Madhya Pradesh Labour Law Compliance Guide for Employers, 2026 Edition

Last Updated on August 28, 2026 by Abhijit Divekar

Madhya Pradesh has three rules that catch out employers who arrive from another state. Professional tax bands are set against annual salary, not monthly. The Labour Welfare Fund applies from the first employee, with no headcount threshold at all. And privilege leave is expressed as a month of leave after twelve months of service, rather than as a number of days. Each of those differs from how most states write the same obligation, and each produces a wrong answer if you carry a policy across from elsewhere.

The 4 Labour Codes, What Changed (Effective 21 November 2025)

The four Labour Codes came into force on 21 November 2025. The Code on Wages absorbed the Payment of Wages Act 1936, the Minimum Wages Act 1948, the Payment of Bonus Act 1965 and the Equal Remuneration Act 1976. The Code on Social Security took in the EPF & MP Act 1952, the ESI Act 1948, the Payment of Gratuity Act 1972 and the Maternity Benefit Act 1961. The Industrial Relations Code absorbed the Industrial Disputes Act 1947 and the Standing Orders Act 1946. The Occupational Safety, Health and Working Conditions Code took in the Factories Act 1948 and the Contract Labour Act 1970.

The provision with the widest payroll effect is the definition of wages in section 2(y) of the Code on Wages. Basic, dearness allowance and retaining allowance together must be at least 50% of total remuneration. That is three components measured against total remuneration, not basic pay measured against CTC. The difference matters when you restructure a salary, because it moves the base for provident fund, gratuity and bonus.

Madhya Pradesh has published draft rules under all four Codes but has not finalised them. Until they are notified, the central rules apply alongside the state Acts described below.

Madhya Pradesh-Specific Labour Laws

1. Madhya Pradesh Professional Tax

Professional tax is levied under the Madhya Pradesh Vritti Kar Adhiniyam, 1995 and the Vritti Kar Niyam of the same year.

🔴 The bands are annual. Most states publish professional tax slabs against monthly salary. Madhya Pradesh publishes them against annual salary. Applying an annual band to a monthly figure will understate the deduction by roughly twelve times, and it is the single most common error we see on payrolls that have expanded into the state.

Annual salary	Professional tax per year	How it is deducted
Up to ₹2,25,000	Nil	–
₹2,25,001 to ₹3,00,000	₹1,500	₹125 a month
₹3,00,001 to ₹4,00,000	₹2,000	₹166 for 11 months, ₹174 in the 12th
Above ₹4,00,000	₹2,500	₹208 for 11 months, ₹212 in the 12th

Note the uneven final month. The annual figure does not divide cleanly by twelve, so the last month of the year carries the remainder. A payroll that simply divides by twelve will be a few rupees short every year, which is small but is exactly the kind of thing an inspection picks up.

Remittance is monthly, by the 10th. Returns are quarterly on Form 7.

2. Madhya Pradesh Labour Welfare Fund

The fund runs under the Madhya Pradesh Shram Kalyan Nidhi Adhiniyam, 1982 and its 1984 Rules.

🔴 It applies from one employee. There is no headcount threshold. Most states start their Welfare Fund at ten or twenty employees, so a small Madhya Pradesh office that would be exempt in Haryana or West Bengal is in scope here from the first hire.

Contribution	Amount	Frequency
Employee	₹10	Half-yearly
Employer	₹50	Half-yearly
Total per employee	₹60	Half-yearly

Deduction is taken against the register at 30 June and 31 December and remitted by 15 July and 15 January. These rates were revised by an amendment notification dated 28 January 2025, so figures published before that date are out of step.

People employed in a managerial or supervisory capacity drawing above ₹10,000 a month are outside the Act.

3. Madhya Pradesh Shops and Establishments Act

Registration under the Madhya Pradesh Shops and Establishments Act, 1958 is due within 30 days of the Act applying to the establishment.

Requirement	Position
Registration	Within 30 days of the Act applying
Daily hours	9 hours
Weekly hours	48 hours
Overtime rate	Twice the ordinary rate
Weekly off	One day per week
Privilege leave	One month after every 12 months of continuous employment, accumulating up to 3 months
Casual leave	14 days

Privilege leave is written as a period, not a count. The Act grants one month after twelve months of continuous employment, accumulating to three months. Converting that into a fixed number of days is where policies go wrong, because the answer depends on how your establishment defines a month. Casual leave may not be combined with privilege leave, so a policy that lets staff bolt the two together to make a longer break does not comply.

Women on night shifts: under section 43 of the Occupational Safety, Health and Working Conditions Code 2020, a woman may be employed in all establishments for all types of work and, with her consent, before 6 a.m. and after 7 p.m., subject to conditions the appropriate government prescribes. Madhya Pradesh’s specific conditions are not confirmed. Apply the standard safeguards on transport, batch size, security and grievance handling, and check the state notification before rostering.

4. Madhya Pradesh Minimum Wages

Madhya Pradesh revised minimum rates with effect from 1 April 2026. Rates apply uniformly across the state rather than by zone, and are published as a basic component plus variable dearness allowance.

Category	Basic per month	VDA per month	Total per month	Total per day
Unskilled	₹9,575	₹2,850	₹12,425	₹478
Semi-skilled	₹10,571	₹2,850	₹13,421	₹516
Skilled	₹12,294	₹2,850	₹15,144	₹582
Highly skilled	₹13,919	₹2,850	₹16,769	₹645

The variable dearness allowance is the same flat amount at every skill level, which is unusual, and it is the component that moves at each revision. Madhya Pradesh revises twice a year, so treat the total as current only until the next notification.

Central Laws in Madhya Pradesh

• Provident fund: 12% employee and 12% employer on basic and dearness allowance, split 3.67% to EPF and 8.33% to EPS, plus administrative charges and EDLI. ECR by the 15th of the following month.
• ESIC: 0.75% employee and 3.25% employer within the wage ceiling, due by the 15th of the following month.
• Bonus: 8.33% to 20%, payable within eight months of the financial year end.
• Gratuity: after five years of continuous service. The one-year rule applies to fixed-term employment, not permanent staff.
• Maternity benefit: 26 weeks for the first two children, 12 weeks thereafter.

Madhya Pradesh Compliance Calendar

Obligation	Frequency	Due
Professional tax remittance	Monthly	10th of the following month
Professional tax return (Form 7)	Quarterly	Per quarter
Labour Welfare Fund	Half-yearly	15 July and 15 January
PF (ECR)	Monthly	15th of the following month
ESIC contribution	Monthly	15th of the following month
TDS on salary	Monthly	7th of the following month
Bonus payment	Annual	Within 8 months of financial year end

Indore, Bhopal and the industrial corridor

Minimum wages do not vary by zone in Madhya Pradesh, so an Indore employer and a Jabalpur employer apply the same table. That removes one common source of error but leaves the other two firmly in place: the annual professional tax bands, and a Labour Welfare Fund that starts at the first employee. A two-person representative office in Bhopal is in scope for both.

FAQs, Madhya Pradesh Labour Compliance

Is professional tax applicable in Madhya Pradesh?

Yes, and the bands are set against annual salary. Nil up to ₹2,25,000 a year, then ₹1,500, ₹2,000 and ₹2,500 a year in rising bands. Remittance is monthly by the 10th and returns are quarterly on Form 7.

What is the Labour Welfare Fund contribution in Madhya Pradesh?

₹10 from the employee and ₹50 from the employer, ₹60 in total per employee, half-yearly. There is no headcount threshold, so it applies from the first employee.

How much privilege leave applies in Madhya Pradesh?

One month after every 12 months of continuous employment, accumulating to three months. Casual leave is 14 days and may not be combined with privilege leave.

What are the working hours in Madhya Pradesh?

Nine hours a day and 48 hours a week, with overtime at twice the ordinary rate and one weekly holiday.

What are the minimum wages in Madhya Pradesh?

From 1 April 2026: ₹12,425 a month unskilled, ₹13,421 semi-skilled, ₹15,144 skilled and ₹16,769 highly skilled. Rates apply uniformly across the state.

How does HRTailor handle Madhya Pradesh compliance?

We run the monthly professional tax deduction on the correct annual band, the quarterly Form 7 return, the half-yearly Labour Welfare Fund remittance, Shops Act registration, PF and ESIC filings, and the minimum wage check against your salary structure at each revision.

Madhya Pradesh Compliance Made Easy

If you employ people in Madhya Pradesh, the two things worth checking first are whether your professional tax is being calculated on annual salary rather than monthly, and whether you are contributing to the Labour Welfare Fund at all. Both are common misses, and both are quick to confirm.