Other BriefingsWhat are India’s New Model Standing Orders 2026? Top 10 Must-Know Compliance Updates for HR
India has formally notified the Model Standing Orders, 2026, operationalizing the country’s new labor code framework. The MSO, 2026, has been issued specifically under the Industrial Relations Code, 2020 (IR Code). The notification itself states that they are framed under Section 29(1) of the IR Code, 2020.
However, the Standing Orders are not operationally limited only to IR Code provisions. They also incorporate and cross-reference obligations from the other labor codes, including:
- Occupational Safety, Health and Working Conditions Code, 2020 (OSH Code),
- Code on Social Security, 2020, and
- Code on Wages, 2019.
The new Standing Orders are designed to standardize employment practices and bring greater procedural clarity to employer-employee relations across India’s mining, manufacturing, and service sectors.
Key component of India’s labor code reforms
This framework establishes model rules governing worker classification, attendance, shifts, leave management, wage payments, transfers, disciplinary procedures, misconduct, and termination practices. The SOs are divided into sector-specific schedules covering mining, manufacturing, and service establishments.
Under the IR Code, establishments that fall within the standing order requirements must either adopt the government-issued SOs directly or formulate their own certified standing orders consistent with statutory requirements.
Formalization of workforce categories
One of the most commercially important aspects of the new framework is the formal classification of workers into clearly defined employment categories. The Orders recognize permanent workers, temporary workers, apprentices, probationers, substitute workers, fixed-term employees, and casual workers.
|
Category |
Description |
|
Permanent worker |
A regular employee hired for ongoing work. A worker usually becomes permanent after successfully completing 6 months of probation. Time lost due to leave, accidents, strikes, or lockouts still counts toward probation. |
|
Temporary worker |
Someone hired for short-term work that is expected to end within a limited period. |
|
Apprentice |
A trainee learning skills under a formal apprenticeship contract under the Apprentices Act, 1961. |
|
Probationer |
A worker hired for a permanent position but still under evaluation. The normal probation period is 6 months, which can be extended by up to 3 more months based on performance. |
|
Badli worker |
A substitute worker hired temporarily in place of a permanent employee or probationer who is absent. If the substitute continues for a long enough period, they may become permanent. |
|
Fixed-term employee (FTE) |
A worker hired for a specific period under a written contract. They must receive wages and benefits similar to permanent workers doing similar work. Their employment automatically ends when the contract period expires. |
|
Casual worker |
A worker engaged for irregular, occasional, or purely casual work with no long-term or continuous nature. |
This clarification is particularly important for employers seeking to reduce ambiguity around employment status determination and confirmation procedures.
FTE gains stronger legal recognition
The 2026 Orders substantially strengthen the legal framework governing FTE. Under the new framework, fixed-term employees engaged through written contracts must receive parity with permanent workers in relation to wages, working hours, allowances, and statutory benefits. Fixed-term employees are also entitled to proportionate statutory benefits and gratuity upon completing one year of service under a fixed-term contract.
Digital workforce administration
The SOs place substantial emphasis on formal recordkeeping and digital workforce administration. Businesses or HR administrations are required to issue identity cards or badges containing employee details, including designation, contact information, emergency details, photographs, etc.
Employee recordkeeping requirements
Employers in India must maintain proper service records for every worker. These records may be kept electronically or in physical form and must be regularly updated.
Service card and employment records
Every industrial establishment must maintain a service card for each worker containing key employment details. If records are maintained manually, they must be signed and verified by an authorized officer.
Service certificate on exit
When a worker resigns, retires, is terminated, or leaves employment, the employer must issue a service certificate within 10 days. The certificate should mention the nature of work performed, designation, and duration of employment.
Operational rules on shifts, attendance, and working hours
Entities must maintain detailed operational requirements relating to working hours, shift management, attendance systems, and public disclosure obligations.
Employers are required to publicly display working hours, shift schedules, wage rates, holidays, and payment timelines on physical or electronic notice boards and company portals in Hindi, English, and the relevant local language.
Shift operations
Employers may operate multiple shifts and transfer workers between shifts depending on operational requirements.
It is important to note that discontinuation or reopening of shifts generally requires the following:
- 21 days’ notice to affected workers, and
- Communication to registered trade unions, where applicable.
Emergency changes may be exempted from notice requirements under specific circumstances.
Employee attendance management
Attendance management may be carried out through biometric systems, ID-based systems, or other approved digital mechanisms. Standing Orders further clarify that habitual late attendance or unauthorized absence may attract wage deductions under the Code on Wages, 2019.
Structured leave framework
The dossier lay down a structured process for applying, approving, refusing, and extending leave.
General leave rules
The SOs prescribe a formal process for availing leave in industrial establishments. Workers are generally required to apply for leave at least seven days in advance, and employers must communicate approval, refusal, or postponement within the prescribed timeline.
Leave cannot be claimed as an automatic right and must be approved by the employer or authorized officer. The rules also require employers to provide written reasons where leave is denied or postponed.
Additionally, workers are prohibited from taking up other employment or profit-making activities while on leave.
Casual leave rules
Workers can avail themselves of up to 10 days of paid casual leave in a calendar year. Casual leave is intended for short-term, urgent, or unforeseen situations and is generally limited to a maximum of three consecutive days at a time, except in cases such as sickness or emergencies.
Workers are ordinarily expected to obtain prior approval before availing casual leave. However, where prior permission is not possible, workers must inform the employer or authorized officer about their absence and expected duration as soon as practicable.
|
Comparison: General Leave Rules vs Casual Leave Rules |
||
|
Aspect |
General Leave Rules |
Casual Leave Rules |
|
Purpose |
Covers overall leave procedures and approvals |
Intended for short-term or unforeseen absences |
|
Advance notice |
Normally 7 days before leave |
Prior approval generally required, but flexibility allowed in emergencies |
|
Employer response |
Approval/refusal must be communicated formally |
Usually quicker and more flexible |
|
Duration |
Depends on applicable law or company policy |
Maximum 10 days annually |
|
Consecutive leave limit |
No specific limit mentioned |
Normally limited to 3 days at a time |
|
Extension process |
Formal leave extension approval required |
Generally designed for brief absences |
|
Emergency situations |
Same-day decisions possible for urgent leave requests |
Emergency absence allowed with later intimation |
Payment of wages to an employee
MSO prescribes timelines and procedures for employers to pay wages to workers based on the nature of their employment cycle.
Employers must publicly display wage periods and payment dates on notice boards or electronic portals in Hindi, English, and the local language. Employers must also pay wages electronically through bank transfer or check.
Where a worker is dismissed, retrenched, resigns, or loses employment due to the closure of an establishment, employers must clear all pending wages within two working days.
The standing orders prohibit employers from making unauthorized wage deductions. Employers may impose deductions, fines, or recoveries only in compliance with the Code on Wages, 2019.
Confidentiality and conflict of interest
The orders impose strict confidentiality obligations on employees. Workers cannot remove company documents, disclose manufacturing or operational information, or share confidential information without written authorization.
Employees are also prohibited from taking competing employment or engaging in activities contrary to the employer’s interests without permission.
The framework also formalizes workplace conduct standards by recognizing a wide range of misconduct categories, including theft, insubordination, habitual absenteeism, intoxication at work, sabotage, illegal strikes, assault, falsification of records, refusal to use safety equipment, and sexual harassment.
Codified disciplinary and inquiry procedures
One of the most consequential aspects of the MSO is the detailed codification of disciplinary and domestic inquiry procedures.
The framework establishes rules governing suspension pending inquiry, timelines for investigations, employee representation rights, appeal mechanisms, and subsistence allowance entitlements. Suspended employees are entitled to receive 50 percent of wages during the first 90 days of suspension and 75 percent thereafter where delays are not attributable to the employee.
The Orders also provide employees with the right to appeal disciplinary penalties before designated appellate authorities within 21 days.
Top 10 rules of thumb for employers and HR under India’s Model Standing Orders
1. Treat the MSO as a core workforce governance framework
The orders go beyond traditional labor compliance and establish a standardized governance framework covering workforce administration, disciplinary management, wage administration, attendance systems, and operational controls. Employers should therefore evaluate the MSO alongside existing HR policies, employment contracts, and internal governance structures rather than treating them as a standalone labor law requirement.
2. Eliminate ambiguity in worker classification
Labor laws in India now have formal categorization of workers, which reduced ambiguity around informal employment classifications. Employers should clearly define employment status on boarding and ensure consistency across contracts, payroll systems, benefits administration, and internal HR records to minimize classification-related disputes.
3. Use fixed-term employment strategically
The orders strengthen the legal legitimacy of fixed-term employment by expressly excluding the expiry of fixed-term contracts from the definition of retrenchment. This provides businesses with greater workforce flexibility for project-based, seasonal, and demand-driven operations. However, employers must ensure wage parity, statutory benefit compliance, and carefully drafted written contracts to avoid future litigation exposure.
4. Prioritize digitization of workforce administration
India’s labor regulatory framework strongly favors technology-enabled compliance through electronic service records, digital attendance systems, electronic notice boards, and centralized documentation practices. Integrated HRMS and payroll infrastructure will increasingly become essential rather than optional.
5. Build defensible disciplinary and inquiry procedures
Codification of suspension, inquiry, appeal, and subsistence allowance procedures increases procedural scrutiny in disciplinary matters. Employers should standardize domestic inquiry frameworks, train HR and managerial personnel on procedural fairness principles, and maintain detailed documentation.
6. Formalize operational controls around shifts and attendance
New labor standing orders include greater operational flexibility in managing shifts, transfers, and attendance systems, particularly for continuous operations and multi-shift establishments. However, this flexibility is accompanied by procedural obligations. Informal operational practices may create regulatory vulnerabilities under the new framework.
7. Treat payroll administration as a statutory risk area
Shortened timelines for wage settlement following resignation, dismissal, retrenchment, or closure significantly increase payroll compliance pressure. Employers managing large workforces or high attrition levels should strengthen payroll automation, settlement workflows, and approval systems to avoid delays that may trigger disputes or enforcement actions.
8. Strengthen confidentiality and conflict-of-interest safeguards
The comprehensive document provides employers with a clearer legal basis for regulating disclosure of confidential information, secondary employment, competing business activities, and workplace misconduct. Businesses must revisit confidentiality clauses, code-of-conduct policies, data governance practices, and conflict-of-interest disclosures to align with the expanded conduct framework.
9. Standardize workforce mobility and transfer policies
Employers should ensure that employment agreements expressly authorize transfers where operationally necessary and that mobility policies preserve continuity of service, wages, and employment conditions as required under the framework.
10. Integrate labor compliance into broader business continuity planning
MSO introduces structured obligations relating to operational disruptions, temporary closures, epidemics, and stoppages of work. Businesses should integrate labor compliance considerations into crisis management, workforce continuity, and operational resilience planning to ensure legally compliant responses during disruptions affecting production or workforce deployment.
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