Key Takeaways

• The OSH Code repealed the Factories Act, 1948, on 21 November 2025. Existing licences and state factories rules continue under the savings provisions to the extent they aren’t inconsistent with the Code, until they’re repealed or replaced.
• A factory means 20 or more workers with power or 40 or more without. Units with 10 or more workers are still “establishments” with registration, appointment letter and working-hour duties.
• Core checks include a valid licence, OSH registration, appointment letters, wages by the 7th, PF and ESI by the 15th, an 8-hour day and a 48-hour week, safety and welfare appointments, and accident and dangerous occurrence reporting on the prescribed timelines.
• Review compliance monthly, annually and whenever rules change, and audit yourself before an inspector does.

What Is Factory Compliance and Why Is It Important?

Factory compliance means running your plant the way the law requires. Your licence and registration are in place, workers are hired and paid correctly, hours stay within limits, and safety and welfare measures are documented. It’s less about passing an inspection and more about proving, every day, that the factory is safe and the paperwork matches reality.

The rulebook changed recently. On 21 November 2025, the four labour codes came into force, and the OSH Code repealed the Factories Act, 1948. Existing licences and state factories rules weren’t switched off, though. They continue under the Code’s savings provisions to the extent they aren’t inconsistent with the Code, until they’re repealed or replaced under the new framework.

That means today’s factory compliance rules are a mix of the OSH Code, the OSH (Central) Rules, 2026 notified on 8 May 2026, the other labour codes and your state’s rules. Searching for a factory compliance checklist India manufacturers can use without wading through all of that? The sections below are built for exactly that.

Why does it matter so much? The Ministry of Labour and Employment says the Code relies on web-based, randomised inspections by Inspector-cum-Facilitators, and complaints can trigger targeted inspections too. Clean records make either kind routine.

Factory Compliance Checklist for Manufacturers

Use this list as your starting point. Check each item against your state’s rules, because some details vary.

Licence and registration

• Factory licence compliance: Keep your state factory licence valid, display and follow its conditions, and apply for amendments when details change.
• OSH registration: Register on the Shram Suvidha or designated portal. The final central rules use Form I and Form III, auto-generate the certificate and add a late fee after 60 days. Existing registrations get a six-month transition, so keep legal name, address and activity details accurate.

Appointment and employment records

• Appointment letters: Every employee must have a compliant appointment letter.

Wages and social security

• Wages: Pay monthly wages by the 7th of the following month under the Code on Wages.
• Wage slips: Issue them in electronic or physical form, on or before the date of wage payment.
• PF and ESI: Deposit contributions by the 15th of the following month.
• Annual return: The final rules add a declaration on ESI and PF contributions, so reconcile headcount, wage records, contractor manpower and contribution data before filing.

Working hours

• Daily and weekly limits: The Code caps the working day at 8 hours, and the Central Rules cap the working week at 48 hours.
• Overtime: Overtime is paid at twice the normal wage rate, and a worker can be required to work overtime only with their consent. Under the Central Rules, daily-wage workers earn overtime for hours beyond 8 in a day and other workers for hours beyond 48 in a week. The Code calculates the overtime period on a daily or weekly basis, whichever is more favourable to the worker. Payment is made at the end of the wage period, and the Rules round part-hours (15 to 30 minutes counts as 30 minutes, and more than 30 minutes counts as a full hour). States may notify variations, so check yours.

Safety, health and welfare

• Safety committee: Under the Code, the appropriate Government can require an establishment or a class of establishments to constitute a Safety Committee, with worker representatives at least equal in number to employer representatives. Check the Central Rules or your state’s rules to see whether your unit is covered.
• Safety officers: The Code requires safety officers in a factory with 500 or more workers and in a factory carrying on a hazardous process with 250 or more workers. The number, qualifications and duties are prescribed by the appropriate Government.
• Welfare officer: At least one for factories with 250 to 500 workers, plus one more for every additional 500. With two or more, designate a Chief Welfare Officer.

Accident and dangerous occurrence reporting: The timelines differ by event.

• Fatal accident: Inform the Inspector-cum-Facilitator, the District Magistrate or Sub-Divisional Officer, the police station and the victim’s family immediately.

• Injury that keeps a worker off work for 48 hours or more: Inform the Inspector-cum-Facilitator and send a report within 12 hours after those 48 hours.

• Dangerous occurrence, even without injury: Report within 12 hours to the Inspector-cum-Facilitator and the District Magistrate or Sub-Divisional Officer.

• Later death or disability: If an injured worker dies, or is diagnosed with a disability, after the 48 hours, inform immediately and send written confirmation within 12 hours.

Health examinations: These depend on the worker and the process.

• Annual health examination: The Code requires employers to provide it free of cost to employees of the age or class prescribed by the appropriate Government. The Central Rules specify free annual examinations for employees aged 40 and above in dock work and building or construction work, so check your state’s factory rules.
• Hazardous processes and dangerous operations: The Code requires medical examinations before workers are assigned to a job involving a hazardous substance and at intervals not exceeding twelve months while they continue in it. For dangerous operations, periodic medical examination at the occupier’s cost can be prescribed. The Labour Ministry’s FAQ (13 March 2026) says free pre-employment and periodic examinations apply to workers in these factories, regardless of age, and states the required frequency.
• Facilities: The Code requires separate, adequate washing and locker facilities for male, female and transgender employees.
• Certificates: Many states require valid stability, fire safety, and electrical safety certificates at renewal. Keep them current.

Contract workers

• Welfare: Contract workers are expressly covered for welfare facilities, and the principal employer must provide them.
• Grievances: Contract workers can raise grievances about health, working conditions and wages with the principal employer. Under the Central Rules, the principal employer must set up a Grievance Redressal Committee with representatives from both the principal employer and the contractor and dispose of grievances within 30 days. If a grievance isn’t resolved, it’s forwarded electronically to the Inspector-cum-Facilitator, who must dispose of it within 60 days of receipt.

Factory Compliance Requirements for Different Types of Manufacturers

Factory compliance for manufacturers isn’t one-size-fits-all. Factory compliance requirements shift with your headcount, processes, and use of contract labour.

Type of unit	What it means for compliance
Small unit with 10 or more workers, below the factory threshold	Still an “establishment”, so registration, appointment letters, welfare duties and working-hour rules apply
Factory (20 or more workers with power, 40 or more without)	Factory licence and registration, plus the full set of safety, welfare and working-hour duties
Factory with 250 to 500 workers	At least one welfare officer
Factory with 500 or more workers	Safety officers, plus welfare officers, as the headcount grows. “A Safety Committee applies where the appropriate Government requires it.”
Factory with hazardous processes	Safety officers from 250 workers
Unit with 50 or more contract workers	OSH Code contract labour provisions apply, and the principal employer is responsible for welfare facilities

Not sure which row you fall into? Recount your workers on the busiest day of the last 12 months. The factory definition looks at any day in the preceding twelve months, not just today’s headcount.

Factory Compliance Checklist for New Manufacturing Units

Factory compliance requirements start before the first machine runs. Here’s a sensible order for a new unit:

1. Confirm your classification. Count workers and note whether you use power. That tells you if you’re a factory or an establishment.
2. Check the location. Rules differ by state. In Delhi, for example, licences are granted only to factories in conforming industrial areas.
3. Register on the portal. Complete OSH registration in Form I. The Code gives a 60-day window, and the Central Rules add a late fee after it.
4. Apply for the factory licence.  Use your state’s labour or factories department portal. Existing state factories rules continue under the savings provisions to the extent they aren’t inconsistent with the Code, until they’re repealed or replaced, so follow your state’s current procedure.
5. Issue appointment letters. Do this before workers start.
6. Set up payroll compliance. Plan for wages by the 7th, wage slips in electronic or physical form and PF and ESI deposits by the 15th.
7. Appoint your safety and welfare people. Check whether your headcount triggers a welfare officer or safety officers and whether your state requires a Safety Committee.
8. Build your calendar. Put every recurring date in one place from day one.

Factory Inspection and Audit Checklist

A factory compliance inspection under the OSH Code looks different from the old routine. Inspector-cum-Facilitators both advise and enforce; inspections are randomised and web-based, and complaints can trigger targeted visits.

Keep these ready, using them as a factory compliance audit checklist before anyone else does the checking:

• Factory licence and OSH registration certificate
• Appointment letters for all employees, including contract workers
• Wage records and proof that wage slips were issued
• PF and ESI payment records
• Working-hour registers and shift rosters
• Safety committee minutes and action-taken reports**, where a Safety Committee is required**
• Accident and dangerous occurrence reports
• Welfare officer appointment details
• Safety officer appointment details, where your headcount or process triggers them
• Stability, fire and electrical safety certificates, where your state requires them
• Contractor and contract worker records

Accurate records are your best defence. A factory compliance inspection goes smoothly when your registers, wage data, and floor practices are consistent.

Factory Compliance Calendar for Manufacturers

A calendar turns a long list into small, doable tasks. These are the dates we could confirm:

When	Task
By the 7th of every month	Pay the previous month’s wages (Code on Wages)
On or before the wage payment date	Issue wage slips (electronic or physical)
By the 15th of every month	Deposit PF and ESI contributions for the previous month
Immediately	Report a fatal accident to the authorities and the victim’s family
Within 12 hours of the event	Report a dangerous occurrence to the authorities
Within 12 hours after 48 hours of incapacity	Send the report for an injury that prevents work for 48 hours or more
Before a worker starts	Issue the appointment letter
Within two working days of removal, dismissal, retrenchment, resignation, or unemployment due to closure of the establishment	Pay the wages payable to the employee (Code on Wages, section 17(2))
Every year	File the annual return, including the ESI and PF contribution declaration, and renew the factory licence as per its validity

For items where the rules leave dates to your state, such as the frequency of safety committee meetings and annual return due dates, confirm the notified date and add it to the same calendar.

Common Factory Compliance Mistakes to Avoid

Most slips are easy to avoid once you know them:

• Using outdated checklists. Guides written around the Factories Act cite thresholds and rules that no longer match the OSH Code. Check the date on any list you follow.
• Treating the factory compliance checklist as a one-time exercise. Rules, headcount and processes change. Review it regularly.
• Skipping appointment letters. Every employee must have a compliant appointment letter.
• Letting factory licence compliance slip. Missed renewals and unamended licences create avoidable problems.
• Treating every incident the same way. Fatal accidents, injuries that stop work for 48 hours or more, and dangerous occurrences each have their own reporting steps and timelines.
• Mixing up safety officers and the Safety Committee. The 500-worker and 250-worker (hazardous process) thresholds relate to safety officers. A Safety Committee applies where the appropriate Government requires it.
• Ignoring contract workers. The principal employer is responsible for their welfare facilities.

How to Conduct a Factory Compliance Audit

A factory compliance audit is simply a structured check of what the law requires against what your plant actually does. Here’s a simple approach:

1. Define the scope. Cover your licence, the OSH Code and rules, wages and social security, and your state’s rules.
2. Collect the documents. Use the inspection list above as your factory compliance audit checklist.
3. Walk the floor. Compare what’s written with what’s happening, from machine guarding to welfare facilities.
4. Reconcile the numbers. Match headcount, wage records, contractor manpower, PF and ESI data and annual return figures.
5. Log the gaps. Note each gap, assign an owner and set a closing date.
6. Track closure. Revisit open items at your next review.

Would you rather have a second pair of eyes? comply360° offers an employer and vendor compliance audit service alongside factory compliance support.

Consequences of Factory Compliance Non-Compliance

The consequences range from small financial hits to serious legal trouble:

• Registration: The Central Rules add a late fee if OSH registration is filed after 60 days and leave the amount to a Central Government order. An employer who hasn’t registered an establishment can’t employ anyone there.
• ESI deposits: ESIC states that simple interest at 12% per annum applies for each day of delay in paying ESI contributions (Regulation 31-A of the ESI (General) Regulations, 1950). The ESI Act is now subsumed under the Code on Social Security, 2020, so confirm the current position with ESIC.
• Factory licence: In Delhi, for example, a late renewal fee of 25% applies after the cut-off, and the department describes running a factory without a licence as a punishable offence.
• General contraventions: Under the OSH Code, contravening a provision with no specific penalty attracts a penalty of Rs 2 lakh to Rs 3 lakh, plus up to Rs 2,000 for each day the contravention continues after conviction.
• Death or serious injury: If failure to comply results in death, the punishment is imprisonment of up to two years, a fine of not less than Rs 5 lakh, or both. If it results in serious bodily injury, the punishment is imprisonment for up to one year, a fine of Rs 2 lakh to Rs 4 lakh, or both. The court may direct that at least 50% of the fine goes to the victim or their legal heirs as compensation.
• Records and returns: Failing to maintain a required register or file a return attracts a penalty of Rs 50,000 to Rs 1 lakh.
• Obstructing an inspector: This can attract imprisonment of up to three months, or a fine of up to Rs 1 lakh, or both. A repeat conviction carries imprisonment of up to six months, or a fine of Rs 1 lakh to Rs 2 lakh, or both.

Check the Gazette text of the Code and your state rules for the exact penalty that applies to you.

Conclusion

Factory compliance isn’t a single task. It’s a rhythm of monthly deposits, yearly renewals, regular reviews and quick action when something goes wrong.

An India-wide factory compliance checklist works only if you adapt it to your state’s rules and keep it current as OSH rules change. Ready to turn this process into your own calendar? If you’d like help with factory compliance, comply360° offers factory compliance services for manufacturers across India.

Frequently Asked Questions 

What is included in a factory compliance checklist?

It covers licence and registration, appointment letters, wages and social security, working hours and overtime, safety and welfare appointments, accident reporting, annual returns and records. Contract worker obligations belong on the list too.

Who needs to comply with factory laws in India?

Occupiers and employers of factories, meaning premises with 20 or more workers using power or 40 or more without. Units with 10 or more workers are covered as establishments, and principal employers have duties toward contract workers.

What documents should a factory maintain?

Keep your licence, OSH registration certificate, appointment letters, wage records, wage slip records, PF and ESI records, working-hour registers, safety committee minutes**, where a Safety Committee is required**, accident reports, welfare officer and safety officer appointments and any stability, fire or electrical certificates your state requires.

How often should factory compliance be reviewed?

Check wages, PF and ESI every month, run a fuller review every year, and revisit your checklist whenever the law or your state’s OSH rules change.

What happens during a factory inspection?

A factory compliance inspection is carried out by an Inspector-cum-Facilitator, who both advises and enforces. Inspections are meant to be web-based and randomised, though complaints can trigger targeted ones. Expect requests for registers, certificates and wage and safety records.