Labour and Employment Quarterly Milestones (October-December 2025)

In a recent ruling, the Division Bench of the Delhi High Court has upheld the constitutional validity of para 83 and para 69 of the Employees’ Provident Fund Scheme (EPF Scheme), which relate to contributions towards provident fund by international workers (IW).¹

The two issues framed by the Court for consideration were: (a) whether the introduction of para 83 of the EPF Scheme creates an unreasonable classification in violation of Article 14 of the Constitution (Right to Equality), given that it mandates IWs working in Indian establishments to contribute to the EPF Scheme regardless of their monthly pay, while requiring only domestic employees earning up to INR 15,000 per month to contribute; and (b) whether para 69 of the EPF Scheme is arbitrary and unreasonable as it permits IWs to withdraw the amount standing to their credit only upon retirement after attaining the age of 58 years, despite such employees being engaged in India for limited durations.

The Court held that Article 14 permits reasonable classification and does not require uniform application of the law. It upheld the distinction between IWs and domestic employees under the EPF Scheme, observing that IWs are required to contribute to the fund for shorter durations of two to five years and therefore do not face economic duress, unlike domestic employees who generally contribute to the fund over a much longer period until retirement. Accordingly, the Court found that the distinction established under the EPF Scheme is based on the rationale of economic duress and the social-security objectives of the EPF Scheme and therefore does not violate Article 14 of the Constitution. For the same reasons, para 69 was also held as not arbitrary.

Notably, in 2024, a single-judge Bench of the Karnataka High Court struck down the special provisions relating to IWs under the EPF Scheme as unconstitutional, a decision that is currently under challenge before the Division Bench. In contrast, a Division Bench of the Bombay High Court had earlier upheld the validity of these provisions, which was relied upon by the Delhi High Court in delivering its judgment.

In a recent ruling, the Supreme Court clarified that an Internal Committee (IC) constituted at the aggrieved woman’s workplace has the authority to inquire into a sexual harassment complaint, even where the respondent is an employee of a different department or organisation.²

In this case, the Court examined a jurisdictional challenge arising from a complaint filed before the IC of the aggrieved woman’s department against an employee of another department within the government. After examining the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 (SH Act) and the legislative intent underlying the statute, the Court held that the wide definitions of the terms “employee,” “respondent” and “workplace” under the SH Act empower the IC to inquire into such complaints, and that the respondent need not be employed at the same workplace as the aggrieved woman. The Court further clarified that while the IC at the aggrieved woman’s workplace is empowered to conduct the inquiry, it must forward its report along with its recommendations to the employer of the respondent, who is obligated to act upon such recommendations.

The Court also observed that requiring the aggrieved woman to approach the IC constituted at the respondent’s workplace would defeat the intent of the SH Act and would impose practical and psychological barriers, as the aggrieved woman would be compelled to pursue her complaint in an unfamiliar workplace.

This ruling provides much-needed clarity for employers in handling cases involving inter-departmental or inter-organisational complaints and reinforces the victim-centric framework of the SH Act by removing procedural and practical barriers that could otherwise deter complaints.

The Bombay High Court has held that where an employee accepts termination dues under a ‘full and final settlement’, such acceptance bars any subsequent challenge to the legality of the termination.³ The Court was examining a writ petition filed by a former employee, who served as a Vice President, challenging his termination on the grounds that it was illegal, unfair, arbitrary, and in violation of his constitutional rights.

The employer had terminated the petitioner’s services on account of business restructuring and redundancy, by issuing a termination letter in accordance with the terms of the employment contract, which permitted the employer to terminate the employment by providing three months’ notice or pay in lieu thereof. Accordingly, the petitioner was paid salary in lieu of three months’ notice along with gratuity as part of the full and final settlement. The petitioner accepted this without any dispute and endorsed the receipt as constituting a full and final settlement. Thereafter, the petitioner challenged the letter terminating his employment.

The Court held that the petition was not maintainable and was accordingly dismissed, as the petitioner’s service conditions were governed solely by his employment contract and not by any statutory rules. The dispute was therefore contractual in nature and could not be subjected to judicial review under writ jurisdiction, as there was no public law element involved. The Court further observed that, having accepted the full and final settlement, the petitioner could not subsequently challenge the termination order.

This ruling underscores the importance of a well-documented full and final settlement, as acceptance of termination dues without protest can bring finality to employment separations. For employers, it enhances certainty and mitigates litigation risk in separation cases, as long as exit obligations are properly discharged and accepted by the employee.

On 3 November 2025, the Andhra Pradesh government issued a notification exempting all shops and establishments employing fewer than 20 employees from certain provisions of the Andhra Pradesh Shops and Establishments Act, 1988 (with a few exceptions), including opening and closing hours, spread-over limits, and registration requirements, among others.

Additionally, the notification:

The exemption allows small commercial establishments in Andhra Pradesh to better align working hours and overtime with business needs, particularly during peak periods, while reducing compliance constraints, thereby helping businesses manage staffing more efficiently and control costs.

On 16 December 2025, the Gujarat Shops and Establishments (Regulation of Employment and Conditions of Service) (Amendment) Ordinance, 2025 (Ordinance) was promulgated by the Governor of Gujarat to enhance the ease of doing business in the state. The key changes introduced by the Ordinance include:

The Ordinance provide greater operational flexibility to employers in Gujarat by relaxing compliance requirements for smaller establishments, increasing permissible working hours and overtime limits, and formally enabling employment at night for women, subject to certain safeguards. For overall context, an ordinance is a temporary law issued by the Governor when the State Legislature is not in session. It ceases to have effect six weeks after the Legislature reconvenes, unless it is approved by the Legislature and receives the Governor’s assent.

In a significant step, the government of India has, on 21 November 2025, brought into force the four Labour Codes, consolidating and repealing 29 erstwhile central labour laws to streamline and modernise India’s labour framework. The Employees’ Provident Fund and Miscellaneous Provisions Act, 1952 (EPF Act), which was not repealed initially, was subsequently repealed by a corrigendum dated 19 December 2025.

Although the Labour Codes have been brought into force, several associated rules and schemes are yet to be notified. Pending the finalisation and enforcement of central and state rules and schemes, the transition to the new regime remains in progress. In the meantime, the central government has clarified that all existing rules, forms, registers, and procedural requirements under the previous labour law framework will continue to apply.

To read our update on the key changes introduced under the Labour Codes, click here.

The Karnataka government has issued an order effective 12 November 2025 (Order) mandating employers in Karnataka to provide women workers between 18 and 52 years of age with one paid day of menstrual leave per month with a view to promote health, efficiency, and welfare of women at the workplace.

Soon after, a petition was filed before the Karnataka High Court challenging it on the grounds that, since robust statutory frameworks regulating employee health, welfare, and leave (such as the Shops and Establishments Act) already apply to private employers, the Order lacks statutory authority. The petitions also highlight that no public consultation was conducted prior to the issuance of the Order and that it imposes an additional financial burden on private employers.

The Court had initially stayed the Order through an interim order. However, the stay was subsequently vacated. A final decision from the Court is awaited, and organisations are meanwhile taking a wait-and-watch approach.

To read our detailed update on the menstrual leave mandate, click here.