Business Laws and Ethics · Factories Act, 1948

Power to Exempt in Special Cases under the OSH Code

Updated 10 October 2026 · Fact-checked

The OSH Code, 2020 lets the appropriate Government exempt establishments from its provisions by notification. Section 127 is the general power, with a special rule for new factories. Section 58 covers emergencies. Sections 91 and 129 cover workers and public institutions. In an answer, name the section, who exempts, the condition and the limit.

Understand Power to Exempt in Special Cases and Penalties

A safety and working-conditions law cannot fit every workplace at all times. So the law lets the Government relax it in defined situations. The old Factories Act, 1948 is replaced by the Occupational Safety, Health and Working Conditions Code, 2020. Your exam answer should use the Code's sections.

Section 127 is the main power. The appropriate Government may, by notification, direct that all or any provisions of the Code, rules or regulations shall not apply to an establishment or class of establishments. It can attach conditions and restrictions and fix the period. Exemption must come by notification, not by informal permission.

Section 127(2) is a special power for new factories. If the State Government is satisfied, in the public interest, that it is necessary to create more economic activities and employment opportunities, it may by notification exempt any new factory or class of new factories from all or any provisions. The period runs from the date commercial production starts, as the notification specifies. A notification issued under the Factories Act, 1948 for the same purpose stays in force for its remaining period.

Other exemption powers sit elsewhere in the Code. Section 58 allows exemption in an emergency, by notification, for a specified period. Section 91 deals with persons in supervision, management or confidential positions, and with exemption for workers or classes of workers. Section 91(2) also lets the appropriate Government or the Chief Inspector-cum-Facilitator exempt adult workers by written order. Section 129 lets the appropriate Government exempt workshops attached to public institutions for education, training, research or information.

Penalties and compounding: the text supplied to you does not cover the penalty or compounding sections of the Code. So learn the general scheme from your ICMAI study material and do not quote amounts or section numbers from memory unless you are sure of them. Exemption never means the Government can ignore safety. Always mention the conditions and the time limit.

Key rules to remember

Section 127(1): general exemption: Appropriate Government + notification + conditions + period → all or any provisions do not apply to an establishment or class; Covers the Code, its rules and its regulations.
Section 127(2): new factories: State Government + public interest (economic activity and employment) + notification → exemption from date commercial production starts; Period is specified in the notification. Earlier Factories Act notifications continue for their remaining period.
Section 58: emergency: Emergency + notification + conditions + specified period → provisions do not apply; Applies to an establishment, a class of establishments or a class of contractors.
Section 91: persons and workers: Rules for supervisory, managerial or confidential persons; rules for workers; written order for adult workers; Section 91(2): the appropriate Government or the Chief Inspector-cum-Facilitator may exempt adult workers by written order.
Section 129: public institutions: Workshop attached to an educational, training, research or information institution → exemption on conditions; No exemption from hours of work and holidays unless an approved scheme is not less favourable than the Code.

How to solve Power to Exempt in Special Cases and Penalties questions

Use this order for any theory or case question on exemption powers.

1Identify the situation: general exemption, new factory, emergency, a class of persons or workers, or a public institution.
2Name the matching section: 127, 127(2), 58, 91 or 129.
3State who exercises the power: the appropriate Government, or the State Government for new factories.
4State the form: by notification, or by written order under section 91(2).
5State the trigger or condition, such as public interest, emergency or an approved scheme.
6State the limits: conditions, specified period, and the proviso where one applies.
7Apply to the facts in one or two lines and give a clear conclusion.
8If asked about penalties or compounding, state only what you know from ICMAI material and avoid unsure numbers.

Quickest way: Trigger-Section-Form check

When to use it: For MCQs and short case questions where you must pick the right section fast.

Spot the trigger word: emergency, new factory, public institution, supervisory or confidential position.
Match: emergency to 58, new factory to 127(2), public institution to 129, persons or workers to 91, anything general to 127(1).
Check the form: notification for 127, 58 and 129 (129 does not say it, so state only that the Government may exempt); rules or written order for 91.
Eliminate options that make exemption unlimited or free of conditions.

Common mistakes in Power to Exempt in Special Cases and Penalties

Citing the Factories Act, 1948 sections as current law.
Older books and habit.
Fix: Use the OSH Code sections. Mention the 1948 Act only for the saving of old notifications under section 127(2).
Saying any exemption can be given without conditions or time limit.
Students remember the power but not its limits.
Fix: Always write that conditions, restrictions and a period may be specified.
Saying the Central Government grants new factory exemptions.
Confusing it with the general appropriate Government.
Fix: Section 127(2) names the State Government.
Mixing section 58 and section 127.
Both are headed power to exempt in special cases.
Fix: Link 58 to emergency and 127 to general and new factory exemption.
Quoting penalty amounts or compounding fees from memory.
Students try to add detail to look complete.
Fix: State the principle and only figures you are sure of from ICMAI material.
Forgetting the hours and holidays proviso in section 129.
Only the main rule is learnt.
Fix: Add that an approved scheme not less favourable than the Code is needed for such exemption.

Worked examples

Example 1

A State Government wants to attract investment and wishes to relieve newly set up factories from some Code provisions. Explain whether and how it can do so.

Show the solution

Section 127(2) of the OSH Code, 2020 allows this.
The State Government must be satisfied, in the public interest, that it is necessary to create more economic activities and employment opportunities.
It acts by notification, on conditions it thinks fit.
The exemption can be from all or any provisions of the Code.
The period runs from the date commercial production starts, as the notification specifies.
Earlier notifications under the Factories Act, 1948 for the same purpose remain in force for their remaining period.

Answer: Yes. Under section 127(2) the State Government may, by notification, exempt new factories from all or any provisions for a specified period from the start of commercial production, on public-interest grounds.

Example 2

A workshop attached to a technical training institute carries on a manufacturing process. The institute wants exemption from the Code's provisions on hours of work and holidays. Advise.

Show the solution

Section 129 lets the appropriate Government exempt such a workshop, on conditions, from all or any provisions of the Code.
The workshop is attached to a public institution for education, training, research or information, so it qualifies.
The proviso bars exemption from hours of work and holidays unless a scheme is submitted.
The scheme must regulate hours of employment, meal intervals and holidays of persons employed, attending or resident in the institution.
The appropriate Government must be satisfied the scheme is not less favourable than the Code.

Answer: The institute may get exemption under section 129, but for hours of work and holidays only if it submits a scheme approved by the appropriate Government as not less favourable than the Code.

Exam tips

Match each exemption to its trigger and section. Examiners often test this in a one-line MCQ.
Write who, how, when and limit in every answer.
Use the OSH Code terms such as appropriate Government and Chief Inspector-cum-Facilitator.
Give penalty and compounding points only as far as you are sure. Do not invent section numbers or amounts.

Practice questions from Factories Act, 1948

Power to Exempt in Special Cases and Penalties: frequently asked questions

What does section 127 of the OSH Code, 2020 do?

It lets the appropriate Government exempt any establishment or class of establishments from all or any provisions of the Code by notification. Conditions and a period can be set. Section 127(2) adds a State power for new factories.

Who can exempt new factories under the Code?

The State Government can, under section 127(2). It must be satisfied that exemption is in the public interest to create economic activity and jobs. It acts by notification for a specified period from the start of commercial production.

What is the difference between section 58 and section 127?

Section 58 applies in an emergency and can cover contractors as well. Section 127 is the wider general power, plus the new factory exemption. Both operate by notification with conditions and a period.

Should I learn penalty amounts for this topic?

Learn the principle that contravention of the Code is punishable and that offences can be compounded. Quote amounts and section numbers only from your ICMAI study material, and only if you are sure of them.