If you run an Indian subsidiary of a foreign group, you may be asking what the OSH Code annual safety audit actually requires of you. The question matters to Indian businesses, foreign companies, NRIs, global startups and overseas investors alike. Since the four labour codes took effect on 21 November 2025, workplace safety in India is governed by one consolidated law rather than a patchwork of older statutes. Many parent companies assume their global safety programme already satisfies Indian law. In practice, India has its own thresholds, definitions, records and enforcement style. This guide explains the obligations on safety audits and annual health check-ups, who they apply to, and how to build a defensible compliance routine. Startup Solicitors LLP regularly sees these gaps while advising foreign groups on Company Setup in India.
Understanding the OSH Code Annual Safety Audit in the Indian Context
The Occupational Safety, Health and Working Conditions Code, 2020 (OSH Code) replaced 13 earlier central laws, including the Factories Act, 1948, the Contract Labour Act, 1970 and the Mines Act, 1952. It applies to establishments by size and sector, not by ownership. A subsidiary of a US, UK, German or Singaporean parent is treated exactly like a locally owned company.
Two points are often misunderstood:
- “Annual safety audit” is a compliance outcome, not one fixed form. The Code places a general duty on employers to maintain a safe workplace. Audit frequency, auditor qualifications and reporting formats are set by the rules framed by the Central and State Governments. Hazardous sectors such as manufacturing, chemicals, mining and ports face stricter scrutiny.
- Annual health examination is a defined duty. Employers must arrange periodic medical examinations for prescribed classes of employees, at no cost to the employee. Draft rules proposed an age-linked approach, so confirm the final State-specific position before finalising your programme.
For a foreign group, the practical meaning is simple. Your Indian entity needs documented safety systems, trained responsible persons and dated medical records, regardless of what your head office policy says.
Legal Framework and Regulations in India
The regulatory structure has four layers:
| Layer | What it covers |
|---|---|
| OSH Code, 2020 | Employer duties, safety committees, health examinations, welfare, penalties |
| Central and State Rules | Thresholds, audit and inspection formats, medical examination classes, forms |
| Inspector-cum-Facilitator | Inspection, guidance and enforcement, replacing the older inspector model |
| Sector laws | Environmental, fire, hazardous substances and licensing requirements |
Key concepts for foreign subsidiaries:
- Applicability. Establishments generally come within the Code at 10 or more workers, with higher thresholds for certain categories such as factories and contract labour.
- Safety committees and officers. Prescribed categories of workplaces must form safety committees and appoint qualified safety personnel.
- Registration and returns. The Code moves towards single registration and consolidated returns through government portals.
- Corporate overlay. Your entity must also meet Companies Act duties administered by the Ministry of Corporate Affairs. Safety non-compliance can surface in board reporting and due diligence. Our team supports this through corporate governance compliance and compliance monitoring and reporting.
Rules differ between Central and State governments and are still evolving. Always verify the notified rules for your State and industry before relying on any general summary, including this one.
Step-by-Step Process Explained
- Confirm applicability. Count workers, including contract workers, at each location and map your sector against Code definitions.
- Register the establishment. Obtain the required registrations and licences. See our guidance on licenses and regulatory approvals and factory licence and pollution control.
- Appoint responsible persons. Name a safety officer or committee where required, and document the appointments.
- Run a baseline hazard assessment. Cover machinery, chemicals, fire, ergonomics, electrical systems and contractor activity.
- Conduct the annual safety audit. Use a competent internal or accredited external auditor, and record findings, risk ratings and deadlines for corrective action.
- Schedule annual health check-ups. Cover the prescribed employee classes, keep medical records confidential, and track follow-up for abnormal findings.
- Close actions and report. Brief management and the board, file prescribed returns, and retain records for inspection.
Audience-specific considerations
- Indian residents (promoters and directors): You carry personal exposure as the “occupier” or person in charge, so ensure the nominated responsible persons are properly authorised.
- NRIs: If you hold shares or directorships remotely, appoint a resident officer who can attend inspections and sign records.
- Foreign companies: Align global EHS standards with Indian thresholds. Where parent policy is stricter, keep the stricter standard.
- Global startups: Early-stage teams with under 10 workers may fall below thresholds today, but plan for the headcount at which obligations begin.
- Overseas investors: Add safety audit reports and medical programme evidence to your diligence checklist. Related FEMA obligations are covered under RBI and FEMA approvals.
Key Challenges and Practical Issues
- Assuming head office audits are enough. Global certifications do not replace Indian statutory formats or registrations.
- Ignoring contract workers. Principal employers share responsibility for contractor workforce safety.
- Weak documentation. An audit that was done but not recorded, signed and dated is treated as not done.
- Medical data handling. Health records are sensitive personal data and must be stored with restricted access, in line with India’s data protection requirements.
- Multi-State operations. Each State may notify different rules, forms and timelines.
- Payroll linkage. Inaccurate headcount data distorts threshold calculations. Reliable payroll management supports accurate compliance mapping.
- Penalty exposure. Contraventions can attract fines, and serious cases involving injury or death can attract imprisonment of responsible persons.
Strategic Insights and Expert Recommendations
- Treat the audit as a board-level control. Present findings to the board at least annually, supported by internal auditing services, so ownership is visible.
- Adopt the stricter of two standards. Where your parent’s EHS policy exceeds Indian requirements, apply it. Where India is stricter, document the Indian standard as the baseline.
- Build a single compliance calendar. Combine safety audits, medical camps, licence renewals and statutory returns into one tracker.
- Plan safety at the structuring stage. Entity choice, site selection and hiring plans affect obligations. Decisions made during Private Limited Company registration and business setup for foreign nationals are far cheaper to get right than to remediate later.
- Time your expansion carefully. Understanding the best time to set up an India subsidiary in 2026 helps you align hiring with compliance readiness.
- Use a decision test for outsourcing. Outsource the audit when you lack in-house competence or need independence. Keep ownership of corrective actions internally. For wider legal structuring questions, see corporate law and legal advisory.
Manufacturers and exporters have additional exposure, which is covered in our manufacturing and export industry resources. Startups can review benefits and recognition pathways via DPIIT.
Conclusion
The OSH Code annual safety audit and the annual health examination duty are the two most visible proof points that a foreign subsidiary takes Indian workplace law seriously. The safest approach is simple: confirm applicability, appoint accountable people, audit on a fixed annual cycle, document everything, and review the notified State rules regularly. Strong safety governance also supports smoother Company Formation in India, cleaner investor diligence and lower operational risk. If your group is planning Company Setup in India or reviewing an existing subsidiary, Startup Solicitors LLP can help you map obligations. You can reach the team through the contact page.
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3. FAQ SECTION
Q1. Is an annual safety audit mandatory under the OSH Code?
The OSH Code imposes a duty to maintain a safe workplace, and audit requirements for specific establishments are set through rules. Many hazardous or larger workplaces must audit periodically. Even where not mandated, an annual audit is the most reliable way to demonstrate compliance during inspection.
Q2. Who must receive annual health check-ups under the OSH Code?
Employers must arrange periodic medical examinations for prescribed classes of employees, at no cost to them. Draft rules linked eligibility to age and hazardous work. Since final criteria can vary by State and industry, confirm the notified rules for your establishment before fixing the programme.
Q3. Does the OSH Code apply to a foreign-owned subsidiary in India?
Yes. The Code applies to establishments located in India based on size and sector, not on who owns them. A wholly owned subsidiary of a foreign company must meet the same safety, health and welfare duties as an Indian-owned company.
Q4. Can an overseas parent’s global safety audit replace the Indian audit?
Usually not on its own. Indian authorities look for compliance with Indian rules, formats and records. A global audit can support your programme, but you should map it to Indian requirements, add missing statutory elements, and keep dated local records.
Q5. What are the risks of non-compliance for directors and officers?
Contraventions can attract fines, and serious cases involving injury or death can lead to imprisonment of responsible persons. Directors and nominated occupiers may face personal exposure, so formal authorisation of responsible persons and consistent records are important safeguards.