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Law applicable to factories and large industrial establishments


1. Factories Act, 1948

The Factories Act, 1948 is a central legislation applicable to factories, and is supplemented by the Factories Rules prevailing in the concerned state.


Any premises where a manufacturing process is carried out and:

(i) 10 or more workers are employed with use of power

(ii) 20 or more workers are employed without the use of power

(iii) Less than 10 workers, if the activity is notified by the State Government.

Registers and notices:

Registers have to be maintained for humidity, examination of gas holders, compensatory holidays for the employees, adult workers and child workers, leave with wages, leave book and health register. Notices have to be filed relating to the following matters - of change of manager, periods of work for adult workers & child workers, notice of poisoning or disease, etc., records of eye examination, limewashing, painting, etc. Exact compliance requirements depend on the state legislation (respective Factories Rules made by the government of the concerned state).

Certain kinds of factories may be exempted under the applicable state rules.

Example 1 – Registers to be maintained under Karnataka Factories Rules, 1969

  • Muster roll in Form no.22;
  • Register of adult workers in Form no.11;
  • Register of leave with wages in Form no.14;
  • Register of accident or dangerous occurrence in Form no.23;
  • Health register in Form no.16 in respect of factories involving hazardous processes and dangerous operations.


    Example: Key compliance formats under Maharashtra Factories Rules, 1963
    Form 1 - Application for permission to construct, extend or take into the use any building as a factory
    Form 2 - Application for Registration and Notice of Occupation specified in sections 6 and 7
    Form 3 - Application for licence/renewal of licence of a factory
    Form 4 - Registration for licence to work a factory
    Form 7 - Health Register
    Form 10 - Register of workers attending to machinery



Permission and notice requirements: As per Section 6 of the Factories Act, the State Government can make rules for:

  • Submission of plans and laying down specification of such plans for factories to the Chief Inspector or the State Government,
  • Prior permission in writing of the State Government or Chief Inspector for the site of the factory
  • Registration and licensing of factories

Section 7 states that  the occupier must, before he begins to use or occupy the premises as a factory, send to the Chief Inspector a written notice containing his particulars, details of the owner of the premises, the workers to be employed, the managers employed, etc.

Example – Licensing under Karnataka Factories Rules, 1969

In Karnataka, application for registration and grant of licence is required to be made before 15 days of starting a manufacturing activity in the factory to the concerned area inspector with the following documents:

  1. Registration application in Form No.2, signed by the occupier and the manager.
  2. List of directors / Partners with the memorandum of article of association / partnership deed
  3. Prescribed Fee paid as per Table A & B of the Fee Chart and treasury receipted challan for having paid required registration fee.
  1. Health and Safety policy of the proposed factory drawn and duly signed by the
    Occupier in case of factories engaged in the hazardous processes as stipulated in
    the First Schedule of the Act.

Time limit for grant of license: Application made with the above said documents will be scrutinised by visiting the factory and the licence will be granted after due verification within 30 days.

Deemed grant: Once the application is made for registration to the department and if no order is communicated to the applicant within three months, the registration applied for in the said application shall be deemed to be granted.

Annual compliance: Annual returns for the year ending on the 31st of December, half-yearly returns for the half-year ending on the 30th June and 31st of December, Muster roll of the employees, overtime muster roll for exempted workers,

Responsibility/ duties of occupier and manager:

An occupier is required to ensure the health, safety and welfare of workers by provision and maintenance of plants/ systems that are safe and do not endanger human health. Manufacturers, designers, importers or suppliers of any articles used in a factory must ensure that the article is safe and does not endanger the health of the worker. 

The manager is responsible to send notice to the concerned authorities in case of an accident, dangerous occurrences, diseases, etc. to the concerned authorities.

Liability for contravention: The manager or occupier shall be liable to punishment of imprisonment upto two years, depending upon the offence committed.


Useful links:

Karnataka Factories Rules explanation– http://labour.kar.nic.in/fandb/f_legislations.htm

Karnataka Factories Rules table of forms- http://labour.kar.nic.in/fandb/f_feecharts.htm


2. Industrial Employment (Standing Orders) Act, 1951 (Standing Orders Act)

Application: The Standing Orders Act applies to factories, certain industrial establishments (as defined under Payment of Wages Act), factories, and railways, and those who employ workmen in order to fulfil a contract with an industrial establishment. The statute states that every employer of an Industrial Establishment employing 100 or more workmen is required to draft a standing order which sufficiently states the condition of employment for workers and employees.  The threshold may vary in a particular state, e.g. in Karnataka it is 50 workmen.

Standing orders are basically rules made by the employer, on matters (relating to employment conditions of workmen) that are specified under the Schedule to the act. They are negotiated with representatives of employees (labour union or employees’ association) and the employer is then required to get them certified by the certifying authorities provided under Section 3 of the act. There is a standard standing order provided with the act – which is applicable by default and any employer can directly adopt it with or without modifications. Such certified conditions of service will prevail over the terms of contract of employment.

Matters which should be covered by standing orders

As per the Schedule to the Standing Orders Act, the following matters should be covered by a Standing Order:

1.Classification of workmen, e.g., whether they are permanent, temporary, apprentices, etc.

2. Manner of intimating to workmen periods and hours of work, holidays, pay-days and wage rates.

3. Shift working.

4. Attendance and late coming.

5. Conditions of, procedure in applying for, and the authority which may grant leave and holidays.

6. Requirement to enter premises by certain gates, an liability to search.

7. Closing and reporting of sections of the industrial establishment, temporary stoppages of work and the rights and liabilities of he employer and workmen arising there from.

8. Termination of employment, and the notice thereof to be given by employer and workmen.

9. Suspension or dismissal for misconduct, and acts or omissions which constitute misconduct.

10. Means of redress for workmen against unfair treatment or wrongful exactions by the employer or his agents or servants.

11. Any other matter which may be prescribed.


Compliance Requirements: An employer is required to submit draft standing orders prepared by him for certification to the Certifying Officer (Labour Commissioner or Regional Labour Commissioner) within six months of the act being applicable to his establishment.

The certified standing orders shall be filed by the Certifying Officer in a register in the prescribed form maintained for the purpose, and be available to any person who pays the prescribed fee.

They should be displayed on the notice board at the entrance and in all departments where workmen are employed.

Duration and modification of standing orders

Certified standing orders cannot be modified for at least six months, except by agreement between the employer and the workmen, or a trade union or other representative body of the workmen. An employer or workman/ trade union may apply to the Certifying Officer to have the standing orders modified.

The foregoing provisions of this Act shall apply in respect of an application under sub-section (2) as they apply to the certification of the first standing orders.

Recent developments – Applicability of Standing Orders Act to Karnataka’s IT industry

In August 2012, the applicability of standing orders to the software industry in Karnataka was in the news. As per the language of the Standing Orders Act, it would be applicable to all establishments which employed the minimum number of workmen as specified under the act, irrespective of whether the industry was in the software or IT sector. The Government of Karnataka had exempted companies in the IT and ITeS sectors from the applicability of the Standing Orders Act in the year 1999 for 2 years, which was periodically renewed until August 2011. Presumably, this was to encourage the software industry and the Indian outsourcing. If the exemption expires, software establishments employing above the minimum number of employees will be required to frame standing orders governing the terms and conditions of work of their employees and have them certified under the act.

The IT industry has taken the stand before the government that the requirements of the service sector are very different from that of the manufacturing sector and it may be extremely difficult to have a uniform set of standing orders which could apply to the IT sector Further, for many companies employment policies are framed at a global level, so getting them certified domestically may create hardship. The government has for now, extended the exemption until March 2013, but does not plan to renew it further. Instead, it plans to have customised standing orders for IT, IT-enabled services and the hardware and electronics sectors in the state.

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