The Punjab Cabinet, chaired by Chief Minister Bhagwant Mann, on Saturday, 30 May 2026, approved a sweeping labour reform that will pave the way for the regularisation of more than 65,000 outsourced government employees across 51 departments, dismantling the decades-old private contractor middleman system. The move creates a direct employer-employee relationship between the state and workers who have served without permanent status for years.

What the Cabinet Approved

The Cabinet cleared two landmark legislative frameworks: the Punjab State Outsourced Personnel (Transition to Contractual Engagement) Bill, 2026, and the Punjab Contractual Personnel (Absorption Against Sanctioned Vacancies) Bill, 2026. Simultaneously, it repealed the Punjab Adhoc, Contractual, Daily Wage, Temporary, Work Charged and Outsourced Employees' Welfare Act, 2016, which had governed these workers until now. Two new ordinances were also approved to implement the transition.

The first bill governs the shift from outsourced employment to a direct state contract; the second creates the pathway from a state contract to absorption into the regular cadre against sanctioned vacancies.

How the Transition Works

Under the new framework, outsourced Group C and Group D employees who have completed five years of continuous service will be brought directly under government contractual employment. Workers in hazardous categories become eligible after three years. After completing 10 years of contractual service under the state, employees will be considered for absorption against regular sanctioned posts.

Chief Minister Mann stated that 65,048 outsourced employees fall within the ambit of this reform, with more than 26,000 workers set to be among the first beneficiaries. 'No contractor will now stand between these employees and the state,' he said.

DA and Pension Panel Reconstituted

In a related decision, the Cabinet granted ex post facto approval for the reconstitution of a Cabinet Sub-Committee comprising Finance Minister Harpal Singh Cheema and Cabinet Ministers Aman Arora and Baljit Kaur. The panel will examine pending arrears of revised pay, pensions, leave encashment, and dearness allowance. Specifically, it will consider payment of arrears arising from revised pay and pension benefits between 1 January 2016 and 30 June 2021, and will examine pending dearness allowance and dearness relief dues from 1 July 2021 to 31 March 2024.

Special Courts for Corruption Cases

The Cabinet also cleared the establishment of seven exclusive special courts dedicated to the speedy trial of corruption cases — a signal that the Mann government is pairing its pro-labour agenda with a parallel accountability push.

Significance and What Comes Next

This is among the most significant labour reforms in Punjab in recent memory, addressing a structural inequity that left tens of thousands of state workers without job security, benefits, or a clear route to permanence. Notably, the contractor system being dismantled had persisted across multiple governments. The two new bills will now be placed before the Punjab Legislature for passage, after which the transition process for eligible employees is expected to begin in phases. How quickly the absorption pipeline moves — particularly the shift to regular cadre after 10 years of contractual service — will determine the reform's real-world impact on workers.