Is the Factories Act Applicable to Our Contractor Work? What Records Do We Need?

Hi, please help. We have assigned a part of our manufacturing work to a contractor. We are paying ESI for those contract workers under a sub-code. Could you please tell me if the Factories Act is applicable to this contract work? If so, kindly inform me about the records that need to be maintained.

Compliance with the Factories Act for Contractors

If the contractor is running a unit with power, naturally, the contractor will have to follow the rules prescribed under the Factories Act by obtaining a separate license, etc.

Regards,
Madhu.T.K

Dear Bridha ji, Firstly, your question is not clear. Is your organization covered under the Factories Act? Since you are referring to the "Manufacturing Process," if your organization is a manufacturing unit, the contract works and workmen are also covered under that category.

For the purpose of ESI coverage, manufacturing is not a criterion. Once the principal employer covers, the contractor is also covered. Since you are paying through your sub-code, there is no problem.

You have to maintain all the registers and records as per the "Contract Labour Act," not the Factories Act. Any registers required should be maintained by the Principal Employer.

Regards, PBS KUMAR

What Mr. PBS Kumar said is the right thing.

Note: Applicability of the Contract Labour Act, where 20 or more contract employees are engaged (including security, housekeeping, and production, etc.), you need to obtain a Registration Certificate under the CLRA Act since you are a Principal Employer. Based on the Registration Certificate, your contractor should obtain the license from the authorities.

Registers and records should be maintained under the CLRA Act only.

Registration and Licensing Requirements for Principal Employers and Contractors

The Principal Employer must obtain a registration certificate, and the Contractor must obtain a contractor license as per the Act. Furthermore, it is essential to ensure that the contractor has valid registration numbers under PF, ESI, and other statutory laws.

Regards,
R K Nair