July Newsletter

Regulatory Updates

ESIC Releases Draft Employees' State Insurance (General) Regulations, 2026

The Employees' State Insurance Corporation (ESIC), vide draft notification dated 17 June 2026, released the Draft Employees' State Insurance (General) Regulations, 2026, inviting public comments on a comprehensive regulatory framework proposed under the Code on Social Security, 2020. The draft Regulations seek to replace the existing Employees' State Insurance (General) Regulations, 1950 and streamline the administration of the Employees' State Insurance Scheme by incorporating digital processes, revised compliance requirements, and provisions aligned with the Code on Social Security, 2020.

The proposed Regulations introduce several significant changes, including:

• Mandatory electronic registration of establishments and insured persons through the specified portal, with generation of an electronic Insured Person Card containing details of the insured employee and family members.

• Requirement for employers to file monthly returns of contribution within fifteen days from the end of each month, replacing the existing return filing mechanism.

• Continuation of the requirement to deposit ESI contributions within fifteen days of the end of the relevant calendar month, along with revised provisions governing interest, damages, appeals, and refunds relating to delayed or erroneous contribution payments.

• Expanded use of electronic processes for submission of claims, issuance of medical certificates, maintenance of employee records, and payment of benefits under the Scheme.

• Comprehensive procedural framework governing sickness, maternity, disablement, dependants', funeral and medical benefits, together with revised provisions relating to accident reporting, occupational diseases, medical boards, reimbursement of medical expenses, and claims administration.

• Introduction of updated governance provisions concerning Regional Boards, Local Committees, committees constituted by the Corporation, appellate authorities, inspection procedures, information technology implementation, and digital compliance mechanisms.

The draft Regulations are intended to operationalise the Employees' State Insurance provisions contained in the Code on Social Security, 2020 by establishing a modernised and technology-driven compliance framework. Once finalised, the Regulations are expected to replace the existing ESI (General) Regulations and provide the principal procedural framework governing registration, contributions, administration of benefits, and employer compliance under the Employees' State Insurance Scheme.

Ministry Notifies Employees' Provident Fund Scheme, 2026

The Ministry of Labour and Employment, vide notification dated 29 June 2026, notified the Employees' Provident Fund Scheme, 2026 under the Code on Social Security, 2020. The Scheme supersedes the Employees' Provident Fund Scheme, 1952 and establishes a revised framework governing provident fund membership, contributions, exempted establishments, administration of provident funds, and related compliance obligations. The Scheme comes into force from the date of its publication in the Official Gazette and applies to establishments covered under Chapter III of the Code on Social Security, 2020.

Key features of the Scheme include:

• Every employee covered under the Scheme is required to become a member of the Provident Fund from the date the Scheme becomes applicable to the establishment or from the date of employment, as applicable. Existing members under the Employees' Provident Fund Scheme, 1952 shall continue as members under the new Scheme.

• The Scheme retains provisions relating to International Workers while aligning the membership framework with the Code on Social Security, 2020, including treatment of employees covered under applicable social security agreements.

• A comprehensive framework has been introduced governing exempted establishments, including constitution of Boards of Trustees, electronic maintenance of accounts, online claim processing, investment of provident fund accumulations, audit requirements, reporting obligations, and compliance conditions for continuation or cancellation of exemptions.

• Employers of exempted establishments are required to transfer provident fund contributions within the prescribed timelines, maintain electronic records, submit periodic returns, facilitate inspections, and ensure that members receive benefits which are not less favourable than those available under the statutory Scheme.

• The Scheme prescribes detailed provisions relating to extension, surrender and cancellation of exemptions, transfer of accumulated balances, governance of Boards of Trustees, and digital administration of provident fund accounts, with enhanced oversight by the Central Board and Regional Provident Fund Commissioners.

  
  

The Employees' Provident Fund Scheme, 2026 modernises the statutory provident fund framework by introducing extensive digital compliance measures while aligning the administration of provident fund benefits with the Code on Social Security, 2020. Once implemented, the Scheme will replace the long-standing Employees' Provident Fund Scheme, 1952 and serve as the principal framework governing provident fund administration in India.

Bihar: Bihar Repeals the Bihar Shops and Establishments Act, 2025

The Government of Bihar, through the Bihar Shops and Establishments (Regulation of Employment and Conditions of Service) (Repeal) Ordinance, 2026, promulgated on 1 June 2026, has repealed the Bihar Shops and Establishments (Regulation of Employment and Conditions of Service) Act, 2025 with immediate effect. The Ordinance has been issued under Article 213 of the Constitution of India in view of the Legislature not being in session.

The Ordinance has been introduced in light of the implementation of the Occupational Safety, Health and Working Conditions Code, 2020, which came into force with effect from 21 November 2025. The State Government observed that several provisions of the Bihar Shops and Establishments Act, 2025 overlapped with the provisions of the Occupational Safety, Health and Working Conditions Code, 2020, resulting in duplication of regulatory requirements. The repeal also forms part of the State's efforts to simplify the regulatory framework and promote industrial investment and economic activity within Bihar.

The key features of the Ordinance include:

• Repeal of the Bihar Shops and Establishments (Regulation of Employment and Conditions of Service) Act, 2025 with immediate effect.

• Recognition that the Occupational Safety, Health and Working Conditions Code, 2020 adequately governs matters previously addressed under the State legislation, thereby eliminating overlapping regulatory provisions.

• The repeal has been undertaken with the objective of streamlining labour regulation, reducing compliance duplication, and creating a more conducive environment for industrial and commercial investment in the State.

• The Ordinance contains a saving clause, providing that all proceedings initiated under the repealed Act shall continue and be dealt with as though the Act had not been repealed, thereby ensuring continuity of pending actions and legal proceedings.

The repeal reflects Bihar's continued efforts to harmonise its labour law framework with the labour codes enacted by the Central Government. By removing overlapping state legislation while preserving ongoing proceedings, the Ordinance seeks to simplify the regulatory landscape without affecting accrued rights or pending actions under the repealed enactment.

Andaman and Nicobar: Andaman and Nicobar Administration Publishes Draft Shops and Establishments (Amendment) Rules, 2026

The Andaman and Nicobar Administration, vide notification dated 15 June 2026, published the Draft Andaman and Nicobar Islands Shops and Establishments (Amendment) Rules, 2026, inviting objections and suggestions from stakeholders within forty-five days. The draft amendments seek to modernise the existing Shops and Establishments Rules, 2005 by introducing digital registration processes, facilitating round-the-clock business operations, strengthening safeguards for women employees, and aligning the regulatory framework with the Occupational Safety, Health and Working Conditions Code, 2020.

The proposed amendments introduce several significant changes, including:

• Registration certificates for shops and establishments are proposed to be issued electronically on an auto-approval basis upon submission of the prescribed application and fees, eliminating the requirement for prior approval and simplifying the registration process.

• The draft permits 24×7 operations of shops and establishments, subject to prescribed conditions intended to safeguard employees' welfare and ensure compliance with labour laws.

• Establishments employing women during night shifts are required to comply with enhanced safeguards, including obtaining written consent, limiting working hours, providing free transportation, maintaining CCTV surveillance, ensuring adequate sanitation and medical facilities, appointing welfare assistants, implementing measures under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013, and providing crèche facilities wherever required.

• The draft introduces provisions to harmonise the Shops and Establishments framework with the Occupational Safety, Health and Working Conditions Code, 2020, including registration requirements for establishments employing ten or more workers, deemed compliance in specified cases, and avoidance of duplicate registrations.

• It further clarifies the applicability of the Code and the Shops and Establishments Regulations where both operate concurrently, ensuring that matters relating to occupational safety, health and welfare are governed by the Code while preserving the operation of the Regulations for matters not specifically covered under the Code.

  
  

The proposed amendments represent a significant step towards modernising the regulatory framework governing commercial establishments in the Union Territory. By promoting digital governance, facilitating business operations, enhancing workplace protections for women, and aligning local regulations with the Occupational Safety, Health and Working Conditions Code, 2020, the draft Rules seek to simplify compliance while strengthening employee welfare.

Maharashtra Publishes Draft Employees' Compensation Rules, 2026

The Government of Maharashtra, vide notification dated 16 June 2026, published the Draft Maharashtra Employees' Compensation Rules, 2026 under the Code on Social Security, 2020, inviting objections and suggestions from stakeholders within thirty days. The draft Rules propose to supersede the Maharashtra Workmen's Compensation Rules, 1924 and establish a revised procedural framework governing employees' compensation, claims, reporting obligations, and adjudication under the Code on Social Security, 2020.

The proposed Rules introduce several significant changes, including:

• Prescribing a comprehensive procedural framework for reporting fatal accidents, submission of compensation claims, maintenance of statutory records, settlement agreements, transfer of proceedings, and adjudication before the competent authority under the Code.

• Requiring employers to report fatal accidents in the prescribed form and deposit compensation together with funeral expenses, which shall not be less than ₹20,000, with the competent authority in cases involving the death of an employee.

• Providing detailed procedures for review of compensation awards, medical examinations, maintenance of accident notice books in hazardous establishments, and submission of employer statements following fatal workplace accidents.

• Establishing an updated framework for registration of compensation agreements, issuance of notices, recording of settlements, transfer of records and compensation amounts between competent authorities, and disposal of compensation applications within prescribed timelines.

• Introducing standardised statutory forms for accident reporting, employer statements, compensation agreements, notices, registers, and other procedural requirements to facilitate uniform implementation of the employees' compensation framework across the State.

The Draft Maharashtra Employees' Compensation Rules, 2026 form part of the State's ongoing efforts to align its labour law framework with the Code on Social Security, 2020. By replacing the existing Rules of 1924 with a modern procedural regime, the draft seeks to streamline compensation proceedings, strengthen reporting and compliance mechanisms, and improve the administration of employees' compensation claims.

Notable Judgements

Baksish Ahmad v. Union of India & Anr.

In Baksish Ahmad v. Union of India & Anr., the Supreme Court held that the doctrine of forum non conveniens has limited application where a High Court’s writ jurisdiction is invoked under Article 226(1) of the Constitution. The Court observed that where the necessary respondent authorities are situated within the territorial jurisdiction of a High Court, the writ petition cannot ordinarily be declined solely on the ground that the cause of action substantially arose elsewhere. Accordingly, the Court set aside the Delhi High Court’s order dismissing the writ petition on the ground of forum non conveniens and restored the matter for consideration on merits.

The appellant, a member of the Border Security Force (BSF), had been dismissed from service following disciplinary proceedings relating to allegations of contracting a second marriage without prior permission while his first marriage subsisted. His statutory petition was rejected by the competent authority, following which he approached the Delhi High Court, impleading the Union of India and the Director General, BSF, whose offices are located in Delhi. The High Court declined to entertain the petition on the ground that the cause of action had arisen predominantly outside its territorial jurisdiction and that another High Court constituted a more appropriate forum. Allowing the appeal, the Supreme Court held that Article 226(1) independently confers jurisdiction upon a High Court where the respondent authorities are situated within its territorial limits and that the doctrine of forum non conveniens cannot routinely be invoked to deny access to constitutional remedies. The Court further observed that while the doctrine may apply in exceptional cases, its application in proceedings seeking judicial review under Article 226(1), particularly where a writ of certiorari is sought, must remain limited.

The judgment clarifies the distinction between territorial jurisdiction under Article 226 and the discretionary doctrine of forum non conveniens, reaffirming that constitutional remedies should not ordinarily be denied where jurisdiction is otherwise validly attracted by the presence of the necessary respondent authorities within the territorial limits of the High Court.

Gaurav Mehla & Ors. v. State of Haryana & Ors.

In Gaurav Mehla & Ors. v. State of Haryana & Ors., the Supreme Court held that appointments made through a duly initiated recruitment process cannot be invalidated solely on account of procedural irregularities attributable to the appointing authority, where the recruitment was otherwise fair, transparent, and in substantial compliance with the applicable statutory requirements. The Court observed that candidates who have participated in a lawful selection process and rendered long years of unblemished service should not ordinarily be deprived of their appointments for defects beyond their control. Accordingly, the Court set aside the orders invalidating the appointments and restored the appellants to service.

The appellants were appointed as Clerk-cum-Salesmen and Peon-cum-Chowkidars in a cooperative society pursuant to a recruitment process initiated through public advertisement, followed by interviews and approval of the Board of Directors. Their appointments were subsequently challenged on the ground that the Board meeting approving the appointments had not been attended by certain officials whose presence was mandatory under the applicable service rules. The Supreme Court observed that the essential requirements of public employment, including public advertisement, equal opportunity, a fair selection process, and appointment by the competent authority, had been duly complied with. The Court held that although the absence of the prescribed officials constituted a procedural irregularity, it was a curable defect attributable to the authorities conducting the recruitment and did not render the entire selection process void. The Court further emphasised that equitable considerations assume significance where employees have served for several years without any allegation of fraud, misrepresentation, or misconduct.

The judgment reiterates that while statutory recruitment norms governing public employment must ordinarily be complied with, procedural irregularities that do not undermine the fairness or transparency of the recruitment process and are not attributable to the selected candidates should not automatically result in cancellation of appointments, particularly where such employees have rendered long and satisfactory service.

Bhikhani Devi & Ors. v. Union of India & Ors.

In Bhikhani Devi & Ors. v. Union of India & Ors., the Supreme Court held that temporary status casual labourers are entitled to pensionary benefits upon superannuation even in the absence of formal regularisation. The Court observed that employees who had been conferred temporary status and extended benefits equivalent to those available to temporary Group 'D' employees could not be denied pensionary benefits merely because no formal order of regularisation had been issued. Accordingly, the Court set aside the judgments of the Patna High Court and restored the relief granted by the Central Administrative Tribunal in favour of the appellants.

The appeals arose from claims made by former casual labourers and the legal representatives of deceased employees engaged by the Department of Posts, who had rendered long years of service after being granted temporary status under the Casual Labourers (Grant of Temporary Status and Regularisation) Scheme, 1991. Their claims for pension were rejected on the ground that they had never been formally regularised as Group 'D' employees. The Supreme Court held that the Scheme and the subsequent circular dated 30 November 1992 conferred upon temporary status casual labourers, after completion of three years of continuous service, benefits equivalent to those admissible to temporary Group 'D' employees. The Court observed that pension is a social security measure and a continuing constitutional right, and that beneficial schemes must receive a purposive interpretation. It further held that administrative inaction in issuing regularisation orders could not defeat the employees' entitlement to pensionary benefits where they had otherwise fulfilled the qualifying service requirements under the applicable service rules.

The judgment clarifies that temporary status casual labourers who satisfy the prescribed qualifying service requirements are entitled to pensionary benefits notwithstanding the absence of formal regularisation. The ruling reaffirms the principle that beneficial service schemes should be interpreted in a manner that advances the objective of extending social security to long-serving employees rather than denying such benefits on technical or procedural grounds.

S. Senthil Kumaran Bose v. State of Tamil Nadu & Ors.

In S. Senthil Kumaran Bose v. State of Tamil Nadu & Ors., the Supreme Court upheld the Madras High Court's direction requiring the Tamil Nadu Public Service Commission (TNPSC) to undertake a fresh verification of candidates' workshop experience in the recruitment process for the post of Motor Vehicle Inspector Grade II. The Court held that candidates should not be prejudiced by administrative delays in granting or renewing approvals to automobile workshops where the candidates had otherwise acquired the requisite experience and had no control over the approval process. Accordingly, the Court directed TNPSC to conduct a fresh verification exercise and complete the selection process in accordance with the prescribed eligibility criteria.

The appeals arose from disputes concerning the eligibility of candidates whose work experience had been obtained in workshops that were granted retrospective approval or renewal by the competent transport authorities. TNPSC had excluded such candidates on the ground that the workshops did not possess valid approval during the relevant period of employment. The Supreme Court observed that the requirement of obtaining experience from an approved workshop was intended to ensure the quality of practical training and not to penalise candidates for administrative delays attributable to the authorities. The Court held that where a workshop was subsequently granted retrospective approval and the candidates had acquired the prescribed experience, such experience could not be disregarded solely because the approval was issued at a later date. It further observed that inclusion in a revised select list does not confer an indefeasible right to appointment and directed TNPSC to undertake a fresh verification of the candidates' eligibility before finalising the selection process.

The judgment reiterates that recruitment authorities must adopt a fair and pragmatic approach while assessing eligibility and that candidates should not be denied consideration for reasons arising from administrative lapses beyond their control. The ruling also clarifies that while inclusion in a select list does not create a vested right to appointment, the selection process must remain consistent with the principles of fairness, transparency, and equal opportunity in public employment.

Daily Wage Sweepers v. State Bank of India

In Daily Wage Sweepers v. State Bank of India, the Orissa High Court declined to direct the regularisation of two daily wage sweepers who had served the Bank for nearly 27 years, and instead awarded compensation of ₹20 lakh each. The Court observed that, considering the prolonged litigation and the passage of time, directing regularisation at such a belated stage would not constitute an effective or equitable remedy. It held that substantial monetary compensation would better serve the ends of justice by recognising the employees' long years of service and the hardship they had endured.

The case arose from the claims of two sweepers who had continuously worked on a daily wage basis for almost three decades while seeking regularisation of their services. The High Court noted that the employees had spent a significant portion of their working lives in insecure employment and had remained engaged in litigation for years without any meaningful resolution. While acknowledging the settled legal position that regularisation cannot ordinarily be granted contrary to the applicable recruitment rules, the Court held that the exceptional facts of the case warranted equitable relief in the form of compensation. Emphasising the human consequences of prolonged precarious employment, the Court remarked that "bread is costlier than blood", underscoring the need to provide meaningful relief rather than a purely technical remedy.

The judgment reflects a pragmatic approach in labour jurisprudence by recognising that, in appropriate cases, substantial monetary compensation may constitute a more effective remedy than reinstatement or regularisation. It also highlights the courts' willingness to address the hardship suffered by long-serving casual workers while balancing the legal constraints governing public employment and regularisation.

International Updates

Malaysia – Social Security Protection Expanded to Cover Non-Employment Related Injuries

Malaysia has introduced significant reforms to its social security framework through the Employees' Social Security (Amendment) Act 2026, together with the Employees' Social Security (Minimum Daily Rate of Benefit) (Amendment) Regulations 2026 and the Employees' Social Security (General) (Amendment) Regulations 2026, all of which came into force on 1 June 2026. The reforms implement the LINDUNG 24/7 initiative, extending statutory social security protection to employees who sustain injuries outside the course of employment. Prior to the amendments, coverage under the Employees' Social Security Act 1969 was generally limited to employment-related injuries, occupational diseases, and commuting accidents. The new framework provides eligible employees with round-the-clock protection against accidental injuries, irrespective of whether they occur during working hours.

The amendments introduce a phased contribution structure under which the additional contributions required for the non-employment injury scheme are borne by employees, while employers remain responsible for deducting and remitting the prescribed contributions to the Social Security Organisation (SOCSO/PERKESO). The accompanying regulations also revise the minimum daily benefit rates for temporary and permanent disablement arising from non-employment injuries and align the existing regulatory framework with the expanded scope of statutory protection. Subject to specified exclusions, including accidents occurring outside Malaysia and certain other prescribed circumstances, the reforms significantly broaden Malaysia's social security regime by extending financial protection beyond workplace-related risks and strengthening employee welfare through comprehensive 24-hour coverage.

Australia – New Legislation Introduces Procurement Preferences Linked to Enterprise Bargaining

Australia has enacted the Fair Work Amendment (Safeguarding Australian Jobs and Entitlements) Act, 2026, introducing significant changes to the Commonwealth procurement framework and enterprise bargaining regime. Among other measures, the legislation permits the Commonwealth to give preference in the award of government procurement contracts and grants to businesses that have entered into enterprise agreements with their employees. The reforms are intended to encourage collective bargaining and strengthen workplace protections while aligning public procurement practices with broader industrial relations objectives.

The legislation also amends the Fair Work Act 2009 to facilitate enterprise bargaining by enabling the Commonwealth to consider the existence of enterprise agreements as a relevant factor in procurement and funding decisions. In addition, the reforms introduce measures relating to the variation of enterprise agreements, strengthen protections concerning employee entitlements, and expand the role of the Fair Work Commission in administering workplace relations. The changes are expected to influence employers seeking Commonwealth contracts by creating additional incentives to negotiate enterprise agreements, while also reshaping the interaction between public procurement policy and Australia's industrial relations framework.

Poland – Expanded Electronic Contracting Framework for Employment Agreements

Poland has expanded its electronic employment contracting framework through legislative amendments that came into effect on 19 June 2026. The reforms extend access to the government's online contract management system, available through the praca.gov.pl portal, to all employers and employees, irrespective of the size of the undertaking. Previously, the system was limited to employers with fewer than ten employees and supported only a narrow range of employment-related agreements. The amendments are intended to simplify employment documentation and facilitate the electronic execution of workplace agreements without requiring a qualified electronic signature.

The expanded framework permits a wider range of employment documents to be concluded, amended, and terminated electronically, including employment contracts, non-compete agreements, training agreements, joint material liability agreements, and volunteer agreements. Contracts executed through the system may be signed using a qualified electronic signature, a personal signature, or a trusted (ePUAP) signature, each of which carries the same legal effect as a handwritten signature within the system. While use of the platform remains voluntary, the reforms are expected to increase flexibility in employment contracting, particularly for remote working arrangements and employers seeking to streamline employment documentation through digital processes.

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