Factories Act, 1948

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 OBJECTIVES
 The Factories Act, 1948, is a social legislation to consolidate and amend the
law regulating labour in factories in India.
 Primary purpose is to provide for occupational safety, health, & welfare of
workers at work places.
 Separate chapter on safety of workers in hazardous industries.
 It also regulates the age at which someone can start working in a factory
and prohibiting children from working.
 Over time, the emphasis has moved from being reactive to proactive
(especially after the Bhopal gas tragedy).
 Enforcement is by Inspectors of Factories following a hierarchy going up to
Chief Labour Commissioner, Govt. Of India.
 APPLICABILITY
 Applies to Factories
 Factory u/s 2(m) means
• Any premises including the precincts thereof
• Manufacturing process must be carried on in such place
• If carried on with the aid of power, employing >= 10 workers on any day of the
preceding 12 months; or
• If carried on without the aid of power, employing >= 20 workers on any day of the
preceding 12 months.
• Does not include a mine subject to the operation of the Mines Act, 1952 or a mobile
unit belonging to the Armed forces of the Union, a railway running shed or a hotel,
restaurant or eating place.
 No distinction between seasonal and non-seasonal.
 An important necessity for any premises to be regarded as a ‘factory’ is, that a
“manufacturing process” should be carried on within the premises.
 FACTORY, REGISTRATION
 The Following have been held to be a factory:
1. Salt works.
2. A shed for ginning and pressing of cotton.
3. A Bidi making shed.
4. A Railway Workshop.
5. Composing work for Letter Press Printing.
6. Saw Mills.
7. Place for preparation of foodstuff and other eatables.
 Registration Sec 6:
• States require approval for constructing a factory.
• Factory license is required to operate.
 MANUFACTURING PROCESS SEC 2(K)

Manufacturing process means

(i) making, altering, repairing, ornamenting, finishing, packing, oiling,
washing, cleaning, breaking up, demolishing, or otherwise treating or
adapting any article or substance with a view to its use, sale, transport,
delivery or disposal, or
(ii) pumping oil, water, sewage or any other substance; or
(iii) generating, transforming or transmitting power; or
(iv) composing types for printing, printing by letter press, lithography,
photogravure or other similar process or book binding; or
(v) constructing, reconstructing, repairing, refitting, finishing or breaking up
ships or vessels; or
(vi) preserving or storing any article in cold storage;
 MANUFACTURING PROCESS
Some processes that have BEEN HELD to be manufacturing processes:
1. Sun-cured tobacco leaves.
2. Stitching old gunny bags and making them fit for use.
3. Salt works where sea water is converted into salt.
4. Conversion of latex into sheet rubber.
5. Process of pumping water.
6. Preparation of soap in soap works.
7. Composing in a printing press.
8. Food preparation in a hotel using machinery.
9. Breaking up of boulders.
Some processes NOT HELD to be manufacturing processes:
10. Exhibition of films.
11. Industrial school or Institute imparting training.
12. Any preliminary packing of raw material for delivering it to the factory.
 HAZARDOUS PROCESS SEC 2(CB)
 Means any process or activity in relation to an industry specified in the First
Schedule where, unless special care is taken, raw materials used therein or
the intermediate or finished products, bye-products, wastes, or effluents
thereof would
• cause material impairment to the health of the persons engaged in or
connected therewith, or
• result in the pollution of the general environment
 Schedule 2: Provides for permissible level of certain chemical substances in
work environment.
 In such premises, the Occupier shall disclose information regarding
dangers including health hazards and the measures to overcome such
hazards; lay down a policy of workers employed in such processes.
 Specific provisions in sections 41A to 41H
 OCCUPIER
 A Factory must have an Occupier.
• Occupier u/s 2(n) means the person who has ultimate control over the affairs of
the factory.
 In the case of a company, only one of the directors can be notified as an
Occupier.
 An Occupier
• Performs statutory duties – plant maintenance, systems, safety, health.
• Has statutory liability for non-compliance with the provisions of the Act.
• Maintain accurate and up-to-date health records in case of a factory involving
any hazardous process.
• Furnish before 15 days of occupation details including name, address, owner
details, nature of process, power usage, workforce etc.
 PROVISIONS FOR HEALTH (SEC 11-20)
 Cleanliness – floor, walls, doors, windows, disinfectants, record.
 Treatment and disposal of waste and effluent.
 Maintenance of right temperature, ventilation and free air circulation.
 Steps to remove and release dust, fumes, and gases.
 Instruments to record where humidity is created artificially.
 Avoid overcrowding – should be 14.2 m3 (63.12 sft) per worker.
 Adequate lighting without glare.
 Provision of clean, safe drinking water at prominent places.
 Provision and maintenance of wash rooms and spittoons.
 SAFETY PROVISIONS (SEC 21 – 41)
 Fencing of machinery; Safe working procedures near machinery in motion.
 Prohibition of employing young persons (child or adolescent) on dangerous machines.
 Striking gear and devices for cutting off power.
 Self-acting machines; Casing of new machinery.
 Prohibition of employment of women and children near cotton-openers.
 Hoists and lifts; Lifting machines, chains, ropes and lifting tackles.
 Revolving machinery; Pressure plant.
 Floors, stairs and means of access; Pits, sumps, opening in floors, etc.
 Excessive weights.
 Protection of eyes.
 Precautions against dangerous fumes, gases, fire, etc.
 Safety and maintenance of buildings and machinery; Safety officer.
 Workers’ participation in safety management.
 WELFARE MEASURES (SEC 42 – 50)
 Washing facilities.
 Facilities for storing and drying clothing.
 Facilities for sitting.
 First-aid appliances – one first aid box not less than one for every 150
workers.
 Canteens when there are 250 or more workers.
 Shelters, rest rooms and lunch rooms when there are 150 or more workers.
 Crèches when there are 30 or more women workers.
 Welfare officer when there are 500 or more workers.
 WORKING HOURS ETC. (SEC 51 - 66)
 Weekly hours not more than 48 hours for an adult worker.
 One weekly holiday.
 Compensatory holidays in lieu of weekly holiday lost – within 3 months including
the month when weekly holiday was due.
 Daily hours, not more than 9 hours.
 Intervals for rest at least ½ hour on working for 5 hours.
 Provision for night shifts.
 Extra wages for overtime double than normal rate of wages.
 Restrictions on employment of women before 6am & beyond 7pm.
 Child below 14 years cannot be employed.
 Children cannot work for more than 4 ½ hours in a day and shall not be employed
between 10pm and 6am.
 Registers of health, safety, welfare measures, children, workers etc.
 ANNUAL LEAVE WITH WAGES
 A worker having worked for minimum 240 days in any calendar year
• In case of adult worker – leave of one day for every 20 days of work.
• In case of a child – leave of one day for every 15 days of work.
 Carry forward of unavailed leave can be accumulated up to 30 days for
adult worker and 40 days for child worker.
 Workers entitled to wages during periods of leave.
 PENALTIES FOR OFFENCES [SECTIONS 92–106]
Contravention
For contravention of the Provisions of the Act
or Rules
On Continuation of contravention
On contravention of Chapter IV pertaining to
safety or dangerous operations.
Subsequent contravention of some provisions
Obstructing Inspectors
Penalty
Imprisonment up to 2 years or fine up to
Rs.1,00,000 or both
Rs.1,000 per day
• Not less than Rs.25,000 in case of death.
• Not less than Rs.5,000 in case of serious
injuries.
Imprisonment up to 3 years or fine not less than
Rs.10,000 which may extend to Rs. 2,00,000.
Imprisonment up to 6 months or fine up to
Rs.10,000 or both.
 Contract Labor
(Regulation and Abolition) Act,
1970
 OBJECTIVES
 Regulate employment of contract labour.
 Abolish contract labour wherever possible and practicable
 Where abolition is not possible:
• Prevention of exploitation of contract labour.
• Regulation of working conditions of contract labour.
• Ensure payment of wages.
• Provision of essential amenities.
 The Act provides for the above and:
• Setting up of Advisory boards representing various interests
• Registration of establishments
• Licensing of contractors
• Welfare and health of contract labour
• Responsibilities of principal employer
 APPLICABILITY
 To every establishment
• in which twenty or more workmen are employed, or
• were employed on any day
• of the preceding twelve months
• as contract labour.
 To every contractor
• who employs, or
• who employed on any day of the preceding twelve months,
• twenty or more workmen
 Not applicable if work is of intermittent or casual nature
• Performed for less than 120 days
• Performed for less than 60 days if seasonal
 ESTABLISHMENT, PRINCIPAL EMPLOYER
 Establishment u/s 2(1)(e) means –
(i) any office or department of the Government or a local authority, or
(ii) any place where any industry, trade, business, manufacture or occupation is
carried on
 Principal employer u/s 2(1)(g) means –
(i) ……. (relating to Govt.)
(ii) in a factory, the owner or occupier or manager of the factory
(iii) in a mine, the owner or agent of the mine or the manager
(iv) in any other establishment, any person responsible for the supervision and
control of the establishment.
• Examples: MD, CEO, Director, COO, CFO, CTO, Department head
 CONTRACT LABOUR – SEC 2(1)(B)
 A workman shall be deemed to be employed as “contract labour” in or in
connection with the work of an establishment when he is hired in or in
connection with such work by or through a contractor, with or without the
knowledge of the principal employer.
• They are indirect employees - distinguished from employees in terms of
employment relationship with the principal establishment
• Are neither on the pay roll or muster roll of the principal employer nor receive
wages from the principal employer
• Have a contract for service and not contract of service
 Who is a workman? Sec 2(i)
• Employed to do skilled, semi-skilled or unskilled manual work
• Does not include managerial and administrative personnel
• A supervisor who draws wages > Rs. 500 pm
 CONTRACTOR – SEC 2(1)(C)

Contractor in relation to an establishment, means a person –

 Who undertakes to produce
• A given result for the establishment,
 Other than a mere supply of goods to such establishment,

• Through contract labour, or

 Who supplies contract labour
• For any work of the establishment and
• Includes a sub-contractor.
 REGISTRATION (SEC 7 – 9)
 Every establishment to which the act applies, must register with the
registering officer (as appointed by the appropriate Govt.).
• The principal officer must make the application.
 If not registered or registration is revoked:
• The establishment shall not employ contract labour
 PROHIBITION (SEC 10)
 Employment of contract labour in any process, operation or other work in
any establishment may be prohibited –
 By the appropriate Government which consults with the Central Board or,
as the case may be, a State Board
 Factors taken into account before issuing prohibition notification:
• Conditions of work and benefits of contract labour in the process etc..
• Is the process, operation or other work is incidental to, or necessary for the
industry, trade, business, manufacture carried on in the establishment
• Is the process etc. of perennial nature
• Is it done ordinarily through regular workmen in that establishment or a similar
establishment
 AIR INDIA CASE – EFFECT OF ABOLITION
 Air India Statutory Corporation v. United Labour Union 1996.
 Case pertains to absorption of contract labour which is abolished under
section 10 of the Act.
 The courts were hitherto reluctant to step and rule if after abolition of
contract, the principal employer should absorb them…
• B.H.E.L Workers Association, Hardwar v. UOI
• However, in Sankaran Mukherjee v. UOI, and another cae, the SC said that
CLRA must be literally construed for achieving its objectives.
 Gujarat Electricity Board v. Hind Mazdoor Sabha 1995
• SC held that the contract labour cannot be put in worse situation by abolition –
neither employed by contractor, nor by the principal employer.
• SC also held that the contract labour could raise an industrial dispute in this
regard.
 AIR INDIA CASE – EFFECT OF ABOLITION
 Air India engaged members of the union on contract basis for works of
sweeping, cleaning, security of building owned by Air India.
 The Central Government, exercising the power under Section 10 of the Act,
on the basis of recommendation and in consultation with the Central
Advisory Board, issued a notification on 9 December,1976 prohibiting
"employment of contract labour on and from 9 December, 1976” for the
above activities.
 Appellant failed to enforce the prohibition and the respondents filed a writ
petition in SC seeking directions for enforcement of the prohibition for
absorbing the contract labour.
 Issues were also relating to which is the appropriate Govt. in this case, and
whether HC under Article 226 has power to direct their absorption.
 AIR INDIA CASE – EFFECT OF ABOLITION
 In Air India case, SC
• This overruled SC’s decision in Dena Nath case 1991where SC held that the HC
could not do so.
• Court also overruled its decision in Gujarat Electricity Board case.
 In the Air India case, SC held that:
• A HC in exercise of its jurisdiction under Article 226 of the Constitution, can
direct a principal employer in an appropriate case to absorb the workman
concerned after abolition of the contract labour.
• Though there exists no express provision in the Act for absorption of employees
in establishments upon abolishment of contract labour, the principal employer is
under obligation to absorb.
• Employees who worked for 240 days were ordered to be absorbed.
 SAIL CASE
 Steel Authority of India Ltd. v. National Union Water Front Workers, 2001.
 SAIL case was referred to the Constitutional Bench' because of the
inconsistency of the decisions given by the Supreme Court in other cases on
similar issues
 The appellants had entrusted the work of handling goods in their stockyards
to contractors after calling for tenders in that regard.
 The first respondent was a union representing the cause of over 350
contract workers engaged in the appellant's stockyards in Calcutta.
 The Government of West Bengal by notification under Section 10 (1) of the
Contract Labour Act prohibited the employment of contract labour in the
stockyards of the appellants in 1989.
 CASE STUDY
 In this case too, the court examined the following issues:
• Which is the appropriate Govt.
• Whether the notification issued by the Central Government u/s 10 (1) of the
Contract Labour Act is valid and applies to all Central Government Companies?
• Whether the principal employer is required to automatically absorb the contract
labour upon abolition pursuant to a notification?
 Decision:
• Neither Sec 10 nor any other provision in the Act, whether expressly or by
necessary implication provides for automatic absorption of contract labour on
issuing a notification.
• The principal employer cannot be required to order absorption of contract labour
working in the concerned establishment.
 LICENSING OF CONTRACTORS (SEC 11 – 15)
 Every contractor to whom the act applies, must obtain a license from the
appropriate Govt.
 Unless such license is obtained, the contractor must not undertake or
execute any work through contract labour.
 Some conditions in the license:
• Working hours
• Fixation of wages
• Provision of essential amenities
 License may be revoked or suspended if found to have been obtained by
misrepresentation, non-compliance of conditions or provisions of the act.
 Non-registration by principal employer or contractor without license will
not make the contract labour employees of the principal employer.
 WELFARE (SEC 16 – 21)
 Canteens where contract labour of 100 or more are employed.
 Rest rooms.
 Supply of safe, clean drinking water.
 Sufficient number of wash rooms.
 First-aid facilities.
 Washing facilities.
 If a contractor does not or is unable to provide any of the above, the
principal employer shall be liable to do so.
 PENALTIES (SEC 22 – 27)
 Obstructing an inspector, or refusal to produce registers and documents :
Imprisonment up to 3 months or fine of Rs. 500 or both.
 Contraventions of the provisions of the Act: Imprisonment up to 3 months
or fine of Rs. 1,000 or both.; additional fine of Rs. 100 per day for
continuing contravention.
 In case of a company, the company and every person in charge or
responsible for the affairs of the company shall be deemed guilty.