How India’s New OSH Code Reshapes Labor Compliance for Foreign Investors

India’s Occupational Safety, Health and Working Conditions (OSH) Code, 2020 modernizes workplace regulation, unifies 13 labor laws, boosts safety standards, and streamlines compliance – critical insights for foreign investors and SMEs.

India has officially advanced its ambitious labor reforms agenda with the implementation of the Occupational Safety, Health and Working Conditions (OSH) Code, 2020 – a comprehensive overhaul designed to simplify regulation, elevate worker protections, and accelerate the ease of doing business across sectors.

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Replacing 13 central labor laws with a single consolidated framework, the OSH Code modernizes India’s decades-old workplace regulations while reducing procedural burden, enhancing compliance efficiency, and expanding safety and welfare measures for millions of workers, including migrant, unorganized, construction, and digital-economy workers.

The reform represents a cornerstone of India’s broader strategy to create a transparent, investment-ready and future-oriented labor market, balanced with improved safety standards and strengthened worker rights.

Key structural simplifications: One code replacing 13 laws

The OSH Code, 2020 dramatically reduces complexity in the following ways:

Source: PIB Fact Sheet

Key takeaway: The shift to single registration, single all-India license, single return, and digital compliance significantly reduces paperwork, accelerates approvals, and enhances transparency.

Formalization and worker welfare: A new baseline for employment standards

Mandatory appointment letters

Every employee must now receive a standardized appointment letter with specifications such as the following:

1. Details of the employee,
2. Designation,
3. Employment category,
4. Details of the wages,
5. Details of contribution to social security; etc.

Lower eligibility for paid leave

The eligibility threshold for paid annual leave has been lowered from 240 working days to 180 working days, allowing employees to qualify sooner and benefit from better work–life balance, rest, and overall productivity. In effect, an employee is now required to complete 180 working days in a year to access paid annual leave.

Redefined working hours

The Code caps work at:

• 8 hours per day in a 6-day week; 48 hours per week
• Flexible weekly models:
  • 12 hours/day (4-day week)
  • 9.5 hours/day (5-day week)
  • 8 hours/day (6-day week)

State governments may fix overtime limits, allowing workers to legally earn double wages for approved overtime – previously capped at 75 hours per quarter.

Inter-state migrant workers: Expanded protection and identity

A widened definition now includes:

• Directly employed inter-state migrant worker (ISMW)
• Contractor-employed workers
• Self-migrated workers

Benefits include:

• Annual to-and-fro journey allowance
• Portability of BOCW (building and other construction workers) welfare benefits and the public distribution system (PDS) ration
• 24×7 toll-free grievance helpline
• Mandatory ISMW count in employer registration

These provisions have been introduced to support one of India’s most mobile and vulnerable labor groups.

National worker database

The labor ministry has also developed a national database for unorganized and migrant workers to enhance job mapping, benefits delivery, and policy design.

CLICK HERE TO KNOW MORE: India Gig Workers: Register on e-Shram Portal for Social Security

Enhanced safety, health and medical provisions

Safety committees

Mandatory for:

• Factories with 500+ workers
• BOCW employers with 250+ workers
• Mines with 100+ workers

These tripartite committees strengthen safety monitoring and worker participation.

Victim compensation

The Code authorizes courts, upon convicting an offender for failing to comply with prescribed duties, to mandate that a minimum of 50 percent of the imposed fine be paid as compensation to the victim in cases of serious injury, or to the legal heirs in the event of a worker’s death.

Universal health and welfare coverage

The Code extends safety and welfare protections to all sectors, rather than only seven industries earlier.

Annual free health check-ups

All employees will now be entitled to free annual health check-ups. In addition, plantation employers may access ESI facilities to provide medical services to their workers.

Pro-worker provisions:

• Supports early detection of illnesses, lowering medical costs and enhancing overall workforce health and productivity.
• Promotes preventive healthcare and helps reduce long-term occupational risks.
• Benefits employers through reduced absenteeism and higher productivity.

Modernized definitions of media and gig-economy roles extending safety, health, and welfare measures

• Audio-visual workers now include digital, OTT, dubbing artists, and stunt performers – granting them formal legal recognition and safety protections.
• Working journalists now include digital and electronic media professionals, broadening coverage beyond traditional print.

National Occupational Safety and Health Advisory Board

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The previous structure of six separate boards across various labor laws has been replaced with a single National Occupational Safety and Health Advisory Board. This tripartite body, comprising representatives from trade unions, employer associations, and State Governments, will advise the Central Government on standards and regulations relating to factories, mines, dock work, bidi and cigar manufacturing, construction activities, and other covered sectors.

The Board will issue uniform national standards on occupational safety, health, and working conditions. These standards will be mandatory for all Indian states, ensuring consistent and high-quality protections for workers across the country.

Social security fund

Penalties and compounding fees will now feed into a social security fund supporting unorganized workers – strengthening welfare delivery. This is complemented by the pro-worker provision of the “opportunity to earn more by doing overtime and get paid at higher wage (double the normal wage rate).”

Extended applicability

The Code includes an enabling provision allowing the government to extend its coverage to any establishment engaged in hazardous or life-threatening activities, even if it employs just one worker. This ensures universal protection for worker health, safety, and welfare across all sectors, regardless of establishment size.

Ease of doing business: Major boosts for industry and MSMEs

Centralized digital registration

A uniform threshold of 10 workers triggers mandatory registration, replacing six earlier registration requirements.
The all-India license will be valid for five years with provisions for deemed approvals.

Revised factory thresholds

Under the OSH Code, a factory refers to any premises (including surrounding areas) where a manufacturing process is carried out. Under the new rules, an establishment is considered a factory if:

• 20 or more workers are employed (or were employed on any day in the last 12 months) and the manufacturing process is carried out with the aid of power; or
• 40 or more workers are employed (or were employed on any day in the last 12 months) and the manufacturing process is carried out without the aid of power.

Additionally, certain establishments specified in the Code are treated as factories even if they do not meet the usual worker thresholds, provided they employ 10 or more workers.

Time-bound approvals (within 30 days) and deemed permissions promote rapid expansion and infrastructure investment.

Inspector-cum-facilitator model

Replaces traditional inspectors, enabling:

• Advisory-based compliance
• Randomized digital inspections
• Reduced subjective intervention
• More predictable regulatory oversight

Third-party audits

Under Chapter 9, Section 37 of the OSH Code, the appropriate government is authorised to notify a scheme for empanelling qualified experts to conduct third-party audits and certifications. The scheme may be designed for start-ups or any other specified class of establishments.

Empanelled experts are assigned audit and certification duties through a government-managed, web-based, randomised allocation system. They must carry out these audits in accordance with the procedures and objectives set out in the notified scheme.

Digitization of workplace registers

Registers reduced from 84 to 8, slashing administrative burden.

Contract labor: Clearer rules and higher thresholds

Defined core and non-core activities

Companies may use contract labor in core activities under specific conditions (e.g., seasonal surges, non-full-time tasks).

Threshold raised from 20 to 50 workers

Contractors employing under 50 workers will no longer require a license, easing compliance for small firms.

Principal employer accountability

If contractors fail to pay wages, principal employers must pay – protecting vulnerable contract workers.

Decriminalization: A business-friendly compliance regime

Key reforms include:

• Compounding of offences at 50 percent or 75 percent of penalties
• Replacement of imprisonment provisions with monetary fines
• Mandatory 30-day improvement notice prior to prosecution
• Aligning enforcement with fairness and corrective compliance rather than punitive action

Penalty proceeds contribute to the Social Security Fund.

Women-centric reforms: Enabling workforce participation

Women can now:

• Work in all establishments and all types of jobs
• Work at night with consent, subject to safety and transport arrangements
• Access creche facilities (now gender-equal) in establishments with 50+ workers

These measures support India’s push to increase female labor force participation.

Conclusion

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The OSH Code, 2020 marks a pivotal step in India’s transformation towards a modern, transparent, and globally competitive labor ecosystem. By simplifying regulation, expanding worker protections, and accelerating compliance processes, the Code enhances India’s appeal as an investment destination while building a safer, healthier, and more productive workforce.

As India deepens its structural reforms, the OSH Code stands out as a critical pillar supporting inclusive growth, industrial expansion, and formalization of employment across the economy.

FAQs: India’s OSH Code, 2020 in Implementation

What is the OSH Code 2020 and why does it matter for foreign investors?

The OSH Code consolidates 13 workplace-related laws into one unified framework. For foreign investors, it reduces regulatory fragmentation across India’s states, creates uniform safety and welfare standards, and simplifies compliance through single registrations and digital filings – reducing operational risk and administrative costs.

How does the OSH Code improve ease of doing business for multinational companies?

The Code introduces single registration, one annual return, all-India licenses valid for five years, and deemed approvals. These measures cut paperwork, shorten setup time for factories or warehouses, and enable pan-India operations without navigating multiple state-specific procedures.

What are the major changes affecting workforce management and HR planning?

Key changes include mandatory appointment letters, expanded overtime flexibility, reduced eligibility for paid leave (from 240 to 180 days), expanded migrant worker protections, and universal safety coverage. HR teams can expect clearer rules, easier documentation, and more predictable compliance schedules.

Are there any significant benefits for sectors with seasonal or high-volume labor needs?

Yes. With states allowed to set higher overtime limits and contract labor licenses required only for contractors employing 50 or more workers, industries such as manufacturing, textiles, logistics, construction, warehousing, and e-commerce can adopt more flexible workforce models.

How does the OSH Code strengthen safety and ESG compliance?

It mandates safety committees in large units, expands free annual health check-ups, universalizes safety standards across all sectors, and introduces third-party audits. These changes strengthen ESG reporting, investor due diligence, and operational safety audits for global supply chains.

What protections does the Code offer to migrant and unorganized workers?

The Code widens the definition of inter-state migrant workers, introduces journey allowances, ensures portability of welfare benefits, and supports a national worker database for job mapping and benefits delivery. This aligns with global supply chain transparency and labor mobility expectations.

How does the OSH Code support women’s workforce participation?

Women can work in all establishments, including night shifts, with mandated safety measures. Crèche facilities for establishments with 50+ workers are now gender-equal, supporting workplaces with young parents. This helps MNCs achieve diversity and inclusion targets.

What is the impact of decriminalization and compounding of offences?

By replacing imprisonment with monetary fines for several offences and allowing compounding at 50–75% of the penalty, the Code reduces litigation and compliance anxiety. This makes India’s regulatory environment more predictable and enterprise-friendly.

How should foreign investors prepare for OSH Code compliance?

Businesses should:

• Update HR policies and appointment letter formats
• Conduct workforce audits for overtime and safety compliance
• Align contractor management processes with revised thresholds
• Integrate centralized digital registers
• Prepare for state-specific implementations and notifications

Does the OSH Code improve India’s competitiveness as a manufacturing hub?

Yes. The Code supports faster factory approvals, reduced compliance costs, labor mobility, improved safety standards, and scalable manpower strategies – making India more competitive for global supply chains and industrial investments.

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