Contract labour as principle employer - if the limit is exceeded some time for some additional work?

Hi, I am working in a Pharma Company as Manager of HR and Admin. We have a company staff of around 200 employees. Apart from that, we also employ contract labor. As the principal employer in the contract, we have obtained permission from the IF for 180 staff. If the limit is exceeded at times due to additional work, is it necessary to increase the staff limit provided by the contractor from the IF? Would there be any violation for such additional staff?

According to the Factory Act, a company should have a canteen facility if the staff strength exceeds 250. Since our company staff strength is around 200, we have not established a canteen so far. If we consider the contract labor for the staff count, then the total staff strength is more than 250. I seek your advice on the following: 1. Can we request the contractor to increase the labor strength beyond 180? 2. Are we obligated to open a canteen regardless?

Thank you.

Karun

Hi,

I am working in a Pharma Company as Manager of HR & Admin. We have a company staff of around 200 employees. Apart from that, we also employ contract labor. As the principal employer, we have obtained permission from the Industrial Federation (IF) for 180 staff. If there is a need to exceed this limit temporarily for additional work, is it necessary to increase the staff limit provided by the Contractor from the IF? Would there be any violation for employing additional staff in such cases?

According to the Factory Act, a company must provide a canteen facility if the staff strength exceeds 250. Currently, since our company staff strength is approximately 200, we have not set up a canteen. However, if we consider the contract labor for this calculation, the staff strength exceeds 250.

I have the following queries:
1. Can we request the contractor to increase the labor strength beyond 180?
2. Are we obligated to open a canteen regardless of the staff count?

Thank you.
Karun

Dear Karun ji,

You raised two issues here. One is, I suppose, partaining to Insurance Fund under EPF&MP Act 1952 and another is pertaining to Factories Act 1948.

Your first issue is not clear to me. I just highlight the section 17(2A) of the Act pertaining to exempt any establishment from the operation of IF, for your perusal, as under:

This section permits the Central Govt., subject to specified conditios, to exempt any establishment from operation of all or any of the provisions of the scheme if employees of such establishments are, without making any ssperate contribution or payment of premium, in enjoyment of life insurance benefits which are more favorable.

Are you making compliance of your contract labours under your code and  are in enjoyment of life insurance benefits? If yes, you need to apply for revision in exemption accordingly if the contract labours 

Your second issue is pertaining of FA. You are advised to read the definition of "worker" as defined in section 2(l) which includes contract labour also. No staff is defined in FA. So on case total employees more than 250 including of contractor's, canteen is mandatory.

Hope you as a HR Manager not testing the knowledge of contributing members  like me of this forum.

Dear Mr. Karunakaran,

Greetings of the Day.

As an HR Manager, you must be fully conversant with the statutory obligations/responsibilities as a Principal Employer (PE) in any manufacturing industry. Anyway, you have asked two queries:

1. Regarding IF? Can you explain what it means? Then your query will be addressed suitably.

2. Regarding Canteen Facility: As per the provisions of The Factories Act, 1948, Sec - 46, it is clearly mentioned that any factory wherein more than two hundred and fifty workers are ordinarily employed, a Canteen or canteen shall be provided and maintained by the occupier for the use of the workers.

Not only a canteen, but as a PE, you have to strictly adhere to other statutory provisions of the said Act.

Who are considered as Workers? It is clearly mentioned in the said Act that WORKERS means a person (employed, directly or by or through any agency (including a Contractor/Subcontractor) with or without the knowledge of the Principal Employer... (For full details, please refer to the said Act).

Thanks,

Anil Sharma

Dear Karunakaran,

When the number of contract workmen exceeds the approval of the Inspector of Factories, strictly speaking, it is to be informed to the IF. For the calculation of the number of employees, the employees entered in Form-1 are to be taken.

ANBALAGAN

Dear Karunakaran,

When the number of contract workmen exceeds the approval of the Inspector of Factories, strictly speaking, it is to be informed to the IF. For the calculation of the number of employees, the employees entered in Form-1 are to be taken.

Dear Anbalagan,

I have not understood what you said. Can you elaborate with relevant provisions? If I do not understand any post after my response, I just ignore it. But in this case, I thought of questioning you.

ANBALAGAN

Dear Mr. Karunakaran,

Firstly, I am unable to understand what you want to know. As per my understanding, you want to know two things:

1. Engagement of Contract Labour
2. Canteen Facility

The answer is as follows:

1. Engagement of Contract Labour: For employing contract labour, P.E. needs to obtain the Certificate of Registration under the Contract Labour (R&A) Act, 1970 from the Registering Officer under the act. Once PE gets the RC, he can engage contract labour through contractors who are required to obtain a license from the licensing officer, i.e., ALC, DLC, if they intend to employ 20 or more contract labourers on any given day. If you wish to engage more contractors or contract labourers, you may do so, but any changes in the particulars of contract labour should be notified to the Registering Officer, i.e., DLC, ALC, within 30 days of the change. The Factory Inspector has no involvement in this process. Please bear in mind that the number of workers (regular + non-regular) should not exceed the licensed limit. If the number exceeds this limit, you must apply for an amendment to the factory license accordingly.

2. Canteen: Regarding the canteen, Mr. Anil Sharma has already provided clear details. You are required to provide canteen facilities to the workers.

Please refer to the Contract Labour (R&A) Act, 1970, where the number specified for providing canteen facilities is 100.

Thanks and regards,

Manvendra Singh

Dear,

For additional work by your contract staff, you have to pay overtime payment as per the Contract Labour Act for hours worked beyond 8 hours per day (if restricted to 180 staff members). You can ask your contractor to increase the number of staff by providing a work order. After that, you have to issue Form V for the Contract Labour License with the contractor.

Canteen facility is mandatory as per the Contract Labour Act, and you can reimburse the canteen expenses from the contractor.

Regards,
Avish

Q1. I am working in a Pharma Company as Manager of HR and Administration. We have a company staff of around 200 employees. In addition to our regular staff, we also have contract labor. As the principal employer, we have obtained permission from the IF for 180 staff under the contract. If the limit is exceeded at times due to additional work requirements, is it necessary to increase the staff limit provided by the contractor from the IF? If so, would there be any violation for employing additional staff in such cases?

Answer: The employee strength of your company should not exceed the approved limit of the license issued by the IF. If it does, you will need to amend your factory license before increasing the employee count.

Q2. According to the Factory Act, a company must provide a canteen facility if the staff strength exceeds 250. Currently, our company has a staff strength of around 200, and we do not have a canteen facility. When considering the contract labor as well, the staff strength exceeds 250.

Answer: Anil Sharma has clearly explained the definition of a worker. To provide canteen facilities, you should also consider contract employees. For example, if you have 180 employees as regular staff and 70 from a contractor, your factory will fall under the provision requiring a canteen.

Note: I have corrected the spelling, grammar, and paragraph formatting as per the original content provided.

Dear Mr. Korgaonkar,

Engagement of contract labor over and above the strength approved by the Factory Inspectorate is always a risk. Suppose if there is any accident, we will be in trouble. Hence, in order to avoid such things, it is better to amend the registration/license.

The Form-1 register under the Conferment of Permanent Status Act is the ready reckoner for the Inspectors to calculate the number of permanent employees on the company's rolls. Moreover, even though the canteen is mandatory if the contract employees are above 100, nowadays the provision of canteen facility has become very common.

If there is any more matter to be discussed, please revert back.

K. ANBALAGAN

You have to inform and obtain approval from more than 250 members of the c.l and staff if ordinarily employed. You have to provide a canteen.

Mr. Karunakaran,

As per the Factories Act of 1947, every person working inside the factory premises, knowingly or unknowingly, is counted. You have a staff of 200 and 180 contract laborers, totaling 380. It is necessary to determine the permissible limit as per the Factories Act in your company. If this limit is less than the actual strength, you should update your license to reflect the actual number of workers. Please refer to your Form-4 issued by the factories department. If permissible, we can request the contractor to increase manpower.

In Section 46 (Canteen) of the principal Act, the following section shall be substituted: "46 (1) In every factory where two hundred or more workers are ordinarily employed, a canteen must be provided and maintained by the occupier for the workers' use." Therefore, a canteen is mandatory in your case.

V.K. Rao

Dear Karunakarji,

First, you need to find out if your management is of the opinion to follow the IF and FA obligations or not. If yes, fulfill the obligations because the related statutes are very strict. If the manpower reaches 250, you have to comply with the labor department to obtain the license for the increased strength.

Manager (HR & Legal)
TKECON Pvt. Ltd

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Dear K. Anbalagan Ji,

In normal circumstances, I would have ignored your post. However, because of your private message to me, I could not ignore it. I have read your post repeatedly to understand it. I think I should update myself, and only then will I be in a position to understand you.

PF and ESIC Coverage for Daily Wage Laborers

One of our labor contractors does not have a PF code as he employs daily wage earners to keep the total number of employees below 20. However, he assures that as the daily wage earners work on-site, they are covered under ESIC and the Workmen's Compensation Act (both named and unnamed).

1. Is PF applicable to daily wage laborers?
2. What do named and unnamed mean?

Thank you in advance!

Shubhangi JS