Navigating Labor Laws: Does Your Manufacturing Firm Follow the Factories or S&CE Act?

Hello all, for example, a company that manufactures fire alarm circuit panels with 100 employees in the OMR area, Chennai. Which act does the company have to follow or fall under? Is it the Factories Act or the S&CE Act?

If it falls under the Factories/S&CE Act:

1. How many leaves (CL, PL, SL) can be given?
2. What are the minimum wages (Basic & DA)?
3. How should the salary structure/breakup be done? What percentage of components should be allotted?
4. Can a person be employed without PF & ESI during their probationary period of 3-6 months?
5. What statutory registers need to be maintained?
6. What kind of insurance/accidental benefits should be covered for non-ESI members?

Please guide. Thank you for your reply in advance.

I am trying to answer your question, which I am able to do. Your company falls under the definition of "factory & manufacturing process" according to the Factories Act-1948. Hence, your company falls under the Factories Act, and therefore you have to follow the provisions listed in the Tamil Nadu Factories Rules-1950.

Leave Policy

There are CL/SL mentioned in the Factories Act. The company can frame a leave policy for its own. However, for PL/EL, an adult employee is eligible to get one day of paid leave for every 20 days of working. (Please refer to the Act).

Minimum Wages

If you are employing workers under the scheduled employment mentioned in the Minimum Wages Act-1948, then you have to pay minimum wages as determined by the state. Please refer to the state minimum wages notification.

Probation and Benefits

During probation, employees are eligible to become members of ESI & PF.

Applicable Acts and Rules

Please refer to the Tamil Nadu Factories Rules-1950 and various acts that are applicable to your factory, for example, the Bonus Act, Payment of Wages Act, etc.

With Regards,

Mr. Thumbs Up

1. There is no CL/SL mentioned in the Factories Act. Companies can frame their leave policy; however, for PL/EL, an adult employee is eligible to get one day of paid leave for every 20 days of working (please refer to the Act).

Mr. Praveen answered some basic provisions. I am adding some more.

Leave Entitlement

An employee will be eligible for paid leave if they have worked for a minimum of 240 days in a calendar year. This will be calculated by adding one leave for every 20 days present in the factory.

Minimum Wages

Check your state government's gazette notifications for the minimum wages (Basic & DA).

Salary Structure and Components

Ensure that the salary breakup is not less than the minimum wages. There is no rule or law specifying how to fix the structure. You need to have Basic + DA compulsory. You can include other allowances like HRA, educational allowance, special allowances, travel allowances, medical allowances, etc.

PF & ESI Coverage During Probation

Every person has to be covered under PF and ESIC if they are within coverage limits. Even a daily wage worker needs to be covered.

Statutory Registers to Maintain

Maintain the following registers: Muster roll (Form 25), wage register, leave with wage register, overtime register, national holidays and festival holidays register, payslips in a prescribed format, ID card, fines and damages register, suspension register, health register, workmen register, adult register, etc.

Insurance/Accidental Benefits for Non-ESI Members

If an employee's gross salary is more than 15k per month, they will not be covered under ESIC. For them, you need to cover them under an Employees' Compensation Insurance policy.

Please guide. Thank you for your reply in advance.