Does a Factory Under Construction Fall Under the Factory Act? Seeking Your Insights and Resources

Actually, I want to know if a factory that is under construction will be covered in the definition of Section 2m of the Factory Act (1948). Please give your suggestions. I am awaiting your replies. Kindly provide the links to the related judgments.

If it is under construction, it will come under the labor department, not under the Factory Act. Once you finish and submit your documents to the factory inspectorate for a license, then it will fall under the Factories Act.

Regards,
Eswar.K

Understanding Factory Construction and Licensing

If a factory is under construction, it will be covered under the Building and Other Construction Workers (BOCW) Act. You need to obtain a license under the BOCW Act. Once the construction is completed and production starts, you must apply for a factory license. BOCW falls under DISH.

Regards,
Bhavin Pandya

Pramod, please refer to Bhavin Pandya. You need to obtain the necessary license and permission from the municipal corporation to proceed with the construction until this is completed. Additionally, for commencing manufacturing operations and establishing the factory, you must acquire the factory license. If you require any assistance, do not hesitate to engage with the community in Cite HR, where experienced professionals are available to support you.

Once you are planning to construct a factory, you must convert the land to commercial land. If the land is agricultural, you will not get permission to construct a factory. Approval for the construction of the factory must be obtained from the Inspector of Factories as per the Factories Act.

When engaging a contractor and contract workmen for construction, the Contract Labour Act will apply. During the construction phase, the Building & Other Construction Workers Act will be in effect until the commencement of production in the completed factory premises.

Once production begins in the premises, the BOCW Act will cease to apply, and the Factories Act will take effect.

Since the construction is being done as per the approved plan by the Factories Inspector and is being built for a factory, yet it is not a factory since it does not fulfill the definition of a Factory under the Factories Act as no manufacturing process as defined under the Act is being carried out at the construction stage. However, I am of the opinion that the BOCW Act won't be applicable as specific exemption is given for Factory Building from the purview of the Act and that will have no meaning if the Factory building under construction is not exempted.

Regards,
KK

Dear Nair,

The Factories Act is applicable only when production starts. When there is no such production activity involved on the premises, the construction activity carried out in the factory construction is covered under the BOCW Act.

You can clarify from your nearest Factory Inspector Office or from the Labour Commissioner Office.

Who is an Employer Under the BOCW Act?

Is the owner of the establishment or the corporation which awards the contract considered the principal employer or not?

Thank you.

Whenever construction is happening under the MIDC zone, it is necessary to obtain a provisional NOC from the Chief Fire Officer and MIDC engineer. This is because when starting factory construction, there must be clearance from the MIDC engineer until the end of the construction phase, which means obtaining the final NOC. The Chief Fire Officer provides clearance based on the approved plan sanctioned by the MIDC engineer. They calculate the fire load according to your FSI. It is essential to obtain the plan approval copies from DISH, MIDC, and the Chief Fire Officer. If your factory falls under the boiler or explosive category, clearance from the CCE is also required.

BOCW Act Applicability

The BOCW Act is applicable throughout the construction phase. As of today, the BOCW Act is in effect, but no specific inspector, such as a factory inspector, has been assigned. Therefore, it is necessary to obtain clearance from DISH before commencing any construction activities.

Regards, SSP

Dear Manjiri ji,

First of all, you need to clarify whether the supply and erection job of equipment/plant and machinery, which you are going to execute, is in an existing factory or in a factory under construction falling under the BOCW Act.

If it is in an existing factory, the BOCW Act is not applicable to any of the activities on the factory premises. If it is in a factory under construction, the BOCW Act is applicable to the entire worksite, including your supply and erection work. The Principal Employer and all the contractors under him employing 10 or more persons need to apply for and obtain an RC under the BOCW Act. Each beneficiary (in service for more than 90 days) is required to be registered with the Board under the BOCW Act.

According to me, Cess is payable by the PE in case your PE is non-PSU/Govt. U/T. However, the PE can make a recovery of the cess amount from your billing if it is provided in the agreement signed by you.

If the PE is PSU/Govt. U/T, cess is payable by you.

Regarding the License under CLA, if you are employing 20 or more persons, you are liable for the License. However, the PE is liable to endorse your details in his RC under CLA irrespective of the number of persons you employ.

Hope you find it in order.

Thanks with regards,

Keshav Korgaonkar

Please note that there are two separate orders - one for supply and one for erection. The erection part has been offloaded to our subcontractor, who directly employs the workforce for the erection work. Our employer is the owner of the plant. It is an existing plant already in production; however, the plant where the current construction is going to be is a separate entity, and a separate factory license for the same will be applied for.

Applicability of the BOCW Act

The question is, under this situation, whether the BOCW Act is applicable? If yes, then do we have to obtain BOCW registration as well as a separate license for our subcontractor?

Thank you.

With regards

Construction activity within factory premises, including precincts (boundaries), will not come under the purview of the BOCW Act. However, you mentioned that new construction activity is a separate entity, etc. One needs to carefully examine all the facts and papers and provide an expert opinion accordingly. Generally, within boundaries, there is no separate entity.

Thanks with regards,

Keshav Korgaonkar