Unit-Iii The Factories Act, 1948
Unit-Iii The Factories Act, 1948
Unit-Iii The Factories Act, 1948
The object is to secure to workers health, safety, welfare, proper working hours and
others benefits.
Definitions
Factory means any premises where 10 or more workers are working and a manufacturing
process is carried out with aid of power (20 if manufacture is without aid of power)
{Sec.2(m)}
Worker means a person employed in any manufacturing process or cleaning or any work
incidental to manufacturing process. It includes persons employed through contractor
{Sec.2(l)}
"adult" means a person who has completed his fifteenth year of age;
"adolescent" means a person who has completed his fifteen year of age but has not
completed his eighteenth year;
"calendar year" means the period of twelve months beginning with the first day of January
in any year;]
"child" means a person who has not completed his fifteenth year of age;
"competent person", in relation to any provision of this Act, means a person or an
institution recognized as such by the Chief Inspector for the purposes of
carrying out tests, examinations and inspections required to be done in a factory under
the provisions of this Act having regard to-
(i) the qualifications and experience of the person and facilities available at his
disposal;
or
(ii) the qualifications and experience of the persons employed in such institution
and facilities available therein, With regard to the conduct of such tests, examinations
and inspections, and more than one person or institution can be recognised as a competent
person in relation to a factory;
"hazardous process" 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,
"factory" means any premises including the precincts thereof-
(i) whereon ten or more workers are working, or were working on any day
of the preceding twelve months, and in any part of which a manufacturing
process is being carried on with the aid of power, or is ordinarily so carried on,
or (ii) whereon twenty or more workers are working, or were working on any day
of the preceding twelve months, and in any part of which a manufacturing
process is being carried on without the aid of power, or is ordinarily so carried on,-
OCCUPIER- of a factory means the person who has ultimate control over the affairs of
factory. It includes a partner in case of firm and director in case of a company. In case of
Govt. company, occupier need not be a director. In that case, person appointed to mange
affairs of the factory shall be occupier {Sec.2(n)}
Name of the occupier should be informed to the Factories Inspector
He has to give notice 15 days before he begins to occupy the premises in the
prescribed form
The Occupier will be held responsible if provisions of Factories Act are not complied
with
The Occupier shall ensure, as far as possible, health, safety and welfare of workers while
they are working in factory
HEALTH
There should be arrangement to dispose wastes and effluents
Ventilation should be adequate
Adequate lighting, drinking water, latrines, urinals and spittoons should be provided
SAFETY
Safety appliances for eyes against dangerous fumes, dusts, gas should be provided
Safety officer should be appointed if number of workers in factory are 1,000 or more
WELFARE
Adequate facility for washing, sitting, storing clothes, when not worn during working
hours
WORKING HOURS
A worker cannot be employed for more than 48 hours in a week
If he is asked to work on weekly holiday, he should have full holiday on one of the three
days immediately or after the normal day of holiday
Total period of work inclusive of rest interval cannot be more than 10.5 hours
Overtime wages
If the worker works beyond 9 hours a day or 48 hours a week, overtime wages are double
the rate of wages are payable
Total working hours inclusive of over time should not exceed 60 hours in a week and
total overtime should not exceed 50 hours in a quarter
Employment of women
A women worker cannot be employed beyond the hours 6 a.m. & 7.00 p.m.
State Govt. can grant exemption to any factory or group or class of factories, but no
woman can be permitted to work during 10pm to 5am
Record of workmen
register (muster roll) of all workers should be maintained.
While calculating 240 days, earned leave, maternity leave up to 12 weeks and lay-off
days will be considered, but leave shall not be earned on those days
Leave can be accumulated up to 30 days in case of adult and 40 days in case of child
Leave admissible is exclusive of holidays occurring during or at either end of the leave
period
Wage for period must be paid before leave begins, if leave is for 4 or more days
Wages include DA & cash equivalent of any benefit excluding bonus & OT
Child employment
Child below age of 14 cannot be employed
Child above 14 but below 15 years can be employed only for 4.5 hours per day
He can be employed as an adult if he has a certificate of fitness for a full days work from
certifying surgeon
Name and address of Factories Inspector and the Certifying Surgeon should also be
displayed in the notice board
To secure the welfare of the workers in a competitive market by fixing the minimum rates of
Schedule to the Act or any process or branch of work forming part of such employment
THE SCHEDULE
PART I Employment in woolen carpet making or shawl weaving establishment, rice mill,
flour mill, dal mill, oil mill, tobacco, bidi-making, plantation like rubber, tea or coffee,
harvesting, the raising of livestock, bees or poultry and any practice performed by a farmer
a. fix the minimum rates of wages payable to employees specified in Part I & II of the
Schedule
b. in respect of Part II employment, instead of fixing minimum rates of wages for the
c. review at such intervals not exceeding 5 years, the minimum rates of wages so fixed
The appropriate Government may refrain from fixing minimum rates of wages in respect
of any scheduled employment in which there are in the whole State less than 1,000
If the no. of employees in any scheduled employment in the State has risen to 1,000 or
MINIMUM RATES
Advisory Committee
After considering the advice of the committee or representations received , the Govt.
The fixation shall come into force on the expiry of 3 months from the date of issue of
unauthorized deductions
WAGES
Wages means all remuneration due to any worker or employee if the terms of contract of
employment are fulfilled. Wages include
a) award or settlement
b) overtime wages & annual leave with wages
c) additional remuneration
d) any remuneration paid at the time of termination of employment other than
gratuity
e) Any sum to which the person employed is entitled under any scheme
Wages does not include
a) any bonus
b) value of amenities like House accommodation, etc.
c) any contribution paid by the employer to provident fund or pension fund and interest
thereon
d) any traveling allowance
e) any special expenses
f) any gratuity
TIME OF PAYMENT OF WAGES
Wages to be paid before 7th day from the wage-period Less than 1,000 workers
Wages to be paid before 10th day from the wage-period More than 1,000 workers
Wages in case of termination of employment before the expiry of 2nd working day
The appropriate Govt. may exempt an employer from the above provisions
{SEC.6}
Cheque or bank credit after getting written authorization from the workmen
Sec. 7 provides that the wages of an employed person shall be paid to him without deductions
of any kind except those authorized by or under the Payment of Wages Act, 1936
a. No fine shall be imposed without the previous approval of the Central Govt. or
prescribed authority
b. Notice specifying the acts and omissions for which fines may be imposed shall be
c. Show cause notice and the employee should have completed 15 years of age
Deductions may be made on account of the absence of an employed person from duty
The absence may be for the whole or any part of the period during which he is so
required to work
The ratio between the amount of such deductions and the wages payable shall not exceed
the ratio between the period of absence and total period within such wage-period
DEDUCTIONS FOR DAMAGE OR LOSS
A deduction for damage or loss of goods expressly entrusted to the workman for custody
or for loss of money for which he is required to account shall not exceed the amount of
A deduction for house accommodation and such amenities and services is possible
Deductions in respect of these services shall not exceed the actual value
In case of deductions as regarding services and amenities, the Govt. may impose
conditions
Recovery of an advance money given before employment began shall be made from the
SCHEMES
OTHER DEDUCTIONS
Deductions for contribution to the Prime Ministers National Relief Fund or such other
LIMIT ON DEDUCTIONS
The total amount of deductions in a wage-period of any workman shall not exceed 75%
of his wages, where such deductions are wholly or partly made for payments to
cooperative societies
In any other case, they shall not exceed 50% of such wages( Co-operative society)
Suppose if the deductions exceed 50% or 75% as the case may be, then the excess may be
c) Appropriate Govt. by Notification in the Official Gazette 2 months notice bring any
establishment - less than 20 workers but not less than 10
AVAILABLE SUPLUS
AVAILABLE SURPLUS: The available surplus in respect of any accounting year is the
gross profit for that year after deducting the sums as per Sec.6
* Gross profit to be calculated in the manner specified in the First & Second
Schedules
*Section: 6 Depreciation, Development rebate or investment allowance or development
allowance, direct tax & other sums mentioned in the Third Schedule
ALLOCABLE SURPLUS Sec.2(4)]
The allocable surplus is the workers share in the available surplus as defined in Sec.2(6)
In relation to an employer, being a company 67% of the available surplus in an
accounting year
In any other case, 60% of the available surplus
Where an employee has not worked for all the working days (240 days), the bonus
payable shall be proportionately reduced
* where the salary or wage of an employee exceeds Rs.6,500 per month, the bonus
payable to such employee shall be calculated as if his salary or wage were Rs 6,500 per month
Maximum Bonus 20% of the wage or salary
Set-on & Set-off: While computing the allocable surplus, the amount of set-on & set-
off to be taken into consideration [Fourth Schedule]
Where for any accounting year, the allocable surplus exceeds the amount of maximum bonus
payable to the employees in the establishment under Sec.11, the, the excess shall, subject to a
limit of twenty per cent of the total salary or wage of the employees employed in the
establishment in that accounting year, be carried forward for being set-on in the succeeding
accounting year and so on up to and inclusive of the fourth accounting year to be utilized for
the purpose of payment of bonus in the manner illustrated in the Fourth Schedule.
Where for any accounting year, there is no available surplus or the allocable surplus in
respect of that year falls short of the amount of minimum bonus payable to the employees in
the establishment under Section 10, and there is no amount or sufficient amount carried
forward and set on under sub-section (1) which could be utilized for the purpose of payment
of the minimum bonus, then, such minimum amount or the deficiency, as the case may be,
shall be carried forward for being set-off in the succeeding accounting year and so on up to
and inclusive of the fourth accounting year in the manner illustrated in the Fourth Schedule.
Where the allocable surplus for any accounting year exceeds the amount maximum bonus
payable to employees under sec.10, then the excess of allocable surplus, subject to a limit of
20% of the total salary or wage of the employees employed in that accounting year shall be
c/f for being set-on to the succeeding year and so on. This excess amount, which is carried
on, shall be utilized for the purpose of payment of bonus in the succeeding years.
Where there is no allocable surplus or the allocable surplus for that year falls short of the
amount of bonus payable to the employees in the establishment under sec.10 and there is no
sufficient amount carries forward and set on which could be utilized for the purpose of
payment of bonus, then so much amount is necessary for the payment of bonus shall be
carried forward for being set off in the succeeding year and so on.
- lay-off, annual leave with wages, temporary disablement & maternity leave
Adjustment of customary or interim bonus against bonus payable under the Act
Time limit for payment of bonus within 1 month in case of settlement of dispute and
within 8 months in any other case
Grant of Bonus under different formula: with the previous approval of the Government
DEFINITION OF INDUSTRY
Industry means any business, trade, undertaking, manufacture or calling of employers and
of workmen [Sec.2(j)] Thus, the definition of very wide . . . . The scope is much wider than
Industrial disputes means any dispute or difference between employers and employers or
between employers and workmen, or between workmen and workmen, which is connected
with the employment or non-employment of the terms and conditions of employment or with
WORKMAN
Any person (including apprentice) employed in any industry to do any manual, clerical or
supervisory work for hire or reward. It includes dismissed, discharged or retrenched person
also. However, it does not include (i) Armed forces (ii) Police or employees of prison (iii)
person in supervisory capacity drawing wages exceeding Rs.1,600 per month [Sec.2(x)]
Works Committee [Sec.3]: The Act provides for Works Committee in factories
employing 100 or more workers. The works committee will consist of equal number of
selected in consultation with the Registered Trade union. The works committee will first
try to settle disputes. If dispute is not solved, it will be referred to the appropriate
Government.
Governments. It will be presided over by Presiding Officer. The Labour court has
Officer. The Industrial Tribunal has powers in respect of wages including period and
mode of payment, compensatory and other allowances, hours of work and rest intervals,
leave with wages and holidays, bonus, profit sharing, provident fund and gratuity, shift
Sec.11-A: The Labour Court and Tribunal have wide powers. They can reappraise
evidence. They can also see whether the punishment is disproportionate to the gravity of
the misconduct proved. If the Court or Tribunal is of the view that the punishment is
disproportionate, it can impose lesser punishment or even set aside the termination and
order reinstatement. If the court orders reinstatement and employer files appeal in
Higher Court, the employer is required to pay full wages to the employee during the
period of pendency of proceedings with High Court or Supreme Court. However, if the
workman was gainfully employed elsewhere, Court can order that payment of such wages
is not to be made.
SETTLEMENT
agreement between employer and workmen arrived at otherwise than in course of conciliation
proceedings (i.e., outside the conciliation proceedings). The difference is that settlement arrived
at in course of conciliation or an arbitration award or award of labour court or Tribunal binds all
LAY-OFF
Lay-off means not giving employment within 2 hours after reporting to work. Lay-off
A factory employing 50 or more but less than 100 workers on an average per working
day can lay off the workmen, who have completed one year of service, by paying
compensation equal to 50% of salary (Basic plus DA). Employer can offer him alternate
employment, if the alternate employment does not call for any special skill or previous
experience and lay off compensation will be not be payable if employee refuses to accept
RETRENCHMENT
Sec.2(oo): It means termination by the employer of service of a workman for any reason,
ill-health of a workman.
Retrenchment should be on basis of last in first out. Later, if the employer wants to re-
notice (or paying one months salary) plus retrenchment compensation @ 15 days
average wages for every completed year of service. [If number of workmen are 100 or
understanding, of any number of persons who are or have been so employed to continue
work, or the refusal by employer to continue to employ any number of persons employed by him
In case of public utility services, employees have to give at least 14 days notice for strike.
The notice is valid only if strike commences within 6 weeks. Otherwise, fresh notice is
required. Similarly, an employer cannot declare lock out without giving 14 days notice.
Punishment: Fine up to Rs.50 per day to workman and Rs.1,000 employer can be
Protected Workman (Min. 5 & Max.100). In case of such a workmen, order for his
before whom proceedings are pending, whether the issue is related to dispute or not.
Section 25T prohibits unfair labour practices by employer or workman or a trade union.
Section 25U punishes any person who commits unfair labour practice, with fine up to