Employment Newsletter September - October 2025
Legal updates
Central
The Ministry of Labour and Employment announced the Employees' Enrolment Campaign 2025 to expand social security coverage for employees
On October 13, 2025, the Ministry of Labour and Employment (“MoLE”) announced the Employees' Enrolment Scheme, 2025 (“EES 2025”), which aims at expanding social security coverage under the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 (“EPF Act”).
The EES 2025 is operational for a 6-month period from November 1, 2025, to April 30, 2026, offering employers to voluntarily enrol eligible employees who joined between July 1, 2017, and October 31, 2025, and to regularise their past non-compliances under the EPF Act.
The EES 2025 offers substantial employer benefits, including a complete waiver of employees' past contribution share (if not already deducted) and protection to employers from compliance actions related to employees who have already left the organisation. For employees enrolled under the EES 2025, employers need to remit only their share of contribution along with interest under Section 7Q of the EPF Act, administrative charges and a nominal penalty of INR 100. Additionally, establishments currently under inquiry, under Section 7A, Para 26B, or Para 8 of the Employees’ Pension Scheme, 1995 (“EPS”), are also eligible to participate, with damages notionally capped at INR 100.
The Employees' Provident Fund Organisation issues a circular requiring employers to display ownership details
The MoLE, through the Employees' Provident Fund Organisation (“EPFO”), issued a circular (“Circular”) on October 7, 2025, directing employers to display an extract of Form 5A (Return of the ownership) at the entrance of the establishment or on the website along with the mobile application of the establishments.
Form 5A is normally submitted to the EPFO at the time the employer is covered under the EPF Act for the first time. This form shows owners/partners or directors of the company who are responsible for the conduct of the business of the company.
The display should include the following details:
- EPF Code
- Registered name of the establishment
- Date of coverage
- Primary branch address
- No. of branches
- Regional office
Compliance with this Circular is mandatory within 15 days of issuance, failing which legal action may be initiated under the EPF Act.
Amendment to the Apprenticeship Rules, 1992
The Ministry of Skill Development and Entrepreneurship, on September 3, 2025, introduced significant amendments to the Apprenticeship Rules, 1992 (“Amendment”), effective from September 11, 2025. These changes aim to modernise India's apprenticeship framework to better align with industry requirements and educational integration.
A key highlight of the Amendment is the introduction of "degree apprenticeship," which is defined as a course with an integrated apprenticeship component in its curriculum. Institutions offering approved degree or diploma courses are now formally recognised as partners in this model, thereby establishing a tripartite structure involving the employer, apprentice and institution.
The Amendment now allows employers to reallocate unfilled reserved positions to other categories of apprentices with the approval of the Apprenticeship Adviser.
The Amendment has also mandated reservation of training slots for persons with benchmark disabilities, as per the Rights of Persons with Disabilities Act, 2016.
The Amendment has increased minimum stipend rates across all categories, enhancing financial support for apprentices. The establishments can deploy a major apprentice at a client location, wherein employers are required to pay at least double the amount of the minimum stipend and cover expenses such as visa, travel and accommodation.
Draft Factory Safety and Welfare Rules under the Occupational Safety, Health and Working Conditions Code, 2020
The MoLE on September 22, 2025, issued a comprehensive draft of rules (“Draft Rules”) under Sections 23 and 24 of the Occupational Safety, Health and Working Conditions Code, 2020 (“OSH Code”), focusing on factory workers' welfare. The Draft Rules are open for public consultation for 45 days, aiming to establish standardised safety, health, and welfare measures for workers across all factories in India.
Key provisions:
- Workplace environment: The Draft Rules mandate clean, sanitary workplaces with proper ventilation, temperature control, and protection against dust and harmful substances.
- Heat protection: The Draft Rules require risk assessment for extreme heat conditions, with provisions for shaded rest areas and hydration stations.
- Basic facilities: It stipulates clean drinking water access, gender-separated toilet facilities, adequate washing areas, and proper waste management systems.
- Canteens: Factories with 100 or more workers are required to provide canteens on a non-profit basis.
- Medical support: The Draft Rules mandate first aid boxes with trained personnel in each department. Additionally, factories with 500 or more workers must provide ambulance rooms/dispensaries with specified equipment.
- Welfare officers: Factories with 250 or more workers must appoint welfare officers to facilitate management-worker relations and ensure compliance with statutory obligations.
- Creche facilities: Factories with 50 or more workers must provide free, accessible crèches for children under 6 years, with qualified supervision, CCTV monitoring, and strict safety protocols.
State
Maharashtra amends Shops and Establishments Act to increase registration threshold, working hours and overtime limits.
Maharashtra has promulgated the Maharashtra Shops and Establishments (Regulation of Employment and Conditions of Service) (Amendment) Ordinance, 2025 (“Ordinance”) on October 1, 2025. The Ordinance came into effect immediately on October 1, 2025, and will remain in force for 6 weeks from the date of reassembly of the State Legislature.
Key amendments include:
- Threshold for registration: The requirement for mandatory registration has been increased from 10 or more employees to 20 or more employees. Establishments employing fewer than 20 employees are only required to provide an intimation to the Facilitator. Establishments with fewer than 20 workers will no longer need a registration certificate from the Facilitator, but they will only need to provide an intimation of their business.
- Extended working hours: The daily maximum working hours have been increased from 9 hours to 10 hours per day (inclusive of rest intervals), subject to a maximum of 48 hours per week.
- Rest interval: The maximum continuous number of working hours without an interval has been increased from 5 hours to 6 hours in a day.
- Increased spread over: The maximum spread over period has been extended from 10.5 hours to 12 hours per day.
- Revised overtime limits: The quarterly overtime limit has been raised from 125 hours to 144 hours.
The Ordinance has been introduced to promote economic growth in the State by enabling ease of doing business in the State and economic growth initiatives in the State, by reducing compliance burdens on smaller establishments.
Gujarat Strengthens Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 compliance following Supreme Court directions
Flowing from the Supreme Court of India's landmark directions in the case Aureliano Fernandes vs. State of Goa1and as seen in Delhi, Maharashtra and Rajasthan, Gujarat has enhanced implementation compliance of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 (“POSH Act”) through the notification dated September 15, 2025 (“Notification”). Every organisation (both public and private) with 10 or more employees are required to mandatorily register on the SHe-Box Portal and upload the details of the Internal Committee ("IC") on the portal.
The Notification directs District Officers appointed under the POSH Act to assist in survey work by collecting information about shops, commercial establishments under municipalities and municipal corporations with 10 or more workers, and factories registered with the Director of Industrial Safety and Health. Each district's Assistant Labour Commissioner will handle this process and send consolidated reports through Deputy Labour Commissioners by September 30, 2025, creating a systematic monitoring framework.
Telangana exempts small shops and establishments from compliance requirements under the Telangana Shops and Establishments Act, 1988
Telangana issued a notification on September 23, 2025, granting exemptions to establishments employing up to 10 employees from the applicability of the Telangana Shops and Establishments Act, 1988, as a part of ease of doing business reform.
This reform aligns with the Government of India’s deregulation and compliance reduction initiative aimed at supporting Micro, Small and Medium Enterprises.
While most provisions such as maintenance of registers and records, restrictions relating to opening and closing hours, regulatory procedures related to inspection and others have been exempted for establishments with up to 10 employees, certain provisions relating to registration (Sections 3-6), daily and weekly hours and rest intervals (Sections 9, 11, 16-18), holidays and leave including maternity leave (Sections 12, 19, 24, 30-31), wages and overtime (Sections 37-38), employment security and termination conditions (Sections 47-49), and dispute resolution mechanisms (Sections 50-56) continue to apply.
Kerala introduces the Right to Disconnect Bill, 2025
The Kerala Legislative Assembly introduced the Kerala Right to Disconnect Bill, 2025 (“RTD Bill”) on October 3, 2025, to grant private sector employees the right to disengage from work-related communication after official working hours without facing adverse consequences from employers. This is not yet implemented.
The key provisions of the RTD Bill include:
- Scope of the right: Employees may refrain from responding to calls, emails, messages, or attending online meetings beyond designated working hours unless previously agreed with the employer. Employers are prohibited from imposing any disciplinary or punitive measures, including termination, against employees exercising this right.
- Grievance redressal mechanism: A Private Sector Workplace Grievance Redressal Committee (“Committee”) must be established in each district, chaired by the Regional Joint Labour Commissioner, to monitor compliance, investigate complaints of excessive working hours or unrealistic targets, and issue directions to promote work-life balance. The Committee may inspect establishments, collect evidence and recommend action against violators.
- Enforcement and penalties: Non-compliance with the RTD Bill or the Committee’s directions may lead to investigation by the State Labour Commissioner, followed by appropriate penal action after due process.
- Protection of rights: The RTD Bill operates in addition to existing labour laws, ensuring that current employee protections remain unaffected.
The RTD Bill addresses the growing challenges of digital work culture post-pandemic, where constant connectivity has blurred boundaries between work and personal life, causing stress and health issues. Drawing from Article 24 of the Universal Declaration of Human Rights, it upholds the right to rest and leisure by ensuring employees’ ability to disconnect from work, marking a progressive step towards employee welfare and work-life balance in Kerala’s private sector.
Karnataka government notifies the Platform Based Gig Workers (Social Security and Welfare) Act, 2025
On September 12, 2025, Karnataka notified the Karnataka Platform Based Gig Workers (Social Security and Welfare) Act, 2025 (“Gig Workers Act”), deemed effective from May 30, 2025. The Gig Workers Act applies to aggregators and platforms operating in Karnataka that provide services such as ride sharing, delivery, logistics, e-marketplaces, healthcare, travel, and digital content.
Salient features of the Gig Workers Act are:
- Establishment of Welfare Board and Fund: Establishment of a Karnataka platform-based Gig Workers Welfare Board (“Board”) and a Social Security and Welfare Fund (“Fund”) chaired by the Labour Minister and comprising of government officials. The Fund will be financed through welfare fees, worker contributions, government grants, and donations, with up to 5% allocated for administration expenses.
- Registration: Aggregators/platforms must register with the Board within 45 days of commencement of the Gig Workers Act (i.e., on or before July 14, 2025) and share gig worker databases while gig worker must be registered within 30 days of onboarding and issued a unique ID across platforms. Please refer to the attached link for further details on Aggregators and Platforms-here
- Welfare fee: Aggregators/platforms must contribute a welfare fee ranging from 1–5% of the worker payout. The quantum of the worker payout is to be notified by the State Government within 6 months from the commencement of the Gig Workers Act (i.e., by end of November 2025). This should be credited quarterly and treated as the total contribution under the Code on Social Security, 2020. These payments will be tracked through a verification system.
- Rights and protections: The Gig Workers Act mandates fair and transparent contracts, timely payments and 14 days’ notice for termination. The aggregators must ensure safe working conditions, non-discrimination in automated systems and disclosure of algorithmic parameters affecting work and earnings.
- Grievance redressal: A two-tier system grievance redressal mechanism enables workers to approach an Internal Dispute Resolution Committee (the proceedings should be completed within 14 days) and, if unresolved, the decision of the Board is final. Disputes against the Board may be appealed to an Appellate Authority which will be notified by the State Government.
- Compliance and penalties: Failure to pay welfare fees attracts 12% interest, with fines up to INR 5,000 for first offence and INR 1,00,000 for subsequent contraventions.
Madhya Pradesh amends the Madhya Pradesh Shops and Establishments Act, 1958 to increase overtime limits
Madhya Pradesh, through a notification dated September 11, 2025, amended the Madhya Pradesh Shops and Establishments Act, 1958 to increase the permissible limit on overtime hours for employees. The amendment raises the overtime limit from 6 hours per week (i.e., 72 hours per quarter) to 144 hours per quarter.
Karnataka exempts small establishments from the display of notices and maintenance of registers and records.
On September 10, 2025, Karnataka issued a notification proposing to amend (“Proposed Amendment”) the Karnataka Shops and Establishments Rules, 1963 (“Karnataka Rules”). Under the existing framework, all employers have to follow various documentation and display compliance, such as displaying a notice in Form ‘P’ of working days and weekly holidays, filing a combined Annual Return in Form 'U' and maintaining a combined Muster Roll-cum-Register of Wages in Form 'T'.
The Proposed Amendment exempts establishments having fewer than 10 employees from the above-mentioned compliances relating to the maintenance of registers and records and the display of notices.
The Proposed Amendment has not been implemented and will be taken into consideration after the expiry of 30 days from the date of publication.
Goa has notified the Goa Shops and Establishments (Regulation of Employment and Conditions of Service) Act, 2025
With the intent of modernising and replacing the Goa, Daman and Diu Shops and Establishments Act, 1973 (“1973 Act”), Goa has passed the Goa Shops and Establishments (Regulation of Employment and Conditions of Service) Act, 2025 (“GSEA”), which came into force on October 1, 2025.
The key highlights of GSEA include:
- Applicability: The registration threshold has increased from 10 to 20 workers. Establishments with fewer than 20 workers are only required to provide online intimation of commencement and closure.
- Working hours: Daily working hours have been increased from 8 to 10 hours, with a maximum of 48 hours per week.
- Overtime: Workers are entitled to overtime calculated at twice the rate of ordinary wages if the permissible working hours exceed the maximum permitted daily or weekly limit. However, if the normal working day is 10 hours per day, overtime applies only when exceeding 48 hours per week. Additionally, the GSEA has introduced a cap on total overtime at 144 hours per quarter.
- Holiday and leave entitlements: The workers under the GSEA are now entitled to 9 public holidays annually (instead of 7 public holidays as stipulated in the 1973 Act). Leave entitlement under GSEA remains aligned with the 1973 Act.
- Automatic registration: Under the GSEA, establishments are deemed registered if the Facilitator-cum-Inspector fails to act within 7 working days of receiving a complete application for registration in the prescribed format.
- 24/7 operations: Establishments can now remain open 24 hours a day, the entire week, provided every worker receives at least 24 hours of consecutive rest.
- Women’s working hours: Women workers are now allowed to work between 7:30 p.m. and 7:00 a.m. if the establishment provides adequate safety measures such as shelter, safe transport from the establishment to their residence, protection from sexual harassment and other security measures, subject to the woman worker’s written consent.
- Digitisation of records: Employers are required to maintain registers, issue appointment letters and ID cards, submit annual returns and changes through digital platforms. This is a move towards modernising the documentation and record-keeping.
Factories Act amendments- Haryana, Andhra Pradesh and Telangana and Maharashtra
Haryana
Haryana, on October 13, 2025, exempted factories from the provisions relating to intervals of rest and working hours for adults under the Factories Act, 1948 (“Factories Act”), in order to promote ease of doing business and the business reform action plan.
The exemptions are subject to specific conditions under the Factories Act:
- The permissible working hours cannot exceed 12 hours per day;
- The spread over period, including intervals, should not exceed 13 hours on any day;
- The maximum working hours in a week (including overtime) should not exceed 60 hours; and
- No worker is permitted to work overtime for more than 7 consecutive days, and the total overtime hours cannot exceed 75 hours in any quarter.
These exemptions are handled via the Haryana Labour Department portal, eliminating the need for manual approvals. Applicants are required to self-certify this compliance to avail the above-mentioned exemption.
Andhra Pradesh and Telangana
To promote employment opportunities for women workers and to eliminate gender discrimination, both the Government of Andhra Pradesh (by amendment to the Andhra Pradesh Factories Rules, 1950) and the Government of Telangana (by amendment to the Telangana Factories Rules, 1950), through a notification dated September 13, 2025, have introduced progressive amendments to their respective factory regulations. Both State Governments have permitted the employment of women workers in operations classified as ‘dangerous’ under the Factories Act.
While these amendments represent a significant step towards gender equality in industrial employment, critical safety measures remain in place. Pregnant and lactating women continue to be prohibited from engaging in such operations to ensure their health and safety.
Maharashtra
Maharashtra, through the Maharashtra Factories (Second Amendment) Rules, 2025 (“Mah Amendment”), has amended the Maharashtra Factories Rules, 1963, effective from October 3, 2025. The Mah Amendment aims to promote digitisation, modernise regulatory compliance and enhance workplace safety standards.
Key amendments include:
- Digitisation and streamlined compliance: The Mah Amendment mandates electronic submission of Form 1 (applications for factory construction, extensions, registration, licenses, and notices) and Form 4 (license grants and renewals). Triplicate submission of forms has been omitted.
- Mandatory health surveillance: Employers must arrange annual medical examinations, free of cost, for all workers aged 45 and above.
- Safety measures for women working in night shifts: Employers are required to provide safety measures for women workers working in the night shift (i.e., 7:00 p.m. to 6:00 a.m.) such as transportation facilities, at least 2 women workers on duty at any location, bi-monthly grievance meetings, written consent of women workers preserved for 3 years and CCTV surveillance with 45 day recording retention.
- Employment of women in dangerous operations: Women workers are allowed to work operations classified as ‘dangerous’ with a specific restriction that pregnant and lactating mothers must not be engaged in such operations.
Anti-Bribery and Anti-Corruption Updates
UK’s Serious Fraud Office achieves first Unexplained Wealth Order recovery2
The UK’s Serious Fraud Office secured GBP 1.1 million from the sale of a Lake District property in October 2025, marking its first successful deployment of an Unexplained Wealth Order (“UWO”). The recovered funds stem from an ongoing investigation into convicted fraudster Timothy Schools and his associates.
The property, a 5-bedroom house called 'Hope Springs House' with an additional two-bedroom lodge, was owned by Claire Schools, Timothy Schools's ex-wife. Investigators traced the purchase to proceeds from Schools's multi-million-pound investment fraud scheme, which targeted no-win, no-fee law firms. Timothy Schools was convicted in 2022 and sentenced to 14 years in prison after diverting over GBP 19 million in criminal benefits through the fraudulent scheme.
Following his conviction, Timothy Schools conceded that he had transferred GBP 1,083,067 in proceeds of crime to others, primarily family members. The High Court granted the UWO in January 2025, and Claire Schools subsequently sold the property in April, resulting in the GBP 1.1 million recovery.
The following are the key features of UWOs3:
- UWOs became effective on January 31, 2018, under the Criminal Finances Act 2017, requiring individuals and corporate bodies to explain how they lawfully acquired property.
- The UK High Court may grant a UWO without notice if satisfied that the known income of the property holder would have been insufficient for its lawful acquisition.
- UWOs apply to politically exposed persons (including family members or associates) and persons where there are reasonable grounds to suspect involvement in serious crime, including fraud, money laundering, tax evasion, sanctions offences, or bribery and corruption.
- The value of the property interest must exceed GBP 50,000, and the definition encompasses real estate, jets, boats, motor vehicles, artwork, jewellery, and intangible assets such as securities and bonds.
- Failure to respond may lead to civil recovery of the property, while false or misleading statements can result in up to 2 years' imprisonment, a fine, or both. A simultaneous freezing injunction may also be imposed, prohibiting the movement or sale of the property.
Judicial Updates
| SUPREME COURT | ||
| Sl. No. | Ratio | Brief details |
The employer-employee relationship requires examination of multiple factors, including control, supervision, payment method, and the nature of integration into the employer's business. Mere financial assistance or provision of infrastructure for running a canteen does not establish an employer-employee relationship.
General Manager, U.P. Cooperative Bank Ltd. v. Achchey Lal & Anr4.
| This case involved canteen workers at the U.P. Cooperative Bank Ltd.(“Bank”), whose services were terminated when the canteen was closed. The workers filed a case before the labour court, claiming they were employees of the Bank and that their termination was illegal. The Bank contested this, arguing the workers were employed by a cooperative society that ran the canteen, not by the Bank directly.
The labour court ruled in favour of the workers, finding they were Bank employees and ordering their reinstatement with back wages. The Bank challenged this order through the high court, which upheld the Labour Court's decision, prompting a final appeal to the Supreme Court (“SC”).
The high court had based its decision on several factors: 75% of the canteen workers' wages was borne by the Bank (although this was pursuant to the joint resolution between the Bank, cooperative society and employee union); the enhancement of the subsidy to the canteen by 30% by the Bank; and provision of free space, electricity, and other infrastructure for the canteen.
The SC examined the evolution of tests used to determine employer-employee relationships, including the control test, the integration test, and the multifactor test. The SC noted that the control test examines whether the employer has control over the work assigned and the manner of its execution, with later refinements suggesting that "sufficient degree of control" rather than "effective and absolute control" is the appropriate standard.
The SC also analysed the integration test (whether the worker is part of the organisation), economic reality test (economic control over workers), and the multiple factor test, which includes examining who is the appointing authority, who pays the salary, who can dismiss, and the extent of control and supervision.
In analysing previous judgments on canteen workers, the SC distinguished between statutory canteens (mandated by law), non-statutory recognised canteens, and non-statutory non-recognised canteens. The SC emphasised that each case must be decided on its specific facts rather than applying a general rule to all canteen employees.
The SC ultimately held that providing infrastructure and financial assistance alone does not establish an employer-employee relationship without sufficient control and supervision over the employees' work. The SC found that in this case, the Bank had merely provided space, subsidies, and partial wage reimbursement, but did not exercise the necessary control over the canteen workers to establish them as Bank employees. The SC set aside the award and high court judgment, effectively ruling that the termination of the canteen workers was not illegal as claimed. | |
A complaint of sexual harassment under the POSH Act must be filed within 3 months of the last incident of harassment. Subsequent administrative actions that are not directly linked to the alleged harassment cannot be treated as continuing harassment to extend the limitation period.
Vaneeta Patnaik v. Nirmal Kanti Chakrabarti & Ors.5 | This case involved Ms Vaneeta Patnaik, a faculty member of the West Bengal National University of Juridical Sciences (“NUJS”), who filed a complaint of sexual harassment against the Vice-Chancellor, Dr Nirmal Kanti Chakrabarti. The complaint was submitted to the Local Committee ("LC") on December 26, 2023.
The central legal issue was whether her complaint was time-barred under the POSH Act, considering that the last alleged incident of sexual harassment occurred in April 2023. The petitioner contended that subsequent administrative actions taken against her—including her removal from the position of Director of a centre at NUJS in August 2023 and the institution of an inquiry against her—were connected to the earlier sexual harassment and created a continuing hostile work environment, thereby extending the limitation period.
The case had a complex procedural history. Initially, a single judge of the high court had ruled in favour of the petitioner, finding that the complaint was within the limitation period by considering the subsequent administrative actions as part of a continuing pattern of harassment. However, this judgment was challenged before a division bench, which reversed the single judge's decision. The division bench held that the administrative actions taken after April 2023 were collective decisions of the executive council of NUJS, comprising eminent persons, and were not linked to the alleged sexual harassment. The division bench concluded that the complaint was time-barred as it was filed more than 3 months after the last incident of sexual harassment in April 2023, without any justifiable reason for the delay.
The SC examined the definition of 'sexual harassment' under Section 2(n) of the POSH Act and analysed what circumstances would constitute sexual harassment in relation to the limitation period provided for making complaints. The SC carefully considered whether administrative actions, such as removing the petitioner from a directorship position or initiating an inquiry against her, could be classified as sexual harassment or as creating a hostile work environment connected to earlier alleged harassment.
The SC agreed with the division bench's assessment that these administrative actions were separate from the alleged sexual harassment and were collective decisions of the executive council of NUJS rather than actions by the respondent alone. Consequently, the SC held that the complaint filed on December 26, 2023, was indeed time-barred as it was submitted more than 3 months after the last incident of sexual harassment in April 2023, without adequate justification for the delay.
However, despite dismissing the appeal on technical grounds of limitation, the SC recognised the gravity of sexual harassment allegations in academic institutions. In an unusual directive, the SC ordered that its judgment be made part of the Vice-Chancellor's resume, with strict compliance to be ensured by him personally.
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| HIGH COURTS | ||
Employees are entitled to exercise pension options within the window period granted by the SC in the EPFO and another v. Sunil Kumar B and Others6 case (“Sunil Kumar case”), even if they had not previously exercised their option under the pension scheme provisions.
D. Chandirasegar and Others v. Union of India and Others.7 | This case involved 6 writ petitions filed by 86 retired employees of Bharat Heavy Electronics Limited (“BHEL”), Trichy, challenging orders of the EPFO and a circular dated January 18, 2025, which denied them the option for a higher pension based on BHEL’s Trust Rules (“Trust Rules”).
The impugned circular clarified that for exempted establishments, eligibility for higher pension based on actual wages must be determined in accordance with their Trust Rules, and that Trust Rules could not be amended retrospectively to align with the SC's judgment in the Sunil Kumar case.
The petitioners had submitted joint option applications within the time limit fixed by the SC in the Sunil Kumar case and extended by the EPFO up to January 31, 2025. The EPFO contended that the petitioners had neither exercised their option under paragraph 11(3) nor under paragraph 11(4) of the EPS prior to their retirement, and therefore, were not entitled to the benefits under the SC's judgment. Additionally, the EPFO argued that the petitioners, being employees of an exempt establishment with its own Trust Rules limiting contributions to 8.33% of the statutory wage ceiling, could not seek higher pension contributions based on their actual salaries.
The Madras High Court examined the SC's judgments in R.C. Gupta v. Regional Provident Fund Commissioner8 (“R.C. Gupta”) and Sunil Kumar cases, which established key principles regarding pension options under the EPS. The R.C. Gupta judgment had held that there was no time limit for exercising an option under the unamended paragraph 11(3) of the EPS, a finding confirmed by the SC in the Sunil Kumar case. The Sunil Kumar case further clarified that even employees who had not exercised their option under the unamended provision could exercise a joint option under both provisions within the 4-month window period granted by the Court (later extended by the EPFO).
The Madras High Court's analysis focused on the status of BHEL as an exempt establishment under Section 17 of the EPF Act. The court emphasised that while BHEL had an exemption for its provident fund scheme, it was still governed by the statutory pension scheme. The court examined Rules 10 and 11 of the BHEL Trust Rules, which limited provident fund contributions to the statutory ceiling. However, the court found that these Trust Rules could not override the statutory pension scheme or the SC's interpretations of it, especially since BHEL was not exempted from pension scheme or the SC’s interpretations of it, especially since BHEL was not exempted from the pension scheme under Rule 39 of the EPS.
The court held that the circular dated January 18, 2025, was in violation of the SC’s order in the Sunil Kumar case and was liable to be set aside. The court ruled that conditions imposed while granting exemption to the provident fund scheme cannot be extended to deny benefits under the statutory pension scheme for which no exemption has been granted. The court further held that even if the Trust Rules prohibited higher contributions to the pension scheme, such a prohibition would constitute a contract in violation of statutory provisions and would be void.
The court also addressed practical concerns about employees who had already withdrawn their provident fund accumulations, ruling that they should be permitted to remit the differential contribution, along with interest, to access the higher pension benefits.
The court ordered the calculation of pensionable salary based on the petitioners' actual salaries, allowing them to remit the differential amount between the contribution already made and the contribution required on the actual salary, along with interest. The court directed that a higher pension should be paid from the month following the date of remittance of the differential amount. This judgment affirms the supremacy of statutory schemes over trust rules and reinforces employees' rights to exercise options for higher pension benefits within judicially extended timelines.
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Gratuity cannot be forfeited under Section 4(6)(b)(ii) of the Payment of Gratuity Act, 1972 (“Gratuity Act”) without a conviction by a court of competent jurisdiction establishing an offence involving moral turpitude; a statutory right to gratuity cannot be defeated by bank service regulations.
Smt. Babita Mor v. Central Madhya Pradesh Gramin Bank9 | The petitioner, Smt. Babita Mor filed a writ petition seeking payment of gratuity after her husband's dismissal for misconduct and subsequent death. The petitioner's husband had been dismissed from service for alleged misconduct involving defalcation of bank money, but criminal proceedings were not initiated against him. The employer, Central Madhya Pradesh Gramin Bank (“Bank”), relied on its service regulations to deny the petitioner gratuity, arguing that the regulations provided for forfeiture of gratuity in cases of dismissal for misconduct.
The Madhya Pradesh High Court examined Section 4(6) of the Gratuity Act, which allows forfeiture of gratuity only in 2 specific circumstances: (i) termination for any act, willful omission, or negligence causing damage or loss to the employer's property (limited to the extent of damage), and (ii) termination for an offense involving moral turpitude in the course of employment.
The court emphasised that for forfeiture under the second provision, there must be an act constituting an offence involving moral turpitude, and crucially, there must be a conviction by a court of competent jurisdiction establishing such an offence. The court held that, without a criminal conviction, there can be no presumption of a criminal offence involving moral turpitude. In this case, the petitioner's husband had been dealt with under the Bank's service regulations without being subjected to criminal prosecution, making the forfeiture of gratuity under Section 4(6)(b)(ii) of the Gratuity Act untenable.
The court rejected the Bank's argument that its service regulations could override the Gratuity Act. The court reaffirmed that the right to gratuity is a statutory right that accrues upon fulfilling the conditions outlined in the Gratuity Act and cannot be defeated by service rules or regulations. The court also observed that even if a proven case of financial loss to the Bank existed, gratuity could only be forfeited to the extent of the proven loss, not in its entirety.
The court directed the Bank to calculate and pay the full gratuity amount to the petitioner, along with 6% interest from the date of her husband's death, within 60 days.
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Termination of an employee based on a criminal conviction requires consideration of relevant factors, such as the nature and gravity of the offence, and does not mandate automatic removal. The principle of natural justice requires the recording of reasons for dispensing with an inquiry, even in cases of criminal conviction.
Shiv Raj v. Himachal Road Transport Corporation and Anr10
| The petitioner, Shiv Raj, challenged his removal from service at the Himachal Road Transport Corporation (“Corporation”), where he had worked for more than 28 years as a bus driver. He was convicted under Sections 279 and 304A of the Indian Penal Code, 1860, related to a vehicular accident while driving a Corporation bus in 2011. Based on this conviction, the Corporation removed him from service under Rule 19 of the Central Civil Services (Classification, Control and Appeal) Rules, 1965 (“Civil Services Rules”), which permits disciplinary action without inquiry when an employee is convicted of a criminal charge. The Corporation argued that Rule 19 empowered them to terminate an employee without inquiry if they were convicted of a crime.
The Himachal Pradesh High Court examined Rule 19 in detail and rejected the Corporation's interpretation. The court held that Rule 19 provides three distinct scenarios under which disciplinary authority may dispense with the usual inquiry procedure: where penalty is imposed on conduct that led to conviction on a criminal charge (Rule 19(i)), where the authority records reasons in writing that it is not reasonably practicable to hold an inquiry (Rule 19(ii)), and where it is in the interest of state security not to hold an inquiry (Rule 19(iii)). The court emphasised that these provisions are not mutually exclusive and that even when relying on Rule 19(i) for conviction-based action, the disciplinary authority must still exercise proper discretion and follow due procedure. Critically, the court held that Rule 19 does not mandate automatic removal upon conviction.
The court identified several procedural irregularities in the Corporation's handling of the matter. First, the Corporation failed to record any reasons explaining why it was not practicable to hold a disciplinary inquiry as required under Rule 19(ii). Second, the authority failed to demonstrate any application of mind by not considering relevant factors such as the nature and gravity of the offence, the petitioner's 28-year unblemished service record, the fact that the accident occurred during the course of official duty, whether dismissal was proportionate or if a lesser penalty would suffice, and the petitioner's suitability for continued employment. Third, the Corporation's approach was inconsistent, as it had initially initiated disciplinary proceedings under Rule 14 and accepted Rs. 6,000 from the petitioner before dropping those proceedings. The subsequent invocation of Rule 19 without explanation raised questions about the consistency of the disciplinary process. Fourth, the appellate and review authorities dismissed the petitioner's appeals without properly examining the grounds raised, merely rubber-stamping the original termination order.
The court relied on the SC’s judgment in Pawan Kumar v. Union of India11 (2023) 12 SCC 317, which established that an employee should not be terminated "axiomatically from service just by a stroke of pen" even when there is a conviction or acquittal. The court held that the employer must consider all relevant facts and circumstances regarding the employee's antecedents and the objective criteria outlined in the service rules when making decisions about the employee's continuance in service.
The court concluded that the corporation's action of removing the petitioner from service without considering the nature and gravity of the offence, his long service record, and without recording reasons for dispensing with inquiry was illegal and arbitrary. The court quashed the dismissal order and directed the corporation to reinstate the petitioner with all consequential benefits. | |
Termination without a fresh opportunity for hearing in cases of alleged misrepresentation during recruitment is invalid when the alleged experience has been previously scrutinised and approved during the selection process; stigmatic termination requires proper adherence to the principles of natural justice.
XX v. Union of India & Ors12 | The case concerned the petitioner's challenge to her termination from the post of Assistant Director at the Bureau of Indian Standards (“BIS”). The petitioner was terminated on the grounds that she allegedly failed to satisfy the requirement of 3 years' experience as mandated in the recruitment notice.
The petitioner had disclosed her experience as an empanelled advocate for IEC University from January 20, 2015, to August 30, 2021, in her application. After working at BIS for some time, she was issued a show-cause notice questioning her experience, which was followed by her termination.
The petitioner contended that the termination was a retaliatory measure for her having filed a POSH complaint against the Deputy Director General (Administration), who had initiated the termination proceedings. She further argued that her experience at IEC University as a panel advocate had been disclosed in her application, scrutinised by the 5-member selection committee, and approved during the selection process. She contended that the termination order was passed while she was on probation, without following the principles established in service jurisprudence regarding probationary periods.
The Delhi High Court analysed various judicial precedents dealing with misrepresentation in service matters and termination during probation. The court observed that during the probation period, the conduct and efficiency of a probationer are under scrutiny, and any decision regarding confirmation should not be taken casually. The court found that there was no misrepresentation or concealment by the petitioner, as she had disclosed her experience at IEC University, which was vetted during the selection process.
The Delhi High Court allowed the petition and quashed the termination, finding it to be stigmatic in nature because it attributed malafide and suppression of facts to the petitioner. The court noted that the termination was ordered without affording the petitioner a fresh opportunity of hearing before the executive committee, which made the final decision based on the same material that had earlier been scrutinised and approved during her selection. The court emphasised that the termination of a probationer on grounds of misrepresentation carries a stigma and cannot be done without following the principles of natural justice. The court further held that since the petitioner had acquired the requisite 3 years' experience during her service with BIS itself, and her annual performance appraisal reports were outstanding with no question mark over her suitability or integrity, the termination was inappropriate and unsustainable.
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An inquiry by the IC under the POSH Act constitutes valid "disciplinary proceedings" for the purpose of suspension. An accused can be suspended when a POSH inquiry is initiated, even before formal charge sheets are issued.
Kamarudheen P. v. The Vice-Chancellor, Calicut University & Ors.13
| This case involved interconnected writ appeals related to proceedings against Kamarudheen P., an Assistant Professor in a college, who challenged his suspension and disciplinary proceedings for alleged sexual harassment. The appellant had filed a writ petition before the Kerala High Court challenging the orders suspending him from service and the disciplinary proceedings initiated against him, asserting violations of statutory provisions and procedural defects.
The Kerala High Court examined the provisions of the POSH Act, the Calicut University Act, 1975 and relevant University Statutes, which provide that a teacher shall not be kept under suspension except when disciplinary proceedings are contemplated or pending.
The appellant argued that disciplinary proceedings were initiated against him only when he received a formal charge sheet in January 2024, making his suspension from February 2020 illegal. Therefore, a key legal question was whether an IC inquiry under the POSH Act constitutes "disciplinary proceedings" for the purpose of Section 60(2) of the Calicut University Act, 1975.
In its analysis, the court carefully examined both the POSH Act and the Calicut University Act, 1975. The court noted that Section 11 of the POSH Act empowers the IC to conduct inquiries with powers similar to those of a civil court, including summoning witnesses and requiring the production of documents. The court recognised the purpose of the POSH Act in creating a safe working environment free from sexual harassment.
The court observed that when the POSH complaint was received in February 2020, an IC was constituted on the same day as required by Section 11, and the appellant was suspended the following day. The court reasoned that if a narrow interpretation requiring formal charge sheets were adopted, it would defeat the purpose of the POSH Act in creating safe workplaces. The court stated that "there is no meaning in saying that the delinquent can be suspended from service only after initiating disciplinary proceedings under the relevant service rules".
While acknowledging that parallel disciplinary proceedings under service rules could be initiated, the court held that the POSH inquiry itself constituted valid grounds for suspension. The court dismissed the writ of appeal but directed the manager of the college to complete the disciplinary proceedings against Kamarudheen P within 2 months from the receipt of the judgment, in accordance with the law.
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