Section 2 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.
The OSH Code regulates contract labour through a chain of definitions in section 2(1): contract labour, contractor, principal employer, core activity, inter-State migrant worker, and, for the screen industry, audio-visual production, audio-visual worker and producer. These terms decide whether the contract labour chapter applies to you and who carries which duty.
Contract labour (section 2(1)(m)) is a worker hired in connection with an establishment's work by or through a contractor, with or without the principal employer's knowledge, and includes an inter-State migrant worker. It excludes a worker (other than a part-time employee) regularly employed by the contractor on agreed standards of employment with periodical increment, social security and welfare benefits. A contractor includes a sub-contractor and a person who supplies contract labour as mere human resource. A core activity is the activity for which the establishment is set up, and the section lists 11 support activities that are not treated as essential to it.
Contract labour: section 2(1)(m)
"Contract labour" means a worker who is deemed to be employed in or in connection with the work of an establishment when hired in or in connection with that work by or through a contractor, with or without the knowledge of the principal employer. It includes inter-State migrant workers.
It does not include a worker (other than a part-time employee) who is regularly employed by the contractor for any activity of his establishment where the worker's employment:
- is governed by mutually accepted standards of the conditions of employment (including engagement on a permanent basis); and
- gets periodical increment in pay, social security coverage and other welfare benefits in accordance with the law for the time being in force in such employment.
The Central Rules, 2026 give a number to this increment: rule 185 says a worker regularly employed by the contractor on such standards must get an annual increment of not less than two per cent. of wages. See rules 185 and 186. The Central Rules apply where the Central Government is the appropriate Government; where the State Government is, the State's own rules apply.
Contractor: section 2(1)(n)
A contractor, in relation to an establishment, is a person who:
- undertakes to produce a given result for the establishment, other than a mere supply of goods or articles of manufacture, through contract labour; or
- supplies contract labour for any work of the establishment as mere human resource,
and includes a sub-contractor. The second limb catches manpower agencies. The first limb is about work contracts (housekeeping, security, fabrication) performed through contract labour; a person who only supplies goods is not a contractor for this purpose.
Principal employer: section 2(1)(zz)
Where contract labour is employed or engaged, the principal employer is:
| Establishment | Principal employer |
|---|---|
| Any office or Department of the Government or a local authority | The head of that office or Department, or such other officer as the Government or local authority specifies |
| A factory | The owner or occupier of the factory, and where a person is named as manager, that person |
| A mine | The owner or agent of the mine |
| Any other establishment | Any person responsible for the supervision and control of the establishment |
For a first look at how these roles play out in practice, see our note on the old Act's key definitions for contractor and principal employer and, for a wider view, contract labour under the new labour codes. Companies that hire through agencies can get a structured review from our labour law compliance team.
Core activity: section 2(1)(p)
A "core activity of an establishment" means any activity for which the establishment is set up and includes any activity essential or necessary to it. The proviso lists activities that are not to be considered essential or necessary if the establishment is not set up for that activity:
- sanitation works, including sweeping, cleaning, dusting and collection and disposal of waste;
- 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 support services;
- courier services that are support services;
- civil and other constructional works, including maintenance;
- gardening and maintenance of lawns and similar activities;
- housekeeping and laundry services and like activities, where they are support services;
- transport services including ambulance services; and
- any activity of intermittent nature, even if it constitutes a core activity.
Why this matters: section 57 prohibits employment of contract labour in core activities, subject to conditions. See section 57.
Inter-State migrant worker: section 2(1)(zf)
An inter-State migrant worker is a person employed in an establishment who:
- has been recruited directly by the employer, or indirectly through a contractor, in one State for employment in an establishment in another State; or
- has come on his own from one State and obtained employment in an establishment of another State (the "destination State"), or has subsequently changed establishment within the destination State,
under an agreement or other arrangement for such employment, and draws wages not exceeding Rs 18,000 per month or such higher amount as the Central Government notifies.
A worker who came on his own and found work is therefore covered, not only one recruited through a contractor. The benefits for these workers are in sections 59 to 65.
Audio-visual terms: section 2(1)(e), (f) and (zza)
- Audio-visual production means audio-visual produced wholly or partly in India and includes animation, cartoon depiction and audio-visual advertisement; digital production or any activity in making it; and feature films, non-feature films, television, web-based serials, talk shows, reality shows and sport shows.
- Audio-visual worker means a person employed, directly or through any contractor, in or in connection with audio-visual production as an artist (actor, musician, singer, anchor, news reader, dancer, dubbing artist or stunt person) or to do any work, skilled, unskilled, manual, supervisory, technical, artistic or otherwise, whose remuneration does not exceed the amount notified by the Central Government (for monthly wages or a lump sum).
- Producer means the company, firm or other person who undertakes the arrangements for producing the audio-visual, including raising finances and engaging audio-visual workers.
The employment terms for these workers sit in section 66 and rule 105. The text of clause (f) leaves the remuneration ceiling to a notification; it does not state a figure.
Controlled industry: section 2(1)(o)
A "controlled industry" means any industry the control of which by the Central Government has been declared under a Central Act in the public interest. It matters because, under section 2(1)(d)(i), establishments concerning a controlled industry specified by the Central Government fall in the Central sphere.
Example. A software company engages a facility-management firm to provide 60 housekeeping and security staff. The firm is a contractor; the 60 staff are contract labour; the software company, as the entity responsible for supervision and control of its establishment, is the principal employer. Housekeeping and security are on the proviso list, so they are not treated as the company's core activity. Section 45 applies the contract labour Part to an establishment in which fifty or more contract labour are employed, or were employed on any day of the preceding twelve months, so this engagement brings the company within that Part.
Need help with contract labour compliance?
Whether a worker is contract labour, who is the principal employer and whether an activity is core all decide licensing, welfare duties and liability. Our labour law compliance team can review your vendor contracts, headcounts and activity lists against these definitions. Bring your contractor list and the contracts.
Key takeaways
- Contract labour includes inter-State migrant workers; a regularly employed contractor worker with agreed standards, increment, social security and welfare benefits is excluded.
- A contractor includes a sub-contractor and a supplier of contract labour as mere human resource.
- The principal employer is the owner or occupier of a factory, the owner or agent of a mine, or the person supervising and controlling any other establishment.
- Eleven support activities are not treated as core activities unless the establishment is set up for them.
- An inter-State migrant worker draws wages not exceeding Rs 18,000 a month or a notified higher amount; audio-visual worker remuneration limits are as notified.
Read next
- Section 57: prohibition of contract labour in core activities
- Sections 46 and 47: designated authority and licensing of contractors
- Section 2: establishment, factory and manufacturing process
- Contract labour under the new labour codes: what will change
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.