Changes in labour law will affect half of all factories 

The original Act identifies a factory based on the number of workers employed.

Written by Surabhi | New Delhi | Updated: August 14, 2014 9:32 am
The move is expected to ease the labour law burden on most of the existing factories by freeing them from complying with the numerous provisions of the Act that relate to safety, working conditions and welfare of the employees. Source: Reuters The move is expected to ease the labour law burden on most of the existing factories by freeing them from complying with the numerous provisions of the Act that relate to safety. (Source: Reuters)

More than half the factories across the country may be exempt from the restrictive provisions applicable under the current legislative framework, with the Factories Amendment Bill, 2014 proposing to revise the definition of a factory by effectively doubling the threshold of the number of workers employed in such a unit.

The move is expected to ease the labour law burden on most of the existing factories by freeing them from complying with the numerous provisions of the Act that relate to safety, working conditions and welfare of the employees, as well as filing lengthy compliance reports to the government.

The original Act identifies a factory based on the number of workers employed. At present, units where power is used for manufacturing must employ 10 workers or more in a year to be identified as a factory, while units that do not use power must employ at least 20 workers in a year.

Under the amendment, the minimum number of workers in a factory is sought to be doubled to 20 for units with power and 40 for non-power units. State governments will be empowered to prescribe the number of workers up to this limit that a unit must employ to be defined as a factory.

Data from the Annual Survey of Industries — the most comprehensive official exercise on the industrial sector — reveals that about 1 lakh, or 58 per cent, of the 1,75,710 factories reported to be operating in the country in 2011-12 employed up to 30 workers. While 63,568 units employed 0-14 workers, another 18,763 factories employed 15-19 workers and 20,541 units had 20-29 workers on their payrolls (see chart).

This is backed by the Labour Ministry’s data based on returns submitted by factories under the Factories Act, 1948. The statistics reveals that in 2010, of the 67,508 factories that submitted returns (except from Orissa), 52.5 per cent, or 35,208 units, had employed less than 20 workers. However, the number of workers employed by these units was just 3,78,970 workers, as compared to the total 44.96 lakh workforce in factories.

But trade unions as well as experts have opposed the amendment, arguing that it could lead to greater violations by factories. “There have to be more discussions with the Labour Ministry on the proposed amendments to the Factories Act. In effect, these factories will be out of the purview of the government and working conditions will not be regulated,” said A K Padmanabhan, president CITU.

Michael Dias, secretary, Employers’ Association of Delhi, and a member of the Council of Indian Employers, concurred with the view, while arguing that there also has to be some modicum of control. “This will bring out smaller units from the purview of the Act, though most violations are done by them. It will also lead to unhealthy competition amongst small manufacturers while not helping out bigger factories,” he said.

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  1. R
    Ramesh Gopinath
    Jan 28, 2017 at 2:43 am
    Please search the internet . corrupt nagarajas and gajananas . corrupt ESIC inspectors to know the ill effects and high handedness of the inspection raj to its menopause inspectors with prosecution powers and recovery powers.lt;br/gt;Now itself he'll is broken out in labour and ESIC dept.
    Reply
    1. S
      Satish Verma
      Oct 10, 2014 at 12:33 pm
      actually inspector raj has not flown from the labour ministry and their inspections on silly point which are very useless for any industry are hurdles in the progress. licensing procedures are very bad. illegal demand of labour officers gives a bad message for entrepreneur. we should permit evey thing online with he condition that all responsibility will be of employer and full coverage of insurance should be given for all types of employees. contract labour is just to make the foolish and for exploitation.rights of contract labour is not safe in our nation specially in pvt sectors and small industries. now the time has come to make a good and accountable laws for our employees. Labour word should be removed from the dictionary.
      Reply