Karnataka Labour Compliance for Employers with 100+ Staff: 2026 Guide
This guide explains Karnataka labour compliance for employers with 100 or more staff, including where the Karnataka labour code rules stand today. Karnataka, led by Bengaluru, has one of India’s largest concentrations of technology, GCC and manufacturing employers. The state amended its Shops Act in September 2026 and is still finalising its Labour Code rules.
The four central Labour Codes have been in force since 21 November 2025. Karnataka has published draft rules under the Codes, including the draft OSH (Karnataka) Rules of 23 January 2026 and draft Social Security rules of 29 January 2026. As of 7 November 2026, they are not final. This guide sets out what an employer with 100 or more staff in Karnataka needs to manage today.
Karnataka Labour Compliance at a Glance
| Area | Position (checked 7 November 2026) |
|---|---|
| Labour Code state rules | Draft only (2026) |
| Shops and Establishments | Karnataka Shops and Commercial Establishments Act 1961, amended 4 September 2026; registration valid until closure |
| Professional Tax | Rs 200 a month from Rs 25,000, Rs 300 in February |
| Labour Welfare Fund | Rs 50 employee, Rs 100 employer, yearly, due 15 January |
| Contractor licence | 50+ contract labour (OSH Code) |
Contract Labour Compliance in Karnataka: Principal Employer Duties under the OSH Code
Since 21 November 2025, contract labour across India is governed by the Occupational Safety, Health and Working Conditions Code, 2020 (the OSH Code), which replaced the Contract Labour (Regulation and Abolition) Act, 1970. For an employer with 100 or more staff, the Code changes four things.
| Requirement | What the OSH Code says |
|---|---|
| Establishment registration | Every establishment with 10 or more workers registers electronically within 60 days (s.3). An unregistered establishment cannot employ workers. |
| Contractor licence | Required where a contractor engages 50 or more contract labour (s.45, s.47). One licence is valid for 5 years (s.48). |
| Welfare and wages | The principal employer provides welfare facilities to contract labour (s.53) and pays any wages the contractor fails to pay, recovering them from the contractor (s.55). |
| Core activities | Contract labour is not permitted in core activities, except in three cases set out in s.57. |
Engaging contract labour through a contractor who needed a licence and did not hold one is treated as a contravention by the principal employer (s.54). Contractor licence checks should therefore be part of every vendor onboarding.
Contract labour in Karnataka today
Until the final state rules are notified, rules made under the old Contract Labour Act continue to the extent they are not contrary to the OSH Code (s.143). The draft rules propose new registration and licence fees, including a security deposit per contract worker; these are not yet in force.
Professional Tax in Karnataka
Employees earning Rs 25,000 or more a month pay Rs 200 a month and Rs 300 in February (Rs 2,500 a year). Employers register within 30 days of becoming liable, deposit the tax deducted within 20 days of the end of each month, and file an annual return within 60 days of the end of the year. Companies also pay their own Professional Tax of Rs 2,500 a year.
Labour Welfare Fund in Karnataka
The annual contribution is Rs 50 per employee and Rs 100 by the employer (with Rs 50 from the State), payable by 15 January for the previous calendar year, online only through the Karnataka Labour Welfare Board portal. Late payment attracts interest of 12% for the first three months and 18% after that.
Shops and Establishments in Karnataka
The Karnataka Shops and Commercial Establishments (Amendment) Act, 2026 (Act 38 of 2026, in force 4 September 2026) made several changes relevant to large employers:
- Registration is valid until the establishment closes; there is no renewal.
- If the Inspector does not act within 7 days, registration is deemed granted.
- Employers must issue a service certificate within 7 days of a request and must not retain employees’ original certificates.
- Establishments with 10 or more workers registered under the OSH Code are taken outside the Shops Act.
| Rule | Position |
|---|---|
| Registration fee | Rs 54,000 (100 to 250 staff), Rs 67,500 (251 to 500), Rs 94,500 (501 to 1,000), Rs 1,01,250 (above 1,000) |
| Working hours | 9 a day, 48 a week; with overtime, up to 10 hours a day |
| Leave | 1 day per 20 days worked, carry-forward up to 45 days; sickness leave up to 12 days a year |
| Women at night | Written consent, free GPS-tracked transport with security, guards and rest rooms |
Karnataka also provides one day of paid menstrual leave a month for women employees aged 18 to 52 (order of 12 November 2025).
Karnataka Labour Compliance Checklist for Multi-State Employers
Most employers with 100 or more staff operate in more than one state. The central Codes are common, but registrations, Professional Tax, LWF and shop rules are state by state. A practical control list:
- Map every site and headcount by state, including contract labour on any day of the last 12 months.
- Confirm OSH Code establishment registration for each site with 10 or more workers.
- Keep a register of contractors with licence numbers, validity, states covered and permitted headcount.
- Set Professional Tax and LWF deductions in payroll by work location, not by head office.
- Track each state’s due dates in one calendar: PT is monthly in some states and half-yearly in others.
- Check Shops and Establishments registration or intimation for every office, store and branch.
- Review night-shift approvals and conditions for women employees state by state.
- Recheck each state’s Labour Code rules every quarter: several states are still at the draft stage.
How TMS Supports Large Employers in Karnataka
Team Management Services manages statutory compliance, payroll and contract labour governance for employers across India, including OSH Code registrations, contractor licence audits, Professional Tax and LWF filings, and Shops and Establishments registrations. See our HR services in Karnataka and contract labour compliance services, or speak to our compliance team.
Frequently Asked Questions
What is the Professional Tax rate in Karnataka?
Rs 200 a month for employees earning Rs 25,000 or more, with Rs 300 in February, totalling Rs 2,500 a year.
Does Karnataka Shops Act registration need renewal?
No. Since the amendment of 4 September 2026, registration is valid until the establishment closes.
When is Karnataka LWF due?
By 15 January each year, online, at Rs 50 per employee and Rs 100 by the employer.
Related Reading
- Statutory compliance services in Bengaluru
- Professional Tax rates 2026, state by state
- Labour Code state rules 2026: what each state decides
Sources
- Karnataka Commercial Taxes Department: Professional Tax Act and notifications
- Karnataka Labour Welfare Board
- Karnataka Labour Department: Acts, amendments and draft rules
- Ministry of Labour and Employment: Labour Codes
Last checked: 7 November 2026. Where state rules are still in draft, positions may change when final rules are notified. This guide is general information, not legal advice.