What happened to the BOCW Act and Inter-State Migrant Workmen Act under the new Labour Codes?

The Building and Other Construction Workers (Regulation of Employment and Conditions of Service) Act, 1996 (BOCW Act) and the Building and Other Construction Workers Welfare Cess Act, 1996 are subsumed by the Code on Social Security, 2020. The welfare cess and BOCW welfare board provisions continue under the Social Security Code framework. The Inter-State Migrant Workmen (Regulation of Employment and Conditions of Service) Act, 1979 is subsumed by the OSH Code, 2020, which now governs inter-state migrant worker protections. Both sets of obligations remain in force; they have not been eliminated, only consolidated. Construction companies must continue all current BOCW and migrant worker compliance until states notify transition rules.

Is the principal employer liable for a sub-contractor's wage defaults even if the main contract requires the sub-contractor to comply?

Yes. The Code on Wages, like the Minimum Wages Act before it, imposes joint and several liability on the principal employer for minimum wage violations by contractors and sub-contractors engaged on the principal employer's premises or for the principal employer's work. A contractual clause requiring the sub-contractor to comply does not extinguish the principal employer's statutory liability, though it does create a right of indemnity against the sub-contractor. Labour courts have consistently held principal employers liable and allowed them to recover from sub-contractors in separate proceedings. Prevention through audit is the only effective protection.

How is the BOCW welfare cess calculated, and who is responsible for payment?

The welfare cess is 1% of the "cost of construction" as defined under the BOCW provisions (now Social Security Code). The "cost of construction" includes materials, labour, plant and machinery, and other costs directly related to construction activity, and is assessed by the state cess collection authority. The obligation to pay rests on the "employer" undertaking the construction, which is the project owner or principal contractor. Even where the project is divided among sub-contractors, the principal employer remains the primary cess obligor. Payment is made to the relevant state government or welfare board and must be accompanied by a certificate from an engineer or architect certifying the cost of construction.

What are the specific OSH obligations for construction sites that distinguish them from other establishments?

The OSH Code prescribes construction-specific requirements beyond the general establishment provisions. These include: mandatory appointment of a safety officer for sites with 250 or more workers; construction-specific safety standards for scaffolding, hoisting machinery, excavations, demolition, and confined spaces (to be specified in construction-specific rules); mandatory provision of PPE including helmets, harnesses, safety nets, and foot protection; specific standards for temporary electrical installations on construction sites; requirements for welfare facilities (drinking water, first aid, sanitary conveniences) scaled to the number of workers on site; and a duty to conduct risk assessments for particularly hazardous operations. The contractor and principal employer are both liable for site safety, creating a shared enforcement target for inspectors.

What compensation is payable to the family of a worker killed in a construction accident?

Compensation for fatal accidents on construction sites is governed by the Employees' Compensation Act (subsumed by the Social Security Code). For a fatal accident, compensation is the higher of: (a) 50% of the worker's monthly wages multiplied by a relevant factor (age-dependent, specified in a schedule), or (b) ₹1,20,000 (currently; this figure is revised periodically). The compensation is in addition to any liability under the Motor Vehicles Act for vehicle-related accidents, and does not preclude a civil suit for negligence (though amounts must be set off). In fatal accident cases, state governments increasingly invoke the OSH Code's criminal penalty provisions in parallel with compensation claims, and prosecution of the safety officer and site management is standard practice following a worksite death.

Do OSH Code provisions apply to small sub-contractors who employ fewer than 10 workers?

The OSH Code applies to construction establishments employing 10 or more workers. A sub-contractor employing fewer than 10 workers on a site would technically fall below the coverage threshold for OSH Code obligations as an independent employer. However, this does not affect the principal employer's liability: where these workers are engaged on the principal employer's site, the principal employer's OSH obligations cover all workers on the site regardless of which contractor engaged them. In practice, the principal employer's site safety rules and systems apply to all workers present, including those employed by very small sub-contractors. Inspectors treat the site as a single unit for safety enforcement purposes.

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Construction & Infrastructure

Migrant Worker Protections, Building Cess, OSH Safety Standards & Contract Labour Compliance

Industry Guide18 min readLast updated: February 2026

welfare cess on the cost of construction payable by every establishment engaged in building work (BOCW provisions, now under Social Security Code)

50 m

approximate number of construction workers in India; the majority are inter-state migrants engaged through contractor chains

5 crore

minimum penalty under the OSH Code for wilful non-compliance causing a fatal accident at a construction site

90 days

maximum period for which an inter-state migrant worker can be engaged without the employer making OSH Code-compliant welfare arrangements

Overview

Construction and infrastructure is India's second-largest employer after agriculture, engaging over 50 million workers, the majority of them inter-state migrants engaged through a chain of principal contractors, sub-contractors, and labour suppliers. This layered engagement structure creates a complex compliance environment across all four Labour Codes. The Code on Social Security, 2020 subsumes the Building and Other Construction Workers (Regulation of Employment and Conditions of Service) Act, 1996 (BOCW Act) and its associated 1% cess levy, preserving these obligations within the new framework. The OSH Code, 2020 replaces the BOCW Act's safety provisions and establishes construction-specific health and safety standards that are among the most demanding in Indian labour law, given the industry's fatality rate. The Code on Wages applies to every worker on site regardless of which contractor deployed them, and the principal employer carries joint and several liability for minimum wage compliance down the contractor chain. The Industrial Relations Code governs worker representations, standing orders, and retrenchment procedures for establishments of qualifying size. For inter-state migrant workers (who constitute a large proportion of the construction workforce), the Inter-State Migrant Workmen Act provisions are now subsumed by the OSH Code, creating a unified framework that nonetheless requires careful implementation. Women workers on construction sites are entitled to specific protections including adequate sanitation, crèche facilities, and protections against working at unsafe heights at night. Fatal accident liability is a persistent and growing area of risk, with courts and tribunals imposing increasing awards against principal employers and their officers. Getting compliance right in construction requires system-level engagement with the contractor chain, not just head-office policy.

Code on Wages, 2019

Minimum wage applies to all workers on a construction site regardless of which contractor employs them; the principal employer is jointly and severally liable for minimum wage compliance by sub-contractors.
Construction workers are paid in multiple modes (daily wages, piece-rate, contract payments), and the Code on Wages requires that all modes result in earnings not below the applicable state minimum wage for the relevant skill category.
The 50% basic wage rule applies to construction workers classified as employees; piece-rate and daily wage structures must be re-examined to ensure that at least 50% of total earnings constitutes "wages" for PF and gratuity calculation purposes.
Payment of wages must be made in full and on time; on construction sites with migrant workers, wage delays and deductions by sub-contractors are among the most frequently prosecuted violations.
Equal remuneration provisions require no gender-based wage discrimination; women construction workers (particularly in unskilled categories such as head-loading) must receive the same wages as male workers performing the same work.
The Code applies to establishments employing one or more workers, making it universally applicable to construction sites regardless of size.

The Code on Wages creates principal employer liability that flows through the entire contractor chain on a construction site. Every sub-contractor's wage non-compliance is a potential liability for the project owner and main contractor. A systematic contractor wage audit programme is essential, not optional.

Labour courts and the Supreme Court have consistently held principal employers jointly liable for minimum wage violations by their sub-contractors. A single site inspection finding wage default across 200 migrant workers can result in a principal employer liability running into crores.

Industrial Relations Code, 2020

Standing Orders under Chapter IV of the IR Code apply to construction establishments employing 300 or more workers; large project sites and principal contractors with aggregated workforces above this threshold must have certified Standing Orders.
Fixed-term employment contracts provide construction companies a structured route to engage project-specific workers, particularly for limited-duration infrastructure projects, without creating permanent employment obligations.
Retrenchment, layoffs, and closure: the raised threshold of 300 workers for prior government permission means mid-sized construction establishments gain flexibility to wind down operations at project completion without prior approval.
Contract labour in construction: the IR Code preserves restrictions on contract labour in core construction activities; principal employers engaging contract labour must register under the relevant provisions and bear joint liability for service conditions.
Grievance redressal committees (mandatory for establishments of 20+ workers) must be established; in construction, this means setting up a committee at the project site level, not just at head office.
Workers' representatives and trade union recognition provisions apply to construction establishments of qualifying size; on large infrastructure projects, recognised unions may claim collective bargaining rights.

The IR Code's increased threshold to 300 workers for retrenchment permission provides meaningful flexibility at project completion, addressing one of the construction industry's most persistent pain points. Fixed-term employment is the most useful new tool for project-based workforce engagement. The key IR risk remains contract labour compliance down the contractor chain.

Fixed-term employment under the IR Code is ideal for project-based construction workforce engagement. Workers engaged on FTE contracts accrue pro-rata gratuity and all other benefits, but the engagement ends cleanly at project completion without retrenchment formalities.

Code on Social Security, 2020

The BOCW Act is subsumed by the Social Security Code; the building and other construction worker welfare cess of 1% on the cost of construction continues under the new framework and is payable by every establishment undertaking building work.
The Building and Other Construction Workers Welfare Board (state-level) continues to administer benefits for registered construction workers including medical assistance, maternity benefit, accident benefit, death benefit, education assistance, and pension.
Construction workers must register as Building and Other Construction Workers (BOCWs) with the relevant state Board; the principal employer and contractor share responsibility for ensuring worker registration.
EPF coverage applies to construction establishments employing 20 or more persons; the principal employer is liable for PF contributions for all workers on site, including those engaged through sub-contractors.
ESI coverage applies to establishments in the construction sector with 10 or more employees in covered areas; the wage ceiling (currently ₹21,000/month) determines which workers are covered.
For inter-state migrant workers, displacement allowance (equal to 50% of the monthly wages, minimum ₹1,000) was payable under the old ISMW Act; the OSH Code now governs these obligations and the specific benefits are being finalised in state rules.

The 1% welfare cess remains the highest-visibility social security obligation in construction and is routinely verified during government project audits. BOCW registration for all workers is a prerequisite for cess compliance, and the responsibility for registration cascades through the contractor chain to the principal employer.

KSK regularly assists construction companies with BOCW cess audits, which are increasingly a condition precedent to project completion certificates in government contracts. Non-payment of cess can delay occupation certificates and result in project completion defaults.

OSH Code, 2020

The OSH Code subsumes the BOCW Act's safety provisions and the Inter-State Migrant Workmen Act, creating a unified framework; construction sites with 10 or more workers are covered establishments.
Construction-specific OSH obligations include: site safety officer appointment, scaffolding and shoring safety certification, hard hat and personal protective equipment provision, safety nets and fall protection at height, safe use of construction machinery and explosives, and confined space entry procedures.
Inter-state migrant worker protections (now in OSH Code) include: a displacement allowance equal to 50% of wages (minimum ₹1,000) when workers are recruited from their home state, journey allowance for travel to and from the worksite, suitable accommodation at the worksite at no cost to the worker, and medical facilities.
Fatal accident reporting to the inspector is mandatory within 24 hours; failure to report is an independent criminal offence. The site manager, safety officer, and company's senior management can all face prosecution.
Women workers on construction sites are entitled to: adequate separate toilet facilities, crèche facilities at establishments with 50 or more child-bearing women workers, prohibition on deployment in dangerous operations (as notified), and night-shift protections including adequate security and lighting.
Third-party safety audits of construction sites are increasingly a condition of government project contracts; the OSH Code gives inspectors broad powers to issue improvement notices, prohibition notices, and to seal unsafe sites.

Construction has the highest fatal and serious injury rate of any industry covered by the OSH Code. The Code's provisions on construction site safety, migrant worker welfare, and women worker protections are non-negotiable. Fatal accident liability (combining criminal prosecution of individuals, civil compensation under the Employees' Compensation Act (subsumed by the Social Security Code), and reputational damage) is the single largest legal risk in this sector.

Construction site fatalities routinely result in prosecution of the site engineer, safety officer, and in some cases the company's directors under Section 304A IPC (causing death by negligence) and OSH Code provisions. Officer-level criminal liability is not a theoretical risk. It is a near-certain outcome of a serious fatal accident without a robust documented safety system.

Compliance Checklist

Register the establishment under BOCW provisions (Social Security Code) in each state of operation and obtain BOCW registration certificates

highSocial Security Code

Calculate and deposit 1% welfare cess on the cost of construction quarterly; maintain cess payment records for audit by government project authorities

highSocial Security Code

Ensure all construction workers (including sub-contractor workers) are registered as BOCWs with the relevant state Welfare Board

highSocial Security Code

Appoint a qualified site safety officer at every construction site with 250 or more workers; document safety inspections and incident reports

highOSH Code

Provide displacement allowance, journey allowance, and accommodation to all inter-state migrant workers as required by the OSH Code

highOSH Code

Conduct a principal employer wage audit of all sub-contractors quarterly: verify minimum wage compliance and maintain records to defend joint-and-several liability

highCode on Wages

Implement the 50% basic wage rule for all directly employed construction workers; review piece-rate and daily-wage structures for compliance

mediumCode on Wages

Establish a site-level grievance redressal committee at all project sites employing 20 or more workers

mediumIndustrial Relations Code

Provide and enforce PPE (hard hats, harnesses, safety nets) at all sites; maintain PPE distribution records and conduct monthly safety drills

highOSH Code

Report any fatal or serious accident on site to the inspector within 24 hours; engage legal counsel immediately and preserve the accident scene and records

highOSH Code

Common Pitfalls

Assuming BOCW cess and OSH obligations are the sub-contractor's responsibility

Risk

Principal contractors and project owners routinely assume that labour law compliance is entirely the sub-contractor's obligation. Under the Code on Wages, the Social Security Code, and the OSH Code, the principal employer is jointly and severally liable for compliance failures by contractors. Government audits of infrastructure projects now routinely check BOCW cess payment and BOCW worker registration as a condition for release of final project payments.

Fix

Include BOCW cess compliance, worker registration, and OSH compliance as express conditions in all sub-contractor agreements. Conduct quarterly audits of contractor compliance. Maintain a sub-contractor compliance register with documentary evidence of registration, cess payment, and worker welfare measures.

Failing to provide inter-state migrant worker entitlements

Risk

Migrant workers recruited from other states are entitled to displacement allowance, journey allowance, accommodation, and medical facilities. These obligations are now in the OSH Code and are enforced by state labour departments, particularly in high-migration-destination states like Maharashtra, Karnataka, and Gujarat. Non-compliance is among the most frequently cited violations in construction sector inspections.

Fix

Implement a migrant worker welfare checklist at the time of recruitment: verify home state, calculate and pay displacement allowance, arrange journey allowance for travel, and provide documented accommodation. Maintain a migrant worker register with home address, state of origin, family emergency contact, and welfare benefit records.

Under-reporting construction cost for cess calculation

Risk

The 1% welfare cess is calculated on the "cost of construction" as defined under the BOCW provisions. Some companies use a narrow interpretation of construction cost (e.g., excluding design fees, equipment rental, or land development costs) to reduce the cess base. State welfare boards and auditors are increasingly using government project cost estimates and tender values to challenge under-reported cess bases, resulting in demands for arrears with interest.

Fix

Obtain a definitive legal opinion on the applicable cost of construction formula for each project type (residential, commercial, infrastructure, industrial). Base cess calculations on the inclusive cost definition and document the methodology. Pay any undisputed arrears proactively to avoid interest and penalty accumulation.

No documented safety system before a fatal accident occurs

Risk

Many construction companies rely on informal safety practices and verbal instructions. When a fatal accident occurs, the absence of documented safety training records, PPE distribution logs, safety inspection reports, and incident registers means the company cannot demonstrate that it took reasonable precautions, which is the primary defence in both criminal prosecution and compensation claims.

Fix

Implement a paper and digital safety management system covering: pre-start safety inductions for all workers (signed attendance), daily tool-box talks, weekly safety inspection reports, PPE issuance records, and a near-miss reporting system. Archive these records centrally. A documented safety system is both a compliance obligation and the primary evidentiary defence in fatality proceedings.

Treating women construction workers as unavailable for site work

Risk

Some contractors restrict women workers to certain tasks (e.g., only head-loading, not skilled masonry) on the assumption that site work is not suitable for women. This is both legally incorrect and a source of equal remuneration violations. Women are entitled to equal wages for equal work and cannot be excluded from skilled or semi-skilled construction roles except where specifically prohibited by OSH regulations.

Fix

Review and update site deployment policies to ensure women workers are assigned to all roles for which they are qualified, with equal wages. Ensure adequate sanitation facilities (separate from male facilities), appropriate PPE (sized for women workers), and crèche facilities where applicable. Enforce zero-tolerance for harassment on construction sites and comply with POSH Act requirements.

Frequently Asked Questions

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