How Can We Solve Our Canteen Funding Issues Without Burdening Employees?

Recently, I have joined a manufacturing unit in Maharashtra. There is an observation related to the canteen facility on the premises. This manufacturing unit is still in the execution stage. There are hardly 50 employees on the company's roll, and the company has not provided a canteen facility for the present staff.

Employees who avail canteen food regularly run the canteen by collecting a monthly subscription to cover the total canteen expenses. To assist these staff members, the organization has provided:

- Canteen Room
- Utensils
- Fuel (LPG)
- Canteen Cook

There is an identified charging system in place where regular members pay Rs 20, visitor staff pay Rs 40, and contractors pay Rs 50.

This canteen is also used by other individuals such as visitors and contract employees, and their food charges are collected after they have availed the food. However, a problem arises as expenses for regular members are collected at the beginning of the month to run the system properly. Due to a certain number of visitors and contractors, this extra expense is shared by regular members.

The canteen constantly faces a lack of funds and materials for food preparation. We are exploring the possibility of overcoming this canteen problem by considering running the canteen through an external contractor.

Please Suggest Any Other Options?

Thank you.

As per my knowledge, until the number of employees reaches 150, there is no obligation for the company to provide a canteen according to the Factories Act of 1948. Therefore, my suggestion is that you first gain a clear idea of the costs involved in running the canteen and the contributions made by each employee.

With all the details pre-planned, you can discuss the issue with your HR department and suggest to management that they share the burden of providing the canteen for the employees.

Thank you.

Canteen Obligation in Factories

It is not a statutory obligation to run the canteen. The obligation arises only if you are employing 250 or more workers in the factory.

Regards,
Varghese Mathew
[Phone Number Removed For Privacy Reasons]

Thank you for your information. Could you please clarify whether we can deduct the amount for employees who purchase food from the company canteen, or if the company must bear the cost?

Instead of running the canteen with internal staff and keeping various rates, you can fix the rates to be on par with the contractors. You can give the canteen contract to an external agency, set the prices, and instruct them to operate the canteen based on those prices. For lunch and evening snacks, along with 2 cups of coffee/tea, you can direct the contractor to provide the bill details to your accounts department for direct payment by the accounts department to the canteen. The accounts department will then recover the costs from the employees after deducting any subsidy you are offering to the canteen.

If the bill for the employee amounts to around Rs. 2000/- and the total bill comes to about Rs. 100,000/-, you will make a payment of Rs. 100,000/- to the canteen contractor. However, when collecting from the employees, you will deduct LPG charges of Rs. 8000/-, cook & helper salaries of Rs. 22,000/-, and for the remaining amount of Rs. 70,000/-, you can collect Rs. 1400/- per head per month from your employees. If the company is making a good profit, you can offer canteen subsidies directly from your account and deduct a nominal amount from the employees for meals, snacks, and tea.

Thank you.