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Unions oppose draft small factories Bill

A small factory is proposed to be defined as “any premises wherein a manufacturing process is carried on and which employs less than forty workers.”

Written by Surabhi | New Delhi |
February 7, 2015 2:00:16 am

The Centre’s plan to introduce a new labour law to regulate small factories has met stiff resistance from trade unions who are concerned that the proposed law seeks to exempt these units from 14 labour laws and move out workers from the Employees Provident Fund to private insurance plans.

The issue is understood to have been discussed at a tripartite consultation with employer representatives and trade union leaders called by the ministry of labour and employment on Tuesday.

Concerns have been raised over the proposed definition of a “small factory” that in effect could exclude workers from these establishments from 14 central laws.

A small factory is proposed to be defined as “any premises wherein a manufacturing process is carried on and which employs less than forty workers.”

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Meanwhile, the amendments to the Factories Act, that are already tabled in the Lok Sabha, has sought to enhance the threshold for a factory to a manufacturing unit employing more than 20 workers in case it uses power, and a unit that employs more than 40 workers when it does not use power.


“What happens to these workers employed in a small factory? They have been liberalised of all 14 basic Central labour laws,” said Tapan Sen, member of Parliament (CPI-M) and general secretary CITU, stressing that the proposed Bill is not acceptable.

The draft Small Factories (Regulation of Employment and Conditions of Services) Bill, 2014 was floated by the labour ministry in October last year based on the recommendation of the Second National Commission on Labour in 2000, which felt that not only would it encourage more small scale industries but would also boost employment opportunities in the sector.

The proposed bill seeks to bring all small factories under a common regulation and exempt these units from 14 Central labour laws. Another issue of concern is the proposal to move out workers in small factories from the EPFO act to IRDA approved provident fund schemes.

“Every employer shall ensure that all worker in the small factory are covered by a Provident Fund scheme, approved by the Insurance Regulatory and Development Authority set up under the Insurance Regulatory and Development Authority Act, 1999,” the draft bill said, adding that at least 10 per cent of the consolidated wages must be contributed to the scheme by both the worker and the employer every month.

“Workers in such units will be brought out from the EPFO net,” pointed out AD Nagpal, general secretary, Hind Mazdoor Sabha.

Concerns have also been raised seeking clarity on provisions of employment of young persons. While defining a “young person” as “a person who has attained the age of fourteen but has not completed his eighteenth year of age,” the proposed Bill has suggested employing such young persons as trainees in a small factory with written authorisation of the Chief Inspector.

However, labour ministry officials said that the proposed Bill does not seek to de-regulate small factories but instead encourage more jobs in micro and small enterprises.

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First published on: 07-02-2015 at 02:00:16 am

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