India
New provident fund, pension and deposit-linked insurance schemes notified under the Social Security Code
Impact date: 29 June 2026 (notifications; the schemes state that they commence on publication in the Official Gazette)
The Central Government notified the Employees’ Provident Funds Scheme, 2026, Employees’ Deposit-Linked Insurance Scheme, 2026 and Employees’ Pension Scheme, 2026 under the Code on Social Security, 2020, of new rules, superseding the corresponding legacy schemes. The notifications are G.S.R. 525(E), 526(E) and 527(E), respectively. The schemes operationalize the provident fund, pension and deposit-linked insurance framework under the Social Security Code and introduce updated procedural and compliance requirements.
Employer implications/action needed Covered employers should review payroll, provident fund administration, employee enrolment, contractor-related processes and exemption arrangements against the 2026 schemes rather than relying solely on legacy-scheme procedures. Employers should also assess any time-bound regularization, amnesty or dispute-resolution mechanisms available under the new framework where historic PF exposure may exist.
Employer risk Continuing to apply superseded procedures may cause compliance failures under the new statutory framework. Employers may also lose the benefit of time-limited regularization or dispute-resolution mechanisms if historic PF issues are not reviewed promptly.
Stigmatic termination of a probationer requires disciplinary process (case law)
Impact date: 27 July 2026
In The Board of Governors, Ghani Khan Choudhury Institute of Engineering and Technology v. Deb Halder, the Supreme Court upheld the decision that a probationer’s termination was punitive because allegations such as unauthorized absence and involvement in a tender formed the foundation of the decision. A misconduct-based termination cannot be converted into a simple termination “termination simpliciter” merely because the employee is on probation. The Court substituted reinstatement with lump-sum compensation of INR 1.35 crore.
Employer implications/action needed Before terminating a probationer, employers should distinguish a genuine assessment of suitability or performance from a decision founded on alleged misconduct. Where misconduct is the real basis, the applicable disciplinary process and an opportunity to respond should ordinarily be followed rather than relying only on a probationary termination clause.
Employer risk A purported termination simpliciter may be set aside as punitive or stigmatic if contemporaneous material shows that findings or allegations of misconduct were its foundation. Relief may include reinstatement, consequential benefits or substantial compensation depending on the circumstances.
Link N/A
Supreme Court distinguishes non-stigmatic probationary discharge from disciplinary termination (case law)
Impact date: 6 August 2026
In M/s Bharatiya Vidya Bhavan’s Public School v. M. Vimala (2026 INSC 833), the Supreme Court upheld the discharge of a probationary teacher whose B.Ed. degree was from an institution not recognized by the NCTE. The order was non-stigmatic and the qualification issue was treated as the motive rather than the foundation for punitive action. The Court also held that, even assuming an enquiry requirement applied, its absence caused no prejudice because the invalidity of the qualification was undisputed.
Employer implications/action needed Employers may discharge probationers in accordance with their appointment terms where the order is genuinely non-stigmatic and is not founded on a finding of misconduct. The “no prejudice” principle should be relied on cautiously and only where the relevant facts are admitted or indisputable and an enquiry could not realistically have produced a different result.
Employer risk Calling an order a probationary discharge will not protect it if misconduct is its true foundation. Conversely, a procedural defect will not invariably invalidate a decision, but whether prejudice has actually been caused is ultimately a judicial assessment.
Criminal background non-disclosure does not automatically justify termination (case law)
Impact date: 11 August 2026
In Shatrughn Yadav v. Fertilizers and Chemicals Travancore Ltd. (F.A.C.T.) (2026 INSC 829), the Supreme Court held that an employer must first determine whether the employee knowingly suppressed or falsely stated information about their criminal background (criminal antecedent), and then assess whether the nature of the antecedent and the job role justify termination. Where the employee claims lack of knowledge, the burden lies on the employee to establish that claim with cogent material. The employee was reinstated with consequential benefits and 50% of the wages that would have been earned if they had remained in employment.
Employer implications/action needed Background-verification processes should distinguish deliberate concealment from an inaccurate declaration made without knowledge of the relevant proceeding. Before terminating employment, employers should document both the suppression analysis and a separate assessment of the nature and gravity of the offence, the duties of the job role, the outcome of the criminal case and overall suitability.
Employer risk Automatic termination based solely on an adverse police or background-verification result, without considering knowledge, gravity and suitability, may be set aside and can result in reinstatement, unpaid wages and consequential employment claims.
Nine-judge Supreme Court leaves “industry” test unchanged for legacy disputes (case law)
Impact date: 20 August 2026
In State of U.P. v. Jai Bir Singh (2026 INSC 897), a nine-judge Supreme Court bench reconsidered the meaning of “industry” under the Industrial Disputes Act, 1947. Although four judges proposed adding a requirement that the relevant goods or services have a “discernible commercial character”, there was no majority for changing the test set out in the case of Bangalore Water Supply. Pending disputes under the repealed Act therefore continue to be governed by the existing 1978 test.
Employer implications/action needed Employers dealing with pending Industrial Disputes Act matters should continue applying the Bangalore Water Supply test when assessing whether an establishment or activity is an “industry”. For disputes under the Industrial Relations Code, 2020, employers should separately assess section 2(p), including its express exclusions, as the new statutory definition has not yet been interpreted by the Courts.
Employer risk Treating the four-judge “commercial character” approach as the new law may lead employers to incorrectly assume that activities have fallen outside industrial-relations coverage. Coverage under the Industrial Relations Code also remains open to judicial interpretation.
Contact
© Eversheds Sutherland. All rights reserved. Eversheds Sutherland is a global provider of legal and other services operating through various separate and distinct legal entities. Eversheds Sutherland is the name and brand under which the members of Eversheds Sutherland Limited (Eversheds Sutherland (International) LLP and Eversheds Sutherland (US) LLP) and their respective controlled, managed and affiliated firms and the members of Eversheds Sutherland (Europe) Limited (each an "Eversheds Sutherland Entity" and together the "Eversheds Sutherland Entities") provide legal or other services to clients around the world. Eversheds Sutherland Entities are constituted and regulated in accordance with relevant local regulatory and legal requirements and operate in accordance with their locally registered names. The use of the name Eversheds Sutherland, is for description purposes only and does not imply that the Eversheds Sutherland Entities are in a partnership or are part of a global LLP. The responsibility for the provision of services to the client is defined in the terms of engagement between the instructed firm and the client.
Connect with us
