Confused About Factory vs. Shop Act Registration? Need Help with Inspector's Demand

My establishment is covered under the Factories Act for the past 20 years. One of the labor inspectors in our city visited our premises and asked me to register under the Shop and Commercial Establishment Act and is forcing us to do so. But as far as I know, there is no need to register under the Shop Act as we are already registered under the Factories Act. Please help me to fight back this issue. Let me know if there is any notification or case law regarding this. Thank you.

If you have fewer than 20 people working in your establishment, then there is a need to register under the Shop and Establishment Act.

There are more than 40 employees, and I have registered under the Factories Act according to the state rules.

Mr. Pavan Kadam,

If in your establishment any "manufacturing process" is taking place as defined under the Factory Act, and the establishment employs 10 or more persons with the aid of power or 20 or more persons without the aid of power, then you have to register your company under the Factory Act. Otherwise, go through your state's S&E Act for registration under the S&E Act. Whichever definition is closest to the nature of your business will be applicable.

Hi Praveen Kumar,

First, please clarify if your corporate office is situated where the manufacturing process takes place. If the corporate office and the manufacturing unit are in different locations, it is necessary to register for S&E. In that case, S&E registration is compulsory as per the S&E rules.

Thanks,
T. Sivakumar

I agree with Sivakumar. If your Corporate Office is separate from the Manufacturing Unit, then you need to register under the S&E Act & Rules.

I appreciate Mr. Sivakumar's comment regarding the location of the corporate office. To be specific, it depends upon the area of the factory shown on the factory plan approved by the Directorate of Factories and the number of employees working in the offices or establishments beyond the factory map approved. Such offices beyond the factory do not necessarily mean only the corporate office; employers even keep the site admin office or other offices not directly associated with the factory operations and maintenance jobs outside the factory premises. Employees posted in such outside offices shall be covered under the Safety and Environment Act.

Mr. Sivakumar and Abuhrd have clarified the circumstances under which you need to register under the Shops Act. Apart from this, if you have any shop on the premises of the factory that is not connected with the manufacturing process, then you may also have to register under the Shops Act in some states. You have not specified the grounds on which the Labour Inspector insisted on registration under the Shops Act, which would have made things clear to the members and enabled them to reply more specifically.

Regards,
B. Saikumar
HR & Labour Law Advisor
Mumbai