India: The State of Bihar Repeals its Shops and Establishments Act to Mitigate Overlap with the OSH Code

Authors: Avik Biswas, Ivana Chatterjee, and Kevin Kennedy

Background

On 01 June 2026, the Governor of Bihar promulgated the Bihar Shops and Establishments (Regulation of Employment and Conditions of Service) (Repeal) Ordinance, 2026 (“Ordinance“), repealing the Bihar Shops and Establishments (Regulation of Employment and Conditions of Service) Act, 2025 (“Bihar S&E Act“) with immediate effect.

The Bihar S&E Act regulated the employment conditions of employees engaged in shops and commercial establishments across the State, covering matters such as working hours, overtime, leave entitlements and health & safety obligations, amongst others.

 

Why the Repeal Matters:

(a) Addressing Legislative Overlap:

A key rationale for repealing the Bihar S&E Act was to eliminate the overlap between the State legislation and the Labour Codes which came into force on 21 November 2025, particularly the Occupational Safety, Health and Working Conditions Code, 2020 (“OSH Code“).

The OSH Code (as well as the other Labour Codes) consolidated specified Central labour legislations but did not expressly repeal or override State specific shops and establishments laws. Consequently, following the enforcement of the Labour Codes, employers in Bihar (amongst other States) were required to navigate parallel legal frameworks governing substantially similar aspects of employment conditions, including working hours, leave entitlements and other conditions of service. This created uncertainty regarding the extent to which the Bihar S&E Act continued to apply alongside the OSH Code.

This was further aggravated by Section 120 of the OSH Code which provided that the provisions of the OSH Code would prevail over any inconsistent law, agreement or contract of service with the exception where an employee is receiving more favourable benefits available under any law, agreement or contract of service. The coexistence of these provisions gave rise to interpretational uncertainty, particularly in determining whether provisions of the Bihar S&E Act that were more beneficial to employees would continue to operate despite the overriding effect of the OSH Code.

 

(b) What the Repeal Resolves:

The repeal of the Bihar S&E Act removes the dual regulatory framework that came into existence following the enforcement of the OSH Code. Consequently, employers in Bihar are no longer required to navigate 2 overlapping statutory regimes governing the same aspects of employment conditions.

From a compliance perspective, the repeal brings much-needed certainty by making the OSH Code and the rules framed thereunder by the State of Bihar the sole statutory framework governing shops and commercial establishments in the State. This eliminates the need for employers to undertake a comparative assessment of the Bihar S&E Act and the OSH Code to determine which provisions are more beneficial to employees and therefore continue to apply.

 

Outstanding Issues:

Although the OSH Code is in force, the Bihar Rules under the OSH Code have not yet been notified in their final form. Several operational requirements, including rest intervals, spread over of working hours, overtime and health and safety measures, are intended to be prescribed under the State Rules. These matters were previously governed under the Bihar S&E Act. Until the Bihar Rules are notified, uncertainty remains regarding the applicable requirements on these aspects. Further, unlike the repealed Bihar S&E Act, neither the OSH Code nor the Bihar Rules under the OSH Code provide for statutory entitlements relating to sick leave and casual leave. As a result, there is currently no specific statutory framework in Bihar governing these leave entitlements.

 

Other Considerations:

It is pertinent to note that an ordinance is a temporary legislative measure. Under Article 213 of the Constitution of India, an ordinance ceases to operate upon the expiry of 6 weeks from the date on which the State Legislature reassembles, unless it is replaced by an enactment passed by the State legislature and assented to by the Governor. Accordingly, while the repeal has taken immediate effect, it will attain permanence only if the Ordinance is subsequently replaced by legislation enacted by the State Legislature of Bihar.

Key Action Points for Human Resources and In-house Counsel:

Employers operating shops and commercial establishments in Bihar should review their existing compliance framework in light of the repeal of the Bihar S&E Act. To the extent the provisions of the OSH Code are presently enforceable, employers should ensure compliance with those requirements, subject to further clarifications from the Government.

Employers should also prepare for compliance with the Bihar Rules under the OSH Code once they are notified in their final form by reviewing their existing policies and processes. In addition, employers should continue to monitor legislative developments, including the enactment of legislation replacing the Ordinance and the notification of the Bihar Rules under the OSH Code.