Occupational Safety, Health & Working Conditions Code 2020

India’s labour law reforms have introduced comprehensive frameworks to ensure employee safety, welfare, and regulatory compliance. One of the most significant legislations in this regard is the Occupational Safety, Health and Working Conditions Code (OSH Code), which consolidates multiple labour laws into a unified structure.

Definition: Occupational Safety, Health and Working Conditions Code, 2020

The Occupational Safety, Health and Working Conditions Code, 2020 (OSH Code) is a comprehensive labour law enacted by the Government of India to consolidate, simplify, and regulate laws relating to occupational safety, health, and working conditions of workers across various establishments.

It aims to ensure that employees are provided with:

A safe and healthy working environment
Adequate welfare facilities
Humane working conditions

The Occupational Safety, Health and Working Conditions Code, 2020 consolidates and replaces 13 existing labour laws related to safety, health, and working conditions into a single framework.

Acts Included in the OSH Code

The following Acts have been merged into the OSH Code:

Factories Act, 1948
Mines Act, 1952
Dock Workers (Safety, Health and Welfare) Act, 1986
Building and Other Construction Workers (Regulation of Employment and Conditions of Service) Act, 1996
Plantation Labour Act, 1951
Contract Labour (Regulation and Abolition) Act, 1970
Inter-State Migrant Workmen (Regulation of Employment and Conditions of Service) Act, 1979
Working Journalists and Other Newspaper Employees (Conditions of Service) and Miscellaneous Provisions Act, 1955
Working Journalists (Fixation of Rates of Wages) Act, 1958
Motor Transport Workers Act, 1961
Sales Promotion Employees (Conditions of Service) Act, 1976
Beedi and Cigar Workers (Conditions of Employment) Act, 1966
Cine Workers and Cinema Theatre Workers Act, 1981

1. Mandatory Registration of Establishments

Under the Code, every applicable establishment must be registered before employing workers. Employers are required to:

Obtain registration through prescribed procedures
Intimate any changes in ownership or management within 30 days
Notify authorities about commencement and closure of operations electronically

Failure to register prohibits the employer from engaging any workers.

2. Duties of Employers: Ensuring Workplace Safety

Employers carry primary responsibility for maintaining a safe and healthy work environment. Key obligations include:

Providing a workplace free from hazards and occupational risks
Ensuring compliance with prescribed safety standards
Conducting periodic health examinations for employees
Maintaining welfare facilities and safe working conditions

These measures aim to reduce workplace injuries and promote employee well-being.

3. Contract Labour: Compliance and Restrictions

The Code introduces stricter provisions governing contract labour:

Applicability:

Applies to establishments employing 50 or more contract workers

Key Provisions:

Contractors must obtain valid licenses before engagement
Wages must be paid through bank transfer or electronic mode
Principal employer is liable if contractor fails to pay wages
Welfare facilities must be provided by the principal employer

Restrictions:

Employment of contract labour in core activities is generally prohibited, except under specific conditions such as:
- Intermittent work
- Sudden increase in workload
- Activities traditionally outsourced

4. Inter-State Migrant Workers Protection

The Code extends protection to inter-state migrant workers:

Applicable where 10 or more migrant workers are employed
Employers must ensure:
- Suitable working conditions
- Reporting of accidents to both states
- Welfare measures considering their migrant status

Additionally, a centralized portal is introduced for worker registration and tracking.

5. Health, Safety, and Welfare Measures

Employers must implement comprehensive safety systems, including:

Formation of Safety Committees in larger establishments
Appointment of Safety Officers based on workforce size
Maintenance of safe infrastructure, equipment, and work processes
Protection against hazardous substances and occupational diseases

The Code also lists notifiable diseases and mandates preventive actions.

6. Special Provisions for Factories and Construction Work

Factories:

Prior approval required for site, construction, and expansion
Licensing and renewal governed by prescribed rules
Deemed approval if no response within specified time

Construction Workers:

Employers must ensure workers are medically fit for hazardous tasks
Workers with health risks cannot be assigned dangerous operations

The Occupational Safety, Health and Working Conditions Code, 2020 (OSH&WC)
			Sl.No	Query	Reply
1	Are leave encashment provisions under the OSH & WC Code applicable only to workers, sales promotion employees, and working journalists, or to all employees? Leave-related provisions apply to managerial, supervisory, and corporate office staff?	Leave provisions apply to workers as per the OSH & WC Code, 2020 and only to those supervisors having wage not exceeding Rs 18,000/ per month. The definition of worker includes sales promotion employees and working journalists.
2	What is the maximum number of days of leave that can be carried forward to the succeeding year under the applicable Labour Codes and Rules? If Employer agrees to carry forward 120 days of Leave to next calendar year, whether he is allowed to do so?	A worker can carry forward up to 30 days of leave to the succeeding calendar year. Further, a worker who has applied for leave with wages and has not been granted, can carry forward the leave refused without any limit.
Sl.No	Query	Reply
3	Under the Labour Codes, who is eligible for leave encashment—only workers or employee? Whether the Relationship Manager and Sales person working independently (doesn’t supervises anyone) and drawing wage of more than ₹18,000 are entitled for Leave Encashment?	Worker is entitled for leave encashment. The sales promotion employees are included in the definition of Worker under Section-2(1)(zzl) of OSH&WC Code, 2020.
4	Is the provision of crèche facility dependent on any specific gender composition of the workforce?	The creche facility is available to employees, irrespective of gender.
5	At what stage does overtime become payable under the OSH&WC Code, when it exceeds 8 hrs of daily working hours or 48 hrs of weekly limit? If maximum working hours limit is prescribed as 12 Hours by the appropriate government, whether Overtime is applicable for Hours exceeding 8 Hours on a particular day?	The Code prescribes working hours as 8 hours per day. If, a worker works for more than eight hours in any day as daily wager, or for more than forty-eight hours in any week, as the case may be, a worker shall in respect of such overtime work be entitled to wages at the rate of twice the normal rate of wages and shall be paid at the end of each wage period.
6	Where the OSH&WC Code permits accumulation of leave up to 30 days, but a State law (e.g., Andhra Pradesh) allows 60 days, which provision will prevail?	The provision of the OSH&WC, 2020 Code will prevail over the State Law for provisions which are inconsistent with the Code. However, an employee is entitled to benefits under State Law if more favourable to him than those under the Code.
7	What is the maximum number of leave days that can be encashed under the applicable Labour Code(s)?	There is no prescribed maximum limit for leave encashment under the OSH&WC Code, 2020. Leave exceeding 30 days, if applied but not granted by the employer, can be encashed at the end of the calendar year. At the time of separation from service, the worker is entitled to encash the leave to his/ her credit.
7			8	Where the age threshold for annual health check-ups differ between Central Rules and State Rules, which provision will apply?	Central rules will be applicable on the establishments where Central Government is Appropriate Government and state rules will be applicable on the establishments where State Government is Appropriate Government.

New Labour Codes

Navigating India’s New Labour Codes: What Every Business Must Know About Wage Restructuring & Compliance

India’s labour law landscape is undergoing one of its most significant transformations in decades. With the consolidation of 29 central laws into four comprehensive labour codes, businesses are entering a new era of compliance—one that demands not just awareness, but strategic action.

Yet, many organizations are still approaching these changes reactively.

This is where the real risk lies.

Understanding the Shift: The Four Labour Codes

The new framework is built on four pillars:

Code on Wages, 2019 – Standardizes wage definitions, ensures timely payments, and impacts salary structuring.
Code on Social Security, 2020 – Expands benefits like EPF, ESI, and gratuity to a wider workforce, including gig workers.
Industrial Relations Code, 2020 – Simplifies dispute resolution and regulations around layoffs and retrenchment.
OSH Code, 2020 – Strengthens workplace safety, health standards, and working conditions.

Together, these reforms aim to simplify compliance while increasing accountability.

The Game Changer: Definition of Wages

At the heart of this reform is a single, powerful rule:

Basic Pay + Dearness Allowance + Retaining allowance must be at least 50% of total remuneration.

This fundamentally changes how companies design salary structures.

Earlier, organizations could reduce statutory liabilities by increasing allowances. Now, if allowances exceed 50% of total pay, the excess is added back to “wages” for statutory calculations.

What this means:

Higher PF and gratuity contributions
Reduced flexibility in salary structuring
Increased compliance scrutiny

Impact on Salary Structures

Most companies will need to re-engineer their compensation models.

Before:

Basic salary: 30–40% of CTC
Higher allowances to maximize take-home pay

Now:

Basic salary: Minimum 50% of CTC
Allowances capped collectively at 50%

This shift leads to:

Higher employer costs (PF, gratuity liabilities)
Lower take-home salary for employees
Greater transparency and standardization

Financial & Operational Impact on Businesses

The implications go beyond payroll restructuring.

Provident Fund (PF): Contributions increase significantly
Gratuity: Liability may rise by 25–50%
Overtime: Payable at twice the wage rate
Leave Encashment: Higher payouts due to increased wage base
Final Settlement: Must be processed within 48 hours

Additionally, organizations must upgrade systems for:

Digital compliance filings
Real-time payroll adjustments
Structured record-keeping

Compliance Isn’t Optional: Penalties Are Severe

The new labour codes come with stringent penalties for non-compliance:

EPF/ESI violations: Up to 3 years imprisonment + ₹1 lakh fine
Wage underpayment: Fine up to ₹50,000 (higher for repeat offences)
Gratuity delays: Jail term + financial penalties
Non-maintenance of records: Heavy fines under OSH Code

Even restructuring salaries incorrectly—without reducing CTC—can still lead to violations if statutory benefits are impacted.

The Hidden Risk: Improper Salary Restructuring

Many companies attempt to absorb increased statutory costs within existing CTC.

While not illegal in itself, it becomes a compliance issue if:

Statutory contributions are reduced
Wage definitions are manipulated
Employee benefits are indirectly compromised

This is where most audit failures occur—not due to ignorance, but due to improper execution.

What Businesses Should Do Now

To stay compliant and future-ready, organizations must:

Reassess salary structures in line with the 50% wage rule
Evaluate financial impact on PF, gratuity, and other benefits
Upgrade payroll systems for new compliance requirements
Conduct periodic compliance audits
Document everything—because proof of compliance is as important as compliance itself

Final Thoughts

India’s new labour codes are not just a regulatory update—they represent a structural shift in how businesses manage workforce compliance.

Organizations that act early will not only avoid penalties but also build stronger, more transparent employee frameworks.

Those who delay may find themselves dealing with rising costs, audit failures, and legal exposure.

Compliance is no longer a backend function—it’s a strategic priority.

Industrial Relations Code, 2020: A Complete Overview for Employers & HR Professionals

Introduction

The Industrial Relations Code, 2020 is a landmark reform introduced by the Government of India to consolidate and modernize laws relating to trade unions, employment conditions, and industrial disputes. It replaces and merges key legislations such as the Trade Unions Act, Industrial Employment (Standing Orders) Act, and Industrial Disputes Act into a single framework.

This Code aims to bring simplicity, transparency, and efficiency in managing industrial relations while balancing the interests of employers and workers.

Key Objectives of the Code

Simplify multiple labour laws into a single unified legislation
Promote ease of doing business
Ensure fair dispute resolution mechanisms
Strengthen trade unions and collective bargaining
Enhance industrial harmony and productivity

Applicability of the Code

The Code applies to all industrial establishments across India, with specific provisions based on employee strength:

Provision	Applicability
Works Committee	100+ workers
Grievance Redressal Committee	20+ workers
Standing Orders	300+ workers

Trade Union Provisions

Registration Criteria

Minimum 7 members required
At least 10% of workers or 100 workers (whichever is less) must be members

Key Highlights

Recognition of Negotiating Union/Council
A union with 51% support becomes the sole negotiating union
If no union meets the threshold, a negotiating council is formed

Benefits

Legal recognition
Protection from civil and criminal liability in certain cases
Structured collective bargaining process

Grievance Redressal Mechanism

Every establishment with 20 or more workers must form a Grievance Redressal Committee (GRC).

Features:

Equal representation of employer and employees
Maximum 10 members
Must include adequate representation of women
Resolution timeline: 30 days

If unresolved, the matter can be escalated to:
Conciliation Officer
Industrial Tribunal

Works Committee

Applicable to establishments with 100 or more workers, this committee:

Promotes employer-employee harmony
Addresses day-to-day workplace concerns
Prevents disputes at an early stage

Standing Orders

Applicable to establishments with 300 or more workers.

Key Requirements:

Employers must define service conditions in writing
Must cover:
- Work hours
- Leave policies
- Misconduct rules
- Disciplinary procedures

Timeline:

Draft standing orders must be submitted within 6 months

Industrial Dispute Resolution Mechanism

The Code provides a structured approach:

Step-by-Step Process:

Grievance Redressal Committee
Conciliation Officer
Industrial Tribunal
National Industrial Tribunal (for national importance cases)

Arbitration

Disputes can be voluntarily referred to arbitration
Binding award ensures quicker resolution

Industrial Relations Code 2020 (FAQ)
1	Is a fixed-term employee engaged for 11 months eligible for gratuity upon contract expiry? Is gratuity payable where a fixed-term employee exits before completion of the contracted tenure?	Fixed Term Employee (FTE) will be eligible for gratuity if he/she renders service under the contract for a period of one year (from start of contract).

Conclusion: Industrial Relations Code – A Progressive Step Forward by Pragnaa

The Industrial Relations Code marks a significant evolution in India’s labour law framework, aiming to strike a balanced approach between employer flexibility and employee protection. By consolidating existing laws and introducing clarity in areas such as dispute resolution, union recognition, and retrenchment norms, the Code creates a more structured and transparent industrial environment.

From Pragnaa’s perspective, this reform is not just about compliance—it is about building sustainable industrial harmony. Organizations must view the Code as an opportunity to strengthen workplace relationships, improve communication mechanisms, and adopt fair labour practices. Proactive implementation, supported by strong internal policies and awareness, will be key to unlocking its full potential.

As businesses navigate this transition, the focus should remain on compliance readiness, employee engagement, and risk mitigation. With the right approach, the Industrial Relations Code can serve as a foundation for long-term growth, productivity, and a resilient workforce ecosystem.At Pragnaa, we believe that aligning with evolving labour laws is essential not only for legal adherence but also for fostering a future-ready and people-centric organization.

Code on Wages, 2019

The Code on Wages, 2019 is one of the four labour codes introduced by the Government of India to simplify and consolidate existing wage-related laws.

Definition:
The Code on Wages is a law that regulates wages, bonus payments, and equal remuneration for employees across all sectors, ensuring fair and timely payment to workers in both organized and unorganized sectors.

It applies to all employees and employers in India, without any wage ceiling (unlike earlier laws).

Objectives of the Code on Wages

Ensure uniform definition of wages
Provide timely payment of wages
Introduce minimum wages for all employees
Promote gender equality in wages
Simplify compliance for businesses

Acts Included in the Code on Wages

The Code on Wages, 2019 has merged and replaced the following four Acts:

The Payment of Wages Act, 1936
- Ensures timely payment of wages to employees
The Minimum Wages Act, 1948
- Fixes minimum wage rates for different employments
The Payment of Bonus Act, 1965
- Provides for bonus payments to eligible employees
The Equal Remuneration Act, 1976
- Ensures equal pay for equal work for men and women

Sl.No	Query	Reply
Code on Wages, 2019
1	a. Does overtime payment form part of the 50 percent wage calculation rule?	Overtime allowance payment forms a part of the 50 percent wage calculation.
	What constitutes “total remuneration” for applying the 50% wage floor?	Please refer to FAQ No-3 dated 30.12.2025 available on MoLE website. Weblink: de4758d5bfeffc456d7de97a801891b0.pdf
	1. Is actual gratuity paid included? 2. Is gratuity included where shown as part of CTC? 3. Are employer contributions to PF and other social security benefits included?	Only statutory components such as employer PF and pension contributions and statutory bonus are included for arriving at 50% of wages to form part of remuneration. Gratuity, ESI and other retirement benefits are not included.
	b. With reference to FAQ Question No. 7 of the MoLE FAQs under the Code on Wages, 2019, clarification is sought on: whether statutory components such as employer / employee PF contribution,statutory bonus,ESI,or other retirement benefits are included within “Other Allowances” or whether the illustration is based only on gross monthly salary excluding statutory contributions.	No. Statutory components such as employer share of PF/Pension contribution, are prescribed under Section 2(y)(c) of the Code on Wages and difference amount of back to the wages/remuneration in case it exceeds 50% of remuneration/wages (First proviso to the Section 2(y) of the Code on Wages).
2	Are there any specific legal provisions in place for the wage protection of white-collar employees?	The Code on Wages, 2019 has provisions for timely payment of wages. These provisions are applicable to all employees.
total of (a) to (i) of Section 2(y) of the Code will be added
Sl. No	Query	Reply
3	Can wages and minimum wages be treated as the same?	No, minimum wages are the statutory wages fixed by the appropriate government. An employer is legally prohibited from paying an employee less than the prescribed minimum wage. The Wages are defined in Section 2(y) of the Code on Wages, 2019 and can also be referred to in FAQ No- 2, 3 and 4 dated 30.12.2026 available on MoLE website. Weblink: 9fb60321f0028fc2fe08d3b3d8626dd7.pdf
4	Do annual performance- based incentives form a part of “wages” for computation under the Labour Codes?	No. Annual performance-based incentives do not form a part of “wages” for computation under the Labour Codes. Pl. refer to Sl. No. 3 of FAQs dated 30.12.2025 available on the MoLE website. Weblink: de4758d5bfeffc456d7de97a801891b0.pdf
5	Who is eligible for overtime wages—only workers or it is applicable for Employees also? If so does the entitlement also extend to supervisory and managerial staff?	Yes. Employee, including worker, whose minimum rate of wages is fixed under the Code on Wages, 2019 is eligible for overtime.
6	Is the revised definition of “wages” under the Code on Wages, 2019 applicable for gratuity calculation from the date of enforcement of the Code, i.e., 21.11. 2025?	Yes. Gratuity, based on revised definition of wages will be applicable w.e.f. 21.11.2025 i.e. date of implementation of the Codes.
7	From which date does the definition of “wages” under the Labour Codes come into effect?	The definition of “wages” has come into effect from 21.11.2025.
SI.NO	Query	Reply
8	Whether variable components of wages such as overtime (OT) allowance are included while calculating the “wages” under the Codes?	Yes. Overtime allowance payment forms a part of components Section 2(a) to 2(i). If such allowance, exceed 50 percent of remuneration then excess over 50 percent is added to the wage calculation.
9	What is the distinction between “minimum wages” and “wages” under the Labour Codes?	Minimum wages are fixed by the Appropriate Government for the employees, whereas wages are fixed as per Terms of Employment between employee and employer, employed in any establishment as per the definition of Wages as mentioned in Section 2(y) on the Code of Wages, 2019

Conclusion:

The Code on Wages, 2019 is a transformative reform that brings clarity, uniformity, and accountability to wage-related practices across India. By standardizing the definition of wages, enforcing the 50% rule, and extending coverage to all employees, it compels organizations to rethink and realign their salary structures while ensuring fair and timely compensation.

However, with these changes comes increased compliance responsibility. Businesses must carefully review payroll structures, statutory components, and documentation processes to avoid risks and ensure adherence to the law.

Pragnaa plays a crucial role in this transition by acting as a trusted compliance partner. With expertise in labour law advisory, payroll structuring, compliance audits, and end-to-end implementation support, Pragnaa helps organizations seamlessly align with the Code on Wages. From interpreting complex provisions to executing practical solutions, Pragnaa enables businesses to stay compliant while focusing on operational growth.

In a regulatory environment that is becoming more structured and scrutinized, partnering with experts like Pragnaa ensures not just compliance, but confidence and sustainability in workforce management.

Understanding the Code on Social Security, 2020:

A Comprehensive Guide for Employers & Professionals

India’s labour law landscape underwent a major transformation with the introduction of the Code on Social Security, 2020. This landmark legislation consolidates multiple social security laws into a single framework, aiming to extend protection to a wider workforce, including those in the unorganised and gig economy.

What is the Code on Social Security, 2020?

The Code on Social Security, 2020 is a unified law designed to amend and consolidate existing social security regulations. Its primary objective is to ensure income security, healthcare access, and welfare benefits for employees across sectors—organised, unorganised, gig, and platform workers.

Key Objectives of the Code

Extend social security coverage to all categories of workers
Simplify and rationalize compliance for employers
Promote universal registration of establishments
Enable digital administration of benefits and records
Strengthen governance through dedicated social security bodies

Acts included in the Code on Social Security:

Employees’ Provident Funds and Miscellaneous Provisions Act, 1952
Employees’ State Insurance Act, 1948
Employees’ Compensation Act, 1923
Employment Exchanges (Compulsory Notification of Vacancies) Act, 1959
Maternity Benefit Act, 1961
Payment of Gratuity Act, 1972
Cine Workers Welfare Fund Act, 1981
Building and Other Construction Workers Welfare Cess Act, 1996
Unorganised Workers’ Social Security Act, 2008

Conclusion:

Sl.No	Query	Reply
Code on Social Security, 2020 (FAQ)
1	Does fixed-term employment cover contract labour engaged through contractors, or only direct employees of the principal employer?	Fixed Term Employment covers employees directly engaged by the employer.
2	Whether Gratuity calculation will be applicable prospectively or retrospectively?	Gratuity calculation will be applicable w.e.f. 21.11.2025 i.e. date of implementation of the Codes. Please refer to Sl. No. 8 of FAQ dated 30.12.2025available on MoLE website. Weblink: de4758d5bfeffc456d7de97a801891b0
3	How will the ESI coverage be governed until the finalization of Rules?	With effect from 21.11.2025, the definition of wages under the CoSS, 2020 shall apply. At present, Rs 21,000 per month wages notified for ESI coverage will be applicable.
4	For the calculation of gratuity, will wage components other than those specified under clauses (a) to (c) of included part and (a) to (k) of excluded part of Section 2(88) of the Code on Social Security, 2020, be included?	Any payment made to employee which is not part of components mentioned under section 2(88) of the Code on Social Security,2020 shall not be considered for calculation of gratuity.
5	For Fixed Term Employees (FTE), is gratuity payable on completion of exactly one year of service or more than one year of service is required for calculation of gratuity under the Labour Codes?	Fixed Term Employee (FTE) will be eligible for gratuity if he/she renders service under the contract for a period of one year (from start of contract).
6	Whether States can levy cess on gig and platform workers, and if so, this will result in a dual financial burden on aggregators?	As per section 114(4) of the Code on Social Security, 2020, the contribution to be paid by the aggregators for the funding Schemes for gig workers and platform workers will be notified by the Central Government. The said contribution will be credited to Social Security Fund set up by the Central Government for social security and welfare of the gig workers and platform workers.
7	In case of contract labour, whether gratuity liability is to be borne by the Principal Employer or the Contractor?	As per the section 53 of the Code on Social Security, 2020, the employer (i.e. Contractor) will pay gratuity on rendering of five years continuous service at the rate of 15 days wages for each completed year of service based on the last drawn wages.
8	Whether gratuity for service rendered prior to 21 November 2025 will be calculated under the Payment of Gratuity Act,1972, and service on or after that date under the Labour Codes?	The employee will be paid gratuity based on the rate of wages last drawn by the employee at the time of superannuation or retirement or resignation or death etc, on and after 21.11.2025 as per the provisions of Code on Social Security, 2020.
9	What types of benefits or facilities will be considered as “remuneration in kind” under the definition of wages? Please provide illustrative examples.	Benefits under the terms of employment such as food coupons, ration items, mobile recharge etc. would constitute remuneration in kind.

Conclusion:

At Pragnaa, we see the Code on Social Security, 2020 as more than just a legal reform—it is a shift toward building a more accountable and inclusive workforce ecosystem. By bringing multiple legislations under one umbrella, the Code reduces complexity while expanding the scope of social security to previously uncovered segments like gig and unorganised workers.

However, compliance under this Code requires more than basic awareness. It demands structured processes, accurate documentation, and proactive monitoring. Organizations that treat this as a strategic priority—not just a statutory obligation—will be better positioned to mitigate risks and build long-term workforce stability.

Pragnaa supports businesses in navigating these changes with clarity and confidence. From compliance assessments to end-to-end implementation support, our focus is on helping organizations stay compliant, audit-ready, and future-ready.

As the labour law landscape evolves, one thing is clear—strong compliance is no longer optional; it is a business necessity.