroll systems and ensure all salary and contribution reporting reflects the new figures.

For foreign workers, salary requirements tied to work permit compliance and immigration criteria will now be benchmarked against this higher minimum wage; offers below the revised base could jeopardise permit approvals or renewals. Because market salary thresholds and work permit rules often reference the national minimum wage, employers should review employment contracts and immigration filings to ensure they meet the updated standards.

• Employers must pay at least ALL 50,000 gross per month for full-time work.

• Payroll and contribution bases must be updated.

• Foreign employee salary thresholds tied to permits generally move upward in line with the new minimum.

State Minimum Wage Increases in the US

Across the United States, a wave of minimum wage hikes took effect on January 1 2026 as states implemented scheduled increases tied to inflation indexing or legislated pay floors. At least 19 states raised their minimum wages this year, and together these changes affect more than 8 million workers by lifting wage floors well above the unchanged federal minimum of $7.25/hr.

What this really means is that many states are now setting hourly wage floors that better reflect local living costs. For example, Washington State’s minimum wage rose to $17.13/hr, the highest among the states, and parts of New York, including New York City, Long Island and Westchester, now set the minimum at about $17.00/hr. Other notable rates include Connecticut at about $16.94/hr, California at $16.90/hr, and Hawaii at $16.00/hr.

Several states also crossed or approached the $15/hr threshold - Arizona (~$15.15), Colorado (~$15.16), Missouri and Nebraska (~$15.00), while smaller increases lifted wages in Michigan, Maine, Minnesota, Ohio, Rhode Island, Vermont, and Virginia.

These state-level increases reflect a broader trend of jurisdictions supplementing or exceeding the federal floor in response to cost-of-living pressures, even as the federal rate remains unchanged.

The content provided in this update is for educational and informational purposes only and should not be construed as legal advice or opinion. Lex Alliance, Advocates & Legal Consultants, will not be liable in connection with the use of this information without seeking appropriate legal counsel