For everything under the Code on Social Security, yes: its definition of employee covers a person employed "either directly or through a contractor", so contract heads count toward provident fund, ESI, gratuity, maternity and the crèche. Under the OSH Code it is less settled. That Code spells out "including contract labourers" in exactly two places and says nothing in the rest, which leaves the word "worker" doing the work.
The two words that decide it
Every threshold in both Codes is a count of a defined term, so the definition is the whole question. The Code on Social Security settles it in its own definition, at section 2(26): an employee is any person "employed on wages by an establishment, either directly or through a contractor", to do any skilled, semi-skilled or unskilled, manual, operational, supervisory, managerial, administrative, technical, clerical or any other work. Six words in the middle of that sentence decide every headcount in the Code.
The OSH Code has no equivalent phrase, and it uses two different terms. Its "employee" at section 2(t) is a person employed on wages by an establishment. Its "worker" at section 2(zzl) is "any person employed in any establishment" to do manual, unskilled, skilled, technical, operational, clerical or supervisory work for hire or reward, excluding managerial and administrative staff and supervisors drawing more than ₹18,000 a month or such amount as the Central Government notifies.
What the OSH Code counts
Its thresholds are keyed to workers ordinarily employed, and only two of them say anything about contract labour.
| Obligation | Threshold | What the provision says it counts |
|---|---|---|
| Is it an establishment at all | 10 or more | "workers are employed" (s.2(v)(i)); no threshold where the Centre notifies a hazardous or life-threatening activity |
| Is it a factory | 20 with power, 40 without | "workers are working, or were working on any day of the preceding twelve months" (s.2(w)) |
| The contract labour Part applies | 50 or more contract labour | "contract labour are employed or were employed on any day of the preceding twelve months through contract" (s.45(1)(i)); and any manpower supply contractor with 50 or more (s.45(1)(ii)) |
| Canteen | 100 or more | "workers including contract labourers are ordinarily employed" (s.24(1)(v)) |
| Crèche, plantations | 50 or more | "workers (including workers employed by any contractor)" employed on any day of the preceding twelve months (s.24) |
| Rest rooms, shelters and a lunch room | more than 50 | "workers are ordinarily employed", factories and mines (s.24(2)(iii)) |
| Crèche, other establishments | more than 50 | "workers are ordinarily employed" (OSH (Central) Rules 2026, r.58) |
| Welfare officer | 250 or more | "workers are ordinarily employed", factory, mine or plantation (s.24(2)(iv)) |
| Safety officer | 500 factory; 250 hazardous-process factory; 250 construction; 100 mine | "workers ... are ordinarily employed" (s.22(2)) |
| Ambulance room | more than 500 | "workers are ordinarily employed", factory, mine or construction (s.24(2)(i)) |
The canteen clause and the plantation crèche clause are the only two that name contract labour, and both name it to include it. Everything else in that table says "workers" and stops.
What the Social Security Code counts
Here the answer is uniform, because the definition does the work once and every chapter inherits it.
| Chapter | Threshold | What the provision counts |
|---|---|---|
| III — Provident fund | 20 or more | "employees are employed" (First Schedule), and employee includes a person employed through a contractor (s.2(26)) |
| IV — ESI | 10 or more | "persons are employed other than a seasonal factory" (First Schedule); a single employee where the Centre notifies a hazardous or life-threatening occupation |
| V — Gratuity | 10 or more for shops and establishments; every factory, mine, oilfield, plantation, port and railway company regardless | "employees are employed, or were employed, on any day of the preceding twelve months" (First Schedule) |
| VI — Maternity benefit | 10 or more for shops and establishments; every factory, mine or plantation regardless | "employees are employed, or were employed, on any day of the preceding twelve months" (First Schedule) |
| VI — Crèche | 50 or more | "employees are ordinarily employed" (s.67; Social Security (Central) Rules 2026, r.37) |
Two of those lines deserve attention on a site that thinks of itself as small. Gratuity and maternity benefit apply to every factory, mine and plantation with no headcount qualifier at all, so the ten-employee line is only for shops and establishments. And the ESI line counts "persons", a wider word than employees, at ten.
Two counting rules that catch people out
The first is a proviso most sites have never read, and it works in one direction only: upwards. Section 2(26) provides that for the purposes of counting employees for the coverage of an establishment under Chapter III and Chapter IV, employees whose wages are above the notified ceiling "shall also be taken into account".
That splits coverage from benefit. A worker above the ESI wage ceiling is not an employee for the purpose of receiving ESI, but is still counted for the purpose of deciding whether the establishment is covered at all. A unit with fifteen people under the ceiling and eight above it is not at fifteen for coverage. It is at twenty-three, and it has been covered all along.
The second is a mismatch between the two Codes on the same facility. The crèche obligations do not line up, and at exactly fifty they point different ways.
| OSH (Central) Rules 2026, r.58 | Social Security Code s.67 and Rules r.37 | |
|---|---|---|
| Trigger | More than fifty workers ordinarily employed | Fifty or more employees ordinarily employed |
| Counts | Workers, with no express mention of contract labour | Employees, expressly including those engaged through a contractor (s.2(26)) |
| At exactly 50 | Not triggered on the face of the rule | Triggered |
| Children covered | Rule prescribes the facility for children of employees | Children under six years (r.37(1)) |
| Location | Within the workplace as far as possible, or nearby and accessible (r.58) | Within one kilometre, relaxable in a notified industrial park (r.37(2)(i)) |
A site at fifty or a little above, with a contract crew making up the difference, can therefore owe a crèche under one Code while reading the other and concluding it does not. Neither rule is optional, and the safer arithmetic is the one that triggers first.
Where the OSH Code is silent, and how to count anyway
The silence is genuinely arguable, and it is worth stating both readings plainly rather than picking one. On the first reading, a Code that troubles to write "including contract labourers" into the canteen clause, and "including workers employed by any contractor" into the plantation crèche clause, and omits it from the rest, meant something by the omission. On the second, "worker" is already defined as a person employed in an establishment rather than by it, which catches the contract crew on its own, and the two express mentions are belt-and-braces drafting carried over from the older Acts.
One feature of the Code's own structure sits awkwardly with the first reading. Section 53 requires the welfare facilities specified under sections 23 and 24 to be provided by the principal employer to the contract labour employed in the establishment. Reading the section 24 thresholds to exclude contract labour produces a facility that is owed to those workers but that they cannot help trigger. We are not going to resolve that here, and nobody should plan a headcount on our view of it.
- Count once, on the wider basis: every person on site, direct and contract, including anyone above a wage ceiling. That single number tests almost everything, and it is the number the gate register already holds.
- Then apply the narrowing words where a provision uses them: supervisors above ₹18,000 a month and managerial and administrative staff drop out of "worker" under s.2(zzl); the ESI and PF benefit tests, as against the coverage tests, apply the wage ceiling.
- Use "ordinarily employed" and "on any day of the preceding twelve months" as the time tests they are. A seasonal peak that touched fifty contract workers on one day in the last year is enough to bring the contract labour Part into play under s.45(1)(i), even if the floor is at thirty today.
- Reconcile the contractor's return against the gate register monthly. A threshold argument you lose is usually lost on the contractor's own ECR, not on a reading of the Code.
- Re-test after every ramp. Thresholds are crossed by seasonal hiring far more often than by a hiring decision, and nothing tells you when you cross one.
The practical position is narrower than the legal argument. On the Social Security Code the answer is not in doubt, and those are the thresholds with the contributions behind them. On the OSH Code the two express inclusions cover the canteen, which is the threshold a contract-heavy site is most likely to cross first, and the rest are facilities a site that has already crossed 100 workers will usually be providing anyway.
Sources
- Occupational Safety, Health and Working Conditions Code, 2020 (Act 37 of 2020), Gazette text hosted by DGFASLI — s.2(t) (employee), s.2(v) (establishment, ten workers), s.2(w) (factory, twenty with power and forty without), s.2(zzl) (worker, and the ₹18,000 supervisory limit), s.22(2) (safety officers), s.24(1)(v) (canteen at one hundred workers including contract labourers), s.24(2)(i), (iii) and (iv) (ambulance room, rest rooms, welfare officer), s.24 (plantation crèche including workers employed by any contractor), s.45(1) (contract labour Part at fifty), s.53 (welfare facilities provided by the principal employer to contract labour). Opened and read.
- Occupational Safety, Health and Working Conditions (Central) Rules, 2026, G.S.R. 345(E) dated 8 May 2026 — r.58, crèche facility where more than fifty workers are ordinarily employed. Opened and read from a mirrored copy of the Gazette [VERIFY: against the e-Gazette original].
- The Code on Social Security, 2020 (Act 36 of 2020), Gazette text hosted by the Ministry of Labour and Employment — s.2(26) (employee, "either directly or through a contractor", the wage-ceiling proviso and the proviso on counting employees for coverage under Chapters III and IV), s.67 (crèche), and the First Schedule (applicability of Chapters III, IV, V and VI). Opened and read.
- The Social Security (Central) Rules, 2026, G.S.R. 344(E) dated 8 May 2026 — r.37, crèche where fifty or more employees are ordinarily employed, within one kilometre, for children under six. Opened and read from a mirrored copy of the Gazette [VERIFY: against the e-Gazette original].
- The ₹21,000 monthly Code-wage ceiling for ESI coverage is stated in the ESIC registration article on this site [VERIFY: the Ministry FAQ was not re-opened for this piece; this post deliberately cites the ceiling as a mechanism rather than restating the figure]