Occupational Safety, Health & Working Conditions Code, 2020

The Occupational Safety, Health and Working Conditions Code, 2020 is the most comprehensive of the four labour codes in terms of the number of statutes it replaces. With 143 sections across 14 chapters, it consolidates 13 existing laws: the Factories Act, 1948; the Mines Act, 1952; the Dock Workers (Safety, Health and Welfare) Act, 1986; the Building and Other Construction Workers (Regulation of Employment and Conditions of Service) Act, 1996; the Plantation Labour Act, 1951; the Contract Labour (Regulation and Abolition) Act, 1970; the Inter-State Migrant Workmen (Regulation of Employment and Conditions of Service) Act, 1979; the Working Journalists and Other Newspaper Employees (Conditions of Service) and Miscellaneous Provisions Act; the Motor Transport Workers Act, 1961; the Sales Promotion Employees (Conditions of Service) Act, 1976; the Beedi and Cigar Workers (Conditions of Employment) Act, 1966; and the Cine-Workers and Cinema Theatre Workers Act.

The Code establishes a unified framework for occupational safety standards, working conditions, hours of work, leave, and welfare provisions across all categories of establishments. It replaces the sector-specific approach of the old laws with a principles-based framework that applies general safety and working condition standards while allowing sector-specific rules to be prescribed through schedules and notifications. This approach provides the government flexibility to update safety standards without legislative amendment, enabling faster response to emerging workplace hazards.

The OSH Code applies to establishments employing 10 or more workers where manufacturing processes are carried on with the aid of power, and to establishments employing 20 or more workers where manufacturing is carried on without power. This covers factories, mines, plantations, motor transport undertakings, beedi and cigar establishments, building and construction work, and dock work. The Code also extends to establishments or class of establishments as the appropriate government may notify, giving broad discretionary power to expand coverage.

A significant simplification is the single registration requirement. Under the previous regime, an employer operating a factory with contract labour and inter-state migrants needed separate registrations under the Factories Act, Contract Labour Act, and Inter-State Migrant Workmen Act. The OSH Code introduces a unified registration system through the Shram Suvidha Portal, replacing multiple licences and registrations with a single electronic registration. The registration is valid for the period specified by the appropriate government and is subject to conditions regarding safety, health, and welfare standards.

The Code empowers the appropriate government to exempt any establishment or class of establishments from all or any provisions if satisfied that adequate alternative arrangements exist. This provides flexibility for modern workplaces — such as IT establishments, co-working spaces, and remote-work arrangements — that may not fit the traditional factory or shop paradigm. However, exemptions do not extend to fundamental safety provisions, and the government must specify the conditions and duration of any exemption.

The OSH Code prescribes a standard working day of 8 hours and a maximum working week of 48 hours for all establishments within its scope. No worker shall be required or allowed to work for more than 8 hours in a day and 48 hours in a week. The spread-over period — the span between the commencement and end of work including rest intervals — cannot exceed 12 hours in a day. Every worker is entitled to at least one day off per week, and the weekly holiday cannot be substituted except in accordance with prescribed conditions.

Overtime is strictly regulated and must be compensated at twice the ordinary rate of wages. This is a critical cost consideration: under the new wage definition in the Code on Wages, "ordinary rate of wages" is calculated on the expanded wage base (subject to the 50% rule), which means overtime costs could increase substantially for employers who currently calculate overtime on a lower basic pay figure. The total hours of work including overtime cannot exceed such limits as the appropriate government may prescribe.

Annual leave entitlement is standardised at one day for every 20 days of work performed in the previous calendar year. Workers who have worked for 240 days or more in a calendar year are entitled to earned leave. Leave can be accumulated up to 30 days, and encashment of accumulated leave is permissible upon separation or during service as per the employer's policy. The Code also mandates compensatory holidays if a worker is required to work on their weekly rest day. For adolescent workers (between 15 and 18 years), additional protections apply including prohibition from hazardous work and reduced working hours.

The OSH Code introduces a progressive shift in the regulation of women's employment, removing several legacy restrictions that limited women's participation in certain industries and working hours. Under the Factories Act, 1948, women were prohibited from working in factories during night hours (between 7 PM and 6 AM) and were barred from certain dangerous operations. The OSH Code removes these blanket prohibitions and instead enables women to work in all establishments, including factories, during night shifts, subject to specific safeguards.

The conditions for women working night shifts include: adequate safety measures at the workplace during night hours as prescribed by the appropriate government; provision of transportation from the workplace to the worker's residence; consent of the woman worker (night shifts cannot be imposed unilaterally); and compliance with such other conditions regarding safety, dignity, and honour as may be prescribed. The employer must also ensure adequate lighting, security personnel, CCTV coverage in common areas, and a helpline number accessible during night hours.

The restrictions on women working in dangerous operations have been similarly reformed. Women can now be employed in operations previously classified as dangerous, provided proper safeguards are in place including adequate training, protective equipment, regular health monitoring, and compliance with safety standards prescribed for the specific operation. The creche requirement continues: every establishment employing 50 or more workers must maintain a creche for children under six years of age, either within the premises or within a prescribed distance. The woman worker is permitted four visits to the creche daily, including during rest intervals. These reforms represent a significant step toward gender-equal workplace access while maintaining necessary protective standards.

The regulation of contract labour under the OSH Code retains the dual registration-and-licensing framework from the Contract Labour (Regulation and Abolition) Act, 1970, but with important modifications. Every principal employer of an establishment employing 50 or more contract workers (or such number as the government may notify) must register the establishment. Every contractor supplying 50 or more workers must obtain a licence from the licensing officer. The registration and licensing are now processed through the unified electronic system.

The principal employer bears primary liability for wage payment and welfare provisions for contract workers. If the contractor fails to pay wages within the prescribed period, the principal employer is obligated to pay the wages directly to the contract workers and recover the amount from the contractor. This liability extends to working conditions, safety measures, and social security contributions. The Code empowers the appropriate government to prohibit the employment of contract labour in any establishment or process if the conditions of work are not adequate, if the work is perennial in nature, or if similar work is done by regular workers.

The inter-state migrant worker provisions are particularly significant. A worker recruited by or through a contractor in one state for employment in another state is classified as an inter-state migrant worker. Such workers are entitled to a displacement allowance (equal to 50% of monthly wages, payable at the time of displacement), journey allowance (for outward and return journeys), and suitable working conditions including accommodation. The contractor must ensure equal wages and conditions for inter-state migrants as applicable to local workers performing similar work. The employer must facilitate portability of ration cards and Aadhaar-linked benefits across states. The building and construction workers' welfare cess (1-2% of construction cost) continues under the Code, funding welfare schemes administered by state welfare boards.

The OSH Code introduces a statutory timeline for full and final (F&F) settlement that addresses one of the most common sources of post-employment disputes in India. Under Section 32, when an employee is terminated, retrenched, or resigns from service, the employer must settle all dues within two working days from the date of the employee's last working day. This is a significant tightening from the previous regime where no uniform statutory timeline existed, and employers routinely took 30 to 90 days (or longer) to process F&F settlements.

The components of a full and final settlement typically include: unpaid salary for the days worked in the last month; earned leave encashment for accumulated but unavailed leave; pro-rata bonus for the current accounting year (if eligible); gratuity (if qualifying service is completed); notice pay (if the employer terminates without notice or the employee serves a shorter notice period); reimbursement of expenses (travel, medical, other approved claims); and any other contractual entitlements such as retention bonuses or deferred compensation. Each component must be calculated in accordance with the applicable provisions of the respective labour codes.

The two-day timeline demands that employers maintain robust separation processes. HR and payroll teams must have pre-configured systems that can compute all F&F components immediately upon separation. Common disputes arise from disagreements over the leave balance, deductions for notice period shortfall, recovery of advances or loans, and calculation of the gratuity amount. Employers should maintain clear documentation throughout the employment lifecycle — attendance records, leave records, advance/loan agreements, and salary structure details — to ensure the F&F computation is transparent and defensible. Failure to settle within the statutory timeline exposes the employer to penalty proceedings under the Code.

The OSH Code establishes comprehensive safety and health obligations that apply to all establishments within its scope. Every employer must ensure, so far as is reasonably practicable, the health, safety, and welfare of all workers. The specific obligations include provision of a workplace free from hazards that may cause injury or occupational disease, adequate ventilation, lighting, and temperature control, clean drinking water and sanitation, safe means of access and egress, safe handling and storage of hazardous substances, and personal protective equipment.

Establishments employing 250 or more workers must constitute a Safety Committee with representation from both management and workers. The committee's functions include identifying hazards, recommending safety measures, reviewing safety policies, and investigating accidents. Factories employing 500 or more workers must establish an occupational health centre staffed by qualified medical practitioners. Every worker must undergo a health examination upon recruitment and periodically thereafter (at least once a year for workers in hazardous processes). The employer bears the cost of all health examinations.

Hazardous processes are regulated with additional stringency. The employer must notify the Chief Inspector of any hazardous process being carried on in the establishment. Workers in hazardous processes are entitled to specific information about the nature of the hazard, safety measures in place, and emergency procedures. The maximum permissible limits for exposure to chemical and toxic substances must be displayed and enforced. Penalties for safety violations are substantial: up to INR 2,00,000 for a first offence, and for accidents resulting in death, the employer faces imprisonment up to two years and a fine up to INR 5,00,000. If the same offence is repeated within five years, imprisonment may extend to three years. The Code also provides for the appointment of safety officers in prescribed establishments and mandates periodic safety audits by competent persons.