June Newsletter

Regulatory Updates

Ministry Of Finance Mandates Timely Payment of Wages and Salaries for Manpower Engaged Through Contractors

The Ministry of Finance, vide Office Memorandum dated 8 May 2026, issued directions regarding timely payment of wages and salaries to manpower engaged directly or through contractors in Central Ministries, Departments, attached and subordinate offices, autonomous bodies, and Central Public Sector Enterprises (CPSEs). The Office Memorandum has been issued pursuant to directions of the Ministry of Labour and Employment and prescribes requirements relating to payment of wages, reimbursement procedures, and compliance with statutory obligations in respect of manpower engaged under contractual arrangements.

The directions issued under the Office Memorandum include the following:

• Wages and salaries payable to manpower engaged directly or through contractors shall be paid within the prescribed timelines:

  • Daily: End of shift

  • Weekly: Before the weekly holiday

  • Fortnightly: Within 2 days of the end of the fortnight

  • Monthly: Within 7 days of the following month

• Contractors shall ensure timely payment of wages and statutory dues to workers engaged under government contracts.

• Contractors seeking reimbursement of wage payments shall submit claims by the 10th day of the month after payment of wages to workers by the 7^th day of the month.

• Drawing and Disbursing Officers (DDOs) shall process and clear reimbursement claims by the 15^th day of the same month..

• Compliance relating to payment of wages and statutory contributions shall be monitored by the concerned authorities.

• Principal employers and contractors shall ensure compliance with obligations relating to payment of wages and statutory dues in respect of manpower engaged through contractual arrangements.

• Labour law compliance has been prescribed as a requirement in relation to government procurement and contractual engagements.

The directions are to be read in conjunction with the provisions relating to payment of wages and statutory contributions applicable to manpower engaged under government contracts.

Ministry Notifies Central Rules Under All Four Labour Codes

The Ministry of Labour and Employment, vide notifications dated 8 and 9 May 2026, notified the Central Rules under all four Labour Codes, namely the Code on Wages, 2019, the Industrial Relations Code, 2020, the Code on Social Security, 2020, and the Occupational Safety, Health and Working Conditions Code, 2020. The notifications mark a significant step towards operationalising India's labour law reforms and provide the procedural framework governing wages, industrial relations, social security, and occupational safety and health.

Some of the Key provisions of the Rules include:

• Minimum wages shall be fixed on a daily basis in accordance with criteria to be specified by the Central Government. The Rules further provide that where daily wages are fixed, hourly wages shall be calculated by dividing the daily wage by eight and monthly wages shall be calculated by multiplying the daily wage by twenty-six.

• Variable Dearness Allowance (VDA) shall be revised twice every year before 1 April and 1 October. The revision shall be based on the Average Consumer Price Index for Industrial Workers published by the Labour Bureau and shall take into account the cost of living allowance and value of concessions in respect of essential commodities.

• A normal working day for employees paid on a daily basis shall consist of eight working hours, excluding intervals for rest. For employees paid on a weekly or monthly basis, working hours shall be fixed in a manner that total work does not exceed forty-eight hours in a week.

• Every employee shall be entitled to one weekly day of rest. Employees required to work on a rest day shall be entitled to overtime wages for such work and shall also be provided a substituted rest day in accordance with the Rules. Employees shall not work for more than ten consecutive days without a rest day.

• The Central Government shall determine floor wages after consultation with the Central Advisory Board and after considering minimum living standards, including food, clothing, housing, and other prescribed factors. Floor wages shall ordinarily be revised every five years and may also be adjusted to account for changes in the cost of living.

• The Central Advisory Board shall be constituted by the Central Government. The Chairperson and members shall hold office for a term of three years from the date of appointment or nomination. A member who fails to attend three consecutive meetings without prior intimation to the Chairperson shall cease to be a member of the Board.

The Rules also contain provisions relating to calculation of wages in establishments operating with shorter work weeks, treatment of night shifts extending beyond midnight, rounding-off of wage calculations, eligibility for full-day wages, and procedures relating to the functioning of the Central Advisory Board.

Ministry Of Labour and Employment Notifies Mandatory Rest Intervals Under the Occupational Safety, Health and Working Conditions Code, 2020

The Ministry of Labour and Employment, vide notification dated 13 May 2026 issued under Section 25(1)(b) of the Occupational Safety, Health and Working Conditions Code, 2020, prescribed mandatory rest interval requirements for workers covered under the Code. Section 25 of the Code deals with daily and weekly working hours, leave, and related conditions of employment and empowers the appropriate Government to prescribe the arrangement of working hours, duration of rest intervals, and spread-over of the working day. Pursuant to these provisions, the notification prescribes uniform requirements relating to continuous working hours and rest breaks.

The notification provides as follows:

• No worker shall be required or allowed to work continuously for more than five hours without a break.

• A minimum rest interval of thirty minutes shall be provided after every five hours of continuous work.

• No worker shall ordinarily be required or allowed to work for more than eight hours in a day.

• The appropriate Government shall determine the arrangement of working hours, duration of rest intervals, and spread-over of the working day.

• Workers employed below ground in mines shall not work beyond the daily hours prescribed by the Central Government.

• Workers employed below ground in mines shall work in accordance with the prescribed shift system and shall not remain underground beyond their authorised working hours.

• In the case of motor transport workers, working time shall include driving time, time spent on duties connected with the vehicle, and waiting periods at terminals not exceeding fifteen minutes.

The notification also reiterates the special provisions applicable to workers employed below ground in mines and motor transport workers under the Occupational Safety, Health and Working Conditions Code, 2020. The prescribed requirements are applicable with effect from 14 May 2026 and govern the duration of continuous work, rest intervals, daily working hours, and sector-specific working time requirements under the Code.

Chandigarh Administration Revises Minimum Wage Rates For 2026–2027

The Chandigarh Administration, vide notification dated 12 May 2026, revised the minimum wage rates applicable to employees engaged in Government Offices, Boards, Public Sector Undertakings, and autonomous bodies within the Union Territory of Chandigarh. The revised wage rates have been made effective retrospectively from 1 April 2026 and shall remain applicable until 31 March 2027.

Key features of the notification include:

• Revision of minimum wage rates across various occupational categories, including administrative, technical, professional, and support staff.

• Increase in monthly wages for entry-level and support positions such as attendants and helpers from INR 22,680 to INR 24,494.

• Revision of wage rates for professional and technical positions, including Legal Officers, Medical Officers, Assistant Professors, and other specialised categories.

• Prescribed wages for certain senior-level categories have been revised up to approximately INR 87,275 per month.

• The notified wage rates are based on a standard eight-hour working day.

• In the case of part-time employees, wages shall be calculated on a proportionate basis corresponding to the hours worked.

• Outsourced employees who have completed five years of continuous and uninterrupted service as on 31 March 2026 shall be entitled to an additional 2% increase over the revised wage rates.

The notification prescribes revised wage rates for various categories of employees engaged under Government establishments, Boards, Public Sector Undertakings, and autonomous bodies operating within the Union Territory of Chandigarh for the period from 1 April 2026 to 31 March 2027.

Rajasthan Revises Variable Dearness Allowance Under Engineering Wage Board Recommendations

The Labour Department, Government of Rajasthan, vide notification dated 2 May 2026, revised the Variable Dearness Allowance (VDA) payable under the Engineering Wage Board recommendations. The notification clarifies that despite the introduction of the revised Consumer Price Index (CPI) series from September 2020 onwards, the VDA under the Engineering Wage Board recommendations shall continue to be calculated on the basis of the All India Consumer Price Index with Base Year 1949=100.

Key features of the notification include:

• Continuation of the existing methodology for calculation of VDA under the Engineering Wage Board recommendations based on the All India Consumer Price Index with Base Year 1949=100.

• Consideration of the average CPI for the period October 2022 to March 2023 for determination of the revised VDA.

• The average CPI for the period October 2022 to March 2023 has been determined at 10,601 points.

• The average CPI for the previous period, namely April 2022 to September 2022, was 10,351 points.

• The difference between the two periods reflects an increase of 250 CPI points for the purpose of determining the revised VDA payable under the Engineering Wage Board recommendations.

The revised VDA has been determined on the basis of the increase in the average Consumer Price Index between the relevant reference periods and shall be payable in accordance with the Engineering Wage Board recommendations as specified in the notification.

Notable Judgements

M.K. Suresh Kumar & Anr. v. Union of India & Ors.

In M.K. Suresh Kumar & Anr. v. Union of India & Ors., the Hon’ble Kerala High Court upheld the constitutional validity of Section 104(1A) of the Industrial Relations Code (Amendment) Act, 2026, which permits Labour Courts, Industrial Tribunals, National Tribunals, and other authorities constituted under the repealed labour laws to continue functioning until the corresponding authorities under the Industrial Relations Code, 2020 become operational. The Court held that the amendment constitutes a valid transitional arrangement and does not violate constitutional guarantees under Articles 14 or 21.

The petitioners challenged the amendment on the ground that continuation of authorities constituted under repealed enactments was arbitrary and contrary to the scheme of the Industrial Relations Code, 2020. The Court rejected the challenge and observed that the amendment expressly authorises existing adjudicatory bodies to continue exercising jurisdiction during the transition period. The Court further held that legislation can be invalidated on the ground of arbitrariness only where it is shown to be manifestly arbitrary, a threshold that was not met in the present case.

The judgment affirms the validity of the transitional framework introduced under the Industrial Relations Code (Amendment) Act, 2026 and clarifies that proceedings before existing Labour Courts, Industrial Tribunals, and National Tribunals may continue until the adjudicatory authorities contemplated under the Industrial Relations Code, 2020 are constituted and become functional.

Azim Premji v. State of U.P. & Anr.

In Azim Premji v. State of U.P. & Anr., the Hon’ble Allahabad High Court quashed criminal proceedings, the summoning order, and consequential proceedings initiated against Wipro Chairman Azim Premji in a case concerning alleged labour law violations. The Court held that criminal liability cannot be imposed upon a company’s Chairman or senior officials solely on the basis of their designation in the absence of specific allegations indicating direct involvement in the alleged violations.

The proceedings arose from a complaint alleging non-compliance with labour law requirements at a Wipro establishment. The Magistrate had issued summons against Premji and other company officials, following which the proceedings were challenged before the High Court. The Court observed that the complaint did not contain any specific allegation regarding Premji’s role in the day-to-day functioning of the establishment or his direct involvement in the alleged contravention. The Court further held that the Magistrate had failed to examine the factual aspects of the complaint before issuing the summoning order.

The judgment reiterates that vicarious criminal liability of directors, chairpersons, and senior management personnel cannot be presumed in labour law prosecutions unless the complaint contains specific averments establishing their responsibility for, or involvement in, the alleged violation. The Court accordingly set aside the criminal complaint proceedings and the summons issued against Premji.

Allahabad Bank v. R.S. Saini

In Allahabad Bank v. R.S. Saini, the Hon’ble Delhi High Court held that Labour Courts exercising jurisdiction under Section 33C(2) of the Industrial Disputes Act, 1947 cannot adjudicate disputed claims relating to service entitlements and are confined to computation or recovery of benefits arising from pre-existing and recognised rights. The Court observed that claims relating to travelling allowance (TA), dearness allowance (DA), or other service benefits requiring determination of entitlement fall outside the scope of proceedings under Section 33C(2).

The case arose from a claim seeking payment of service-related benefits before the Labour Court under Section 33C(2) of the Industrial Disputes Act, 1947. The employer challenged the Labour Court’s order on the ground that the entitlement itself was disputed and had not been previously adjudicated or recognised. Accepting the challenge, the High Court held that proceedings under Section 33C(2) are in the nature of execution proceedings and can be invoked only for enforcement or computation of an existing right. The Court observed that the Labour Court cannot first determine a disputed entitlement and thereafter compute the benefit claimed.

The judgment reiterates the settled principle that Section 33C(2) of the Industrial Disputes Act, 1947 is limited to enforcement and computation of pre-existing rights and cannot be invoked for adjudication of disputed claims. The ruling clarifies the distinction between determination of entitlement through industrial adjudication and computation of benefits arising from an already established right.

Abdur Rahman v. Union of India & Ors.

In Abdur Rahman v. Union of India & Ors., the Hon’ble Supreme Court held that the Central Government has the final authority to accept or reject a request for voluntary retirement submitted by an officer of the All India Services under Rule 16(2A) of the All India Services (Death-cum-Retirement Benefits) Rules, 1958. The Court, however, set aside the Ministry of Home Affairs’ decision rejecting the voluntary retirement request of IPS officer Abdur Rahman and directed reconsideration of the application after examining the relevant material and circumstances.

The appellant, a Maharashtra cadre IPS officer, had sought voluntary retirement from service. His request was rejected by the Central Government on the ground that disciplinary proceedings were pending or contemplated against him, including proceedings arising from complaints relating to alleged misconduct and a speech delivered at a public event. The Supreme Court held that while the Central Government is not bound by the recommendation of the State Government and retains the final decision-making authority under Rule 16(2A), such power must be exercised on the basis of an independent assessment of the material available on record. The Court observed that disciplinary proceedings can be regarded as “pending” only upon issuance of a formal charge-sheet and examined whether the material available at the relevant time justified rejection of the voluntary retirement request.

The Court concluded that the Central Government had not adequately examined the complaints and surrounding circumstances before rejecting the request for voluntary retirement. Accordingly, the order dated 25 October 2019 rejecting the appellant’s request was set aside and the Ministry of Home Affairs was directed to reconsider the application afresh. The judgment clarifies the scope of the Central Government’s powers under Rule 16(2A) and reiterates that decisions relating to voluntary retirement of All India Services officers must be based on a reasoned consideration of the material available on record.

Sansar Chand Awasthi v. State of H.P. & Ors.

In Sansar Chand Awasthi v. State of H.P. & Ors., the Hon’ble Himachal Pradesh High Court held that service rendered by a government employee on a higher post in different spells is required to be counted for the purpose of grant of increment benefits under Fundamental Rule 26. The Court observed that the applicable rules do not require such service on the higher post to be continuous or rendered in a single uninterrupted spell for the purpose of counting increments.

The petitioner, a Deputy Labour Commissioner, had been assigned the duties of Joint Labour Commissioner on multiple occasions during the leave periods of senior officers and had discharged such duties for approximately 460 days in different spells. After his regular promotion to the higher post, the petitioner sought counting of the period spent on the higher post for the purpose of annual increments. The State Government rejected the claim on the ground that the service had been rendered in separate spells and not on a continuous basis. The High Court rejected this contention and held that Rule 26(c)(i) of the Fundamental Rules and Subsidiary Rules does not prescribe continuity of service on the higher post as a condition for grant of increment benefits.

The Court further observed that the petitioner had already been paid salary and allowances applicable to the higher post for the relevant period and that a similarly situated employee had previously been granted the same benefit. The judgment clarifies that officiating service rendered on a higher post, even in multiple spells, may be counted for increment purposes where the applicable service rules do not prescribe any requirement of continuous service on the higher post.

International Updates

Unites States of America - California Governor Issues Executive Order on AI Workforce Disruption

On 21 May 2026, California Governor Gavin Newsom issued Executive Order N-6-26 directing state agencies to assess and prepare for the economic and labour market impact of artificial intelligence (AI). The Executive Order requires various agencies to conduct research, review workforce-related policies, and provide recommendations concerning AI-driven workforce disruption, employment trends, worker protection measures, and workforce training initiatives.

The Executive Order directs the Labour and Workforce Development Agency (LWDA), the Governor’s Office of Business and Economic Development (GO-Biz), and the Department of Finance to review academic research relating to AI’s impact on the labour market and workforce. It also requires the LWDA to examine potential revisions to the California Worker Adjustment and Retraining Notification (WARN) Act, review workforce protection measures, and assess existing workforce training programs. The Employment Development Department (EDD) has been directed to publish data relating to AI’s impact on employment across sectors and prepare periodic reports regarding the role of technological adoption in workforce and hiring decisions.

United Arab of Emirates - UAE Introduces Stricter Salary Payment Rules Under New Wage Protection Framework

The UAE Ministry of Human Resources and Emiratisation (MoHRE) has introduced Ministerial Resolution No. 340 of 2026, effective from 1 June 2026, establishing a revised Wage Protection System (WPS) framework for private sector employers. Under the new framework, salaries for the preceding month must be paid on the first day of each Gregorian month through the WPS or other approved payment channels, and any payment made after the due date will be treated as delayed. The Resolution also increases the compliance threshold from 80% to 85% of total wages payable and prescribes revised requirements relating to salary payments, wage documentation, and payroll compliance.

The Resolution further introduces a phased enforcement mechanism for delayed wage payments, including electronic monitoring, warning notices, suspension of new work permits, administrative penalties, labour dispute registration, and additional enforcement measures for repeated violations. The revised framework applies to private sector establishments registered with MoHRE and contains provisions relating to wage payment timelines, compliance thresholds, exemptions, and monitoring of wage payment obligations under the Wage Protection System.

United Kingdom - Draft Equality Act Code of Practice for Services, Public Functions and Associations Laid Before Parliament

The Equality and Human Rights Commission’s (EHRC) draft Code of Practice for Services, Public Functions and Associations was laid before the UK Parliament on 21 May 2026. The draft Code provides guidance on the application of the Equality Act 2010 in relation to services, public functions, and associations and will acquire statutory status upon completion of the parliamentary review process. Parliament has been provided a period of 40 days to consider the draft Code before it is brought into force.

The draft Code reflects developments in legislation and case law since the previous Code was issued, including the UK Supreme Court’s decision in For Women Scotland Ltd v. The Scottish Ministers concerning the interpretation of “sex” under the Equality Act 2010. The draft Code contains guidance relating to protected characteristics, discrimination, harassment, victimisation, single-sex and separate-sex services, public functions, membership associations, and reasonable adjustments under the Equality Act. It also provides guidance on circumstances in which service providers may lawfully provide separate or single-sex services and the factors to be considered in assessing proportionality and legitimate aims under the Act.

The draft Code further contains guidance applicable to service providers, public authorities, associations, and organisations exercising public functions across England, Scotland, and Wales. Once brought into force, the Code may be relied upon in legal proceedings under the Equality Act 2010 and may be taken into consideration by courts and tribunals in matters involving interpretation and application of the Act.

Brazil - Brazil’s Gender Pay Equality Law Upheld by Supreme Court

On 14 May 2026, the Brazilian Supreme Federal Court (STF) unanimously upheld the constitutionality of Law No. 14.611/2023, commonly referred to as the Gender Pay Equality Law. The law requires companies with more than 100 employees to publish semi-annual salary transparency reports containing anonymised remuneration data and information relating to pay equality between men and women.

The constitutional validity of the law had been challenged on grounds relating to free enterprise principles and data protection requirements, resulting in injunctions that had partially suspended enforcement of the reporting obligations. Following the STF’s decision, the injunctions were lifted, enabling full enforcement of the law by the Ministry of Labour and Employment. The ruling permits implementation of the reporting requirements and administrative sanctions applicable in cases of non-compliance.

Italy- Italy Introduces Fair Pay Framework and New Rules on Platform Work

Italy’s Decree-Law No. 62/2026, which came into force on 1 May 2026, introduced a labour market reform framework focusing on fair pay, employment incentives, and regulation of platform work. The Decree introduces the concept of a “fair wage”, linking remuneration standards to collective bargaining agreements concluded by the most representative trade unions and employers’ organisations, without introducing a statutory minimum wage. Access to certain public employment incentives and contribution relief measures has been made conditional upon compliance with the prescribed fair wage requirements.

The Decree also strengthens employment incentives through social security contribution exemptions for eligible permanent hires and conversion of fixed-term contracts into permanent employment. In relation to platform work, the framework provides that employment status is to be determined based on the actual manner in which work is performed, irrespective of the contractual classification adopted by the parties. The reforms further introduce transparency obligations for digital platforms in relation to algorithmic systems used for task allocation, remuneration, performance evaluation, and suspension or termination of access to the platform. Additional provisions have been introduced concerning worker identification requirements, wage monitoring mechanisms, and collection of wage-related data by public authorities.

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