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.
Two definitions drive the coverage of the OSH Code: establishment (section 2(1)(v)) and factory (section 2(1)(w)). Around them sit manufacturing process, industry, industrial premises, godown and machinery. This article sets out each definition, the worker thresholds and the State-law saving.
An establishment is a place where any industry, trade, business, manufacturing or occupation is carried on with ten or more workers, and the same ten-worker test applies to a motor transport undertaking, newspaper establishment, audio-video production, building and other construction work or plantation. A factory needs twenty or more workers with power or forty or more without power, and a manufacturing process. Where a State law in force before the Code set a different factory number, the State's number prevails in that State until amended. A mine, and a port or its vicinity where dock work is carried out, are establishments without a headcount test.
Establishment: section 2(1)(v)
"Establishment" means:
- a place where any industry, trade, business, manufacturing or occupation is carried on in which ten or more workers are employed; or
- a motor transport undertaking, newspaper establishment, audio-video production, building and other construction work or plantation, in which ten or more workers are employed; or
- a factory, for the purpose of Chapter II (registration), in which ten or more workers are employed, notwithstanding the threshold in the factory definition; or
- a mine or port or the vicinity of a port where dock work is carried out.
Two provisos adjust the count. The first says the worker threshold in sub-clauses (i) and (ii) does not apply to an establishment or class of establishments in which a hazardous or life-threatening activity notified by the Central Government is carried on. The second says that, for Chapter II, the establishments in sub-clauses (i), (ii) and (iii) are deemed establishments though the number of employees is ten or more, despite any higher threshold in the definition of factory.
| Establishment type | Threshold |
|---|---|
| General: industry, trade, business, manufacturing, occupation | Ten or more workers |
| Motor transport, newspaper, audio-video production, construction, plantation | Ten or more workers |
| Factory (for registration under Chapter II) | Ten or more workers |
| Mine; port or vicinity where dock work is carried out | No headcount test |
| Notified hazardous or life-threatening activity | Headcount threshold does not apply |
For registration, an employer of an establishment must apply electronically within sixty days of the Code becoming applicable; see section 3 on registration. Businesses sorting out whether a small unit or shop is covered can use our labour law compliance service.
Factory: section 2(1)(w)
"Factory" means any premises including the precincts thereof:
- where twenty or more workers are working, or were working on any day of the preceding twelve months, and in any part of which a manufacturing process is carried on with the aid of power, or is ordinarily so carried on; or
- where forty or more workers are working, or were working on any day of the preceding twelve months, and in any part of which a manufacturing process is carried on without the aid of power, or is ordinarily so carried on.
It does not include a mobile unit belonging to the armed forces of the Union, a railway running shed, or a hotel, restaurant or eating place.
State-law proviso
If, under any State law in force immediately before the commencement of the Code, the number of workers specified was more or less than twenty or forty, the number under the State law prevails in that State until the competent Legislature amends it. A manufacturer operating in several States may therefore face different thresholds.
The two Explanations
- Explanation I: for counting workers, all workers in different groups and relays in a day are taken into account.
- Explanation II: the mere fact that an Electronic Data Processing Unit or Computer Unit is installed in a premises does not make it a factory if no manufacturing process is carried on there.
Example. A plastic-moulding unit has 14 workers on the first shift, 10 on the second and 6 on the night shift. Counting all groups and relays in a day gives 30 workers (Explanation I). The unit runs powered machines, so the 20-worker power threshold is met and it is a factory, unless a State law with a different number applies in that State.
Manufacturing process: section 2(1)(zi)
The term covers any process for:
- making, altering, repairing, ornamenting, finishing, packing, oiling, washing, cleaning, breaking up, demolishing, or otherwise treating or adapting any article or substance with a view to its use, sale, transport, delivery or disposal;
- pumping oil, water, sewage or any other substance;
- generating, transforming or transmitting power;
- composing, printing (letter press, lithography, offset, photogravure, screen printing, three-dimensional or four-dimensional printing, prototyping, flexography or other types) or book binding;
- constructing, reconstructing, repairing, refitting, finishing or breaking up ships or vessels;
- preserving or storing any article in cold storage; or
- such other processes as the Central Government may notify.
Related definitions
| Clause | Term | Meaning in brief |
|---|---|---|
| 2(1)(zc) | Industrial premises | Any place or premises (not a private dwelling house), including its precincts, in which any industry, trade, business, occupation or manufacturing is ordinarily carried on with or without power, and includes a godown attached thereto |
| 2(1)(y) | Godown | A warehouse or other place used for storing any article or substance required for a manufacturing process |
| 2(1)(zg) | Machinery | Any article or combination of articles assembled or connected, used or intended to be used to convert any form of energy to perform work, or to develop, receive, store, contain, confine, transform, transmit, transfer or control any form of energy |
| 2(1)(zd) | Industry | Any systematic activity carried on by co-operation between an employer and worker (direct or through any agency including a contractor) for production, supply or distribution of goods or services to satisfy human wants or wishes (not merely spiritual or religious), whether or not capital is invested or profit is the motive |
The definition of industry does not include institutions owned or managed by organisations wholly or substantially engaged in charitable, social or philanthropic services; sovereign functions of the appropriate Government (including defence research, atomic energy and space); domestic service; or any other activity notified by the Central Government.
Places outside the factory definition can still be brought in: section 81 lets the appropriate Government apply provisions of the factories Part to certain places, see sections 80 and 81. For the earlier Factories Act thresholds, see applicability under the Factories Act.
Need help with applicability?
Whether your premises is a factory, an establishment or neither decides registration, licensing and safety duties. Our labour law compliance team can assess your headcount across shifts, the nature of your processes and your State's threshold. Bring your muster roll and a short description of your operations.
Key takeaways
- An establishment generally needs ten or more workers; a mine and a port or dock work are establishments without a headcount test.
- A factory needs 20 or more workers with power, or 40 or more without, plus a manufacturing process; for registration under Chapter II a factory with ten or more workers is an establishment.
- All groups and relays in a day are counted, and workers on any day of the preceding twelve months count.
- A pre-Code State threshold that differs prevails in that State until amended.
- A computer unit alone is not a factory; hotels, restaurants and eating places are excluded.
Read next
- Section 3: registration of certain establishments
- Section 2: hazardous process, hazardous substance and serious bodily injury
- Section 79: approval and licensing of factories
- Factory under the new labour codes: OSH Code 2020
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.