Introduction
The Occupational Safety, Health and Working Conditions Code, 2020 (“OSH Code”) was intended to provide employers with a single, predictable framework for the everyday aspects of employment, such as working hours, leave and overtime, in place of the range of State legislation that had traditionally governed these areas. Since the OSH Code came into force in November 2025, however, a number of States have continued to maintain, and in some cases actively amend, their own Shops and Commercial Establishments (“S&E”) legislation. This is not limited to any particular State; several States across the country continue to operate independent S&E frameworks alongside the OSH Code. For the purposes of this article, Karnataka, Maharashtra and Gujarat have been taken as illustrative examples, given the differing approaches each has adopted, and are not intended to suggest that these are the only States where such an overlap exists.
For an employer operating across more than one State, this means the OSH Code cannot be applied in isolation. It has to be read together with the applicable State law, and the comparison is likely to differ meaningfully from one State to another. The OSH Code does provide a degree of guidance through its ‘better-benefit’ clause, under which a more favourable provision available to an employee under a State law or settlement continues to apply notwithstanding the Code. This is a useful starting principle, but its application still requires a State-wise, and at times provision-wise, comparison. The sections below examine three such areas of comparison, by reference to Karnataka, Maharashtra and Gujarat.
Working Hours Under the OSH Code and State Legislation
The most visible point of comparison is the permissible length of the working day. The OSH Code prescribes ordinary working hours of eight hours a day for establishments above a prescribed employee threshold. None of the three States considered here currently mirrors this figure in its own S&E legislation. The Karnataka S&E Act permits nine working hours a day, and the Maharashtra S&E Act permits a similarly higher daily ceiling. The Gujarat Shops and Establishments (Regulation of Employment and Conditions of Service) Act, 2019 was amended in early 2026 to extend the permissible working day from nine hours to ten, while retaining the weekly ceiling of 48 hours. This amendment, intended to provide larger establishments with greater scheduling flexibility, took effect retrospectively from 16 December 2025 upon formal notification in February 2026.
Employers in Gujarat may find it useful to review the interaction between the daily and weekly limits before relying on the extended ten-hour ceiling. A ten-hour working day across a five-day week totals fifty hours, which would already exceed the State Act’s own 48-hour weekly ceiling and could give rise to an overtime obligation under the State framework, independent of the OSH Code’s separate eight-hour daily standard. Reviewing weekly rosters against both limits together, rather than the daily figure alone, would help avoid an unintended overtime liability. A similar comparison is advisable in Karnataka and Maharashtra as well, since the working-hours provisions in both States currently differ from the OSH Code’s eight-hour standard, and the applicable ‘better-benefit’ analysis should be conducted expressly rather than assumed.
Categories of Leave Not Addressed by the OSH Code
A further point of comparison arises in relation to categories of leave. The OSH Code addresses annual earned leave in some detail but does not separately provide for sickness leave or casual leave. The Karnataka S&E Act specifically provides for leave on account of sickness, accidents or other reasonable cause, and the Maharashtra S&E Act separately provides for casual leave. The Gujarat S&E Act similarly sets out its own leave and holiday framework.
As the OSH Code is silent on these categories rather than inconsistent with the State provisions, the more reasonable position is that the relevant State entitlements continue to apply without interruption. Employers may proceed on this basis. It would, however, be prudent to monitor the State Rules as they are notified under the OSH Code, since any subsequent clarification on this point, whether at the Central or State level, may require the position to be revisited.
Carry-Forward and Encashment of Annual Leave
A more substantive divergence arises in relation to the treatment of unused annual leave. Under the position that continues to apply under the Karnataka and Maharashtra S&E Acts, employees may carry forward up to forty-five days of unused annual leave into the succeeding year, with the unutilised balance payable on separation. The OSH Code adopts a different approach: it caps the permissible carry-forward at thirty days, while additionally entitling a worker to request annual encashment of earned leave at the end of each calendar year, rather than only upon separation, and mandating encashment of any leave in excess of the thirty-day carry-forward limit. The Gujarat S&E Act and Rules prescribe a further, independent leave framework, adding a third point of reference to this comparison.
Neither approach is inherently more beneficial in all cases; the preferable option is likely to depend on individual employee circumstances, such as whether a larger carried-forward balance or an annual payout is of greater value to a given employee. This is, accordingly, less a compliance gap to be resolved and more a policy choice that employers would benefit from considering in advance of the State Rules operationalising the OSH Code’s leave provisions. Establishments may wish to determine, at an early stage, whether a single model will be applied uniformly or whether employees will be permitted to elect between the two, so that the approach is ready for implementation once the State Rules are notified.
Differing State Approaches to Harmonisation
It is useful to view the above comparisons against the broader position, since States have not approached the question of harmonisation with the OSH Code in a uniform manner, and the three States discussed here illustrate only some of the approaches currently visible across the country. Bihar, by way of further illustration, has repealed its S&E Act altogether, allowing the OSH Code to apply without a parallel State framework. Maharashtra has taken a more incremental approach.
Gujarat’s 2026 amendment, by comparison, was primarily directed at working-hours flexibility for employers, a change that operates alongside the OSH Code’s working-hours provision rather than in alignment with it. These differing approaches are noted here as illustrations of the current regulatory landscape, and not as a comment on the relative merits of any particular State’s approach. The practical implication for employers is that the compliance position should be assessed independently in each State in which they operate, rather than assumed to be consistent across State lines.
AMLEGALS Remarks
Given the differing approaches adopted by Karnataka, Maharashtra, Gujarat and other States, employers would be well advised to maintain a State-wise comparison of working hours, overtime triggers, leave categories and encashment provisions, rather than a single uniform policy. In Gujarat, shift schedules should be checked against both the State’s 48-hour weekly ceiling and the OSH Code’s 8-hour daily standard before relying on the full 10-hour limit, while State-specific entitlements such as sickness or casual leave should continue to be applied as valid.
Employers should also begin forming a view on how the choice between the OSH Code’s annual-encashment model and a State Act’s longer carry-forward period will be administered, and treat this comparison as an ongoing exercise, to be revisited each time a State notifies rules under the OSH Code or amends its own S&E legislation.
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