Confused About Factories and Establishments Act Coverage for My PSU – Need Guidance!

I have recently reported as an Administration Manager in a PSU. When the topic of Factories and Establishment Registration came up for discussion, everybody pleaded ignorance, and none of my seniors were able to say whether we have registered or not. I even visited the office of the Ministry of Labour. One of the officials briefed me that our PSU is not covered under the Factories and Establishments Act, and he asked us to maintain silence and not unnecessarily rake up the issue as there was no notice from the department.

I am really doubtful about how we are not covered under the Act. My head office is in New Delhi, and we have offices in most of the states. A few people I have enquired with are saying that they have registered under the local Factories and Establishments Act. I am really bothered. What should I do? Mine is a premier PSU trading for more than 50 years and has been operational in this state for more than 17 years. How come they have not seen this?

Can somebody guide me?

Kind Regards,
Mr. Robin Singh

Registration Under State Shops and Establishment Act

The concerned office needs to be registered under the State Shops and Establishment Act. If you check, you might find details of old registrations done years ago. Many officials in such PSU jobs pass their time and get transferred; this is one reason why such a vital legal requirement is overlooked.

Similarly, you may find that the building does not have fire licenses or clearances and that fire audits are not being done. Sometimes, if the local labor officer or shops inspector conducts a check and discovers the lack of registration, problems will arise.

Talk to your older staff and even get in touch with some agent or liaison agency versed in such affairs who can guide you discreetly. I am not surprised at this lackadaisical functioning of many PSUs.

Regards

First, there is nothing called the Factories and Establishments Act. Either you come under the Factories Act or the Shop and Establishment Act. You need to provide details of what the company does, its structure, etc., for anyone to be able to advise correctly.

Registration of Administrative Offices Under State Shops and Establishments Act

Needless to dwell on the definitions of "factory" under the Factories Act, 1948, and "establishment" under the State Shops and Establishments Act, as the core of the question relates to the registration of administrative offices of the PSU located in different states under the respective State Shops and Establishments Acts. If the administrative wing of the establishment is located within the factory premises or if it is situated elsewhere within the jurisdiction of the Shops and Establishments Act, you should ensure it is registered under the Act.

Regards

Umakanthan.M.

Sir,

The issue is how the company can now get itself registered if it has been running for years without registration under the Shops and Establishment Act of the concerned state. The organization will have to explain the reasons for the delay in applying for registration. Many similar issues arise under the Fire Safety Act as well for not following basic provisions, despite being a government organization. It speaks volumes about the culture and involvement of the top management.

Shri Robin Singh has mentioned about Regn. under Factories & Shops & Comm. Estt. Act. However, nowhere is it stated whether the PSU is involved in the Mfg./Prodn. activities or making any products requiring Regn. under the Factories Act. If there is no Mfg./Prodn., and it is only Trading activity, then Regn. under State Shops & C Estt. Act will suffice. Factory Inspectors cannot have jurisdiction where there is no Prodn. activity as defined in the Factories Act.

Email: c.neyimkhan@gmail.com

20.5.16.

Dear Mr. Rao,

I am in total agreement with you on the points of non-registration so far and the inappropriate reasons for the lapse. However, it is always better late than never for this is an example of both poor compliance and enforcement of legal provisions. The monetary penalty or surcharge, if any, levied for the belated application for registration has to be recovered from the concerned officers of the PSU so that such lapses do not occur in the future.

I am surprised to read that PSU, operating for years in various states, has not been picked up on the radars of the authorities so far. Is it possible, anyways? What do the authorities do then?

Many thanks for your replies. I am sorry for the error in my previous message where I mentioned the Factories and Establishment Act incorrectly. It should be the Shops and Establishment Act. We would like to take remedial action now. Upon inquiring with retired individuals, they recall some registration being completed in the past. However, it seems none of the previous sections or supervisors noticed this, which is a mystery. If we register now, what implications might there be for previous years? Will this pose a problem? Nevertheless, it is better late than never.

Our business activities revolve around trading various commodities and not manufacturing or production. In case we have misplaced the original Registration Certificate, how can we retrieve it? During our visit to the state labor office, they requested the Registration Number. Unfortunately, we are unaware of the number, and they mentioned that they could not locate it using the establishment's name.

Is there a method to confirm whether we are indeed registered? I am skeptical about how a prestigious PSU could have functioned without a valid Shops and Establishment Certificate. Please provide guidance.

Kind Regards,

Robin Singh

Shops and Establishment Act Registration

Shops and Establishment Act registration is a one-time exercise. Kindly check it out using the services of an agent who specializes in such liaison work.

Fire Safety Audits

Fire safety audits are conducted twice a year in Maharashtra, and a report by a certified fire agency is to be submitted to local fire officials. Big bosses are seldom concerned with such legalities. The HR/Office Service department is responsible for ensuring compliance with legal requirements.

When things go smoothly, no one will question the lack of registration or fire safety compliance. However, when something goes wrong, all the right questions will be asked to fix responsibility. As an HR professional, do the right thing and discreetly check the state of registrations.

Dear Robin Singh,

The reply of the Labour Department you mentioned is a reflection of the ubiquitous lethargy and red-tapism prevalent in government offices. Since registration is a one-time affair, certainly, every registering authority will have a register of establishments to be kept permanent.

Anyway, engage a consultant as Mr. Nathrao suggested, for he will have the knack of getting things done in time because of his influential acquaintances.

Challenges in Shop and Establishment Registration

It is unfortunate that even for the registration of your shop or establishment, one has to engage a consultant. The idea of registration through the internet and one-click, one-window processes is not translated into reality. I had to engage a consultant for obtaining an NOC, even though most requirements were complied with. Lethargy and greed dominate thinking. How will business get going if the very department that is supposed to facilitate is itself not really helpful? This fundamental problem has to be resolved for India to move forward. Otherwise, things will remain on paper, and we will remain stuck in a complex environment of rules and regulations.

Making government departments work optimally is the biggest challenge, and that is not being meaningfully addressed by any government.

Thanks for the reply, sir. Yes, it was a mistake. I had corrected it in my subsequent posts as the Shops and Establishments Act. I can reveal my company's name, but I have not disclosed it for obvious reasons. We are a PSU and we trade various commodities. We have already checked with the local labor department office, and they have informed us that registration is not necessary or applicable for us as we fall under the Central Government. However, I have doubts because even though we are a central PSU, we are a commercial undertaking, so registration may be necessary. Nevertheless, following the guidance of our members, I am consulting a professional to determine the registration status of our certificate as I am confident that it should have been registered. Unfortunately, we have been unable to locate the registration number in our records. I am grateful for all the guidance you have provided.

Thanks,
Robin Singh

Robin,

You seem to be in the state of Tamil Nadu. To the best of my knowledge, the Tamil Nadu Shop and Establishment Act does not provide for registration or licensing of shops and commercial establishments. That is probably why you do not have a registration number. Please get a copy of the act and check what the actual requirements are and how they dovetail with your organization.

Dear Saswata Banerjee, We are based in Telangana. Today, I heard from my retired seniors that they had registered a long time back. The sad thing is that nobody has bothered to renew or look into it and preserve a copy. It has disappeared. The labor department here said that it is not necessary. I am confused. However, after detailed discussions here, we have decided to go in for a consultant to find the registration number and handle the renewal. Moreover, the local GHMC authorities say that we have to obtain a separate trade license and renew it annually at the rate of Rs. 6 per sq.ft for our office.

Regards, Robin Singh