Running a business in Delhi in 2026? You are required to comply with at least 12 different labour laws — from the newly amended Delhi Shops & Establishments Act to EPF, ESI, minimum wages, POSH, and maternity benefits. Miss even one, and you risk fines up to ₹1 lakh, imprisonment, or licence cancellation.
This guide breaks down every labour law applicable to Delhi employers in plain language — what applies to you, what you must do, the exact rates and deadlines, and the penalties for non-compliance. Whether you run a 5-person startup in Saket or a 500-employee IT company in Nehru Place, this is your single reference for staying compliant in 2026.
Last updated: March 2026 — includes the Delhi Shops & Establishments (Amendment) Act, 2026 notified on 11 March 2026 and the new Labour Codes expected from April 2026.
1. Delhi Shops & Establishments Act, 1954 (Amended 2026)
This is the primary law governing every shop, office, restaurant, and commercial establishment in Delhi. The 2026 Amendment — notified on 11 March 2026 after Presidential assent on 23 February — brings significant changes that every employer must understand.
Who Does It Apply To?
After the 2026 amendment, the Act applies to establishments employing 20 or more employees. Previously, there was no minimum threshold. This change provides regulatory relief to micro-establishments, but if you cross 20 employees, you must register and comply immediately.
Key Changes in the 2026 Amendment
| Parameter | Old Rule (Pre-2026) | New Rule (2026 Amendment) |
|---|---|---|
| Applicability | All establishments | 20+ employees only |
| Daily working hours | 9 hours (incl. breaks) | 10 hours (incl. breaks) |
| Weekly hours | 48 hours | 48 hours (unchanged) |
| Continuous work without break | 5 hours max | 6 hours max |
| Spread-over limit | Varied | 12 hours uniform |
| Overtime cap (weekly) | 54 hours | 60 hours |
| Overtime cap (quarterly) | 150 hours/year | 144 hours/quarter |
| Minimum employment age | 12 years | 14 years |
| Women night shifts | Not permitted | Allowed with safeguards (min. 2 women, transport) |
| POSH compliance | Not mandated under this Act | Mandatory for all covered establishments |
Registration Requirements
Employers must register their establishment with the Delhi Labour Department through the e-District Delhi portal. Required documents include:
- PAN card of the business/owner
- Proof of business address (rent agreement or ownership deed)
- List of employees with Aadhaar details
- Details of working hours and weekly off
Important: The effective date for the 2026 amendment provisions has not been notified yet. Until then, the existing 1954 provisions continue to apply. However, employers should prepare now — the notification can come at any time.
Leave Entitlements Under the Act
| Leave Type | Entitlement | Rules |
|---|---|---|
| Earned Leave (EL) | 15 days/year | After 12 months of continuous service |
| Casual Leave (CL) | 12 days/year | Cannot be carried forward |
| Sick Leave (SL) | 12 days/year | Half-pay; may require medical certificate for 3+ days |
| National Holidays | 3 days (Republic Day, Independence Day, Gandhi Jayanti) | Mandatory paid holidays |
HR Tip: Automate leave tracking with leave management software to avoid manual errors and ensure every leave type is correctly calculated for payroll deductions.
2. Minimum Wages in Delhi (October 2025 – March 2026)
Every employer in Delhi must pay at least the government-mandated minimum wage based on the employee’s skill category. Delhi revises minimum wages twice a year — in April and October — by adjusting the Variable Dearness Allowance (VDA) based on the Consumer Price Index.
Current Minimum Wage Rates
| Category | Monthly (₹) | Daily (₹) |
|---|---|---|
| Unskilled (helpers, sweepers, loaders) | ₹18,066 | ₹695 |
| Semi-Skilled (drivers, machine operators) | ₹20,000 | ₹769 |
| Skilled (electricians, mechanics, plumbers) | ₹22,022 | ₹847 |
| Highly Skilled (supervisors, foremen) | ₹24,388 | ₹938 |
| Clerical (Graduate) | ₹22,022 | ₹847 |
| Clerical (Matriculate) | ₹20,000 | ₹769 |
Rates include Basic + VDA. Source: Govt. of NCT of Delhi. For the full rate card with hourly breakdown, see our Delhi Minimum Wages page.
Penalties for Paying Below Minimum Wage
Under the new Labour Codes, non-compliance with minimum wage rules can result in:
- Fine of up to ₹50,000 for first offence
- Fine up to ₹1,00,000 and/or imprisonment up to 3 months for repeated offence
Compliance Tip: Set up automated salary rules in your payroll software to flag any salary below the current minimum wage — this catches errors before they become violations.
3. Employees’ Provident Fund (EPF)
The Employees’ Provident Funds & Miscellaneous Provisions Act, 1952 applies to every establishment in Delhi with 20 or more employees. Once covered, the establishment remains covered even if the employee count drops below 20.
Contribution Rates
| Component | Employee Share | Employer Share |
|---|---|---|
| EPF | 12% of Basic + DA | 3.67% of Basic + DA |
| EPS (Pension) | — | 8.33% of Basic + DA (max ₹15,000) |
| EDLI (Insurance) | — | 0.50% of Basic + DA |
| Admin Charges | — | 0.50% of Basic + DA |
Wage ceiling: EPF is mandatory for employees earning Basic + DA up to ₹15,000/month. Employees earning above this can opt out (if joining for the first time), but most employers extend EPF to all employees.
Key Deadlines
- Monthly contribution deposit: 15th of the following month
- ECR (Electronic Challan cum Return): Along with payment by 15th
- Annual return: 25th April every year
Penalties
- Late payment: Interest at 12% per annum on delayed deposits
- Damages: 5% to 25% of arrears depending on delay period
- Non-compliance: Imprisonment up to 3 years and/or fine up to ₹5,000
Pro Tip: Use our free PF Calculator to verify employer and employee contributions instantly.
4. Employees’ State Insurance (ESI)
The ESI Act, 1948 provides medical benefits, sickness benefits, maternity benefits, and disability coverage to employees. It applies to establishments in Delhi with 10 or more employees where any employee earns a gross salary of ₹21,000/month or less.
Contribution Rates
| Contributor | Rate | Example (₹21,000 Gross) |
|---|---|---|
| Employee | 0.75% of Gross Salary | ₹157.50 |
| Employer | 3.25% of Gross Salary | ₹682.50 |
| Total | 4% | ₹840 |
Key Deadlines
- Monthly contribution: 15th of the following month
- Half-yearly return: 12th May (for October – March) and 12th November (for April – September)
Benefits Covered
- Free medical treatment at ESIC hospitals and dispensaries
- Sickness benefit: 70% of wages for up to 91 days
- Maternity benefit: Full wages for 26 weeks
- Disablement benefit: 90% of wages (temporary) or pension (permanent)
- Dependent’s benefit: 90% of wages as pension to dependents
Calculate It: Use our free ESI Calculator to compute exact employer and employee contributions.
5. Professional Tax — Not Applicable in Delhi
Here is some good news for Delhi employers — Delhi does not levy Professional Tax. Unlike states such as Maharashtra, Karnataka, or West Bengal where employers must deduct and remit professional tax monthly, Delhi has not implemented this tax.
However, be careful if you have employees in other NCR cities:
- Noida/Ghaziabad (Uttar Pradesh): No Professional Tax
- Gurugram/Faridabad (Haryana): No Professional Tax
If you have branches in states like Maharashtra, Karnataka, or Telangana, you must deduct PT for employees working from those locations. Read our Professional Tax Guide for a state-by-state breakdown.
6. Maternity Benefit Act, 1961
Applies to every establishment in Delhi with 10 or more employees. Employers cannot deny or delay maternity benefits — doing so invites penalties, litigation, and serious reputational damage.
Entitlements
| Benefit | Entitlement |
|---|---|
| Maternity Leave (1st & 2nd child) | 26 weeks paid leave (8 weeks pre-delivery + 18 weeks post) |
| Maternity Leave (3rd child onwards) | 12 weeks paid leave |
| Adoptive / Commissioning Mother | 12 weeks from the date of handover |
| Miscarriage / MTP | 6 weeks paid leave |
| Crèche Facility | Mandatory if 50+ employees |
| Work from Home | Employer may allow WFH after maternity leave, if nature of work permits |
Employer Obligations
- Pay full wages during maternity leave (average of last 3 months’ salary)
- Cannot terminate or issue a discharge during maternity leave
- Must allow 2 nursing breaks daily until the child is 15 months old
- Provide crèche facility if you have 50+ employees — allow 4 visits per day
7. POSH Act (Prevention of Sexual Harassment at Workplace)
Every employer in Delhi with 10 or more employees must comply with the POSH Act, 2013. The 2026 Delhi Shops & Establishments Amendment has made POSH compliance mandatory for all covered establishments — making this non-negotiable.
Compliance Checklist
- Constitute an Internal Complaints Committee (ICC) — must include a presiding officer (senior woman employee), at least 2 employee members, and 1 external member from an NGO/legal background
- Draft and display a POSH policy — visible at the workplace
- Conduct awareness training — at least once a year for all employees
- File Annual Report — with the District Officer (cases received, action taken, pending)
Penalties for Non-Compliance
- First offence: Fine up to ₹50,000
- Repeated violation: Fine up to ₹1,00,000 + potential cancellation of business licence
8. Delhi Labour Welfare Fund (LWF)
Applies to every establishment in Delhi with 5 or more employees. The amounts are small, but missing the filing attracts disproportionate penalties.
Contribution Rates (Half-Yearly)
| Contributor | Amount Per Employee |
|---|---|
| Employee | ₹0.75 |
| Employer | ₹2.25 |
| Government | ₹1.50 (matching) |
| Total | ₹4.50 per employee per half-year |
Due Dates
- Contribution period: January – June and July – December
- Filing deadline: 15th July and 15th January
- File through the Delhi Labour Welfare Board portal
9. Payment of Gratuity Act, 1972
Applies to every establishment in Delhi with 10 or more employees. Once applicable, it remains applicable even if employee count drops below 10.
Eligibility & Calculation
- Who qualifies: Any employee who has completed 5+ years of continuous service
- Formula: (Last drawn salary × 15 × Years of service) ÷ 26
- Maximum limit: ₹25,00,000 (increased from ₹20 lakhs)
- Payment timeline: Within 30 days of it becoming payable
Example: An employee with a last drawn salary of ₹40,000 and 8 years of service: (₹40,000 × 15 × 8) ÷ 26 = ₹1,84,615
Quick Calculate: Use our Gratuity Calculator to compute the exact amount for any employee.
10. Payment of Bonus Act, 1965
Applies to every establishment in Delhi with 20 or more employees.
Key Rules
| Parameter | Rule |
|---|---|
| Eligible employees | Drawing salary up to ₹21,000/month |
| Minimum bonus | 8.33% of salary (even if company makes no profit) |
| Maximum bonus | 20% of salary |
| Calculation ceiling | ₹7,000/month (even if actual salary is higher) |
| Payment deadline | Within 8 months of closing the accounting year |
11. Factories Act, 1948 (For Manufacturing Units)
If you run a factory in Delhi, additional compliances apply beyond the Shops & Establishments Act.
Applicability
- With power: 10+ workers = classified as a factory
- Without power: 20+ workers = classified as a factory
- Location: Must be in a Conforming Industrial Area of Delhi
Compliance Requirements
- Factory Plan Approval from Chief Inspector of Factories
- Factory Licence (annual renewal via e-District Delhi portal)
- Fire Safety NOC from Delhi Fire Service
- DPCC Certificate (Delhi Pollution Control Committee)
- Occupational health and safety measures as per the Act
- Maintain registers: overtime, leave, wages, accidents, health records
Penalties
Operating a factory without registration and licence: Fine up to ₹1,00,000 or imprisonment up to 2 years or both.
12. New Labour Codes 2026 — What’s Coming
Four new Labour Codes are expected to be implemented from April 2026. These will consolidate 29 existing labour laws into 4 unified codes. Draft rules were published on 30 December 2025 and the feedback period closed on 14 February 2026.
The Four Codes
| Code | Replaces | Key Change for Delhi Employers |
|---|---|---|
| Code on Wages, 2019 | 4 Acts (Min. Wages, Payment of Wages, Bonus, Equal Remuneration) | National floor wage; Basic must be ≥50% of CTC |
| Code on Social Security, 2020 | 9 Acts (EPF, ESI, Gratuity, Maternity, etc.) | Gig/platform workers get social security; gratuity from day one |
| Industrial Relations Code, 2020 | 3 Acts (Industrial Disputes, Trade Unions, Standing Orders) | Fixed-term employment recognised; retrenchment threshold raised to 300 |
| OSH Code, 2020 | 13 Acts (Factories, Shops & Establishments, Contract Labour, etc.) | One registration for all labour laws; annual health checkups mandatory |
The 50% Basic Salary Rule
This is the biggest impact for Delhi employers. Under the Code on Wages, “Wages” must be at least 50% of total remuneration (CTC). This means:
- If your employees’ Basic + DA is less than 50% of CTC, you must restructure
- Higher Basic = higher EPF, ESI, gratuity, and leave encashment liabilities
- Employer payroll costs could increase by 8-12% depending on current salary structures
Action Item: Start restructuring salary components NOW. Use our CTC to In-Hand Calculator to model the impact of the 50% rule on your employees’ take-home pay.
Complete Compliance Checklist for Delhi Employers
Use this checklist to ensure you are covering all mandatory compliances:
| Compliance | Applies If | Frequency | Deadline |
|---|---|---|---|
| Shops & Establishment Registration | 20+ employees (post-amendment) | One-time + annual renewal | Within 30 days of starting business |
| EPF Contribution | 20+ employees | Monthly | 15th of next month |
| ESI Contribution | 10+ employees, salary ≤₹21K | Monthly | 15th of next month |
| Minimum Wages Revision Check | All employers | Twice a year | April & October |
| TDS on Salary | All employers | Monthly | 7th of next month |
| Labour Welfare Fund | 5+ employees | Half-yearly | 15th July & 15th January |
| Bonus Payment | 20+ employees | Annual | Within 8 months of FY close |
| Gratuity | 10+ employees | On exit (5+ yrs service) | Within 30 days |
| POSH Annual Report | 10+ employees | Annual | 31st January |
| Maternity Benefits | 10+ employees | As applicable | Before leave begins |
| Factory Licence Renewal | Factories only | Annual | Before 31st December |
How HR Software Automates Delhi Labour Law Compliance
Managing 12+ labour laws manually — with different deadlines, rates, and rules — is a compliance disaster waiting to happen. Here is how an HRMS built for Delhi businesses eliminates this risk:
- Auto-calculated EPF & ESI — contributions computed every payroll cycle based on current rates
- Minimum wage alerts — system flags salaries below the current Delhi minimum wage before payroll runs
- TDS auto-deduction — computes tax based on declared investments and regime choice
- Leave balance tracking — CL, SL, EL tracked per the Shops & Establishments Act rules
- Bonus calculation engine — computes statutory bonus per the Payment of Bonus Act formula
- Gratuity provisioning — accrues gratuity liability monthly so there are no surprises at exit
- LWF reminders — alerts before the 15th July and 15th January deadlines
- POSH compliance module — ICC member management, complaint tracking, annual report generation
Book a free demo to see how automated compliance works for your Delhi business — setup takes 15 minutes.
Frequently Asked Questions
Is Professional Tax applicable in Delhi?
No. Delhi does not levy Professional Tax. However, if you have employees working from states like Maharashtra, Karnataka, or West Bengal, you must deduct PT for those employees based on the respective state rules.
What is the minimum wage in Delhi in 2026?
For the period October 2025 – March 2026, Delhi minimum wages range from ₹18,066/month (unskilled) to ₹24,388/month (highly skilled). New rates for April – September 2026 will be announced by the Delhi government. Check our updated minimum wages page for the latest rates.
When will the new Labour Codes be implemented?
The four Labour Codes are expected to be implemented from April 2026. The central government published draft rules on 30 December 2025, and state governments are finalising their own rules. Delhi employers should start preparing for the 50% basic salary rule now.
Does the Shops & Establishments Act apply to IT companies?
Yes. IT companies, BPOs, consultancies, and all commercial establishments in Delhi are covered under the Delhi Shops & Establishments Act. After the 2026 amendment, only establishments with 20+ employees are covered.
What happens if I miss the EPF payment deadline?
Late EPF deposits attract interest at 12% per annum from the due date. Additionally, damages ranging from 5% to 25% of the arrears can be levied depending on the delay period. Persistent non-compliance can result in imprisonment up to 3 years.
Is ESI applicable if all my employees earn above ₹21,000?
If none of your employees earn a gross salary of ₹21,000 or less, ESI contributions are not required. However, if even one employee earns ≤₹21,000 gross, the establishment must register with ESIC and make contributions for all eligible employees.
