The Occupational Safety, Health and Working Conditions Code, 2020

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The Occupational Safety, Health and Working Conditions Code, 2020

Introduction

The Occupational Safety, Health and Working Conditions Code, 2020 (‘OSHWC Code’) is one of the 4 labour Codes that the Central Government introduced to replace various existing labour laws. It received presidential assent on 28 September 2020 but is yet to be notified.

The OSHWC Code has subsumed 13 central labour legislations.

Background

The OSHWC Code aims to regulate the safety, health and working conditions of various industries and establishments in India.

The OSHWC Code repeals the following legislations:

  • The Factories Act, 1948 (‘Factories Act’);
  • The Contract Labour (Regulation and Abolition) Act, 1970 (‘Contract Labour Act’);
  • The Building & Other Construction Workers (Regulation of
  • Employment and Conditions of Service) Act, 1979 (‘BOCW Act’);
  • The Mines Act, 1952;
  • The Dock Workers (Safety, Health and Welfare) Act, 1986;
  • The Plantations Labour Act, 1951 (‘Plantations Act’);
  • The Inter-State Migrant Workmen (Regulation of Employment and Conditions of Service) Act, 1979 (‘ISMW Act’);
  • The Beedi and Cigar Workers (Conditions of Employment) Act, 1966;
  • The Working Journalist and other News Paper Employees (Conditions of Service and Miscellaneous Provision) Act, 1955;
  • The Motor Transport Workers Act, 1961;
  • The Sales Promotion Employees (Conditions of Service) Act, 1976;
  • The Working Journalist (Fixation of rates of wages) Act, 1958; and
  • The Cine Workers and Cinema Theatre Workers Act, 1981.

Further, the draft rules of the OSHWC Code were released on 19 November 2020. However, they are yet to be finalized.

Applicability of the OSHWC Code:

The OSHWC Code applies to ‘establishments’. A wide definition has been given to establishments under the OSHWC Code, and it includes the following:

  • A place where any industry, trade, business, manufacturing or occupation is carried on in which 10 (ten) or more workers are employed;
  • A motor transport undertaking, newspaper establishment, audio-video production, building and other construction work or plantation, in which 10 (ten) or more workers are employed;
  • A factory in which 10 (ten) or more workers are employed; or
  • A mine or port or vicinity of port where dock work is carried out.

It is important to note that the OSHWC Code also defines the terms ‘industry’, ‘motor transport undertaking’, ‘newspaper establishment’, ‘factory’ and ‘mine’ separately.

Key definitions in the OSHWC Code:

The OSHWC Code expands the definition of ‘employer’ to include persons who, directly or through any person, employ employees, and includes legal representatives of a deceased employer. Additionally, the definition has clarified that persons having ultimate control over the affairs of the establishment will be included under the definition of ‘employer’.

  • The OSHWC Code defines ‘employee’ to be a person employed (whether expressly or impliedly) on wages by an establishment to do any skilled, unskilled, manual, operational, supervisory, managerial, administrative, technical, clerical or other work.
  • A new definition of ‘worker’ has been introduced in the OSHWC Code. While it is largely similar to the definition of an ‘employee’ under the OSHWC Code, it specifically excludes:

(i) persons employed in a supervisory capacity whose monthly salary is INR 18,000 or more; or
(ii) persons who are employed mainly in managerial and administrative capacity

  • The definition of ‘contract labour’ under the OSHWC Code includes inter-state migrant workers as well, unlike the definition of contract labour under the Contract Labour Act.
  • The OSHWC Code also defines a ‘hazardous process’ as any process/ activity in relation to industries specifically set out in the OSHWC Code, where, unless special care is taken, raw materials/ finished products/ bye-products/ wastes etc., would either:

(i) cause material impairment to the health of the persons engaged or connected therewith; or
(ii) result in pollution of the general environment

The term ‘hazardous process’ is currently defined under the Factories Act and the same definition has been retained in the new OSHWC Code.

  • ‘Wages’ as per the OSHWC Code, comprises of all remuneration including salaries, allowances or otherwise, expressed in terms of money or capable of being so expressed, which would be payable to a person in respect of his/ her employment or work done, and includes basic pay, dearness allowance and retaining allowance, if any.

‘Wages’ as defined under the OSHWC Code, is consistent with the definition of the term under the other labour codes (i.e., Code on Wages, 2019, Code on Social Security, 2020 and Industrial Relations Code, 2020). ‘Wages’ has been given a wider but exhaustive definition to include all remuneration, as stated above.

Wages, however, do not include bonuses (not forming part of the remuneration payable), value of accommodation or supply of light/ water/ medical attendance, employer contribution towards pension or provident fund, including any interest accrued, conveyance, house rent allowance, gratuity, retrenchment compensation or other retirement benefit, etc (‘Excluded Amounts’).

Unlike the previous regime, the OSHWC Code also provides that in case the Excluded Amounts exceed 50% (or such notified percentage) of the total remuneration payable to the employee, the Excluded Amounts in excess of the said threshold, will be deemed as remuneration and should be added to wages. Further, if any part of the remuneration of the employee is given in kind, then the value of said remuneration, which does not exceed 15% of the total wages payable to him/ her, will be considered to form part of the employee’s wages.

Key highlights that every employer must know about:

1. Registration under the OSHWC Code:

Existing establishments:

  • Existing establishments, registered under any other central labour law or any other law notified by the central government, are not required to obtain fresh registration under the OSHWC Code. Such establishments shall be deemed registered under the OSHWC Code.
  • Having said the above, the draft rules indicate that the employer will have to update the registration particulars in the Shram Suvidha portal within 6 (six) months from the date on which the OSHWC Code comes into force.

New establishments:

  • The OSHWC Code has introduced a single registration for establishments that employ ten (10) or more workers. Previously, different registrations were required for factories under the Factories Act, plantations under the Plantations Act, establishments under the BOCW Act etc.
  • The employer of any new establishment, i.e., an establishment which comes into existence after the commencement of the OSHWC Code, is required to register under the OSHWC Code within 60 (sixty) days from the date of applicability of the Code.
  • To ease the registration process of establishments, an e-registration process has been introduced where any establishment, to which the OSHWC Code applies, can make an application for registration electronically.
  • The OSHWC Code also introduces the concept of “common license”. This can be obtained in respect of a factory, industrial premises for beedi and cigar work, for engaging contract labour, or any combination thereof.

2. Amendments to thresholds for determining the applicability of relevant provisions:

The thresholds have been amended under the OSHWC Code, changing the applicability of certain provisions.

Provision No. of employees required for applicability of provision
Previous New
Factory related provisions in case of factories
utilizing power
10 20
Factory related provisions in case of factories not
utilizing power
20 40
Contract labour provisions 20 50
Provision for creche facility 30 50
Provision for canteen 250 100
Appointment of welfare officer (factory, mine or
plantation)
500 250

3. Working hours:

  • Daily working hours of a worker in an establishment have been decreased to 8 (eight) hours a day from 9 (nine) hours a day.
  • A worker can work overtime only after giving his consent and in such cases, he will be liable to get wages from the employer at twice the rate of his normal wages. Previously under the Factories Act worker’s consent was not sufficient. The state government should have granted special exemption through notified rules for an employer to engage the workers overtime.

4. Working conditions and welfare facilities:

  • The employer, in all establishments, is required to maintain health, safety and working conditions. This includes proper hygiene, cleanliness, ventilation, humidification and providing arrangements for treatment of wastes and effluents in the establishment.
  • Additionally, the employer is also required to provide and maintain welfare facilities such as washing facilities, locker rooms, creche, canteens, sitting arrangements etc., subject to the thresholds, as specified in the table above.

5. Leaves:

  • Workers can work in an establishment for a maximum of 6 (six) days in a week.
  • The qualifying period for leave entitlement has been reduced to 180 (hundred and eighty) from the previous 240 (two hundred and forty) under the Factories Act. Under the OSHWC Code, workers who have worked 180 (hundred and eighty) days or more in a calendar year will be entitled to 1 (one) day leave for every 20 (twenty) days of work.
  • Further, a worker is permitted to avail his/ her leaves in the year it is earned, unlike previously, where it could only be availed in the subsequent calendar year.

With respect to leave encashment of annual leaves, the limit under the Factories Act was 30 (thirty) days (with certain exceptions) for carrying forward leaves and encashment on cessation of employment. This has been retained in the OSHWC Code. Further, the Code allows workers to encash unavailed annual leaves at the end of a calendar year.

6. Special provisions for women:

  • Under the OSHWC Code, a woman can be employed to work at night-time, i.e., between 7:00 pm and 6:00 am, with her consent. Previously, women were prohibited from working at night. Only in specific circumstances (such as where the employment was necessary to prevent damage to raw material), the state government could prescribe rules to allow women to work between 10:00pm and 5:00am.

7. Contract Labour:

  • Under the OSHWC Code, a contractor is required to obtain license before:

(i) supplying or engaging contract labour in an establishment; or

(ii) undertaking or executing any work through contract labour.

Note: In case a contractor has not fulfilled the qualifying criteria for a contract labour license, the OSHWC Code permits a contractor to obtain a work-specific license for a work order.

  • The OSHWC Code has made significant changes with respect to a principal employer. The principal employer has been made primarily responsible for providing the prescribed welfare facilities and meeting the prescribed standards for occupational health and safety for the contract labourers at their establishment.
  • Further, the OSHWC Code does not provide for recovery of costs incurred by the principal employer on account of providing amenities. This is unlike the previous position under the Contract Labour Act, which specifically allowed a principal employer to recover sums from the contractor either as deduction for any amount payable or as debt payable by the contractor for the expenses incurred in providing amenities.
  • Contractors are required to intimate the appropriate authority whenever a work order is received by them from an establishment either to supply contract labour in the establishment or to execute the contract through contract labour.
  • The OSHWC Code has also removed the requirement under the Contract Labour Act for a representative of the principal employer to be present while the contractor pays the wages of the contract labourer.

8. Factories:

  • The appropriate Government may declare any place carrying on a manufacturing process as a ‘factory’, irrespective of the minimum number of workers in a factory.
  • The appropriate Government may also set up a site appraisal committee to consider and give recommendations on any application for grant of permission for the location of a factory involving a hazardous process; or for the expansion of such a factory.

9. Inter-state migrant workers:

  • The OSHWC Code has widened the definition of ‘inter-state migrant worker’. The ISMW Act only referred to persons recruited by or through a contractor in one State for employment in an establishment in another State as inter-state migrant workers. Under the OSHWC Code, the term ‘inter-state migrant workers’ also includes any person who has come on his/ her own from one State and obtained employment in an establishment of another State, under an agreement or other arrangement for employment and draws wages.
  • An employer is required to pay to every inter-State migrant worker employed in his establishment, the travel cost for a worker to visit his/ her native place from the place of employment. • The applicability of the chapter regulating the welfare of inter-state migrant workers under the OSHWC Code has been increased from 5 (five) inter-state migrant workers (under the ISMW Act) to 10 (ten) or more inter-state migrant workers.

Duties of an Employer

1. Under the OSHWC Code, employers are inter alia required to do the following:

  • Ensure that the workplace is free from hazards that are likely to cause injuries or occupational diseases to employees;
  • Provide free annual health tests;
  • Provide and maintain a safe working environment, without health risks to employees;
  • Issue letters of appointment to the employees;
  • Levy no charge on employees for maintenance of safety and health at the workplace;
  • Provide information, instruction, training and supervision as may be necessary to ensure health and safety of the employees, wherever applicable;
  • Provide and maintain adequate and suitable facilities for washing to male and female employees separately, bathing places and locker rooms for male, female and transgender employees separately, sitting arrangements for all employees obliged to work in a standing position, adequate first-aid facilities etc.
  • Where an employee notifies the employer about the apprehension of imminent danger, the employer is required to take immediate remedial action, upon being satisfied about the existence of such danger and send a report of the action taken to the inspector-cum-facilitator. In case the employer is not satisfied about the existence of any imminent danger, he/ she must refer the matter to the inspector-cum-facilitator, who will finally decide on the question of existence of such imminent danger.

2. The OSHWC Code puts an obligation on the architect, project engineer or designer responsible for any building, construction work or the design of any project, to ensure that, at the planning stage, due consideration is given to the safety and health of the building workers and employees who are employed in the erection, operation and execution of such projects.

3. The OSHWC Code places various duties and responsibilities on an employer, as stated above. Under the Code, the central government has the power to notify standards on occupational safety and health for workplaces relating to factories, mines, docks, building and other construction work and other establishments. Since the central government will be prescribing these standards, it is presumed that they will now be consistent across the country, as opposed to the current regime where state governments are empowered to make rules for certain occupational health, safety and welfare conditions, resulting in inconsistent standards across states and industries, in some situations. Under the OSHWC Code, states can only amend the prescribed standards with prior approval of the central government.

4. The financial impact on employers, with respect to compliance with the welfare guidelines specified in the OSHWC Code could be considerable. As thresholds for applicability have also changed, establishments which were not required to comply with certain laws earlier will have to follow the rules.

Rights of Employees

1. Under the OSHWC Code, employees inter alia have the following rights:

  • To obtain information from the employer relating to the employee’s health and safety at the workplace;
  • Inform the employer regarding inadequate provisions for protection of the employees’ safety or health in the workplace. If the employee is not satisfied with the response or measures taken, they may approach the inspector-cum-facilitator; and
  • In case an employee apprehends imminent serious personal injury, death or imminent danger to health, he/ she may notify the same to the employer and the inspector-cum-facilitator simultaneously.
  • While the impact on employers to comply with the provisions of the new OSHWC Code may be more taxing, the benefits to employees have improved.

Authorities

1. The appointment of inspector-cum-facilitators has been prescribed for effective implementation of the OSHWC Code.

2. Additionally, National and State Occupational Safety and Health Advisory Boards will be constituted by the Central and State Governments to advise and assist the Government on matters relating to occupational safety and health. Such matters would inter alia relate to:

  • standards, rules and regulations to be declared under the OSHWC Code;
  • implementation of provisions of the OSHWC Code;
  • issue of policy(ies) relating to occupational safety and health; and
  • any other matters referred to it.

Social Security Fund

The OSHWC Code also provides for setting-up of a social security fund for the welfare of unorganized workers, which will be credited with the amount received from composition of certain offences.

Penalty

The OSHWC Code provides that contravention of any provision of the Code shall make an employer or principal employer liable to a penalty of INR 2,00,000 (Rupees two lakhs) which may be extended up to INR 3,00,000 (Rupees three lakhs). The OSHWC Code, has reserved imprisonment for serious offences such as those leading to death or serious bodily injury or obstruction of authorities in performing their duties. This consolidates the various penalties under the 13 (thirteen) different labour laws.

Conclusion

The OSHWC Code aims to standardize the labour law regime in the country by synchronizing a number of provisions applicable to establishments, factories, mines, etc.

While the OSHWC Code has certainly simplified the regulatory processes for employers, it has also imposed greater duties and compliance requirements on employers. The impact of the OSHWC Code may be better ascertained following the finalisation of the OSHWC rules.