Facing Bribery Demands from a Labor Inspector: How Can We Protect Our Business?

My wife runs a small garment manufacturing unit in Delhi. She has some employees on her payroll, but most of the workforce comprises piece-rate tailors who work on a project-to-project basis and leave when a particular style is completed.

Our local labor inspector is asking for a 25,000 rupee bribe, threatening to issue a challan and take legal action against her.

Kindly suggest.

Regards,
Rizwan Ahmad

How many people are working in the garment factory?

Applicability of the Factories Act, 1948

It applies to factories covered under the Factories Act, 1948. The industries in which ten (10) or more than ten workers are employed on any day of the preceding twelve months and are engaged in a manufacturing process being carried out with the aid of power, or twenty or more than twenty workers are employed in a manufacturing process being carried out without the aid of power, are covered under the provisions of this Act. So if the number of people is less than 10, then it does not apply, so you need not worry.

Other Considerations

1. Are you paying them minimum wages? The Factories Act has provisions for piece wages, so there should not be a problem.

2. Are you taking care of the following under the Factories Act:

- **Health**: The work conditions should not be hazardous.
- **Safety**: Enough safety provisions should be there.
- **Welfare facilities**: Like drinking water, a creche for female workers, etc.
- **Working hours**: 8 hours in a day with overtime not exceeding 10.5 hours.
- **Employment of young persons**: Not employing anybody below 18 years.
- **Annual Leave with wages**: 1 leave for every 20 days worked.

If you are maintaining all records and returns, then there should not be an issue. You may file an RTI to the labor department in this regard too.

Regards

While I agree with all that Govind said below, RTI is not going to make any difference. People have this myth that RTI will resolve all problems. No, it is going to give you nothing in this case.

Original Problem and Additional Questions

In addition to what Govind asked, I would like to know: What is he threatening to do? What are the non-compliances that he is going to investigate? What are the requirements that you have not complied with? Once you give the details, we may be able to help you.

If he is asking for a bribe without offering guidance, it is better to have him caught by the anti-corruption police.

As Mr. Govind has pointed out, if you are on the right side of the law, then there will be no cause for concern. In my opinion, the inspector has observed some lapses in your operation, and that is the reason why he is threatening.

Consult a lawyer and explain to him the observations made by the inspector as you may not be in a position to share such information in a public domain like this.

Project Duration and Legal Implications

You are talking about a particular style being part of a project, but the duration of the project is not mentioned. If it exceeds 240 days, and if you are covered under the provisions of the Factories Act, then these employees need to be considered for conferring permanent status.

Compliance with Labor Laws

If the women employees are more than 30, then you need to run a crèche.

You need to pay double wages for overtime work performed.

The space available for workmen movement should be as per specifications in the Factories Act. Generally, in small textile units, this is violated.

There needs to be proper ventilation and lighting.

The women workers cannot be made to work beyond stipulated working hours without obtaining prior permission from the Government.

Like these, there are several provisions that could have eluded your attention. This is the reason why you need to consult a lawyer. The bribe sought by the inspector could be much more than a lawyer's fee. It would be prudent on your part to correct the lapses and face the labor inspector's charges with legal support rather than ducking away from it. The course correction will ensure that you are on the right side of the law and hence you may not face problems in the future.

Regards

Understanding Labour Compliance and Piece Rate Work

All said and done, a doubt would remain in the minds of Mr. Rizwan as to how the Labour Inspector could harass when "most of the work" is done through the so-called 'piece rate' route. It is an illusion to think that if the job is done through piece rate, one can avoid labour act compliances, which would ultimately prove to be a wrong notion.

Micro and small entrepreneurs should be aware and realize that once a premises like a factory exists and workers are carrying out a process considered to be a factory, all the related provisions of the Act apply. There is no escape through the piece rate methods for the simple reason that Acts and rules are clear about this aspect. The piece rate method is generally adopted to ensure optimum productivity is extracted from the workers, cut down costs, meet deadlines for supply schedules, and the entrepreneur need not pay for OBs under the 'time rate' system.

It is presumed that Mr. Rizwan might try to avoid PF/ESI/bonus/gratuity/leave and other labour-related costs, proper maintenance of records, registers, and compliance with various stipulations. However, nobody can prevent the jurisdictional labour officers from inspecting a workplace, raising violations, issuing show cause notices, imposing penalties, and so on. It is up to the owners to defend themselves based on facts and circumstances within the framework of the law with proper evidence and justifications.

Addressing Corruption and Social Reformation

We have to accept that while it is also true that despite prevalent elaborate labour legislations in the country, workers are exploited in many segments, which cannot be justified by saying the organized sector workers enjoy everything and more.

The country is used to bribing every now and then, and there is growing awareness of this menace, though many take it for granted as a part of normalcy. We also must accept the fact that "so long as bribe givers exist, bribe takers also co-exist." Stop and renounce giving; takers should be branded as anti-social elements, and such elements should be treated as outcasts. A "social reformation" is much needed today, which the future India awaits eagerly. Is anything seen on the horizon?

Regards.

Addressing Corruption in Delhi's Government Departments

Since you have mentioned that your wife runs a small garment manufacturing unit in Delhi and the local labor inspector is asking for money from your wife, fortunately, the solution to such problems is likely to see the light of the day. Sh. Gopinath has rightly mentioned in his mail that corruption is rampant in almost all the departments of the Government of NCT Delhi, and we need to fight it out collectively.

In continuation of his mail, I would like to inform you that Sh. Arvind Kejriwal, the CM of Delhi, has recently launched a helpline to nab corrupt officials. The anti-corruption helpline number is 011-27357169, which will be open from 8 AM to 10 PM on all days where you can lodge a complaint.

Regards,
BS Kalsi
Member since Aug 2011