In a bid to improve the ease of doing business, India has revised its 29 national labour laws and consolidated them into four codes on wages, industrial relations, social security and occupational health and safety and working conditions. See here for our update on the Code on Wages, 2019, here for our update on the Industrial Relations Code, 2020 and here for our update on the Social Security Code, 2020. This update focuses on the Occupational, Safety, Health and Working Conditions Code, 2020 (OSH Code). These codes were expected to take effect on 1 April 2021. However, at the time of writing, the government of India has deferred the intended implementation date. The new implementation date has yet to be announced.

Overview

The Code amends and consolidates the following legislation:

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

Coverage

This code will apply to all "establishments". The term "establishment" includes a place where any business is carried out in which 10 or more "workers" are employed. The term "worker" generally refers to blue collar workers and is defined as a person employed to do manual, skilled/unskilled, technical, operational, clerical or supervisory work but excludes, among others, those employed in a supervisory capacity earning at least INR18,000 (~USD243) per month. As explained in our update on the Industrial Relations Code, 2020, the term "workers" will now replace the term "workman". While the two terms are generally similar, the latter has a narrower definition as it excludes those employed in a supervisory capacity earning above INR 10,000 (~USD135) per month.

While the coverage of the OSH Code depends on the number of workers employed, certain provisions of the OSH Code apply to all employees of the establishment. These provisions include the employers' duty to provide a safe working environment, the obligation to issue appointment letters and the duty to notify the relevant authorities in the event of a workplace accident that leads to death or serious bodily injury to an employee.

Registration

To consolidate the multiple registration requirements under various laws, the OSH Code will introduce a 'one registration' requirement.

In essence, all establishments to which the OSH Code applies and which come into existence after the commencement of the OSH Code have to register electronically with the officer to be appointed by the appropriate government (for private entities, this will be the State government).

The timeframe to register is 60 days from the date the OSH Code takes effect.

Mandatory appointment letter

The OSH Code will require establishments to issue a letter of appointment to every employee within three months after the OSH Code takes effect, unless where the employee has already been issued such letter.

The content and the form of the letter of appointment will be prescribed by the appropriate government (for private entities, this will be the State government).

Working Hours

Currently, working hours are regulated by different statutes, depending on the nature of the enterprise and where it is located. For instance, under the Factories Act, the prescribed number of working hours is 9 hours per day and 48 hours per week.

The OSH Code will prescribe uniform working hour requirements which apply across all establishments. In particular, no worker may be required or allowed to work for more than eight hours a day. There are specific requirements which apply to certain establishments such as mines and to certain types of workers such motor transport workers.

Contract labour

Currently, the use of contract labour is regulated by the CLRA. The CLRA generally applies to:

  • establishments with 20 or more contract labour; and
  • contract labour providers who employ or had employed 20 or more contract labour, on any day of the preceding 12 months.

Under the OSH Code, the requirements on the use of contract labour will only apply to:

  • establishments employing 50 or more contract labour; and
  • contract labour providers who employ or had employed 50 or more contract labour, on any day of the preceding 12 months.

Additionally, under the OSH Code, an establishment must not use contract labour in their core activities, subject to the following exemptions:

  • the normal functioning of the establishment is such that the activity is ordinarily done through contractor;
  • the activities are such that they do not require full time workers for the major portion of the working hours in a day or for longer periods; or
  • any sudden increase of volume of work in the core activity which needs to be accomplished in a specified time.

The following are not considered core activities, if the establishment is not set up to carry out such activity:

  • sanitation works;
  • watch and ward services including security services;
  • canteen and catering services;
  • loading and unloading operations;
  • running of hospitals, educational and training institutions, guest houses, clubs and the like where they are in the nature of support services of an establishment; courier services which are in nature of support services of an establishment;
  • civil and other constructional works, including maintenance;
  • gardening and maintenance of lawns and other like activities;
  • housekeeping and laundry services, and other like activities, where these are in nature of support services of an establishment;
  • transport services including, ambulance services; and
  • any activity of intermittent nature even if that constitutes a core activity of an establishment.

Key Takeaways

Employers should review their workforce structure to assess who will be deemed to be "workers" and whether they will consequently be considered "establishments" to which the OSH Code will apply.

If the OSH Code applies, employers should consider how to comply with the new requirements. In particular, employers should keep a look out to see whether the relevant State governments has issued the draft rules which will give clarity on the form and content of the mandatory appointment letter and whether any employment contract already issued will satisfy the requirement. Employers should also review their use of contract labour and assess that they are not being used for the core activities.

If you missed our India webinar, which explains these changes in greater detail, you can access the recording here.