Karnataka’s S&E Amendment Bill: Addressing the OSH Code Registration Overlap

On 24 August 2026, both Houses of the Karnataka Legislature passed the Karnataka Shops and Commercial Establishments (Amendment) Bill, 2026 (‘Bill’), seeking to amend the Karnataka Shops and Commercial Establishments Act, 1961 (‘S&E Act’). Among other things, the Bill exempts establishments already registered under the Occupational Safety, Health and Working Conditions Code, 2020 (‘OSH Code’) from separate registration under the S&E Act — addressing a key overlap that several other states have also moved to resolve.

The Bill also introduces electronic registration and communication, mandates service certificates for outgoing employees, prohibits employers from retaining original documents of employees, decriminalises several procedural defaults (replacing imprisonment with enhanced fines), restructures the existing compounding mechanism for offences, and provides for a statutory right of appeal against orders passed under the compounding provision.

Exemption from Parallel Registration under the S&E Act

The Bill inserts clause (k) in Section 3(1) of the S&E Act, exempting establishments employing ten or more workers that are already registered under the OSH Code. A proviso further clarifies that no separate registration shall be required for godowns or storage facilities situated within 100 metres of the principal establishment.

Section 3 of the OSH Code requires establishments employing 10 or more workers to register with the registering officer under the Code. Since the OSH Code covers the subject matter of registration, and welfare of labour is a concurrent subject, the principle of repugnancy under Article 254 of the Constitution applies — in case of conflict between central and state legislation, the central legislation prevails. Several states have acted on this:

• Maharashtra: Establishments employing 10 or more workers, once registered under the OSH Code, are not required to obtain separate registration under the Maharashtra Shops and Establishments (Regulation of Employment and Conditions of Service) Act, 2017 (‘MSEA’). Establishments employing fewer than 10 workers must continue to intimate commencement of business under the MSEA. Other provisions of the MSEA continue to apply to the extent not inconsistent with the OSH Code. [Circular of April 2026, accessible here]

• Haryana: Establishments registered under the OSH Code are exempt from registration (Section 13) and intimation of business commencement (Section 13A) under the Haryana Shops and Commercial Establishments Act, 1958 (‘HSEA’). This extends the exemption to the intimation requirement as well. Establishments must continue to comply with other provisions of the HSEA to the extent not inconsistent with the OSH Code. [Gazette notification of May 2026, accessible here]

• Bihar: The Bihar Shops and Establishments (Regulation of Employment and Conditions of Service) Act, 2025 has been repealed outright by ordinance (June 2026, accessible here). A savings clause preserves proceedings already initiated under the repealed Act.

• Puducherry: All shops and establishments registered under the OSH Code are exempt from registration under Section 7, and consequently from all provisions of the Puducherry Shops and Establishments Act, 1964 — the broadest exemption among these jurisdictions. The exemption is subject to compliance with all obligations under the OSH Code. [G.O. of March 2026, accessible here]

NASSCOM has similarly recommended that states exempt OSH-registered establishments from separate S&E Act registration, and clarify that the OSH Code prevails over S&E Acts to the extent of any overlap on registration, working hours, overtime, rest intervals, spread-over, and conditions for employment of women during night shifts.

What Else Changes for Employers

• Alignment with Central Labour Codes: The Bill proposes to replace the reference to the Payment of Wages Act, 1936 in Section 21 with the Code on Wages, 2019, and the reference to the Workmen’s Compensation Act, 1923 in Section 22 with the Code on Social Security, 2020 — each of these codes being a consolidating enactment that subsumes several earlier laws. Under the amended Section 22, the Code on Social Security and the rules made thereunder by the State Government would apply mutatis mutandis to employees and employers of shops and commercial establishments. However, the Bill does not amend Section 2(w), which defines ‘wages’ by reference to the Payment of Wages Act, 1936, nor Section 18, under which wages due under the Act may be recovered in accordance with the provisions of that This appears to reflect a conscious decision not to adopt the revised definition of wages within the S&E Act’s internal provisions.

• Digitisation: Registration applications, certificate issuance, renewals, and closure notifications are proposed to be made through electronic or digital mode (Sections 4 and 6).

• Lifetime Registration: Section 4(5) is proposed to be substituted to make registration valid until closure or cessation of business, replacing the earlier five-year renewal cycle. But Section 4(4) — which precedes it — is not proposed to be updated to match; it still says a certificate “shall be valid for five years and shall be renewed before the expiry of the period of registration certificate on payment of such fees,” with only “through electronic or digital mode” proposed to be added. So the Act would tie registration validity to business closure in 4(5), while 4(4) still talks about a fixed five-year term and renewal before expiry on payment of fees — a contradiction that will need to be resolved.

• Faster Deemed Registration: An Inspector’s window to refuse registration is reduced from 30 to 7 days (Section 4(3A)).

• Service Certificate: Employers would be required to issue a service certificate within seven days of receiving an application from an outgoing employee (new Section 6-B). Contravention would attract penalties under Section 30(1).

• Prohibition on Retention of Documents: Employers would be prohibited from retaining original educational, experience, or other certificates of employees (new Section 6-C). Contravention would attract penalties under Section 30(1).

• Removal of Night Shift Safeguards: Clauses (h) through (o) of Section 25(1), which prescribed specific operational safety requirements for women working night shifts (including driver antecedent verification, route planning, confidentiality of personal details, control rooms, and emergency apps), are proposed to be omitted. Section 43 of the OSH Code, read with the Central OSH Rules (May 2026) and Karnataka’s draft OSH Rules (January 2026), also prescribes conditions for women’s night shifts — including free transport, CCTV, lighting, washroom facilities, minimum batch sizes, and dormitories. However, several of the S&E Act’s specific operational requirements — particularly driver antecedent verification, route planning, and vehicle monitoring — do not have direct equivalents under the OSH Code or the rules. Both frameworks would continue to apply concurrently, but with these clauses removed, the S&E Act would no longer prescribe them. Core conditions under clauses (a) through (g) and (p) — covering consent, transport, GPS, rotation, security, rest rooms, and crèche costs — remain.

• Decriminalisation: Imprisonment is proposed to be removed for most offences, including false claims of deemed registration benefits and violations of Sections 24 (employment of children) and 25 (employment of women during night). For procedural defaults under Sections 30(1) and 30(2), fines would be substantially enhanced. For violations of Sections 24 and 25, imprisonment is replaced with fines (not less than ₹10,000). In respect of child employment, the Child and Adolescent Labour (Prohibition and Regulation) Act, 1986 — which carries imprisonment of 6 months to 2 years and fines of ₹20,000–₹50,000 for employing a child — continues to operate as a standalone central enactment. Decriminalising the offence under the S&E Act therefore does not leave a regulatory vacuum, though it does reduce one layer of deterrent.

• Compounding of Offences: The existing Section 33-A is proposed to be substituted. All offences under the Act would be compoundable at 50% of the prescribed fine (first offence) or 75% (subsequent offence). Notably, offences under Sections 24 and 25, which are expressly excluded from compounding under the existing provision, would now be included.

• Right to Appeal: Any person aggrieved by an order passed under the compounding provision (Section 33-A) would be able to appeal to a notified appellate authority (not below Assistant Labour Commissioner) within 30 days. The fine amount would need to be deposited before the appeal is entertained, and appeals would be required to be disposed of within 60 days (new Section 33-B).

Concluding Thoughts

The Bill awaits the Governor’s assent. Once enacted, it will bring Karnataka in line with Maharashtra, Haryana, Puducherry, and Bihar in addressing the overlap between state S&E laws and the OSH Code on the registration front. More broadly, the emerging legislative pattern across states reflects a move toward rationalising state S&E legislation in light of the central labour codes — whether through targeted exemptions (Maharashtra, Haryana), blanket exemptions (Puducherry), or outright repeal (Bihar).