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STATUTES GOVERNING FACTORY

MANAGEMENT

Objective:

To create awareness of Labour regulations among the non-personnel / commercial managers

To enable interpretation and application of relevant laws in day to day factory administration

These guide lines are meant to be a ready reckoner of the important Labour laws governing for the line

managers. It must however be borne in mind that the coverage of the acts it in no way exhaustive. It aims to

provide merely working knowledge of the laws.

The important acts governing day to day factory administration are as follows:

The Factories Act, 1948

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The Contract Labour Act, 1970

The Employees Provident Fund & Misc. provisions Act, 1952

The Minimum Wages Act 1948

The Payment Wages Act 1936

The Payment Bonus Act 1963

The Payment Gratuity Act 1965

The Apprentices Act 1961

The National & Festival Holidays Act 1958

The Employees State Insurance Act 1948

THE FACTORIES ACT, 1948

Object:

To consolidate and amend the laws regulating Labour in factories

To provide for health, safety and welfare needs of workers

Key Definitions:

Worker

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A person employed- directly or through a contractor with or without the knowledge of the principal

employer- whether for remuneration or not in any manufacturing process.

Factory

Any premises where a manufacturing process is being carried on with 10 or more workers- with the use of

power.

Manufacturing process

It has been defined all - inclusively. It means any process for (1) making, altering, repairing - treating or

adapting any articles for its use, sale transport, delivery or disposal (2) pumping oil, sewage or any other

substance (3) generating, transforming or transmitting power (4) Printing & printing related (5) Shipbuilding

and repairing (6) preserving or storing any articles in cold storage.

sufficient latrine and urinal accommodation of prescribed types;

To provide for a sufficient number of spittoons and maintain them in a clean and hygienic condition.

Every factory shall, in accordance with the provisions of the act, take appropriate safety measure:

To fence dangerous part of the machine- for example prime movers, flywheel, electric generator, rotary

converters;

To prohibit employment of women and children near cotton openers;

To maintain hoists and lifts of good mechanical condition, of sound materials,

and adequate strength:;

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To keep all floors, steps, stairs ,passages and gang way in good condition;

To prohibit any person from carrying or moving any load so heavy as to be likely to cause him injury;

To protect workers from injury to eyes from particles or fragments thrown off in the course of the manufacturing

process;

To protect workers from dangerous fumes, inflammable dust, gas, such other materials:

To protect workers from fire and provide for precautionary measure - for example, safe means of escape

for all persons in the event of a fire; fire resistant construction of buildings; adequate fire extinguishing

equipment; alert; efficient and well trained fire fighting squads.

Every factory shall in accordance with the provisions of the Act, take appropriate welfare measures to provide:

Washing facilities

Facilities for storing clothing not worn during working hours and the drying of wet clothing

Facilities for the sitting of workers while they are on duty

First-aid boxes or cupboards one for every 150 workers and ambulance facilities if there are more than

500 workers

Canteen if employing more than 250 workers

Shelters, rest rooms and lunch rooms, if employing over 150 workers

A creache, if employing more than 30 women

Welfare officer, if employing 500 or more workers

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The main restrictive provisions of the Act about the working hours of adults are:

A worker cannot be employed for more than forty-eight hours in a week

He must be given a holiday for a whole day in every week

If a worker is deprived of any of the weekly holidays, he shall be given compensatory holidays (u/s 53)

A worker cannot be employed for more than nine hours in a day

A worker must be given an interval of rest of at least half an hour after five hours of work

The total period of work inclusive of rest intervals, must be spread over more than ten and half hours in a

day

If a worker works for more than nine hours in a day or for more than forty-eight hours in a week, he shall

be paid for overtime work at the rate of twice the ordinary rate of wages.

The State Government may make rules in respect of adult workers in factories providing for the exemption, to

such an extent and subject to such conditions as may be prescribed. In making rules under this section, the

State Government shall not exceed, except in respect of extemption, the following limits of work, inclusive of

over-time:

The total number of hours of work in any day shall not exceeds ten

The spread over, inclusive of the intervals for rest shall not exceed twelve hours in any day

The total number of hours of work in a week including overtime shall not exceed 60

The total number of hours of over-time shall not exceed 50 in any one quarter

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The main restrictive provision of the Act about the employment of workmen and children are

A women worker cannot be employed except between the hours of 6 a.m. to 7 p.m. (It is understood that,

in a recent judgement given by the High Court, Chennai women worker can be employed even in night

shifts)

The employment of a child below the age of 14 years is totally prohibited

A child who has completed the age of 14 years but has to completed the age of 15 years can be employed

for a maximum of 4 hours in a day

A child worker must have a certificate of fitness granted by a certifying surgeon

The manager must maintain a register of child workers in the prescribed form

A child who has completed the age 15 years but has to completed the age of

18 years can be employed as an adolecent if he had certificate of fitness to

Perform a full days work

THE CONTRACT LABOUR ACT 1970

Objective:

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The contract Labour Act, 1970 is a piece of central legislation which provides for the abolition of contract Labour

wherever possible and for the regulation of the conditions of contract Labour in establishment or employments

where the abolition of contract Labour system is not considered feasible for the time being.

Definition

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.

Registration:

The Principal employer has to apply for registration certificate, if employing more than 19 employees.

License

If any contractor is employing more than 19 employees under his contract he has to apply for License.

A Contractor is required to provide

(1) Rest rooms or other suitable alternative accommodation where contract labour is required to halt at night in

connection with the work of an establishment.

(2) A sufficient supply of wholesome drinking water, a sufficient number of latrines and urinals of prescribed

type and washing facilities

(3) First-aid box equipped with the prescribed contents readily accessible during

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all working hours.

(4) A canteen in every establishment employing 100 or more worker

The act imposes a liability on the principal employer to provide the above amenities to the contract Labour

employed in his establishment if the contractor fails to do so.

The payment of wages and deductions if any shall be made by the contract in accordance with the provision of

the payment of wages Act; it is the disbursement of wages and also certifies the amount paid as wages by the

contractor. Under the act, it is the responsibility of the principal employer to pay the unpaid wages of contractor

fails to pay the same or make short payment

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The Employees provident Fund & Miscellaneous Provision Act 1952

Object

The Employees provident fund and miscellaneous provision Act 1952 instituted a compulsory contributory fund

to take care of the;

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Future of the employee after his retirement

Dependents in case of his early death

Applicability

Every factory as defined under the factories Act

Every establishment employing 20 or more persons

Any other establishment so notified by the central

Government even if employing less than 20 persons.

Classification of establishment for coverage

Exempted

Unexampled

Employees covered:

Every employee, including the employed through contractors (excludes an apprentice engaged under

apprentices act)

Every employee who is in receipt wages up to Rs. 6500/-

(The notification has been issued to increase the wage limit to Rs.6500/- per month with a view to enhance

the retirement pension benefits of employees. The necessary amendment issued effecting 10.06.2001.)

Contributions:

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Establishment employing less than 20 and sick industrial companies 10% of the basic wages &

dearness allowance

Establishment employing 20 or more persons 12% of the basic wages and dearness allowance.

Employers contribution is equal to the employee contribution.

Allocation of contribution

8.33% of employers contribution @ the maximum tune of Rs. 541/- I-e equal to 8.33 % of Rs. 6500/- is

being credited to the pension fund. The balance 3.67% of 12 % goes to employees provident fund account.

The entire employee contribution is credited only to the EPF account.

The Minimum Wages Act 1948

Objective:

The act extends the concept of social justice to the workmen employed in certain scheduled employment by

statutorily providing for them minimum rate of wages.

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Definitions:

Wages means all remuneration capable of begin expressed in terms of money which would, if term of the

contract of employment, expressed or implied, were fulfilled, be payable to a person employed in respect of his

employment or of work done such employment, and includes house rent allowance but dose not include

The value of any house accommodation supply of light, water, medical attendance; or any other amenity or

any service excluded by general or special order of the appropriate government;

Any contribution paid by the employer to any pension or provident fund or under any scheme of social

insurance;

Any sum paid to the person employed to defray special expenses entailed on him by the nature of his

employment.

Any gratuity payable on discharge.

Provisions:

When in respect of an employment, the appropriate government has fixed and notified minimum rates of wages

the employer is bound to less than the rates notified.

The appropriate government may review wages at such intervals, as they think fit but not exceeding five years,

and revise them, if necessary. The appropriate government may refrain from fixing minimum rates of wages in

respect of any scheduled employment in which less than 100 employees are employed in whole state.

The minimum rates of wages may be fixed:

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For different classes in the same employment;

For adolescents, children and apprentices;

For different employment

For different localities;

The rates of wages may be

A time rate

A piece- rate

A guaranteed time rate

An over time rate.

The rates may be fixed by the hour, by the day or month or by any other longer period as may be prescribed.

The rate fixed may consist of the basic rate of wages and dearness allowance as may be fixed by the

Concerned Government based on the Consumer Price Index fixed then and there, and the cash value of

confessional rates.

The minimum wages payable under the Act are to be paid in cash but it also provide for authorization of

payment in kind where the appropriate government considers it necessary. The appropriate government may fix

the number of hours of work, rest day, payment of overtime in respect of schedule employment. Provision has

been made in the Act for the maintenance of registers and records in the prescribed manner.

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The Payment of Wages Act 1936

Object:

To regulate payment of wages at regular intervals.

Applicability:

Person employed in a factory other establishments

Shall not apply to employee drawing wages exceeding RS1600/-

Wages

All remuneration by way of salary, allowances or otherwise and include over time wages.

Time of payment of wages:

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In factory or establishment, in which less than 1000 person are employed wages shall be paid before the

expiry of the7 days.

In any other factory or establishment wages shall be paid before the expiry of the 10 days.

In case of termination of an employee, wages earned by him shall be paid before the expiry of the second

working day from the date of termination.

The Employees State Insurance Act 1948

Object:

Provide social protection to workers in contingencies such as illness, maternity and employment injury

Applicability:

Factories covered under factories Act and falling within notified area

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Other establishment wherein 20 more persons are employed

Employees covered under ESI Act are exempted from these Acts

Maternity Benefit Act 1961 and

Workmens compensation Act 1923

Employee covered:

An employee drawing wages up to Rs 10,000/- per month

Excluding Apprentices engaged under the apprentices Act 1961.

Employees in branch of main establishment whether covered

If the main establishment is covered under ESI Act , the branches of such establishment irrespective of the

number of employees, will be covered under the Act (if the branch office is situated in the Not notified area,

that particular branch may be excluded from the provisions).

Registration of Establishment or factory:

Employer to register the factory / Establishment with the ESI corporation (at its appropriate regional office)

within 15 days of the applicability of the Act.

Registration of Employees:

An employees entitled to the benefit under the Act are required to the registered

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Wages Defined:

Wages means all remuneration paid. or payable in cash including any payment for period of authorized

leave, lockout , strike (legal) lay off and any other additional remuneration paid at intervals of less than two

months , but excludes

Employers contribution to any pension, provident fund and ESI fund

Any traveling allowance, or concession e.g. cycle allowance

Reimbursement of any special expenses

Gratuity payable or discharge

Washing allowance

Identity card:

Every member employee shall be provided with a permanent identity card

Contributions:

Employer 4.75% of the wages

Employee 1.75% of the wages

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Exception Employee drawing an average daily wages equal to Less than Rs 25/-are exempted from

employees Contribution.

Responsibility:

Employer to deposit his own as well as the employee contribution in respect of all employees including the

contract Labour in the ESI account.

The following Registers to be maintained under various Acts


Form.
Section Rule Purpose Remarks
No.

FACTORIES ACT

There shall be a competent person


nominated by the manager and
6 15 22 Humidity register
approved by the inspector recording
should be done 3times a day.
Record pointing time washing It should be done once in 14 months an
7 11(1) 16
,white washing etc recorded in the register
To be signed by the competent
authority. A report to be sent to the If
8 31 56 Report of examination of pressure
by the competent person within 7 days
vessel or plant.
of completion of examination.

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Report of examination of water To be done one a year. To be
8A - 56A
sealed gas holders maintained by the factory manager.
To be maintained by the employer once
OT muster roll for exempted
10 59 (5)B 78 exemption is got for OT under sec
workers
51.52,53,54,55,&56
As & when new employee report for
12 62(1) 80 Register for adult workers
duty
This shall be presented for a period of
15 83 87&88 Register of leave with wages
3 years after the last entry in it
Once in a year employee shall be
checked and recorded in the register. In
17 10(4) & 87 103 Health Register
case of dangerous operations details to
be dealt u/s 87, rule 95.
If daily attendance is noted in form 12,
25 62 103 Muster roll this is not required to be preserved for
3 year from last enquiry.
To be marinated for overtime hours
25A 62 103A Muster roll for adult workers done .if palsy approved this can
exempted to be preserved for 3year
If pay slip approved, this can be
25B 62 103 B Time card exempted to be preserved for three
years.
To be entered as & when dangerous
26 - 104 (1) Register of accident accident occur to be preserved for 3
year
To be entered as & when dangerous
Register of dangerous accident occur to be presented for 3
26A - 104(2)
occurrences years

Form.
Section Rule Purpose Remarks
No.

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As & when exemptions are obtained
Maintenance of exempting under
28 - 105(b) has to be entered. Book shall be kept
the act ,granted
for inspection ready at any time.
Showing the particular of forms in As when new rooms/buildings are
29 - 105(b)106
a factory constructed to be entered
This register is for workers who have
specially trained for work on certain
35 22 53(3) Register of trained adult worker
machine which are considered
dangerous as per the Act
The factory has to submit an amount as
specified by the IF after the remittance
36 29 55 Register of hoists lifts
a competent authority Cheque the hoists
& lifts this has to be done in 6 month

38 35 58 Record of eye examination To be done for fork lift operation

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