We welcome you to the January- February 2025 Edition of IndusLaw's Employment Corner Bulletin, where we discuss the key statutory and judicial updates for the period between January and February of 2025. This year has brought significant changes in the realm of legislative developments and evolving employment practices. In this regard, we also discuss some of the more critical statutory developments and prominent HR practices that employers and HR leaders should take into consideration while strategizing on their organizational practices and compliances for 2025. In this Bulletin, we've dedicated a section to provide insights into India's 2025-26 budget's impact on employment law, and to highlight the significant DEI and HR initiatives Indian employers are undertaking during the global crisis.
Legal Updates
CENTRAL
Ministry of Electronics and Information Technology publishes draft Digital Personal Data Protection Rules
In one of India's most significant developments on data privacy law, the Ministry of Electronics and Information Technology released the draft Digital Personal Data Protection Rules ("DPDP Draft Rules") under the Digital Personal Data Protection Act, 2023 on January 03, 2025. Once implemented, the DPDP Draft Rules will introduce stringent requirements for employee data protection. The link to our note on the implications for employers in India is here.
Ministry of Labour & Employment Issues Clarifications on Policy Issues related to processing of the Pension on Higher Wages cases
The Ministry of Labour and Employment ("MoL&E") has issued important clarifications dated January 18, 2025, regarding the processing of Pension on Higher Wages ("PoHW") cases, addressing key policy issues raised by field offices. The MoL&E has confirmed that pension computation will continue on a pro-rata basis as provided in Para 12 of the Employee Pension Scheme, 1995 ("EPS"), noting that this method is equitable and has been upheld by the Supreme Court of India in the Employees' Provident Fund Organisation & Another v. Sunil Kumar B. and Others.1 For exempted establishments, the eligibility for PoHW cases will be determined based on their existing trust rules, in alignment with the Supreme Court's directions with the caveat that applications from trusts which amended their rules after November 04, 2022, will not be considered for PoHW benefits.
The MoL&E has also clarified that PoHW eligibility is only established upon receipt of dues with interest in the pension fund, and netting of these dues against pension arrears is not permitted, particularly considering TDS implications. Regarding retrospective wage arrears, the MoL&E has taken a lenient approach, stating that such arrears should be accounted for in their respective months without imposing damages. However, interest may be recovered up to the date of retirement or cessation of EPS-95 membership.
EPFO Introduces Self-Service Feature for Delinking Erroneously Linked Member IDs
The Employee Provident Fund Organisation ("EPFO") has launched a new self-service facility that enables members to delink incorrectly linked Member IDs from their Universal Account Number ("UAN"). This allows members to remove any Member IDs that may have been linked to their UAN without their knowledge or consent. Members can access this feature through the EPFO unified portal available here, where they can review their service history and initiate the delinking process after proper verification through One Time Password authentication. However, members should note that delinking cannot be completed if an Electronic Challan cum Return has been filed against the Member ID. The EPFO has released a comprehensive user manual detailing the step-by-step process, ensuring members can navigate this new feature effectively, which can be accessed here. This user-centric initiative is part of EPFO's ongoing efforts to enhance member control over their provident fund accounts and maintain accurate service records.
EPFO extension of deadline for UAN Activation and Aadhaar-Bank Account Seeding under Employment Linked Incentive Scheme to March 15, 2025.
On November 22, 2024, the EPFO issued guidelines for implementing the Employment Linked Incentive Scheme ("ELI Scheme") announced in India's 2024 25 Union Budget. The ELI Scheme aims to stimulate formal employment by providing first-time formal sector employees with a direct benefit transfer equal to one month's salary (disbursed in 3 equal monthly instalments). This benefit is capped at INR 15,000, subject to further clarifications from the Government. The EPFO made it mandatory for every subscriber to have an activated UAN linked with Aadhaar, and their bank accounts seeded with Aadhaar. Employers were initially directed to ensure compliance by February 15, 2025, particularly for employees who joined in financial year 2023-24. However, this deadline has now been extended to March 15, 2025. Subscribers can activate their UAN through a simple Aadhaar-based OTP verification process, which grants them access to numerous online services, including Provident Fund passbook viewing, claim submissions, and real-time tracking. The Aadhaar-bank account linkage is particularly crucial as it enables the direct transfer of ELI Scheme benefits. These measures align with the EPFO's initiatives to enhance social security benefit delivery and improve service accessibility.
STATE
Maharashtra's Reminder Regarding Revised Contribution Rates and Online Payment Mandate under Labour Welfare Fund
The Maharashtra Labour Welfare Board ("Board") has issued a reminder on January 18, 2025, regarding the amendment to the Maharashtra Labour Welfare Fund Act, 1953 ("MLWF Act"). The amendment, which was notified on March 18, 2024, revised the contribution rates for employees from INR 12 to INR 25, and for employers from INR 36 to INR 75 per employee. Given that the contributions are required to be paid every six months, on or before July 15 and January 15, the Board issued this reminder on the revised contribution rates ahead of the upcoming payment deadline.
This amendment impacts all establishments including factories, shops and establishments, trade associations, hotels, restaurants, banks, hospitals, societies, and corporations, engaging 5 or more employees. Additionally, the reminder requires all covered establishments to process their employees' and employers' contributions through the online facility available at public.mlwb.in.
Delhi Orders Regarding Implementation of Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013
The Labour Department of Delhi has issued an order dated January 06, 2025, emphasizing the implementation of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 ("POSH Act"). The order reinforces the mandatory requirement under Section 4 of the POSH Act for all employers with 10 or more employees to constitute an Internal Committee ("IC"). This directive comes in light of the Hon'ble Supreme Court's directions in Aureliano Fernandes Vs. The State of Goa & Ors2 regarding the implementation of various provisions of the POSH Act. The order also draws attention to the 'She Box Portal', established by the Ministry of Women and Child Development, which facilitates online registration of complaints and allows employers from both public and private sectors to register themselves. To ensure compliance, all District In-charge officers (Joint Labour Commissioners and Deputy Labour Commissioners) and Directorate of Industrial Safety and Health have been instructed to sensitize employers under their jurisdiction and seek information about the constitution of the ICs while also informing employers about the She-Box Portal registration process.
In view of the above order, employers in Delhi can expect greater scrutiny with respect to compliance under the POSH Act.
Karnataka revises the contributions under Karnataka Labour Welfare Fund Act, 1965
The Government of Karnataka has amended the Karnataka Labour Welfare Fund Act, 1965, via a notification dated January 10,2025 to revise the contributions to be made to the fund by the employer, the employee and the State Government. The employer's contribution is revised from INR 40 to INR 100, while the employee's contribution and the State Government's contribution is revised from INR 20 to INR 50.
This amendment impacts all establishments engaging 50 or more employees. The employer's contribution and the employee's contribution for a given year has to be paid by the employer to the constituted Welfare Board on or before January 15 of the following year.
Chhattisgarh releases effective date of Chhattisgarh Shops and Establishments (Regulation of Employment and Conditions of Service) Act, 2017.
The Government of Chhattisgarh has announced the enforcement of the Chhattisgarh Shops and Establishments (Regulation of Employment and Conditions of Service) Act, 2017 ("CGSE Act"), with effect from February 13, 2025. With the enactment of the CGSE Act, the Chhattisgarh Shops and Establishments Act, 1958 ("1958 Act") stands repealed.
Broadly, the provisions under the CGSE Act are similar to that of the Maharashtra Shops and Establishments (Regulation of Employment and Conditions of Service) Act, 2017. The CGSE Act applies to all shops and establishments that employ 10 or more workers, making it mandator for such establishments to register within 6 months from the CGSE Act's commencement and obtain a Labour Identification Number ("LIN"). Interestingly, establishments which are already registered under either the Employees' State Insurance Act, 1948, or the Employees' Provident Fund and Miscellaneous Provisions Act, 1952, shall be deemed to be registered under the CGSE Act. However, such establishments are required to obtain a LIN within 6 months from the CGSE Act's commencement.
The CGSE Act has introduced significant changes to worker entitlements when compared to the 1958 Act, which are highlighted below:
- Under the CGSE Act, the workers are entitled to 8 days of paid casual leave annually, a reduction from the 14 days previously allowed under the 1958 Act. Additionally, workers completing at least 240 days in a calendar year now earn leave at the rate of 1 day for every 20 days worked (approximately 12 days annually), with accumulation capped at 45 days. This represents a decrease from the 1958 Act's more generous allowance of 1 month of privileged leave with accumulation permitted up to 3 months.
- Regarding working hours, while the weekly maximum remains consistent at 48 hours under both the legislations, the daily limit has been reduced from 10 hours under the 1958 Act to 9 hours in the CGSE Act, providing workers with slightly more protection against extended daily shifts.
- The employer shall provide the workers with 8 paid festival holidays in a calendar year which was not specified under the 1958 Act.
- The CGSE Act has expanded the permissible working hours for women, allowing them to work between IST 6 AM to 9 PM, compared to the 1958 Act, which restricted women's working hours to IST 7 AM to 9 PM. Considering these changes, the employers in Chhattisgarh will likely need to revisit their existing policies on leaves, working hours, and holidays in order to align with the CGSE Act.
Haryana publishes the Draft Haryana Transgender Persons (Protection of Rights) Rules, 2024.
The Government of Haryana via notification dated January 31, 2025, published the Draft Haryana Transgender Persons (Protection of Rights) Rules, 2024 ("Draft Rules") to facilitation the implementation of the Transgender Persons (Protection of Rights) Act, 2019. The Government has invited public comments on the Draft Rules, with a submission deadline of March 19, 2025.
The Draft Rules mandate employers, including private establishments, to draft and implement the Equal Opportunity Policy ("Policy") addressing key aspects such as infrastructural facilities (such as unisex toilets), safety and security (transportation and guards) and workplace amenities (such as hygiene products). The Policy should be displayed either on their websites or prominently within the premises. Further, every establishment is required to designate a complaints officer, within 30 days from the date of notification of the Rules. The details of the designated officer should be provided in the policy. The Draft Rules are identical to the Transgender Persons (Protection of Rights) Rules, 2020, maintaining regulatory consistency without any modifications or regional adaptations.
Tamil Nadu revises the Professional Tax slab rates for Greater Chennai Corporation.
The Tamil Nadu Government has announced significant changes to Profession Tax ("PT") slab rates for Greater Chennai Corporation, via notification dated January 20, 2025. This revision specifically targets individuals with half-yearly earnings between INR. 21,001 and INR. 60,000 and holds relevance for all employers and employees conducting business within Greater Chennai Corporation boundaries. Organizations and individuals operating in this jurisdiction should take note of these revised tax obligations to ensure proper compliance.
The revised PT slab rates are as follows:
Kerala revises working hours for labourers engaged in outdoor work from February 11, 2025, to May 10, 2025.
Due to escalating daytime temperatures throughout the State of Kerala, the Government has implemented a temporary adjustment to working hours for labourers employed in the State. In light of concerns about heat related issues and the need to protect worker wellbeing, the working hours of the workers have been modified in accordance with Rules 24 and 25 of the Kerala Minimum Wages Rules, 1958, effective from February 11, 2025, until May 10, 2025. The modified schedule maintains an 8 hour workday within the 7:00 AM to 7:00 PM timeframe, with all daytime workers required to observe a mandatory 3 hour break from noon until 3:00 PM. The workers on shift schedules will have their shifts restructured to end by noon and begin again at 3:00 PM.
Enforcement teams headed by the District Labour Officer, Deputy Labour Officer, and Assistant Labour Officer will perform daily site inspections, with particular focus on construction sites and road projects to ensure adherence to these protective measures. The directive provides an exemption for areas located above 3,000 feet in elevation where heat conditions are not considered severe enough to warrant these special scheduling accommodations.
Footnotes
1 AIR 2022 SC 5634.
2 W.P. (C) No. 1224/2017
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