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Sales Promotion Employees Act, 1976: Status, Rules and the New Labour Codes

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On 21 November 2025, the central government brought the four Labour Codes into force, replacing 13 legacy laws, including the Sales Promotion Employees Act, 1976, with the Occupational Safety, Health and Working Conditions (OSH) Code, 2020. In May 2026, the Centre notified the OSH (Central) Rules, which replaced the Sales Promotion Employees Rules, 1976. This guide outlines the statutory provisions under the legacy framework, current employee entitlements, and compliance adjustments required of employers.

What is the Sales Promotion Employees Act, 1976?

The Sales Promotion Employees Act, 1976, is a central enactment that regulates the service conditions of personnel engaged in sales promotion. Initially applicable to the pharmaceutical industry, where medical representatives constitute the primary field force, it was extended in 2011 to ten additional industries, including cosmetics, automobiles, and electronics.

The Act entitled these employees to earned leave, medical leave, and a written appointment letter. It also extended the benefits of other labour laws to them, such as the Minimum Wages Act, 1948 and the Payment of Gratuity Act, 1972.

Who Qualified as a Sales Promotion Employee?

Any individual, including an apprentice employed to promote sales or business, fell under the statutory definition, provided they were not in a managerial or administrative capacity, or employed in a supervisory role earning above ₹1,600 per month.

What did the 1976 Act and Its Rules Require?

Here are seven requirements of the law.

• Earned leave: Employees got full-wage leave of at least one-eleventh of the time spent on duty.
• Medical leave: Employees got half-wage leave of at least one-eighteenth of their service, on a medical certificate.
• Holidays and casual leave: The Rules gave 10 paid holidays and 15 days of casual leave each year.
• Leave limits: Earned leave could build up to 180 days. An employee could take up to 90 days at a time.
• Leave encashment: Employees could encash up to 120 days of leave on resignation or retirement, while their legal heirs received the full balance on the employee’s death.
• Records: Employers issued the appointment letter in Form A. They also kept a register, service books, and leave accounts.
• Penalty: A breach of the leave, letter, or register rules attracted a fine of up to ₹1,000.

Additionally, the Act extended the applicability of six key labour statutes, including the Payment of Bonus Act, 1965, the Industrial Disputes Act, 1947, and the Maternity Benefit Act, 1961.

Is the Sales Promotion Employees Act, 1976 Still in Force?

No. The law stands repealed from 21 November 2025. On that date, the Ministry of Labour and Employment brought all four labour codes into force. The OSH Code alone replaced 13 central labour laws, including this Act.

The repeal does not affect actions already taken under the old Act. Rules, notifications and appointments made under it remain in force to the extent that they do not conflict with the Code.

Which Rules Apply Now?

The Centre notified the OSH (Central) Rules, 2026 on 8 May 2026. These rules replaced the Sales Promotion Employees Rules, 1976. Under the OSH Code, 2020, the Central Government prescribes holidays, casual leave, and leave limits for these employees. For other matters, such as registration and records, the rules of the appropriate government apply. Employers must identify whether the Central or State Government acts as the ‘Appropriate Government’ for each specific establishment to ensure compliance with relevant rules.

How do the New Labour Codes Cover Sales Promotion Employees?

All four Labour Codes directly govern sales promotion employees, eliminating the need for standalone legislation to extend statutory benefits.

Occupational Safety, Health and Working Conditions Code

The OSH Code defines “worker” to include sales promotion employees. The Ministry of Labour and Employment confirmed this in the labour codes issued on 16 March 2026. Section 25 of the Code keeps the old leave rates for them. They still get earned leave of 1/11th and medical leave of 1/18th at half wages. The Central Government prescribes their holidays, casual leave, leave limits, and encashment terms.

Code on Wages

The Code on Wages guarantees minimum wage standards, timely disbursement, statutory bonus entitlements, and gender-neutral pay equality. Under the revised wage definition, allowances exceeding 50% of total remuneration are reclassified as wages, though annual performance incentives remain excluded.

Code on Social Security

Social security benefits, including EPF, ESI, gratuity, maternity benefits, and employee compensation, are consolidated under this Code. Permanent employees remain eligible for gratuity after five years of continuous service, whereas fixed-term employees qualify on a pro-rata basis after completing one year.

Industrial Relations Code

The IR Code also counts these employees as workers. Courts had long held that medical representatives were not workmen under the Industrial Disputes Act, 1947. The Supreme Court took this view in the 1994 Sandoz case. The new definition now provides these employees with a clearer path to dispute resolution.

Sales Promotion Employees Act, 1976 vs the New Labour Codes

The comparison table below highlights the key changes and retained provisions under the new Labour Codes:

Compliance Checklist for Employers

The transition to the new labour codes requires employers to review eight compliance areas. These are:

1. Map all field sales roles and identify supervisory staff earning above ₹18,000 per month.
2. Confirm whether the Central or State Government acts as the ‘appropriate government’ for each operating location.
3. Issue appointment letters to every employee in the prescribed format.
4. Update your registration details as required by your applicable rules.
5. Configure leave accrual rates to 1/11th of duty days for earned leave and 1/18th of service duration for medical leave at half wages.
6. Review holidays, casual leave, and encashment terms against the new rules.
7. Check your salary structure against the 50% wage rule.
8. Verify gratuity, EPF, and ESI coverage for all field staff, including fixed-term hires.

Example: Leave for a Medical Representative

Consider a medical representative with one year of service and 297 actual days on duty. The earned leave rate is higher than the 1-in-20 rate used in many Indian leave laws.

Conclusion

The Sales Promotion Employees Act, 1976 gave field sales staff their first statutory leave and service rights. The labour codes now extend those rights well beyond pharma, to field sales teams in FMCG, consumer durables and other sectors. More state rules are still due, and they will shape registration and record-keeping for each office. Employers who standardize appointment letters and leave settings now will find it easier to adapt as those rules arrive.

factoHR’s payroll software and geofencing attendance system help HR teams track field staff, leave balances, wages and statutory compliance.

Frequently Asked Questions

Is the Sales Promotion Employees Act, 1976 Still Applicable?

No. The OSH Code repealed it on 21 November 2025. The Code now provides rights to leave and appointment letters. Past actions under the old Act remain valid insofar as they do not conflict with the Code.

Are Medical Representatives Covered under the New Labour Codes?

Yes. Medical representatives are sales promotion employees. The OSH Code and the IR Code both include them as workers. A supervisor is covered only if their wages are up to ₹18,000 a month.

How Much Leave does a Sales Promotion Employee Get Now?

The employee gets earned leave of at least one-eleventh of the time on duty. They also get medical leave of one-eighteenth of service at half wages. Holidays and casual leave follow the prescribed rules.

Which Industries does the Law Cover Now?

Earlier, the Act covered only pharma and ten notified industries. The new codes cover these employees in any establishment within their scope. So, employers in FMCG, consumer durables, and other sectors must also check their field sales staff.

Do the 1976 Rules and Forms A to E Still Apply?

No. The OSH (Central) Rules, 2026 replaced the 1976 Rules on 8 May 2026. You should now use the letters, registers and forms that your applicable rules prescribe. Check both the Central Rules and your state’s rules.

Are Sales Promotion Employees Entitled to Gratuity?

Yes. The Code on Social Security now governs their gratuity. Permanent employees qualify after five years of continuous service. Fixed-term employees qualify after one year of service under their contract.

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