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Dear Fraternity, We have two factories in Hyderabad under the same name with two different addresses within span of 2km. We are registered our two factories under factories act and paying the licence fees separately. but, we are calculating the salaries of all the employees under one sheet and paying ESIC and PF under one code. is this is correct procedure we are following ? can somebody guide us.

thanking you ..with best regards....Hanumanth..


First of all, there is no geographical integrality, secondly, is the accounts maintained separately for each factory, thirdly, is the process done in the factories related to each other, like the output of one factory is used by the other all these factors are important in treating the factories as separate and distinct entities. Give these details for a considered opinion.

May be, it may work initially but could lead to serious legal complications and compliance issues later. The welfare legislations like PF, ESI, Gratuity, Labour Welfare Fund, etc
are establishment specific and there is no concept of joint compliance. This could land you in a situation where the authorities would seek compliance status, and at that time an answer that all compliances are joint would not serve any purpose. The moment the threshold limit is reached in each factory, the legislations would call for separate compliance.

From India, Mumbai

It is felt that as both factories have separate licences for working, both shall be treated as separate. entities. How long your both factories are working. Are you having separate P&L accounts, balance sheet etc. Please throw some light on this.

It would be better if you have separate PF,ESI LWF etc. Did you obtain Pollution control certificate only one? pls reply.

From India, Aizawl

If you have two units with the same name, the factory licence should be separate because the licence to run any operation, whether manufacturing, trading or whatever be, is location specific. If you have an office outside the boundaries of a factory, you should take separate registration under the Shops and Commercial Establishments Act. For each of your depots/ warehouses separate RCs are required. But under a trade name, you can have one balance sheet only. Similarly, salary processing can be done common for all the units and all the employees can be put under one ESI and PF. In case these units are coming under separate districts, it is better to have separate SUB CODES for ESI. This will enable the employees to submit their sickness certificates to the local offices. Again, with the online services extended to members it is not necessary to have sub codes for PF but you can put all the employees under one code itself.

Even if you have separate payroll for each unit, with separate ESI and PF registrations, all the units will be clubbed together for coverage of various Acts wherein the employee size is applicable. For example, for deciding application of chapter VB of ID Act, the units doing similar activities of the same owner where financial integrality exists will be clubbed and if the number of employees is 100 then the chapter VB will be made applicable to it.

From India, Kannur

thank you all for your replies and really appreciate your time for answering my query. regards hanumanth..

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