Comprehensive Q&A bank for Labour law on concepts, compliance procedures and other issues pertaining to HR Policy, ESOPs, POSH Act and more.

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Who is an occupier under the Occupational Safety, Health and Working Conditions Code, 2020 (“OSH Code”)? Whether any obligation can be cast on a foreign director?

An occupier of a factory is a person who has ultimate control over the affairs of the factory. In addition to the above, the OSH Code also provides for the following individuals to be deemed as an occupier: 


i. In case of a firm or other association of individuals: Any one of the individual partners or members. 

ii. In case of a company: Any of the directors, except any independent director within the meaning of Section 149(6) of the Companies Act, 2013.  

iii. In case of a factory owned or controlled by the Central Government or any State Government, or any local authority: The person or persons appointed to manage the affairs of the factory by the Central Government, the State Government or the local authority, or such other authority as may be prescribed by the Central Government. 


Given that in case of a company, any director other than the independent director can be deemed to be an occupier, therefore, a foreign director who is not an independent director can be an occupier as per the OSH Code. 

The following are some of the responsibilities cast on the occupier under the OSH Code: 


a. Common usage of facilities: Where the premises or separate buildings are leased to different occupiers for use as separate factories, the owner of the premises and the occupiers of the factories utilising common facilities (such as safety, hygiene, ventilation, canteens, rest rooms and crèches) shall be jointly and severally responsible for maintenance of such common facilities as may be prescribed by the appropriate Government. 


b. Disclosure of information, policy, plans etc.: The occupier shall be required to undertake the following:  

i. In case of a factory undertaking activities involving a hazardous process, the occupier is required to disclose to the workers employed in the factory, the Chief Inspector-cum-Facilitator, or Inspector-cum-Facilitator, the local authority within whose jurisdiction the factory is situated and the general public in the vicinity, all the information regarding dangers, including health hazards and measures to overcome such health hazards, including hazards arising from the exposure to or handling of the materials or substances while manufacturing, transportation, storage and other processes.  

ii. At the time of registration of a factory undertaking activities involving a hazardous process, lay down a detailed policy with respect to the health and safety of the workers employed therein and intimate such policy to the Chief Inspector-cum-Facilitator or Inspector-cum-Facilitator and the local authority. 

iii. Draw up an on-site emergency plan and a detailed disaster control measures for the factory and convey the same to the workers employed therein and to the general public living in the vicinity of the factory. 

iv. Lay down measures for the handling, usage, transportation and storage of hazardous substances inside the factory premises and the disposal of such substances outside the factory premises and publicise them in the manner prescribed by the State Government, among the workers and the general public living in the vicinity. 


c. In case of a factory involved in a hazardous process: The occupier shall be required to undertake the following:  

i. Maintain health-records or medical records of the workers who are exposed to any chemical, toxic, or other harmful substances which are manufactured, stored, handled or transported. 

ii. Appoint persons who possess prescribed qualifications and experience in handling hazardous substances and are competent to supervise such handling within the factory and to provide all the necessary facilities for protecting the workers at the working place. 

iii. To provide for medical examination of every worker: (A) before assigning a job to such worker; (B) while continuing on the job; and (C) after he has ceased to work at the job, at intervals not exceeding 12 months. 

The OSH Code prohibits employment of contract labour in core activities of an establishment. This means that contract labour: (a) cannot be employed in any activity for which the establishment is set up (“Primary Activity”), and any other activity which is essential or necessary for undertaking such Primary Activity, and (b) can be employed in  non-essential activities (if the establishment is not set up for such activity), such as, inter alia, sanitation works, canteen, housekeeping, loading and unloading etc.  


However, establishments can employ contract labour in Primary Activities under the following circumstances: 


i. The normal functioning of such establishment is ordinarily through contract labour. 

ii. The Primary Activities of such establishment do not require full-time workers for the major portion of the working hours in a day or longer periods.  

iii. Sudden increase of volume of work while undertaking Primary Activities and requirement of such work is to be accomplished in a specified time. 


Accordingly, the employer will need to manage and employ a mix of all the categories of the workforce in order to undertake the Primary Activities as well as non-essential activities of the establishment. The employer can primarily engage contract labour for its non-essential activities, except for the specific circumstances allowed under the OSH Code. 

The IR Code provides for a new feature of recognition of a negotiating union and negotiating council, as the case may be, in an industrial establishment by an employer for the purpose of negotiations. A negotiating union or negotiating council will ease the process of negotiation with the management of the establishment. The concept of negotiating union or negotiating council, as the case may be, has been explained by way of the following flow chart: 



The new definition of ‘wages’ under the Code on Wages, 2019 brings uniformity in calculating wages for the purpose of contributions like bonus, employee state insurance, employee provident fund and gratuity, which, under the extant laws, were calculated on the basis of varied definitions of wages. Due to the differing practices adopted for computation of the ‘base amount’ on which social security benefits are provided, this base amount ranges from 35-50% of the total wages earned. However, with the new definition of wages, the inclusion components may have to be revised and social security obligations of the employers are to be discharged on 50% of the total wages earned. This may result in a higher outflow for employers and a lesser take-home for employees. Overall, the new definition of wages is expected to result in a sizeable financial impact on the employer.