Sections 115-116 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Section 115 of the Occupational Safety, Health and Working Conditions Code, 2020 (the OSH Code) sets up a social security fund for the welfare of unorganised workers and says what is credited to it, which includes penalties and composition money collected under the Code. Section 116 allows the Central Government to direct, by notification, that its powers under the Code be exercised also by a State Government or a subordinate State officer or authority.
The appropriate Government must establish a social security fund for the welfare of unorganised workers (115(1)). The amount of penalty under section 111(6) and composition money under section 114(4) are credited to it, and other sources may be prescribed (115(1)-(2)). It is administered and spent in the manner prescribed, and money can be transferred to another fund for unorganised workers (115(3)). Rule 183 of the Central Rules, 2026 deems the fund under section 141 of the Code on Social Security, 2020 to be set up under section 115. Under section 116, the Central Government may delegate its powers by notification to the State Government or a subordinate officer or authority.
Sections 115 and 116 at a glance
| Provision | Content |
|---|---|
| 115(1) | Appropriate Government establishes a social security fund for welfare of unorganised workers; credited with composition amount (114(4)) and penalty (111(6)) |
| 115(2) | Other sources as prescribed by the appropriate Government |
| 115(3) | Administered and expended as prescribed, including transfer to any fund under another law for unorganised workers |
| 115 Explanation | "Unorganised worker" has the meaning in section 2(m) of the Unorganised Workers' Social Security Act, 2008 |
| 116 | Central Government may, by notification, direct that a power exercisable by it be exercisable also by the State Government or a subordinate State officer or authority |
Section 115: what the fund is
Section 115(1): "There shall be established by the appropriate Government a social security fund for the welfare of the unorganised workers to which there shall be credited the amount received from composition of the offence as specified in sub-section (4) of section 114 and the amount of the penalty as specified in sub-section (6) of section 111."
So the fund is fed by two streams that employers meet directly:
- Penalties imposed by the officer under section 111; see sections 111 and 112.
- Composition money paid under section 114; see sections 113 and 114.
The text does not send fines imposed by a court after conviction to this fund; it names penalties under section 111(6) and composition under section 114(4).
Other sources (115(2)). The fund "may also be funded by such other sources as may be prescribed by the appropriate Government".
Use of the fund (115(3)). It "shall be administered and expended for welfare of the unorganised workers in such manner as may be prescribed by the appropriate Government including the transfer of the amount in the fund to any fund established under any other law for the time being in force for the welfare of the unorganised workers".
Who is an unorganised worker. The Explanation adopts clause (m) of section 2 of the Unorganised Workers' Social Security Act, 2008 (33 of 2008). The OSH Code does not restate it.
For a compliance team, the practical point is that money paid as penalty or composition is not revenue of the department. It is earmarked, and a payment should be made in the manner the order or notice directs so that it is credited correctly. If you want advice on how a payment or a notice fits into your wider compliance position, our legal consultation team can help.
Rule 183: which fund
Rule 183 of the Central Rules, 2026 says: "Social Security Fund set up under section 141 of the Code on Social Security, 2020 (36 of 2020) shall be deemed to have been set up under section 115 of the Code, including other sources of fund and the manner of administering and expending the fund for welfare of the unorganised workers."
The consequence is that, where the Central Government is the appropriate Government, there is no separate new fund. The fund under the Code on Social Security, 2020 is treated as the section 115 fund, along with its sources and the manner of administering and spending it. See our article on rule 183. Where a State Government is the appropriate Government, it establishes and runs its own fund under section 115, and the State's OSH rules apply.
Section 116: delegation of powers
Section 116: "The Central Government may, by notification, direct that any power exercisable by it under this Code or rules made thereunder shall, in relation to such matters and subject to such conditions, if any, as may be specified in the notification, be exercisable also by the State Government or by such officer or authority subordinate to the State Government as may be specified in the said notification."
Points to note.
- Who delegates. Only the Central Government, and only by notification.
- What. Any power it can exercise under the Code or the rules.
- To whom. The State Government, or an officer or authority subordinate to the State Government.
- Scope. "In relation to such matters and subject to such conditions" as the notification specifies.
- "Also". The power is exercisable also by the delegate, so the Central Government still has it.
For employers, the practical question is who is the right authority for an application, appeal or objection. If a Central power has been delegated, the notification says to whom. Check the notification for your sector rather than assuming the Central authority. Where a matter is for the State in any case, as with factories, delegation is not needed.
Example. A composition payment of Rs 75,000 is made under section 114 for a section 105 offence and a penalty of Rs 50,000 is collected under section 111 from another establishment. Both amounts are credited to the fund for unorganised workers, and the fund is used as prescribed, including transfer to any fund set up under another law for their welfare.
Need help reading a notification or a payment order?
Payment directions, delegations and forms differ by appropriate Government. Our legal consultation team can help you identify who the appropriate Government is for your establishment, which authority applies and how to document payments.
Key takeaways
- Section 115 sets up a social security fund for unorganised workers, credited with penalties (111(6)) and composition money (114(4)).
- The appropriate Government prescribes other sources and how the fund is spent, including transfers to other funds for unorganised workers.
- Rule 183 deems the Code on Social Security, 2020 fund to be the section 115 fund for the Central Rules.
- Section 116 lets the Central Government delegate its powers by notification to a State Government or subordinate officer or authority.
Read next
- Sections 113 and 114: court orders and composition of offences
- Sections 117 and 118: onus as to age and onus of proving limits of what is practicable
- Rule 183: social security fund
- Four Labour Codes 2020: overview
Disclaimer: Based on the Occupational Safety, Health and Working Conditions Code, 2020 (as enacted) and, where noted, the Occupational Safety, Health and Working Conditions (Central) Rules, 2026 (G.S.R. 345(E), 8 May 2026), as on 30 September 2026. The Code is in force from 21 November 2025; some provisions may be notified later, and State Governments make their own rules for establishments where the State is the appropriate Government. Verify the current position before acting.