The Ministry of Labour and Employment is considering implementing the four Labour Codes from April 1, aligning their rollout with the financial year followed by Indian companies.

The proposal is being examined as revised wage structures under the Codes could increase employer liabilities towards provident fund and gratuity, with potential balance sheet implications. The Ministry notified draft Rules for all four Codes on December 31, 2025, and invited stakeholder comments.

Although the Codes were enacted in November 2025, they will become operational only after the final Rules are notified or a separate commencement date is announced.

The Ministry is also considering relaxing eligibility thresholds for gig workers under the Code on Social Security, 2020.

Indian companies are witnessing pressure on third-quarter earnings following the rollout of the new labour codes in November 2025.

The changes increased mandatory wage-linked contributions, pushing up payroll costs in the December quarter. Information technology firms such as TCS, Infosys, and HCL Technologies have been the most affected due to their large domestic workforce and salary-heavy cost structures.

Several companies disclosed one-time expenses linked to higher gratuity, provident fund and leave liabilities, leading to a decline in net profits.

Analysts expect the impact to moderate in subsequent quarters, though some recurring cost pressure is likely to continue across sectors.

The Rajasthan High Court held that the State cannot exploit workers by keeping them in a state of “perpetual temporality” while extracting continuous and regular work. 

The Court observed that although regularisation cannot be claimed as a matter of right, constitutional principles under Articles 14 and 16 do not permit arbitrary and unfair labour practices.

It was held that denial of regularisation solely on the ground that the employee was not appointed against a sanctioned post is unsustainable, where the employee has rendered long, uninterrupted service and performed duties identical to regular employees.

Accordingly, the Court directed regularisation of the petitioner.

[Satu Lal v. State of Rajasthan & Ors]

The Allahabad High Court clarified that compassionate appointment is not governed by the will of the deceased employee, but by financial dependence and family welfare.

The Court held that under the U.P. Dying-in-Harness Rules, 1974, the key factors are whether the applicant was dependent on the deceased and whether the appointment serves the overall interest of the family, especially the widow and minor children.

A registered will in favour of any family member does not create a right to compassionate employment.

The authorities must assess dependency and suitability, not succession preferences.

[Ache Lal v. State Of U.P. Thru. Addl. Chief Secy. Public Works Deptt. Lko. & 3 Ors]

The Supreme Court held that workers engaged through contractors cannot claim parity in status or pay with regular employees of a State authority.

Setting aside a High Court order granting minimum time-scale pay, the Court noted that the workers were never directly employed by the municipal council and were engaged through third-party contractors.

It observed that regular public employment follows a transparent recruitment process, unlike contractual engagement through contractors, and granting equal benefits would undermine this distinction.

However, the Court asked the municipality to consider regularisation on a compassionate basis, given the workers’ long and uninterrupted service, clarifying that this direction would not act as a precedent.

[Municipal Council, Nandyal v. K. Jayaram]

The Tripura High Court struck down a 25-year-old State policy mandating fixed pay for the first five years of service for newly recruited government employees, holding it to be unconstitutional.

The Court ruled that employees appointed to sanctioned posts through competitive examinations are entitled to draw regular pay from the first day of service.

It observed that continuation of fixed pay after a regular appointment violates principles of equality and service jurisprudence.

The Court allowed the writ petitions filed by teachers and other employees, while directing petitioners to pay costs and permitting them to seek further relief if the government fails to implement the decision.

The Andhra Pradesh High Court directed the State government to consider representations of APSRTC employees retired on medical grounds for alternative employment or enhanced compensation.

The Court held that forced retirement without offering alternative jobs or adequate compensation may violate the Rights of Persons with Disabilities Act, 2016.

Noting that hundreds of such claims remain pending after APSRTC’s merger with the State, the Court recorded the government’s decision to revive monetary compensation through a Government Order.

It directed the authorities to decide the employees’ representations within eight weeks and release compensation within three months thereafter.

[RTC Employees v. State of Andhra Pradesh]

The Rajasthan High Court Bar in Jodhpur staged a coordinated protest, abstaining from court work after the High Court designated the second Saturday of each month as a working day for 2026.

A resolution was passed jointly on January 3, opposing the Saturday schedule and the operation of night courts in the district.

Following the boycott across the High Court and subordinate courts, bar delegations planned discussions with Acting Chief Justice Sanjeev Prakash Sharma in Jaipur to decide next steps today.

Earlier representations by bar bodies had termed the decision arbitrary and issued without consultation, stressing advocates are not a “bonded labour force” and cannot be treated as “bonded labour force.”

The Ministry of Labour and Employment has pre-published draft rules under all four newly enacted Labour Codes, the Code on Wages, 2019, Industrial Relations Code, 2020, Code on Social Security, 2020, and the Occupational Safety, Health and Working Conditions Code, 2020 inviting feedback from stakeholders as part of the process to make these laws fully operational. 

The government aims to operationalise the codes across India from April 1, 2026. 

Comments on the draft rules must be submitted within 30 days for the Industrial Relations Code and 45 days for the other three. 

The move is intended to streamline labour regulations, strengthen worker protections and simplify compliance for employers.

The Bombay High Court held that denying permanency to a hospital sweeper solely due to his HIV-positive status was arbitrary, discriminatory, and violative of Articles 14 and 16 of the Constitution.

Justice Sandeep V. Marne noted that the petitioner, a poor sweeper, had performed the same duties as permanent employees but was unjustly denied regularisation

Setting aside the Industrial Court’s order, the Court directed that permanency be granted with effect from December 1, 2006.

However, applying the doctrine of delay and laches, the Court restricted arrears to 90 days prior to filing of the complaint, balancing equity with the hospital’s financial burden.

The Supreme Court restored the dismissal of a Central Industrial Security Force constable for contracting a second marriage without prior permission, in violation of service rules.

The Court held that members of disciplined forces are governed by strict standards of conduct and cannot rely on personal law to bypass statutory service regulations.

It observed that misconduct affecting discipline cannot be treated lightly and upheld the penalty imposed by the authorities.

The Court said judicial interference in disciplinary matters is limited unless the punishment is shockingly disproportionate. Finding no such excess in this case, the Court upheld the dismissal.

[UOI & Ors. v. Pranab Kumar Nath]

The High Court of Jammu & Kashmir and Ladakh has held that the Dharmarth Trust cannot be treated as a purely religious or voluntary organisation and falls within the definition of an “industry” under the Industrial Disputes Act, 1947.

The Court noted that the Trust undertakes systematic activities, employs workmen for remuneration, and renders services that extend beyond exclusively spiritual or religious functions.

Applying the dominant nature test, it held that the Trust’s operations attract labour law obligations, making it amenable to industrial adjudication.

The Court clarified that mere religious affiliation does not place an organisation outside the scope of labour legislation.

[Dharmarth Trust J&K v. Industrial Tribunal & Anr.]

The Haryana Assembly has passed the Haryana Shops and Commercial Establishments (Amendment) Bill, 2025, amending the Haryana Shops and Commercial Establishments Act, 1958.

The Bill raises the maximum daily working hours from nine to ten, while retaining the weekly cap of 48 hours. It increases the permissible overtime limit from 50 to 156 hours per quarter and extends continuous working hours without rest from five to six.

Further, establishments employing fewer than 20 workers are exempt from mandatory registration, requiring only intimation.

The State said the changes ease compliance and boost economic activity, while the Opposition flagged concerns over worker welfare.

The Madras High Court invoked Prophet Muhammad’s teaching that a worker must be paid before his sweat dries, while directing a municipal corporation to settle pending legal fees of its former standing counsel.

Justice G.R. Swaminathan observed that principles of fairness in labour jurisprudence apply equally to professional services such as legal work.

While noting procedural lapses and some delay on the part of the lawyer, the Court held that the corporation could not indefinitely withhold legitimate dues.

It directed payment of the pending fees within two months, without interest, and also flagged concerns over disproportionate public spending on select law officers at the cost of others.