BUSINESS LAWS

SYMBIOSIS INSTITUTE OF
BUSINESS MANAGEMENT
Pune

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BUSINESS LAWS

Prof. Bala
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Session –10
The Factories Act 1948
Presentation on 20.1.2010
11.45 to 13.00 Hr.
Marketing A X-201

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 BUSINESS LAWS

Agenda
1 Recap
The Transfer of Property Act 1882
2 Day’s discussion on
The Factories Act 1948

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Importance of the Act
Primarily object of:
 protecting workers employed in factories

 against industrial and occupational hazards.

 to impose upon the owner / occupier certain

obligations
 to protect the workers and to secure for them
employment in conditions conducive to their
health and safety and the working
conditions

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Importance of the Act
Post Bhopal tragedy
(Union Carbide case)
special chapter (IVA)
has been added making
disclosures mandatory
for hazardous processes.

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History of labour enactments
Evolution of labour rights
- UK – where it all started – then moved to
- Other countries
 From Master-Servant to
 Employer-Workmen
 From rules of status to
 Law of contract
 Post second World War to early 1970s the
reforms momentum geared up and refinements /
fine tunings were done on an ongoing basis

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 The first labour law?

1349 – England – Statute of Labourers

 Placed restrictions on wage increases
 Criminalized actions taken by workers for
demanding wage increases
(organizing, agitations, refusing to work,
etc)
 This was a period of labour shortage in
England in the aftermath of the plague

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The important labour laws
 The Factories Act, 1948
 The Industrial Employment (Standing Order) Act, 1946
 The Trade Union Act, 1926
 The Industrial Disputes Act, 1947
 The Payment of Wages Act, 1936
 The Payment of Bonus Act, 1965
 Shops and Establishment Acts of various states;
 The Contract Labour (Regulation and Abolition) Act, 1970;
 The Workmen’s Compensation Act, 1923;
 The Employees’ Provident Funds and Miscellaneous Provisions
Act, 1952;
 The Employees’ State Insurance Act, 1948;

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History of Factory Act in India
In India the first Factories Act was passed in 1881.
This Act was basically designed to protect children
and to provide few measures for health and safety of
the workers. This law was applicable to only those
factories, which employed 100 or more workers. In
1891 another factories Act was passed which
extended to the factories employing 50 or more
workers.

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The Factories Act 1948
 It is a central Act
 Monitored by States with suitable
ruled made by each of the state
 Basically the Act ensures the safety,
health and working environment
conditions of the workers coupled
with
 Their rights –wages /bonus/retiral
benefits etc.
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THE FACTORIES ACT,1948

The Act consists of 11 chapters with 120 sections and 3

schedules and following deals on SHE
Chapter Coverage
III Health
IV Safety
Iva Related to Hazardous Processes
V Welfare
VI Working hrs-adults
IX Special provisions relating to    -
- Dangerous operations and
    -Notifications
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Schedules
First schedule
- List of Factories involving Hazardous processes
(29)
Second schedule
- Permissible levels of certain chemical
substances in work environment.
 Third schedule
- List of modifiable diseases.
(29 categories)
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Factory definition
 “Factory” is defined in Section 2(m) of the Act. It means
any premises including the precincts thereof-
 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
 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;
 But 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.

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Factory
Factory is:-
- as a place
- where ‘manufacturing process’ is
carried out
- using 10 workers using electrical power or
- 20 workers without power.

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 What are envisaged in the Factories Act,
1948

 Appointment of Safety officer if > 1000

workers
 At least one first aid box with prescribed
contents for every 150 workers under
responsible person
 Ambulance room to be provided if >500
workers

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 What are envisaged in the Factories
Act, 1948
 Minimum standard of lighting, ventilation,
health, safety and welfare of workers and
precautions to be taken in cases of hazardous
processes
 Factories employing over 30 women to provide
crèche for their children
 If employing more than 150 workers shelters,
rest rooms and lunch rooms to be provided
 If more than 250 workers, a canteen
 Appointment of welfare officer if >500 workers
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Manufacturing process
‘Manufacturing process’ also includes
- petrol pumps,
- retail workshops,
- handicraft industries etc.

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Where the factory act does not
apply
 Factories working with the aid of power
wherein less than 10 persons are
employed;
 Factories working without the aid of power
wherein less than 20 persons are
employed;
 Seasonal factories engaged exclusively in
any of the following activities viz. Cotton
ginning, cotton or jute pressing,
decortication of groundnuts, the
manufacture of coffee, indigo, lac, rubber,
sugar (including gur) or tea

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Following are held factories
 Salt works
 A shed for ginning and pressing of cotton
 A Bidi making shed
 A Railway Workshop
 Composing work for Letter Press Printing
 Saw Mills
 Place for preparation of foodstuff and
other eatables

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Occupier of the factory
 Under the Act the “occupier “ is responsible for
all compliances and
 in the case of an incorporated company the
Director on the board of the company must be
designated for the purpose of an “occupier”.
(Historical Judgment in J K Industries Ltd
Limited etc., Vs The Chief Inspector of
Factories & Boilers and others etc. 1996
by Supreme Court)
 Failing which all directors could become liable.
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Highlights of the Act of 1948
 Came into force on the 1st day of April,1949
 It was extended later to Dadra & Nagar Haveli,
Pondicherry in 1963, to Goa in 1965 and to the State
of Jammu & Kashmir in 1970.
 Amended in 1949, 1950, 1954, 1956, 1976 and 1989.
 In Bhikusa Yamasa Kshatriya (P) Ltd. v UOI, the court
observed that the Act has been enacted primarily with
the object of protecting workers employed in factories
against industrial and occupational hazards. For that
purpose, it seeks to impose upon the owner or the
occupier certain obligations to protect the workers
and to secure for them employment in conditions
conducive to their health and safety.

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Important sections
 Registration & Renewal of
Factories
 To be granted by Chief Inspector of
Factories on submission of prescribed
form, fee and plan.
 Only Director be appointed as
“Occupier” of a factory (JK Tyres
judgment by Supreme Court)

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Important sections relating to
health
 Employer to ensure health of
workers pertaining to
 Section 12 -Cleanliness Disposal of
wastes and effluents
 Section 13 -Ventilation & temperature
dust and fume
 Section 14 -Overcrowding Artificial
humidification Lighting
 Section 18 Drinking water Spittoons.
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Important sections relating to
safety
  Section 21 - Fencing of machinery
  Section 22 - Work on near machinery
in motion.
 Section 23 - Employment prohibition
of young persons on
dangerous machines.
 Section 24 - Striking gear and
devices for cutting off power.

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Important sections relating to
safety
 Section 26 - Casing of new
machinery.
 Section 27 - Prohibition of
employment of women
and children near
cotton-openers.
 Section 28 - Hoists and lifts.

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Important sections relating to
working conditions / welfare
 Section 42 - Washing facilities
 Section 43 - Facilities for storing and drying
clothing
 Section 44 - Facilities for sitting
 Section 45 - First-aid appliances
– one first aid box not less
than one for every 150
workers
- Canteens when there are 250
or more workers.

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 Important sections relating to
working conditions / welfare
 Section 47 - Shelters, rest rooms
and lunch rooms when there are
150 or more workers.
 Section 48 - Crèches when there are
30 or more women
workers.
 Section 49 - Welfare office when there
are 500 or more workers.

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Important sections relating to
working hours / wages
 Section 51 - Weekly hours not more than 48
 Section 54 - Daily hours, not more than 9 hours.
 Section 55 - Intervals for rest at least ½ hour on
working for 5 hours.
 Section 56 - Spread over not more than 10½ hours. -
 Section 58 - Overlapping shifts prohibited.
 Section 59 - Extra wages for overtime double than
normal rate of wages
 Section 60 Restrictions on employment of women
before 6AM and beyond 7 PM.

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Sections relating to Leave
Section 79 - Annual Leave with
Wages
 A worker having worked for 240 days
@ one day for every 20 days and for a
child one day for working of 15 days.
 Accumulation of leave for 30 days.

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Offences and Penalties
Offence Penalty
For contravention of For contravention
4. the Act / Rules Imprisonment 2
years
On continuation of
5 contravention Rs. 1000 per day

On contravention of Rs.5000 serious

Chat IV to safety & injury and not less
dangerous operations. than Rs.25000 in case
of death

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Offences and Penalties
Offence Penalty
Imprisonment upto
6 Subsequent 3 years or fine and
Contravention of
some provisions not less than
Rs.10, 000 which
may extend to Rs.2
lacs
Imprisonment upto
Obstructing 6 months or fine
7 Inspectors upto Rs.10, 000 or
both
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Offences and Penalties
Offence Penalty
Wrongful disclosing Imprisonment upto
8 result pertaining to 6 months or fine
results of analysis. upto Rs.10, 000 or
both.

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Offences and Penalties
Offence Penalty
For contravention of the Imprisonment
9 provisions of Sec. 41B,
upto 7 years with
41C and 41H pertaining fine upto 2 lacs &
to compulsory disclosure on Continuation
of information by fine @ Rs.5000
occupier, specific per day Imprison-
responsibility of occupier -ment of 10 years
or right of workers to for continues
work imminent danger. offence

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Factories Act / Shops &
establishment Act
 The working hours, leave , weekly days off
and wages are similar to Shop and
Establishment Act
 Employers are required to follow stringent
licensing and safety measures.

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EMERGING TRENDS IN LABOUR
LAWS
 There is a change in the mind-set of the courts and it
is being seen that the courts are interpreting laws
more liberally that is providing the employer more
flexibility now-a-days
 Several amendments are on the anvil which will give
the freedom to the employers by not being required to
make an employee permanent, even if the employee
has completed 240 days.
 Labour laws in the Special Economic Zone (SEZ) are
to be amended substantially with amendment in the
Contract Labour (Regulation and Abolition) Act, 1970
which will allow the employers to follow a hire and fire
policy under certain conditions.

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 In summary
 It is a Social Welfare Legislation
 Meant to take care of the employees
– Safety
- Health,
- Welfare and Working Environment
- Working Hours
- Annual Leave with Wages and special
conditions of employment of women and
young persons
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Machineries to settle disputes
1 Works Committees
2 Conciliation
(conciliation officer/board of conciliation)
3 Arbitration (Voluntary)
4 Labour Court
5 Industrial Tribunal and
6 National Tribunal

Relevant Sections 2A – Sec 9A – Sec 10 –

Sec 12(3) & Sec 18(1)

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 WHEN WE MEET
NEXT TIME

Next Session on
WEDNESDAY
3 FEBRUARY 2010

TOPICS
The Industrial Disputes Act
1947
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THANK YOU

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