The Occupational Safety, Health and Working Conditions Code, 2020 (OSH Code) came into force on 21 November 2025 and replaced the Factories Act, 1948 along with 12 other central labour laws. For a factory owner, the practical changes are a higher worker threshold (20 with power, 40 without), a move towards one licence and one annual return, a 30-day window for plan approval, and a different penalty structure with compounding and a notice to comply. How much of this you feel on the ground in October 2026 depends on your State, because licensing is run by States under their own OSH rules.
This guide sets out what changes for you, what has not changed yet, and what to do now. For the licence process, see factory licence registration.
What the OSH Code replaced
The Code consolidated 13 central labour laws into one statute. These included the Factories Act, 1948, the Contract Labour (Regulation and Abolition) Act, 1970, the Inter-State Migrant Workmen Act, 1979 and the Beedi and Cigar Workers Act, 1966, among others. The licence is still issued by the State, but under the Code and the State's OSH rules. The four Labour Codes were brought into force together on 21 November 2025.
The big changes for factory owners
| Area | Factories Act, 1948 (old) | OSH Code, 2020 (from 21 Nov 2025) | What it means for you |
|---|---|---|---|
| Who is a factory | 10 or more workers with power; 20 or more without | 20 or more with power; 40 or more without; State can notify smaller hazardous premises | Some small units fall out of the factory definition; hazardous units may not |
| Licences | Separate factory, contract labour and other licences | Move towards one common licence | Fewer parallel applications over time, once State systems catch up |
| Returns | Several returns under different laws | Single electronic annual return | One return to prepare, on State or central portals |
| Plan approval | State rules, no statutory deemed approval | 30-day window for decision, with deemed permission | Keep proof of the filing date |
| Penalties | Largely criminal, lower fines | Higher monetary penalties, compounding for first offences, 30-day notice to comply | Fix defects quickly and use the notice |
| Registration | Factory licence | Establishment registration and licence concepts, with a single registration route | Check your State portal for the registration stage |
| Inspections | Inspectors under the Act | Inspector-cum-Facilitator model | Expect advice as well as enforcement, but inspections continue |
Change 1: The threshold moved
The most visible change is section 2(1)(w): the factory threshold doubled. If you have 20 to 39 workers and no power, or 10 to 19 with power, you may no longer be a factory. The test applies on any day in the preceding twelve months, and contract workers count. Read our detailed guide on the 20/40 worker threshold before you decide to surrender a licence.
Change 2: One licence, one registration, one return
The Code moves towards a single common licence covering factory, contract labour and similar establishments, and one electronic registration and annual return. This is a direction, not a switch that every State has flipped. In practice you may still file under existing State portals. Check each State's current notifications.
Change 3: Plan approval has a clock
Construction or expansion permission now has a 30-day decision window, after which the permission is deemed granted. This helps projects, but only if you can show when you applied. Take a dated acknowledgment, and do not build on deemed permission without taking advice if the inspectorate has raised queries.
Change 4: Penalties and compounding
The Code replaced many jail terms with higher fines, though imprisonment remains for serious contraventions.
| Offence | Penalty under the Code (as summarised) |
|---|---|
| Failure to register the establishment | Up to ₹2 lakh; up to ₹5 lakh for continuing contravention |
| Contravention of safety provisions (first offence) | Up to ₹2 lakh |
| Repeat contravention of safety provisions | Up to ₹5 lakh |
| Contravention resulting in death of a worker | Imprisonment up to 2 years and/or fine up to ₹5 lakh |
Before prosecution, inspectors must usually give a 30-day notice to comply. First-time offences punishable with fine only can be compounded at 50% of the maximum fine (75% where imprisonment is also prescribed). Compounding is not available for repeat offences within the prescribed period. These amounts come from summaries of the Code and should be checked against the section text before you rely on them in a dispute.
Change 5: State rules decide the details
The Code leaves forms, fees, thresholds for welfare facilities and procedure to the State and central rules. Here is where the three focus States stand as of October 2026.
| State | Status of OSH rules | What to do |
|---|---|---|
| Uttar Pradesh | UP OSH&WC Rules, 2026 notified on 27 August 2026 (Notification No. 962/XXXVI-03-2026-1903305), superseding the UP Factories Rules, 1950 | Use the new forms; check fee matrix and returns on the gazette or portal |
| Delhi | Draft OSH Rules; Delhi Factories Rules, 1950 continue to be used to the extent consistent with the Code | Keep using e-District; watch for the final notification |
| Haryana | Draft Haryana OSH Rules, 2026 (notice dated 4 May 2026, objections invited till 19 June 2026); Punjab Factories Rules as applied continue | Use hrylabour.gov.in; do not assume draft provisions are in force |
Details are on our state pages: factory licence in Uttar Pradesh, factory licence in Delhi and factory licence in Haryana.
What has not changed
- You still need State licensing or registration if you are a factory
- Safety obligations remain: machine guarding, exits, ventilation, lighting, drinking water, toilets, first aid and fire arrangements
- Registers and returns still have to be maintained, increasingly in electronic form
- Accident reporting still applies. In Uttar Pradesh, the new rules are reported to require reporting within 12 hours
- Other approvals are separate: pollution consent, fire NOC, building approval, PF and ESIC
Welfare and committee thresholds
Welfare facilities scale with headcount. Commonly cited thresholds are a crèche above 50 workers, a canteen ordinarily at 100, an ambulance room above 500, a welfare officer at 250 and a safety committee at 500 or more workers. These figures are used in our licence guide as typical; confirm them in your State's rules, since States can set them differently and the new State rules are still settling.
What about contract labour?
The Code brings the contract labour regime into the OSH structure and aims at a common licence. Until your State has operationalised that, check whether a separate contract labour licence is still being asked for. Workers engaged through contractors count towards the factory threshold regardless.
Action plan for factory owners
- Re-test your headcount. Use your highest day in the last twelve months, including contractor workers.
- Check your licence status. Find the expiry date, the fee you paid and whether your State has notified a transition for old 10 to 19 worker units.
- Download your State's current forms and fee table. In Uttar Pradesh the 2026 rules apply; in Delhi and Haryana confirm on the portal.
- Update registers and returns. Move to electronic registers where the State requires it and prepare the annual return (see factory annual return).
- Review safety and welfare facilities. Compare headcount with the welfare thresholds.
- Tidy dependent approvals. Pollution consent, fire NOC and building plan should align with the licence application.
- Document your plan approval timeline. Keep the dated submission.
- Brief your team. Name one person responsible for OSH compliance and put dates in a calendar.
- Watch for notifications. Final rules in Delhi and Haryana could change forms and fees at short notice.
Common misunderstandings
- "The Code abolished factory licences." No. It changed who needs one and how it is administered.
- "Everything is now central." No. States still license and run the portals.
- "Penalties are lower now." Many fines are higher; the change is in structure, with compounding and a notice period.
- "My old licence is void." Not automatically. Check your State's transition position.
- "Draft rules are law." Draft rules do not take effect until notified.
When to take advice
Take advice if you hold licences that straddle the old and new thresholds, if you use contractors extensively, if you operate in more than one State, or if you plan an expansion. Lawgical Guru can review your licences against your State's current rules and set up a compliance calendar. Call +91 92205 65553.
General information as of October 2026. State rules are being notified in stages; confirm the current notification before acting. This is not legal advice.
Related guides
Frequently asked questions
When did the OSH Code come into force?
The Occupational Safety, Health and Working Conditions Code, 2020 came into force on 21 November 2025, along with the other three Labour Codes. It subsumed the Factories Act, 1948 and 12 other central labour laws, though State rules decide many procedural details.
Is the Factories Act, 1948 still applicable?
No, it was subsumed into the OSH Code. Licensing is still done by States, and where a State has not notified final OSH rules, existing State factory rules and portals continue to be used to the extent they are consistent with the Code. Delhi and Haryana had draft rules only as of October 2026.
What is the new factory threshold?
Premises are a factory if a manufacturing process is carried on with 20 or more workers using power, or 40 or more workers without power, on any day of the preceding twelve months. The earlier limits were 10 and 20. The Government can still notify smaller hazardous premises as factories.
Is there now a single licence for factories?
The Code moves towards one common licence and a single electronic registration and annual return, but how far this works depends on the State's notified rules and portals. Check whether your State still asks for a separate contract labour licence or separate returns.
What are the penalties under the OSH Code?
As summarised, failure to register can attract up to ₹2 lakh and up to ₹5 lakh for continuing contravention, and repeat safety contraventions up to ₹5 lakh. A contravention resulting in a worker's death can attract up to two years' imprisonment and/or a fine. Inspectors usually give a 30-day notice, and first offences can be compounded.
What are the UP OSH rules of 2026?
The UP OSH&WC Rules, 2026 were notified on 27 August 2026 and supersede the UP Factories Rules, 1950. Reported features include Form-45 for licence application, a licence fee range of ₹500 to ₹38,000, a first licence of one year and renewal up to ten years. Verify these on the gazette.
What should factory owners do now?
Re-test headcount against the 20/40 threshold, check licence expiry and your State's transition position, download current State forms, update registers and returns, align pollution consent, fire NOC and building approvals, keep dated plan approval acknowledgments and watch for new notifications.
Official sources
Reviewed by Satyam Gupta, Company Secretary (CS) & Advocate
8+ years of industry experience. Last reviewed 16 October 2026. Always confirm current rules and fees on the official portal before acting.