Employment Newsletter (January- February 2026)
(I) LEGAL UPDATES ON EMPLOYMENT AND LABOUR LAWS
A. LABOUR CODES: DEVELOPMENT AND WHERE THINGS STAND
While the Central Government has published the draft rules under the Labour Codes and has issued FAQs and a compliance handbook to assist employers in implementing the Labour Codes, the States are releasing draft rules under some or all of the labour codes for public consultation. The table below lists the draft rules that have been recently issued by the State Governments.
| State | Draft Rules | Dates of Publication | Public Comment Period |
| Karnataka | Code on Wages Karnataka Rules, 2026 | January 23, 2026 | 45 days from the date of publication |
| Occupational Safety Health & Working Conditions (Karnataka) Rules, 2026 | |||
| Industrial Relations (Karnataka) Rules, 2026 | |||
| Code on Social Security Karnataka Rules, 2026 | January 29, 2026 | ||
| Madhya Pradesh | Madhya Pradesh Code on Wages Rules, 2026 | January 05, 2026 | 45 days from the date of publication |
| Madhya Pradesh Social Security Rules, 2026 | |||
| Madhya Pradesh Industrial Relations Rules | |||
| Occupational Safety, Health and Working Conditions (Madhya Pradesh) Rules, 2026 | |||
| Rajasthan | Code on Wages (Rajasthan) Rules, 2026 | January 13, 2026 | 45 days from the date of publication |
| Rajasthan Code on Social Security Rules 2026 | |||
| Rajasthan Industrial Relations Rules, 2026 | January 20, 2026 | ||
| Rajasthan Occupational Safety, Health and Working Conditions Rules, 2026 | February 03, 2026 | ||
| Tripura Wages Rules, 2026 | January 20, 2026 | 45 days from the date of publication |
| Tripura Social Security Rules, 2026 | |||
| Tripura Industrial Relations Rules, 2026 | |||
| Tripura Occupational Safety, Health and Working Conditions Rules, 2026 | |||
| Code on Wages (Andhra Pradesh) Rules, 2026 | February 13, 2026 | 45 days from the date of publication |
| Industrial Relations (Andhra Pradesh) Rules, 2026 | |||
| Code on Social Security (Andhra Pradesh) Rules, 2026 | February 23, 2026 | 30 days from the date of publication |
B. CENTRAL
1. Ministry of Labour and Employment Revises Wage Ceiling for Supervisory Employees under the Code on Wages, 2019
On January 30, 2026, the Ministry of Labour and Employment (“MoLE”), issued a notification under the Code on Wages, 2019 (“Wage Code”) prescribing the wage ceiling for persons employed in a supervisory capacity.
While the Industrial Relations Code (“IR Code”) sets the wage threshold with respect to supervisory function at INR 18000 per month, the Wage Code set the threshold at INR 15000 per month, creating a disconnect between the legislations. The notification revises the wage threshold under the Wage Code for supervisory employees from INR 15,000 per month to INR 18,000 per month, thereby bringing it in alignment with the definition of “worker” under the IR Codeand the Occupational Safety, Health and Working Conditions Code, 2020 (“OSH Code”).
Accordingly, any person employed in a supervisory capacity and drawing wages exceeding INR 18,000 per month will be excluded from the definition of “worker” under the Wage Code.
2. The MoLE released a Compliance Handbook for Employers under the Labour Codes.
On February 18, 2026, the MoLE released a comprehensive compliance handbook (“Handbook”) as a reference document to guide employers on compliance requirements under the Wage Code, IR Code, OSH Code, and Code on Social Security, 2020 (“SS Code”).
The Handbook aims to familiarise employers with the key reforms introduced under the labour codes and to simplify the understanding of statutory obligations by presenting them in a structured and accessible manner. It provides an overview of applicable provisions, compliance, and action points to assist employers in implementing the new labour law framework efficiently.
C. STATE
1. Amendment of the Karnataka Labour Welfare Fund Act, 1965
On January 07, 2026, the Government of Karnataka notified the Karnataka Labour Welfare Fund (Amendment) Act, 2025 (“Amendment Act”), which amends the Karnataka Labour Welfare Fund Act, 1965 (“KLWF Act”). The Amendment Act has come into force with immediate effect.
The Amendment Act introduces two key changes:
i. Applicability: The Amendment Act significantly expands the applicability of the KLWF Act by revising the employee threshold. Earlier, the KLWF Act applied only to establishments employing more than 50 persons. This threshold has been reduced to establishments employing 10 or more persons.
ii. Mode of contribution: Previously, the contributions were required to be made only through cheque or crossed demand draft. The Amendment Act now permits contributions through online payment channels, including net banking, NEFT, RTGS, UPI, as well as demand drafts.
While the Amendment Act broadens coverage of the KWLF Act and updates the way contributions are paid, there are still certain practical and administrative details that need clarification from the State Government. These include transitional compliance timelines.
While the move to digital payment modes is welcome, smaller establishments may face initial operational challenges. In this situation, clarifications from the State Government will be important to help employers comply smoothly and avoid unintended lapses.
2. The Government of Delhi introduces the Delhi Shops and Establishments (Amendment) Bill, 2026
On January 09, 2026, the Government of Delhi introduced the Delhi Shops and Establishments (Amendment) Bill, 2026 (“Bill”), proposing amendments to the Delhi Shops and Establishments Act, 1954 (“Delhi S&E Act”). The Bill proposes to revise the following:
i. Applicability threshold: The Bill proposes to increase the applicability threshold under the Delhi S&E Act from establishments employing 1 or more employees to those employing 20 or more employees, thereby excluding smaller establishments from the scope of the Delhi S&E Act.
ii. Working hours and Overtime: The Bill proposes to increase the maximum daily working hours from 9 hours to 10 hours (inclusive of rest intervals and lunch breaks) and the maximum hours (including overtime) from 54 hours to 60 hours, subject to an overall cap of 144 overtime hours per quarter, replacing the earlier annual overtime limit of 150 hours.
iii. Employment of Women during night shifts:The Bill now incorporates into the Delhi S&E Act the conditions earlier prescribed under the exemption notification dated August 07, 2025, relating to the employment of women during night shifts. It permits women employees to work during night shifts (i.e., between 9:00 p.m. and 7:00 a.m. during the summer season and between 8:00 p.m. and 8:00 a.m. during the winter season) with their prior consent, subject to compliance with prescribed safeguards. These safeguards include mandatory CCTV surveillance, adequate security arrangements and transportation facilities, compliance with the Prevention of Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. Additionally, the Bill now requires at least 2 women employees to be present during night shifts.
3. Government of Uttar Pradesh Notifies the Uttar Pradesh Dookan Aur Vanijya Adhishthan (Sanshodhan) Adhiniyam, 2025
The Government of Uttar Pradesh, on December 30, 2025, notified the Uttar Pradesh Dookan Aur Vanijya Adhishthan (Sanshodhan) Adhiniyam, 2025, which amends the Uttar Pradesh Dookan Aur Vanijya Adhishthan Adhiniyam, 1962 (“UP S&E Act”). The amendment is deemed to have come into force with effect from November 19, 2025.
Key changes introduced under the amendment include the following:
i. Applicability threshold: Earlier, the UP S&E Act applied to shops and commercial establishments employing 10 or more employees. The amendment revises this threshold and now exempts establishments employing less than 20 employees, thereby limiting the applicability of the UP S&E Act to establishments employing 20 or more employees.
ii. Expanded definition of “commercial establishment”: The definition of “commercial establishment” has been broadened to expressly include professional service establishments, such as those of medical practitioners, consultants, service providers, platform-based service establishments, and delivery service establishments, which were not expressly covered earlier.
iii. Working hours, spread over and overtime: Earlier, the UP S&E Act permitted a weekly working limit of 48 hours, a maximum spread-over of 12 hours per day, and allowed overtime up to 125 hours in a quarter. The amendment has increased the daily working hour limit to 9 hours while retaining the 48-hour weekly limit. The maximum daily spread-over has been reduced to 11 hours (except on days of stock-taking or preparation of accounts), and the permissible overtime limit has been increased to 144 hours in a quarter.
iv. Mandatory registration through the web portal: The amendment now mandates online registration within 6 months of commencement for shops and commercial establishments employing 20 or more employees, with a provision for automatic registration upon submission of complete details.
v. Women working during night shifts: While earlier restrictions applied in engaging women employees during the night shift, the amendment permits women employees to work during night hours between 7:00 p.m. and 6:00 a.m., subject to consent and prescribed safety conditions, including transportation, rest rooms, and other protective measures.
vi. Additional employer welfare obligations: The amendment introduces new statutory obligations on employers, including:
- Mandatory provision of adequate sitting arrangements for employees working in a standing position; and
- Issuance of a formal appointment letter to every employee at the time of appointment, detailing prescribed particulars such as designation, father’s name, wages/salary, nature of work, Aadhar number and other employment details. This requirement did not exist earlier under the UP S&E Act.
vii. Revised inspection mechanism: The amendment requires inspectors to issue a written improvement notice of 15 days before initiating prosecution for specified violations, except in cases of repeat offences within a prescribed period.
viii. Revised penalty framework: Earlier fines were nominal (up to INR 100 for first offences). The amendment increases penalties to up to INR 2,000 for the first offence and up to INR 10,000 for subsequent offences.
4. The Government of Karnataka notifies the rate of welfare fee to be collected from the Platforms or Aggregators for Social Security of gig workers
In order to extend social security benefits to the gig and platform workers and to raise fees to fund the social security schemes under the Karnataka Platform Based Gig Workers (Social Security and Welfare) Act, 2025, the Government of Karnataka notified the rates at which the welfare fees should be paid by platforms or aggregators on February 13, 2026.
Welfare fees shall be 1% of the transaction value, subject to vehicle‑wise caps ranging from INR 0.50 to INR 1.50, across ride‑hailing, food/grocery delivery, logistics, e‑marketplace, and professional service platforms. Welfare fees are levied on the final payouts made to the gig workers for each transaction that they carry out.
All payments must be reported on a per-transaction basis, with details including but not limited to each payment made to gig workers and the corresponding welfare fee deduction submitted to the Payment and Welfare Fee Verification System, as and when it is operationalised by the government. However, for the time being, the platforms and aggregators are allowed to self-report by providing the details of the payment made to their gig workers for each quarter. Each platform and aggregator shall, within 5 working days from the end of each quarter, calculate, self-declare, and pay the Welfare Fee (excluding only the settled fees such as tips, ex-gratia, incentives, etc.).
5. The Government of Gujarat has published the Code on Social Security (Gujarat) (Amendment) Rules, 2026
The Government of Gujarat has published the Code on Social Security (Gujarat) (Amendment) Rules, 2026 on February 13, 2026 ("Amendment").The Amendment has introduced significant changes to the state's social security framework under the Code on Social Security (Gujarat) Rules, 2023.
The key highlights of the Amendment are as follows:
- Change in the eligibility of gratuity for fixed-term employee: Aligning with the central rules, the fixed term employees shall be eligible for gratuity, if such employees complete a continuous period of service of 1 year under the fixed-term employment contract.
- Substitution of Rule 14 with the provisions on deposit of funeral expenses: The employer shall in addition to the compensation, within 48 hours of the death of an employee, deposit a sum of INR 15,000/- or any higher amount prescribed by the Central Government from time to time to the authority towards funeral expenses (excluding transportation charges of the body of the deceased employee). The amount shall be payable to the eldest surviving dependent of the deceased employee, or in the absence of any dependent, to the person who actually incurred the funeral expenses.
- Change in Form IV on nomination for gratuity: The revised Form IV now mandates the inclusion of a witness declaration, requiring witnesses to provide their signature, place of signing, and date, thereby strengthening the evidentiary value of gratuity nominations.
(II) ANTI-BRIBERY AND ANTI-CORRUPTION UPDATES
A. UK SERIOUS FRAUD OFFICE ISSUES INDEPENDENT REVIEW REPORT ON ELECTRONIC DISCLOSURE FAILURES[ 1]
The UK Serious Fraud Office (“SFO”) has published an update on its independent review concerning the handling of electronic disclosure in the wake of the collapse of the trial in R v Akle and Bond. The review was commissioned following serious deficiencies in the management and processing of digital evidence during the investigation, which ultimately led to the termination of the prosecution.
The report identifies systemic shortcomings in the SFO’s e-discovery framework, including weaknesses in data handling processes, oversight mechanisms, and the technological infrastructure deployed for large-scale digital disclosure exercises. Particular emphasis has been placed on failures in quality control, insufficient legal supervision over disclosure decisions, and limitations in the digital review tools used to process substantial volumes of electronic material.
In response, the SFO has committed to strengthening governance protocols, enhancing technological capabilities for digital evidence review, improving training for case teams, and reinforcing senior legal oversight in disclosure-intensive investigations.
B. A FORMER U.S. EXECUTIVE HELD FOR BRIBING EGYPTIAN GOVERNMENT OFFICIALS TO SECURE CONTRACTS FOR CORSA [2]
In a typical U.S. Foreign Corrupt Practices Act (“FCPA”) violation, a federal jury in Pennsylvania, on February 18, 2026, held a former executive, Charles Hunter Hobson (“Charles Hunter”), Vice President of Corsa Coal Corporation (“Corsa”), for conspiring and paying bribes to Egyptian government officials to obtain approx. 140 million dollars sales contract with AL Nasr Company, a state-owned and controlled chemical manufacturing entity in Egypt.
From 2016 to 2020, under a multi-year bribery scheme, Charles Hunter, through an intermediary in Egypt, who received a commission of more than USD 4.8 million, paid bribes to the Egyptian officials as part of a sales commission. In exchange for this, Charles Hunter secretly received a kickback payment worth over USD 200,000.
On conviction, Charles Hunter, will face a maximum penalty of 20 years in prison for his involvement in conspiracy, money laundering, and conspiracy to commit wire fraud, among others.
In March 2023, Corsa’s former executive, Frederick Cushmore Jr., pleaded guilty to his involvement in the related bribery scheme and is awaiting sentencing. Consequently, the Department of Justice (“DoJ”) declined to prosecute Corsa despite its employee’s direct involvement, citing voluntary self-disclosure of misconduct, full cooperation and remediation as the reason. However, Corsa had to disgorge the profits in accordance with the Criminal Division’s Corporate Enforcement and Voluntary-Disclosure Policy. This declination by the DoJ underscores the importance of timely mitigation measures and transparent disclosures by corporations.
C. A FORMER NATO OFFICIAL AND A TURKISH CONTRACTOR INDICTED FOR A YEARLONG BRIBERY SCHEME RELATED TO MILITARY CONSTRUCTION CONTRACT [3]
Bahadir was the owner and General Manager of a construction company in Turkey, whereas Ralf was a former procurement official with NATO. Bahadir has been charged with bribing Ralf with money and other non-monetary benefits, in exchange for: (i) favourable treatment to help receive NATO’s construction contracts; (ii) leaking confidential information related to bids for contracts with NATO; and (iii) conducting false evaluations on the performance of Bahadir’s company to obtain contracts with the U.S. military.
The DoJ has charged Bahadir and Ralf with one count of conspiracy to commit wire fraud and four counts of committing wire fraud. Following the conviction, each may face a maximum sentence of 20 years in prison.
D. THE ADANIS TO FILE A RESPONSE OR MOTION WITHIN 90 DAYS FROM THE DATE OF FEDERAL COURT’S ORDER IN RELATION TO A CIVIL FRAUD CASE [4]
On January 30, the federal court in Brooklyn, New York, by order, approved an agreement between the U.S. based lawyers representing Gautam Adani and his nephew Sagar Adani (“Adanis”), and the US Securities and Exchange Commission (“SEC”). Consequently, the SEC is allowed to serve the legal papers on the Adanis without requiring the federal court to rule on how the Adanis are to be served, as they reside in India, making it procedurally difficult for the SEC to serve in relation to a civil fraud suit.
Pursuant to the agreement, the Adanis will file their response in accordance with Rule 12(a) of the Federal Rules of Civil Procedure (“Civil Procedure”) or file their motions to dismiss the complaint filed by the SEC, in accordance with Rule 12(b) of the Civil Procedure, within 90 days from the date of the order.
As a background, on November 20, 2024, the SEC filed a civil fraud lawsuit against Adani for violating U.S. securities law by allegedly paying bribes worth millions of dollars to Indian government officials to obtain solar energy contracts for Adani Green Energy. However, the SEC has been facing difficulties in serving the Adanis, who reside in India, and to remove the procedural difficulties, the SEC filed a motion on January 21, 2026, seeking permission to bypass authorities and directly serve the legal papers or summons to the Adanis either through email or their US-based lawyers.
(III) JUDICIAL DEVELOPMENTS
| S. No. | Ratio | Brief Details |
| 1. | A bench comprising the Chief Justice of the Supreme Court (“SC”) has directed a high-level constitutional bench to revisit the scope of “industry” under Section 2(j) of the Industrial Disputes Act, 1947 (“IDA”), and to examine the correctness of the seven-judge bench decision in Bangalore Water Supply and Sewerage Board Vs. A. Rajappa and Ors, 1978 (“Bangalore Water Supply”), which widened the definition of “industry” to include large number of institutions and its employees within the ambit of IDA. The hearing is scheduled to commence on March 17, 2026 and conclude on March 18, 2026. | The Bangalore Water Supply case had expanded the scope of "industry" to include institutions such as hospitals, educational establishments, and clubs, thereby providing employees of these establishments with labour protection under the IDA. On May 05, 2005, a five-judge bench of the SC in the State of Uttar Pradesh vs. Jai Bir Singh (“Jai Bir Singh”), referred the matter to the larger constitutional bench to decide on the scope of the “industry”. The court observed that: “In construing the definition clause and determining its ambit, one has not to lose sight of the fact that in activities like hospitals and education, concepts like right of the workers to go on 'strike' or the employer's right to 'close down' and 'lay off' are not contemplated because they are services in which the motto is 'service to the community'. If the patients or students are to be left to the mercy of the employer and employees exercising their rights at will, the very purpose of the service activity would be frustrated”. Again, on February 02, 2017, a seven-judge bench reconvened in the Jai Bir Singh, opined that the question on the scope of “industry” be placed before the nine-judges bench led by the Chief Justice of India. Now, the nine-judge bench of the SC will examine and/or determine the following, among others:
|
| 2. | If the principal employer intends to employ regular workmen for the work previously done by contract labour, they must give preference to the erstwhile contract labourers. The principal employer cannot simply hire fresh candidates from the open market while ignoring the displaced contract workers. They are legally bound to consider the contract workers who were working in that establishment. M/s Premium Transmission Private Limited Vs. Kishan Subhash Rathod and Others, 2026 INC 87. | Premium Transmission Private Limited (“Premium Ltd”) had availed the services of contract labourers for a decade. Later, when the contract labour apprehended termination of their employment, they approached a conciliation officer. Represented by the Aurangabad Mazdoor Union (“Mazdoor Union”), the contract labourers alleged that the arrangement between Premium Ltd and the contract labour was a sham and was a way to avoid employment obligations by the company. The Mazdoor Union claimed that the contract labour were direct employees performing perennial work, and sought regularisation back wages, and other statutory benefits. The conciliation failed and the dispute was referred to the Industrial Court, Aurangabad, for adjudication. However, during the reference, the contract labourers were removed from the service, which the Mazdoor Union claimed to be a violation of Section 33(1) of the IDA. The Industrial Tribunal agreed with the contract labourers’ claim of regularisation or services and passed an order directing Premium Ltd to provide work and pay wages to the contract labourers. Aggrieved by the order, Premium Ltd approached the Bombay High Court, claiming that there is no employer-employee relationship between Premium Ltd and the contract labour, and hence, Section 33(1) cannot be invoked. The High Court dismissed the petition while affirming the order of the Industrial Tribunal, leading to an appeal before the SC. The SC drew two main issues: (i) whether the protection under Section 33(1) is provided when the employer-employee relationship is already adjudicated; and (ii) what remedies are available to the displaced contract labour upon a valid discontinuation of contracts. The SC held that to invoke the protection under Section 33(1) of the IDA, there has to be a pre-existing employer-employee relationship. The SC further observed that where it is proven that the contract is a sham, the workers will be entitled to regularisation, back wages and other consequential benefits. Conversely, where the contract is found to be valid, and the term of service is discontinued, the contract labourers are entitled to preferential consideration for re-employment when the employer decides to hire regular workers for the same work previously carried out by contract labourers. |
| 3. | The penalty which is imposed upon the employer under Section 4-A(3)(b) of the Employees Compensation Act, 1923 (“EC Act”) is not to be indemnified by the insured-employer. The insurance company shall compensate the insured-employer for the principal amount of compensation as well as interest thereon, however, in case of any additional amount of compensation is awarded by the commissioner by way of penalty, the same would be the liability of the insured-employer alone and not of the insurer. New India Assurance Co. Ltd. Vs. Rekha Chaudhary and Ors, Civil Appeal No. 174 of 2026. | On February 13, 2017, while driving the vehicle of the employer, the driver, Mr. Sandeep died. The legal heirs of Mr. Sandeep preferred claim of compensation under the EC Act before the Labour Commissioner. Pursuant to the claim, the Labour Commissioner held that there existed an employer-employee relationship between the deceased and the employer, and since the death occurred during and in the course of employment, the employer was liable to pay compensation to the legal heirs and ordered payment of compensation under the EC Act. However, when the employer failed to pay the compensation under the EC Act within the prescribed timeline, without providing a justification for such delay, the Commissioner imposed a penalty of 35% (thirty-five percent) upon the employer, in accordance with Section 4-A(3)(b) of the EC Act. The employer approached the Delhi High Court, challenging the order of imposing a primary liability of paying the compensation, including the interest and the penalty, on the employer and not the insurer. The Delhi High Court, set aside the aforementioned order of the Commissioner to the extent of imposing primary liability on the employer and assigned the liability to the insurer. Aggrieved by the order of the Delhi High Court, the insurer approached the SC. While the insurer admitted its liability for paying the accident compensation including the interest, the insurer challenged his liability towards the penalty imposed by the Commissioner, which was a result of the employer’s fault. The SC upheld the claim of the insurer, and further clarified that, Section 4-A (3) of EC Act, obligated the “employer” to make payment within a prescribed timeline, failing which would attract a penalty under the EC Act. The SC further held that where there is a valid insurance, the insured-employer would be entitled for indemnification from the insurer towards the payment of compensation including the amount of interest payable. However, such an indemnification claim would not cover the penalty, which is imposed on the “employer” for the non-compliance with the EC Act. |
| HIGH COURTS | ||
| 4. | Once the domestic enquiry is upheld and misconduct stands proved, modification of punishment under Section 11-A of IDA is allowed only when there is a clear finding that such punishment is shockingly disproportionate to the gravity of misconduct or that legally relevant circumstances exist. Delhi Transport Corporation Vs. Ram Dhari Singh, W.P.(C) 6398/2017 and CM Appl. 26448/2017. | Shri Ram Dhari Singh (“Ram Dhari”) was appointed as a conductor on permanent post with the Delhi Transport Corporation (“DTC”) in the year 1985. A charge-sheet was issued to Ram Dhari for being unauthorizedly absent on various occasions and he was directed to either report to DTC for duty or, in case of illness, to appear before the DTC Medical Board for medical examination. However, Ram Dhari allegedly neither reported for duty nor appeared before the medical board, resulting in a disciplinary inquiry against him. During the enquiry, while Ram Dhari admitted his unauthorised absence from the duty, in his defence, he stated that he could not report to duty on account of illness. DTC had alleged that Ram Dhari had been subjected to several punishments in the past on account of multiple instances of unauthorised absences. Consequently, a penalty of removal from services was imposed. Aggrieved by the order of removal, Ram Dhari raised an industrial dispute, following which the appropriate government referred the dispute for adjudication before the Labour Court. While the Labour Court affirmed the decision of the Disciplinary Authority, it modified the punishment on account of Ram Dhari’s length of service DTC approached the Delhi High Court challenging the order of the Labour Court. The Delhi High Court held that once the domestic enquiry has been upheld and the misconduct stands proved along with adverse past record, the Labour Court can modify the punishment only when there is a clear finding that such punishment is shockingly disproportionate to the gravity of misconduct or that legally relevant circumstances exist. The court held that, sympathy, length of service or benevolent considerations cannot be a reason for modification of punishment under Section 11-A of IDA. |
| 5. | Abandonment cannot be presumed and must be proved by cogent evidence. When an employer alleges misconduct, or unauthorized absence on the part of the workman, then it is incumbent upon the employer to initiate a proper departmental inquiry and then proceed with the termination process in accordance with the law. Sanjay Printers and Publishers Pvt Ltd, Vs. Sh. Suresh Kumar, W.P.(C) 1480/2019 & CM Appls.40302/2019, 47482/2019. | Mr. Suresh Kumar (“Mr. Suresh”) was appointed as a Senior Machine Operator by Sanjay Printers and Publishers Pvt Ltd (“Sanjay Printers”). Mr. Suresh alleged that his services were illegally terminated on August 13, 2015. Sanjay Printers, in its defence, alleged that Mr. Suresh abandoned his job when his demand for a loan of INR 1,00,000/- was denied by the management, and also that in the past the management had extended a loan of INR 50,000/- to Mr. Suresh. However, no evidence supporting such an allegation was produced by Sanjay Printers. The Labour Court had rendered the termination as illegal and arbitrary, thereby directing Sanjay Printers to reinstate Mr. Suresh to his services with full back wages. The Delhi High Court observed that it is settled that when an employer alleges misconduct or unauthorized absence on the part of a worker, then it is required that the employer initiate a proper departmental inquiry and then subsequently proceed with terminating such worker in accordance with the law. Additionally, abandonment cannot be presumed and must be proved by cogent evidence. The High Court relied on the view adopted in G.T. Lad vs. Chemicals & Fibres of India Ltd, 1979, 1 SCC 590, wherein it was held that: “Abandonment or relinquishment of service is always a question of intention, and normally, such an intention cannot be attributed to an employee without adequate evidence in that behalf. Thus, whether there has been a voluntary abandonment of service or not is a question of fact which has to be determined in the light of the surrounding circumstances of each case.” |
| 6. | In the absence of a violation of any notice conditions or conditions stipulated in the contract of employment, or when no disciplinary proceeding is pending against the employee, the employer cannot desist from accepting employee’s resignation. Greevas Job Panakkal vs. Traco Cable Company Limited., 2026 SCC OnLine Ker 2210 | On May 07, 2012, Greevas Job Panakkal (“Mr. Panakkal”) joined Traco Cable Company Limited (“Traco Ltd.”) as a Company Secretary. Due to a consistent default in payment of salary by Traco Ltd., Mr. Panakkal submitted his resignation on March 18, 2024. However, Traco Ltd. through its board meeting rejected the resignation, stating it to be unfair given that the company is experiencing financial difficulty. Subsequent to a repeated request for accepting his resignation, the management again declined his request and directed him to report for duty, thereby leading him to file a writ petition before the Kerala High Court (“Petition-1”). During the pendency of the Petition-1, Traco Ltd. issued a memo dated March 17, 2025, to Panakkal, requiring him to show-cause as to why he has unauthorisedly retained the company’s laptop. Aggrieved by such allegation, Mr. Panakkal filed another writ petition before the Kerala High Court seeking to quash the aforementioned memo (“Petition-2”). With respect to Petition 1, Traco Ltd. filed a statement stating that it has been struggling financially since October 2022 and since Mr. Panakkal has played an important role as a key advisor to the Managing Director, his presence is essential to the company. In relation to the Petition-2, Traco Ltd. filed a counter affidavit, stating that Mr. Panakkal was repeatedly requested to report back to duty, including surrendering the company issued laptop and SIM card. The Kerala High Court observed that, it is the employer’s duty to accept resignations from its employees, except when:
In the absence of the above, if the employer refuses to accept the resignation, it will amount to bonded labour prohibited under Article 23 of the Constitution of India. The Kerala High Court held that financial distress cannot be a reason to force an employee to work against his will and consent. Further, the disciplinary proceedings against Mr. Panakkal can only be seen as an attempt to violate his right to resign from service, and hence, directed Traco Ltd. to accept the resignation and relieve the employee |
