2026 India Public Holidays for Private Establishments | Shops Act, OSH Code & Wage Code Compliance Guide

1. The Core Point: There Is No Single Pan-India Law

A common misconception among employers is that when a state government declares a “public holiday,” every private establishment in that state must close. This is not how Indian law works.

Private establishment holiday obligations in India are governed by a layered framework:

1. State Shops and Establishments Acts — the primary source of holiday entitlements for shops, commercial establishments, and offices (including most IT/ITES entities).
2. State-specific industrial establishments holiday statutes — e.g., Karnataka’s National and Festival Holidays Act.
3. The Occupational Safety, Health and Working Conditions Code, 2020 (OSH Code) — in force from 21 November 2025.
4. The Code on Wages, 2019 — also in force from 21 November 2025, which now governs the wage base against which holiday overtime and double wages must be calculated.
5. The Negotiable Instruments Act, 1881, Section 25 — under which annual “public holiday” notifications are issued, but which primarily governs banking and negotiable instrument transactions, not private employment entitlements.

The distinction between the labour statutes (1–4) and the NI Act (5) is where most compliance confusion arises.

2. Why “Public Holiday” Notifications Do Not Automatically Bind Private Employers

Each year, state governments issue notifications declaring a list of “public holidays” for the coming calendar year. These notifications are typically issued in exercise of powers under Section 25 of the Negotiable Instruments Act, 1881.

Section 25 of the NI Act provides that a negotiable instrument may be presented for payment on the next succeeding business day if the date on which it falls is a public holiday. The provision exists to protect banking and commercial paper transactions and it does not create a labour-law entitlement to a paid day off.

So when a state notification says “the following days shall be Public Holidays throughout the State,” the legally accurate reading is:

• Government offices will be closed (by administrative order).
• Banks will observe the holidays for NI Act purposes.
• Private establishments are not automatically bound — their obligations flow from the Shops and Establishments Act or other labour statutes applicable to them.

This is the single most important point for an employer asking, “Do I have to close tomorrow?“

3. The OSH Code, 2020: What It Does and Does Not Do

The Occupational Safety, Health and Working Conditions Code, 2020 came into force on 21 November 2025, consolidating 13 central labour statutes including the Factories Act, 1948, the Contract Labour (Regulation and Abolition) Act, 1970, and the Inter-State Migrant Workmen Act, 1979.

3.1 What the OSH Code Covers on Leave

Section 32 of the OSH Code deals with annual leave with wages:

• A worker who has worked for 180 days or more in a calendar year is entitled to paid annual leave.
• Leave accrues at one day for every 20 days worked (for adult workers), with more favourable accrual for adolescent workers and mine workers below ground.

3.2 What the OSH Code Does Not Do and What It Does Do on Weekly Offs

Critically, the OSH Code does not contain a national list of compulsory festival or national holidays. It regulates annual leave, not public/festival holidays. So the OSH Code does not answer the question “must I close on 2nd October?”; it answers “how much annual leave must I give?”

However, the OSH Code does regulate weekly holidays. Section 26 mandates a weekly day of rest and provides for compensatory days off where the weekly holiday is not granted or where it is displaced. This matters directly for public holidays because a state-mandated holiday may coincide with an employee’s scheduled weekly off, triggering distinct compensatory rules rather than a simple day off.

3.3 The Overlap Problem

As of 2026, state Shops and Establishments Acts have not been automatically repealed by the OSH Code. Several states have issued transitional clarifications. For example:

• Maharashtra and Haryana have indicated that establishments registered under the OSH Code need not obtain separate registration under the state Act, but must still comply with state provisions to the extent they are not inconsistent with the central Code.
• Bihar is so far the only state to have fully repealed its Shops and Establishments Act, by ordinance, citing overlap with the OSH Code. In Bihar, the transitional vacuum is now governed by the central OSH Code and its corresponding state rules.

The practical rule for employers: until your specific state formally repeals its Shops and Establishments Act, dual compliance (state Act and OSH Code) remains the mandatory default.

4. How to Determine Whether a Holiday Is Mandatory for a Private Establishment

The following is a practical, legally grounded method any employer or advisor can apply.

Step 1: Identify the Correct State Statute

Confirm which statute governs the establishment. For most private commercial entities viz. offices, shops, service establishments, and IT/ITES companies, this will be the state Shops and Establishments Act. For factories and industrial establishments, additional or different statutes may apply.

Step 2: Check the Statutory Definition of “Establishment”

Open the Definitions section of the applicable Act and confirm that the client’s activity falls within the definition of “shop,” “commercial establishment,” or “establishment.” This is the threshold question. If the entity is not covered, the Act’s holiday provisions do not bind it.

Step 3: Distinguish Between “Public Holiday” and “Statutory Holiday Entitlement”

Do not rely on the annual government holiday notification alone. Instead:

• Look for an explicit holiday provision in the Shops and Establishments Act or the relevant industrial holidays statute.
• Check whether the specific date is named in the statute or in a rule/notification issued under the statute (as opposed to a NI Act notification).

Step 4: Distinguish National Holidays from Festival Holidays

Indian labour jurisprudence draws a strict distinction between National Holidays and State/Festival Holidays, and the compliance consequences differ materially.

National Holidays — Republic Day (26 January), Independence Day (15 August), and Gandhi Jayanti (2 October) are governed by rigid mandatory provisions across states and offer virtually zero flexibility for blanket exemptions.

Festival Holidays — Diwali, Holi, Eid, and similar holidays often permit compensatory off or regular operation under IT/ITES exemptions, subject to conditions.

The practical implication: where a Festival Holiday may allow an employer to operate with comp-off, a National Holiday typically mandates closure or imposes much stricter penal compensation; in several states, mandatory double pay plus a comp-off rather than an either/or choice.

Step 5: Check for Exemptions and Sectoral Carve-Outs

Many states grant exemptions to categories such as:

• IT/ITES establishments,
• Essential services (hospitals, utilities, transport),
• Continuous-process industries,
• Establishments below a certain employee threshold.

These exemptions may permit operation on a holiday subject to conditions such as compensatory off or double wages.

Step 6: Review Employment Contracts and Standing Orders

Even where a holiday is not statutorily mandatory, the employment contract, appointment letter, HR policy, or certified standing orders may create a contractual entitlement. A contractual obligation is enforceable even if the statute is silent.

5. IT/ITES Establishments: A Distinct Compliance Position

IT/ITES establishments occupy a special position in Indian holiday compliance for several reasons.

5.1 Why IT/ITES Differ

• They are frequently covered by state-specific IT/ITES exemption notifications under the Shops and Establishments Act, which permit 24×7 operations and relaxed holiday and working-hour requirements.
• They often operate global delivery models requiring coverage on Indian public holidays to serve overseas clients.
• They typically rely on compensatory off (comp-off) arrangements rather than blanket closure.

5.2 The Legal Basis for IT/ITES Exemptions and Their Limits

State governments routinely issue notifications under the Shops and Establishments Act exempting IT/ITES establishments from provisions such as:

• Fixed opening and closing hours,
• Weekly holiday rigidity,
• Restrictions on women’s night work (subject to safety conditions),
• Certain holiday closure requirements.

These exemptions are conditional and time-limited. Typical conditions include:

• Maintaining registers of employees working on holidays,
• Providing compensatory off within a specified period,
• Payment of overtime or double wages where applicable,
• Ensuring weekly off is not denied.

Critically, these exemption notifications are not permanent legal shields. They typically carry a validity period (often one to five years) and must be actively renewed by the employer or the relevant industry body. Operating on an expired exemption notification is a common and costly compliance failure; the employer is treated as having operated without any exemption at all.

5.3 Shift Overlap and Time zone Realities

A statutory holiday in India is legally defined as running from midnight to midnight. IT/ITES employees frequently work night shifts; for example, 10:00 PM on 1 October to 6:00 AM on 2 October to align with US or UK business hours.

This creates a genuine compliance question: which shift attracts holiday pay or comp-off?

Standard legal practice is that the shift in which the majority of working hours fall determines the character of the shift. More conservative employers grant holiday benefits if any part of the shift touches the midnight-to-midnight holiday window. Either approach can be defensible, but it must be defined in the HR policy in advance, applied consistently, and documented. Leaving it undefined invites disputes and wage claims.

6. The Code on Wages, 2019: The 50% Rule and Holiday Overtime

The Code on Wages, 2019 also came into force on 21 November 2025. It introduces a statutory definition of “wages” with a critical compliance consequence for holiday pay.

6.1 The 50% Rule Explained

Under the statutory wage definition, specified exclusions such as house rent allowance, conveyance allowance, and certain other components cannot exceed 50% of total remuneration. Any amount exceeding that 50% ceiling is automatically added back into the statutory “wage” base.

6.2 Why This Matters for Holiday Work

Where an employee works on a statutory holiday, the employer is typically required to pay double wages or overtime. Under the new framework, that calculation must be made against the new, potentially higher statutory wage base and not merely historical “basic pay.”

Failing to recalculate holiday overtime rates against the 50% rule will result in immediate wage underpayment violations, even where the employer believes it is paying “double.”

This is one of the most significant and least understood compliance risks of the 2025–2026 transition.

7. Pan-India Variation: Why a Uniform Answer Is Not Possible

Because the governing law is state-level, the same date can have different legal consequences across India. Broadly:

Category of State Position	Effect on Private Establishments
State statute names the date as a compulsory paid holiday	Mandatory closure or double wages if worked
State statute lists the date as a national/festival holiday but allows work	Operation permitted with statutory compensation
Date appears only in the NI Act public holiday notification	No automatic labour-law obligation; check contract and exemptions
State has repealed its Shops Act (e.g., Bihar)	OSH Code and residual state rules govern; position evolving

This is why a pan-India employer cannot apply a single rule. A state-by-state compliance matrix is the only reliable approach.

8. Common Employer Mistakes

1. Treating the government holiday notification as binding on private establishments. It is primarily a banking/NI Act instrument.
2. Assuming the OSH Code replaced all state Shops Acts. It did not; most remain in force.
3. Ignoring contractual holiday entitlements. A contract can create obligations beyond statute.
4. Applying a single national policy. Holiday law is state-specific.
5. Overlooking exemption conditions. Operating under an IT/ITES exemption without meeting comp-off or wage conditions creates exposure.
6. Operating on an expired exemption notification. Exemptions must be actively renewed.
7. Calculating holiday overtime on basic pay only. The 50% rule under the Code on Wages may raise the statutory wage base.
8. Treating National Holidays like Festival Holidays. National Holidays are far more rigid.
9. Failing to define how overlapping night shifts accrue holiday benefits.
10. Failing to document holiday working arrangements. Registers and records are typically required.

9. Practical Compliance Checklist for Employers [FREE]

•  Identify the state in which each establishment operates.
•  Identify the applicable Shops and Establishments Act and confirm coverage.
•  Check whether the specific holiday is named in the statute or a rule/notification under it.
•  Determine whether the holiday is a National Holiday or a Festival Holiday.
•  Check for sectoral exemptions, especially for IT/ITES, essential services, and continuous-process operations.
•  Verify that current state IT/ITES exemption notifications are valid and have not expired.
•  Review employment contracts, HR policies, and standing orders for contractual holiday entitlements.
•  Verify whether the holiday falls on the employee’s designated weekly off, triggering distinct compensatory off provisions under Section 26 of the OSH Code.
•  If operating on a holiday, ensure comp-off, overtime, or double wages as required.
•  Confirm that holiday overtime/double wage calculations comply with the 50% rule under the Code on Wages, 2019.
•  Define in HR policy how overlapping night shifts accrue holiday pay or comp-off.
•  Maintain statutory registers recording holiday work.
•  Monitor state labour department notifications for transitional clarifications under the OSH Code.
•  Obtain state-specific legal advice before making a blanket decision.

10. Key Legal Provisions to Cite

Instrument	Relevant Provision	Significance
Negotiable Instruments Act, 1881	Section 25	Basis for annual “public holiday” notifications; banking/commercial purpose
OSH Code, 2020	Section 26	Weekly holidays and compensatory days off
OSH Code, 2020	Section 32	Annual leave with wages; does not list compulsory festival holidays
Code on Wages, 2019	Statutory wage definition (50% rule)	Determines the wage base for holiday overtime and double wages
State Shops and Establishments Acts	Holiday and exemption provisions	Primary source of private establishment holiday obligations
State industrial holidays statutes (e.g., Karnataka)	Holiday-granting sections	Compulsory paid holidays for covered industrial establishments
Employment contracts / standing orders	Holiday clauses	Contractual entitlements enforceable independently of statute

11. Conclusion

There is no single pan-India answer to whether a private establishment must close on a given public holiday. The obligation depends on:

1. The state in which the establishment operates,
2. The statute applicable to that establishment,
3. Whether the date is a statutory holiday or merely a NI Act public holiday,
4. Whether the date is a National Holiday or a Festival Holiday,
5. Whether a sectoral exemption applies (critical for IT/ITES) and whether it is currently valid,
6. How weekly off overlap is handled under Section 26 of the OSH Code,
7. Whether the wage base for holiday overtime complies with the 50% rule under the Code on Wages,
8. What the employment contract provides.

Employers should treat the annual government holiday notification as a starting point for inquiry, not as a compliance conclusion. The legally sound approach is a state-by-state, establishment-by-establishment assessment, supported by current legal advice.

Disclaimer: This article is provided for general informational purposes only and does not constitute legal advice or a legal opinion of any kind. Public holiday obligations for private establishments in India vary significantly by state, industry, establishment size, and the specific statute applicable, and the current legal position is transitional following the coming into force of the four labour codes on 21 November 2025. Enforcement practice differs across states and across categories of establishments. The wage-related rules under the Code on Wages, 2019 are subject to ongoing interpretation and possible amendment. Readers should consult a lawyer qualified to practise Indian labour law regarding their specific facts. The author accepts no liability for any action taken or omitted in reliance on this content.