Confusion Between Shops & Establishment Act And Factories Act

Dear Gentlemen,

We have an office at Sakinaka. We are an IT firm engaged in sales, services, and repairing of laptops, desktops, printers, and scanners for our customers. We provide services to our customers.

We have obtained the Shops and Establishment Act License. Recently, a Factory Inspector visited our office and informed us that our office should be covered under the Factories Act, and we need to obtain a Factories Act License.

He has given us a 2-day deadline. Please advise us on whether we are required to comply with the Factories Act and obtain a compulsory Factories Act License. We currently hold a Shops and Establishment Act License.

We are eagerly awaiting your valuable response.

HSA - HR

Since you have not engaged in the manufacturing process, there is no need to get registered under the Factories Act. The Factories Act of 1948 clearly states that in any premises where 10 employees, along with power (electric), or 20 employees without power (electric), are engaged in the manufacturing process, they must be registered under the Factories Act.

If you do not fall under this criteria, you can simply provide a letter stating that you have not engaged in the manufacturing process. Therefore, you have only obtained a Shop & Establishment license.

"Repairing" is a process covered under the definition of "Manufacturing Process" in the Factories Act. Hence, registration under the Factories Act is required. However, a test has to be conducted to determine whether the said process is predominant in nature. If not, then your existing registration under the Shops & Establishment Act holds good.

Hi all,

I'm a new subscriber to this forum. I'm a beginner and I'm working in a start-up company. We are involved in staffing, product development, marketing, and training. I am currently looking for information on our leave policy but I am unsure under which Act my company falls (Factories Act or Shops & Establishments Act).

Could anybody help me by providing relevant information?

Thanks and Regards,
Sultana

Repairing and servicing constitute a manufacturing process as defined under Sec 2(k) of the Factories Act, and the Inspector of Factories is right in asking you to get yourself registered under the Factories Act. However, before enrolling your unit under the Factories Act, you have to determine which activity is primary and which is subsidiary. If repairing is primary and mandatory after-sales service, then you have to register your unit under the Factories Act. On the other hand, if repairing is subsidiary and only optional after sales, then registration under the Shops Act is sufficient.

With regards,
Sanagapalli V.R.

Even though repairing and servicing are considered manufacturing processes under the Factories Act, there is a criterion that 20 employees should be working without the aid of power (10HP). If the number of employees is less than 20, there is no need to register under the Factories Act.

Dear All,

We have started a new non-woven manufacturing unit in Roorkee, Uttarakhand. Please provide me with the process to obtain the factory act license. Additionally, could you also provide me with details on the documents required for the license (with format) and the name of the department from which we can obtain the license?

Thanks,
Rakesh Kumar

I agree with Kiran since there is no manufacturing process involved, there is no need to register under the Factories Act.

Dear All,

Since our company is involved in Research and Development in the Pharma sector, we do not manufacture tablets or any other form of pharmaceutical products. However, we do use hazardous chemicals for testing purposes. My question is whether our company needs to comply with obtaining a Factory License or a Shops and Establishment License.

Thanks,
Rahul