Factory Act 1948 Compliance: A Comprehensive Guide


Factory Act 1948: Your Complete Guide

A concise overview of the historical development of the Factories Act:

In India, the introduction of machinery in cotton industries during the latter part of the 19th century ushered in increased production and marked the beginning of the development of more factories.

Major Moore, the Chief Inspector of the Bombay Cotton Department, first raised concerns about the need for legislation to regulate working conditions in factories. Consequently, legislators enacted the initial Factories Act in 1881, primarily focusing on prohibiting the employment of children below the age of 7. Legislators introduced subsequent amendments under the Indian Factories Act in 1891. Post World War I, in 1911, legislators made amendments to the Factories Act, including provisions related to working hours, minimum age, and night work for women and children. These proactive measures aimed to address the evolving needs of the workforce and ensure better working conditions in factories.

Further developments occurred in 1934 when, based on the recommendations of the Royal Labour Commission, the Factories Act of 1934 was enacted, replacing all previous versions. Following numerous amendments post-1934, the Factories Act of 1948 was passed by the constituent assembly on August 28, 1948, coming into effect on April 1, 1949. This act has undergone subsequent amendments to address evolving needs.

The Bhopal Gas tragedy prompted the introduction of a separate chapter on hazardous processes in the 1987 amendment. Consequently, the Factories Act aims to ensure adequate safety measures, maintain working conditions, and promote the health and welfare of laborers in factories. In 2019 and 2020, certain states, including Gujarat, Rajasthan, Haryana, UP, and Himachal, introduced significant changes through ordinances and amendments to the Factories Act to revitalize the economy affected by the Covid-19 lockdown. Notable changes included an increase in working hours from 8 to 12 hours per day and from 48 to 72 hours per week, along with applicable overtime wages. However, this led to social consequences and worker agitation, with some states withdrawing the notifications and others challenging them in court. Subsequently, the Central government later introduced a Labour Code that consolidates the existing 29 Central Acts into 4 codes. Specifically, the Occupational Safety, Health, and Working Conditions Code, 2020 repealed 13 central Acts, including the Factories Act, 1948, regulating the occupational safety, health, and working conditions of employees. Moreover, the new code aims to streamline and modernize labor laws for better implementation and enforcement.


The necessity of conducting a Factory Compliance Audit

An audit is a necessary examination in any business operation aimed at enhancing a company’s internal controls and systems. It serves to pinpoint weaknesses within the operations, enabling the company to rectify them. Additionally, audits are crucial for identifying potential non-compliance in factories, ensuring the maintenance of adequate safety measures and working conditions, and promoting the health and welfare of labourers. The overarching goal is to ensure compliance with all statutory aspects, thereby avoiding penal consequences under various Acts.


Who falls under the regulations of the Factories Act, 1948?

A factory that employs 10 or more workers in any day during the preceding 12 months for manufacturing activities with the assistance of power, a factory employing 20 or more workers for manufacturing activities without the aid of power, new factories yet to commence manufacturing activities, and existing factories expanding their manufacturing activities are all subject to the regulations of the Factories Act, 1948.


Activities related to compliance under this Act

Engaging in compliance activities under this Act involves:

  1. Obtaining a new license
  2. Renewing or amending existing licenses
  3. Issuing relevant notices
  4. Filing periodic returns
  5. Maintaining various registers
  6. Disclosing and displaying information to various stakeholders
  7. Remitting statutory payments
  8. Facilitating inspections by Inspectors, and more.


Responsibility in the event of Non-Compliance with this Act

Any violation of the Factories Act results in penal consequences for the Occupier and the Manager, including:

  1. Under Section 92 of the Act, contravention of its provisions and rules may lead to a fine of up to Rs. 2 lakhs and imprisonment for a maximum of 2 years.
  2. Continuous breach incurs a daily penalty of Rs. 10,000 until the violation persists.
  3. For accidents causing death or serious bodily injury, Section 94 imposes a fine not less than Rs. 25,000 in case of death and Rs. 5000 in case of serious bodily injury.
  4. Section 93 holds the owner responsible for leased industrial premises, ensuring services like drainage, water supply, electricity, lighting, and approach to main roads are adequately maintained.
  5. Certification is required for individuals to work in factory premises. Falsifying a fitness certificate can result in imprisonment for 2 months and a fine of at least Rs. 10,000.