Occupational safety, health and working conditions code, 2020: An overview


By Arya Tripathy and Aastha Mathur on January 13, 2021

In our previous posts, we provided an overview of some of the key changes in the Code on Social Security, 2020 (here) and the Industrial Relations Code, 2020 (here).

The third in the series of labour laws notified on September 28, 2020 is the Occupational Safety, Health and Working Conditions Code, 2020 (Code). It seeks to amalgamate, simplify and rationalise the provisions of 13 existing central labour legislations[1] that relate to workplace safety and health for employees. The Code is divided into 14 chapters with 143 sections, and retains most of the key principles of the existing laws dealing with workplace safety, working conditions and provision of utilities. However, certain new aspects have been introduced and specific details are left for rulemaking by the central government (CG) or respective state governments (SG). This post aims at providing an overview of the Code with some of the key changes.

1. Establishment: The Code defines establishment as all places where any industry, trade, business, manufacture or occupation is carried on with more than 10 workers. Headcount criteria does not apply where the establishment is engaged in hazardous of life threatening activities. This includes a factory, motor transport undertaking, newspaper establishment, audio-video production, building and construction work, plantation, mine, or port where dock work is conducted. The definition is wide and will cover services sector such as IT establishments and commercial establishments, who may be obligated to factor Code’s requirements for employee’s working conditions and safety. Currently, these aspects are captured under state specific shops and establishments acts, and the Code does not repeal them. This can lead to confusion as to whether both laws will continue to apply to an establishment, and the rules should clarify this aspect.

2. Factory: The Code increases the headcount threshold for factories. Factories will include any establishment with 20 or more workers where the work is done with the aid of power, and any establishment with 40 or more workers where the work is done without the aid of power. Earlier these were 10 and 20 respectively. This revised definition is likely to benefit small manufacturing units and is a welcome step. However, it is not clear at this stage, if manufacturing units that do not exceed the headcount threshold will be regulated as commercial establishments under state specific shops & commercial establishment laws.

3Common registration & license: To lessen the burden of multiple employer registrations under different laws, the Code introduces a common registration process. With this, the government wants to create a consolidated central database and improve ease of doing business. Chapter II of the Code states that all new establishments or existing ones must register within 60 days from the date of application of the Code, unless they are already registered under any other central law such as employee’s provident fund law. If not registered, employer cannot hire any worker. Further, the Code also provides for an optional facility to either obtain a common license for factories, engage contract labour and establish industrial premises for beedi & cigar work, or obtain separate ones. Furthermore, it provides for single e-filing for changes and closure notifications within 30 days of the event. All of these filings will be digital, and details are expected to be finalised in rules. This is a positive change and would ease compliances for businesses.

4. Core activity of an establishment: As of now, there is no law that defines core activities, and in the context of Contract Labour (Regulation and Abolition) Act (CLRA), courts have interpreted core activities as those that are essential operations of a business. The determination is fact specific. The Code codifies settled jurisprudence and defines core activities as any activity for which the establishment was created and those that are essential or necessary to such activity. Unlike CLRA, it specifically lists out 11 non-core activities namely, sanitation, watch and ward services, canteen and catering, loading unloading, running of hospitals/educational/training institutions/guest houses/clubs if they are in the nature of support services for the main activities, gardening and maintenance of lawns, housekeeping & laundry services, transport, and activities which are intermittent in nature. Similar to CLRA, Code defines intermittent nature to mean any activity that is not performed for more than 120 days in the preceding 12 months. Code specifically prohibits engagement of contract labour in core activities, except if activity (i) is ordinarily done by the establishment through contractors (like turnkey projects, EPC contracts), (ii) does not require full time workers for major portion of working hours in a day or for longer periods (like riders for home deliveries), (iii) is outcome of sudden increase of volume of work that must be accomplished in a specified time. Thus, once Code is implemented, establishments cannot engage contract labour, unless they can substantiate in facts that they are covered under the three exceptions.

5. Duties of employers and employees: Chapter III of the Code lists out the duties of employers and rights of employee. The employer is responsible inter alia for ensuring (i) a hazard-free workplace, (ii) comply with prescribed occupational safety and health standards, (iii) provide free annual health examination (this currently applies to workers in factories), (iv) issue a letter of appointment to every employee, (v) ensure disposal of hazardous and toxic waste including disposal of e-waste, and (vi) ensure that no change is levied on any employee for maintenance of safety and health at workplace including medical examination and investigation for detecting occupational diseases. Additional duties are imposed on employers in factories, mines, dock work, building and other construction work, plantations, designers, importers, suppliers, architects, and project engineers.

While Chapter III provides principle-based duties, they must be read with Chapter V and VI that provide for specific directions on health, safety and working conditions plus welfare measures. It empowers CG to prescribe rules applicable to all or certain class of establishments concerning cleanliness and hygiene, ventilation, temperature and humidity, pollution free environment, portable drinking water, overcrowding, lighting, arrangements for latrines and urinals, washing facilities, creche, canteen, first-aid boxes, etc. Further, CG can also prescribe certain establishments to constitute a safety committee comprising of employers and workers. Establishments with more than 500 workers, construction workplaces and hazardous factories with more than 250 workers, and mines with more than 100 workers are required to appoint safety officers.

Alongside, employees are obligated to (i) take reasonable care for health and safety, (ii) comply with safety standards, (iii) co-operate with employer to meet statutory guidelines, (iv) report unhealthy or unsafe circumstances to employers/health & safety representative/safety office, as the case may be, (v) not misuse or use negligently resources provided at workplace, (vi) not act in a manner that endangers others, and (vii) perform other duties as may be prescribed in rules. In terms of rights, employees are entitled to information concerning health and safety at work, and raise concerns regarding inadequate provisions including where he/she/they believe that there is likelihood of imminent serious personal injury or death or harm to health. In such circumstance, employer or members of safety committee must take immediate action to remedy the situation and send report to Inspector-cum-Facilitator.

6. Inspector-cum-Facilitators & Boards: For effective implementation, Chapter IX of the Code prescribes appointment of Inspector-cum-Facilitators. The office will not only inspect and ensure compliance, but also aid and facilitate employers in complying with the obligations. However, how this facilitation role will be discharged is not provided for, and this is likely to be notified under the rules. Additionally, the Code proposes constitution of National and State Occupational Safety and Health Advisory Boards to advise and assist the government in different matters, including prescribing standards, framing policies and programmes relating to occupational safety and any other functions that government directs.

7. Widened Scope of Employment of Women: The Code provides for certain special provisions with respect to women employees. Currently, several states do not permit women to work in night shifts, unless certain specific conditions are fulfilled. As a result, there is no uniform criteria and practice varies across states. Section 43 of the Code states that women can be employed in all establishments for all types of work before 6:00 AM and after 7:00 PM with their consent and subject to conditions relating to safety, holiday, working hours as may be prescribed. The power to provide specific details is vested with appropriate state government, which essentially means that employers will still have to implement different practices at different locations. Thus, the only certainty that the Code brings is that women employees can work in night shifts.

8. License for contractors: As per CLRA, organisations employing 20 or more contract labourers are required to register as principal employer and comply with CLRA requirements. The Code increases the headcount threshold to 50 contract labourers in preceding 12 months. This is likely to be a big relief for smaller organisations who use contract labourers for ancillary activities and find it onerous to comply with several statutory obligations vis-à-vis contract labour. Similar threshold increase has also been implemented for contractors. Further, the Code extends the validity of registration to 5 years as opposed to the current 1 year period. Furthermore, the Code has also introduced the concept of a work specific licence which is renewable and allows contractors to obtain licenses for specific work orders as well. For this, they are required to disclose particulars of work order and how they wish to execute it. However, it is not clear if principal employer needs to register as per the current practice for contractor to obtain a work specific license.

9. Offences and Penalties: To act as a deterrent, specific penalties have been ascribed for different lapses. The amount of fines and imprisonment term have been enhanced, with various offences attracting minimum penalty of INR 50,000. For instance, falsifying records under Section 99 of the Code is punishable with up to three months of imprisonment or minimum fine of INR 100,000 or both. Where penalty is not specified, the employer will be punished with a fine between INR 2 – 3 lakhs. However, prior to imposition of a fine or other liability, the Inspector is obligated to provide an opportunity to the employer to rectify the default. Composition of certain offences is also permitted.

Conclusion: Based on the foregoing, a lot has been left to rule-making, which should hopefully provide suitable clarifications. Without such clarification, interpretation will vary and implementation will be tricky. The government aims to release the final rules by January 2021, and implement the Codes by April 1, 2021. The actual extent to which businesses will have to align existing health & safety practices can be evaluated once the rules are released. Nonetheless, it is prudent for organisations to apprise themselves of the changes and its potential impact to implement transition with business continuity while ensuring maximum compliance.

[1] The acts repealed are Factories, Plantations Labour, Mines, Working Journalists and other Newspaper Employees (Conditions of Service and Miscellaneous Provisions), Working Journalists (Fixation of Rates of Wages), Motor Transport Workers, Beedi and Cigar Workers (Conditions of Employment), Contract Labour (Regulation and Abolition), Sales Promotion Employees (Condition of Service), Inter-State Migrant Workmen (Regulation of Employment and Conditions of Service), Cine Workers and Cinema Theatre Workers, Dock Workers (Safety, Health and Welfare), Building and Other Construction Workers (Regulation of Employment and Conditions of Service) Acts.





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