Labour Laws and Practice · Law of Welfare and Working Condition

Offences, Penalties and Compounding under the OSH Code 2020

Updated 11 October 2026 · Fact-checked

Under the OSH Code 2020, a contravention attracts a penalty or punishment depending on its nature: general penalty (section 94), hazardous processes (section 102), accidents (section 103), and offences by employees (section 106). Companies and persons in charge are liable (section 109). Listed penalties and offences can be compounded under section 114 at 50% or 75% of the maximum.

Understand Offences, Penalties and Compounding

The OSH Code does not use one penalty for everything. It grades the consequence by how serious the contravention is. A plain breach draws a money penalty. A breach that causes death or serious injury draws imprisonment or a heavy fine. A breach in a hazardous process draws both imprisonment and fine.

Start with the general rule. Section 94 covers any contravention of the Code, rules, regulations, bye-laws, standards or written orders, unless the Code provides otherwise. The employer or principal employer pays a penalty of not less than two lakh rupees (₹2,00,000) and up to ₹3,00,000. If the contravention continues after conviction, a further penalty of up to ₹2,000 per day applies. Note: the machine-readable text of s. 94 shows a stray "55" right after "two lakhs rupees". It looks like a footnote marker, not part of the figure. Read the minimum as ₹2,00,000 and confirm it in your printed copy of the Code.

Section 97 deals with contravention of certain provisions, including orders regulating the employment of workers. The penalty is ₹50,000 to ₹1,00,000. A second conviction under the same provision can bring imprisonment up to three months, or a fine up to ₹2,00,000, or both. Section 106 covers employees who breach their own duties: penalty up to ₹10,000. If an employee is convicted, the employer is not deemed guilty unless it is proved that the employer failed to take all reasonable measures to prevent the contravention.

The serious provisions are section 102 (hazardous processes) and section 103 (accidents). Then comes section 109, which decides who is answerable when the offender is a company. Finally, section 114 lets listed penalties and offences be compounded, which means settled by paying a sum, without further proceedings.

Appeals are handled by separate provisions. Section 90 lets the appropriate Government prescribe how a factory manager or occupier may appeal against an Inspector-cum-Facilitator's order. Section 75 allows an appeal against refusal, cancellation or suspension of a licence.

Key rules to remember

General penalty (s. 94): ₹2,00,000 to ₹3,00,000; continuing after conviction: further up to ₹2,000 per day; Applies to the employer or principal employer, save as otherwise expressly provided in the Code. The source text has a stray "55" after the minimum ("two lakhs rupees"); treat it as a footnote marker and check the minimum against the printed Act.
Contravention of certain provisions (s. 97): First: penalty ₹50,000 to ₹1,00,000. Repeat conviction under the same provision: imprisonment up to 3 months, or fine up to ₹2,00,000, or both; Covers provisions of the Code, rules, regulations or bye-laws, and orders on employment of workers.
Hazardous processes (s. 102): Imprisonment up to 2 years and fine up to ₹5,00,000; continuing: additional fine up to ₹25,000 per day after conviction; beyond 1 year after conviction: imprisonment up to 3 years or fine of ₹20,00,000, or both; Applies to duties under s. 6(1)(a) to (h), s. 6(2), s. 13(d) so far as relating to hazardous processes, and s. 80.
Accident causing death (s. 103(1)(a)): Imprisonment up to 2 years, or fine not less than ₹5,00,000, or both; Requires that the failure to comply resulted in an accident or dangerous occurrence causing death.
Accident causing serious bodily injury (s. 103(1)(b)): Imprisonment up to 1 year, or fine ₹2,00,000 to ₹4,00,000, or both; Injury to a person within the establishment.
Fine as compensation and repeat offence (s. 103): Court may direct at least 50% of the fine to be paid as compensation to the victim or legal heirs; repeat conviction: double the punishment; The 50% is a minimum for the portion the court directs, not an automatic rule.
Offences by employees (s. 106): Penalty up to ₹10,000; Employer not deemed guilty unless proved to have failed to take all reasonable measures for prevention.
Compounding (s. 114): Penalty: 50% of the maximum penalty. Offence: 75% of the maximum fine; Only for the listed provisions; can be done before or after the enquiry or institution of prosecution. Not available for a second or subsequent contravention within three years of an earlier compounding or conviction.

How to solve Offences, Penalties and Compounding questions

Use this sequence for any problem or case on offences, penalties and compounding.

1Identify the contravention and who committed it: employer, principal employer, employee, or a company with officers.
2Check the consequence: was there an accident, death, serious injury, or a hazardous process? This picks the section.
3Apply the most specific section first (s. 102 or 103) and use s. 94 only as the general fallback, since it applies save as otherwise expressly provided.
4State the punishment exactly: imprisonment, fine or penalty, minimum and maximum, and any per-day amount for continuing breach.
5If the offender is a company, apply s. 109: persons in charge and the company are liable, subject to the due diligence or lack of knowledge proviso, and s. 109(2) for consent, connivance or neglect.
6Test compounding under s. 114: is the provision listed, and is it a repeat within three years? Then compute 50% of maximum penalty or 75% of maximum fine.
7Note the appeal or order route where relevant (s. 90 for factory orders, s. 75 for licences) and conclude clearly.

Quickest way: Section-picker shortcut

When to use it: When time is short and the question lists facts and asks for liability and amount.

Death or serious injury caused by a breach of duty: s. 103.
Hazardous process duty breached: s. 102.
Employee breached own duty: s. 106.
Anything else: s. 97 if it is a listed contravention, otherwise s. 94.
Company offender: add s. 109.
Want to settle: apply s. 114 and compute 50% or 75% of the maximum.

Common mistakes in Offences, Penalties and Compounding

Applying s. 94 to an accident causing death.
Students remember s. 94 as the general penalty and stop there.
Fix: Use the specific section. s. 94 applies only where the Code does not expressly provide otherwise; death or injury goes to s. 103.
Saying compounding is allowed for every offence.
Section 114 sounds wide.
Fix: List only the provisions named in s. 114(1). For example, s. 103(1)(b) is listed but s. 103(1)(a) and s. 102 are not. Timing is not the test: s. 114(1) allows compounding before or after the enquiry or institution of prosecution.
Computing compounding as 50% for all cases.
Mixing up penalty and offence.
Fix: Use 50% of the maximum penalty for a penalty and 75% of the maximum fine for an offence.
Holding every director liable automatically under s. 109(1).
Ignoring the proviso.
Fix: Liability attaches to persons in charge and responsible for the conduct of business. They escape if they prove lack of knowledge or all due diligence. s. 109(2) separately covers consent, connivance or neglect by a director, manager, company secretary or other officer.
Allowing compounding for a repeat offence.
The three-year bar in s. 114(5) is missed.
Fix: Check whether the person committed the same kind of contravention within three years of an earlier compounded or convicted one. If yes, compounding is unavailable.

Worked examples

Example 1

Aarav Steel Ltd's plant has a safety lapse that results in an accident in which a worker suffers serious bodily injury. Prosecution has been instituted, but there is no conviction yet. The company wants to compound under s. 114. Advise on the offence and the compounding amount.

Show the solution

The contravention of a safety duty resulted in serious bodily injury to a person in the establishment, so s. 103(1)(b) applies.
Punishment: imprisonment up to one year, or fine of ₹2,00,000 to ₹4,00,000, or both. The maximum fine is ₹4,00,000.
Section 114(1) lists clause (b) of s. 103(1), so the offence is compoundable. Section 114(1) allows compounding either before or after the enquiry or, as the case may be, the institution of prosecution, by the officer the appropriate Government notifies.
Check the bar in s. 114(5). It applies only if the company committed the offence a second or subsequent time within three years of an earlier compounded offence or conviction. Assume there is no such earlier case.
For an offence, composition is 75% of the maximum fine. The basis is the maximum fine of ₹4,00,000, not any fine a court might later impose: 75% × ₹4,00,000 = ₹3,00,000.
Once the offence is compounded, s. 114(2) discharges the offender and there are no further proceedings for that offence.

Answer: Section 103(1)(b) applies. The offence is compoundable at ₹3,00,000 (75% of the maximum fine of ₹4,00,000). Section 114(1) allows this before or after the enquiry or institution of prosecution, provided it is not a second or subsequent offence within three years of an earlier compounding or conviction.

Example 2

Meera Textiles Pvt Ltd, a company, contravenes a provision of the OSH Code with no accident. The director in charge of operations proves she had exercised all due diligence. The company secretary is shown to have neglected a compliance duty that led to the contravention. Who is liable under s. 109, and what is the general penalty?

Show the solution

Offence by a company: s. 109(1) makes the company and persons in charge and responsible for the conduct of business liable.
The director's proviso defence: she proves all due diligence, so she is not punishable under s. 109(1).
Section 109(2) applies notwithstanding s. 109(1): where the offence is attributable to neglect of any director, manager, company secretary or other officer, that officer is deemed guilty.
The company secretary's neglect is shown, so the company secretary is liable.
With no accident or hazardous process, the general penalty in s. 94 applies to the employer: ₹2,00,000 to ₹3,00,000, plus up to ₹2,000 per day if the contravention continues after conviction. The minimum is read as two lakh rupees; the source text shows a stray "55" after it, so confirm the figure in the printed Act.

Answer: The company is liable and so is the company secretary under s. 109(2). The director escapes by proving due diligence. The penalty is under s. 94, between ₹2,00,000 and ₹3,00,000 (confirm the minimum in the printed Act).

Exam tips

Write the section number with the amount. Examiners reward exact figures such as ₹2,00,000 to ₹3,00,000 and 75% of the maximum fine.
In case questions, follow provision, analysis, conclusion. Name the section, apply the facts, then state who pays what.
For a company offender, always discuss both s. 109(1) with its proviso and s. 109(2), especially if a company secretary is in the facts.
Mention appeal routes briefly: s. 90 for factory orders and s. 75 for licences. Do not invent time limits; say they are as prescribed.
Since electives are open book, mark the penalty sections and s. 114 in your copy, but practise the section-picker so you do not waste time.

Practice questions from Law of Welfare and Working Condition

Offences, Penalties and Compounding in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

Offences, Penalties and Compounding: frequently asked questions

What is the general penalty under the OSH Code 2020?

Under section 94, the employer or principal employer pays a penalty of not less than two lakh rupees (₹2,00,000) and up to ₹3,00,000. If the contravention continues after conviction, a further penalty of up to ₹2,000 per day applies. It applies save as otherwise expressly provided. The source text shows a stray "55" after the minimum figure, so confirm it in the printed Act.

Can all offences under the OSH Code be compounded?

No. Section 114 compounds only the listed penalties and offences, such as s. 94, s. 97 and s. 103(1)(b). Compounding can be done before or after the enquiry or institution of prosecution. It is barred for a repeat within three years of an earlier compounding or conviction.

How much is paid to compound under section 114?

For a penalty, it is 50% of the maximum penalty. For an offence, it is 75% of the maximum fine. The amount goes to the fund for unorganised workers under s. 115(1).

Is a company secretary liable for offences by a company?

Yes, under section 109(2), if the offence is proved to be committed with the consent or connivance of, or attributable to neglect by, a director, manager, company secretary or other officer. Section 109(1) covers persons in charge, who can escape by proving lack of knowledge or due diligence.