Confused About Factory License Rejection? Do We Need a Shop Establishment License Instead?

Mine is a partnership firm with 15 workers and a factory in Thane, Maharashtra for the past 30 years. We specialize in manufacturing engineering equipment, with an HP usage of 80. We are also registered with ESIC and PF.

My query is regarding the recent rejection of our factory license renewal for 2016. The reason given was that we only have 15 workers and therefore do not fall under the Factory Act. Since the payment was made online, I would like to know if we are required to register for a shop establishment license if not a factory license.

Dear Sir, as per the company policy, you must register the license for the Shop and Establishment Act. If the company has 20 or more employees, we have to register under the Factories Act.

Kind Regards,
Sathyanarayanan T
Senior Advisor – HR Compliance
NI Consulting Services Private Limited
Human Resources | Business Advisory | Information Technology
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Clarification on Factory License Renewal

Adding my view, as you mentioned you are trying to renew your factory license, it implies you are already registered under the said act. It is confusing why they are denying the renewal under the said Act. If you are registered under the Factories Act, then the department should renew your license.

Secondly, if you are not registered under the Factories Act, consider looking into other relevant Acts. First, clarify all aspects such as: Are you a new setup? Are you already registered under the Factories Act and seeking to renew your license?

Regards

Dear ANONYMOUS,

Your factory is located in Thane, Maharashtra. As per the Maharashtra Amendment 2015, the Factories Act is now applicable in Maharashtra when you have 20 workers with the aid of power or 40 workers without the aid of power.

Since you have fewer than 20 workers, you no longer fall under the Factories Act. Therefore, your application for renewal has been rejected by the authority. You need to apply for the cancellation of your license under these circumstances.

Dear Korgaonkar Sir,

I agree with what you said, but in my opinion, this only applies when you want to register your establishment under the Factory Act. The act does not mention the required worker strength for the renewal of a license under the same act.

It is a general law that once you fall under any law, you will be covered by it forever, even if your employee strength falls below the threshold. However, consequent upon the said amendment, the Factory Act is now applicable where the manufacturing process is carried out with more than 20 or 40 workers, as the case may be. This means that if on the date of the said amendment you have fewer than 20 or 40 workers, the Factory Act is not applicable to you.

I recently came across a letter from the Factory Department addressing Factory Occupiers/Managers, informing them that if they have fewer than 20 or 40 workers, the Act is not applicable to them. Consequently, the license issued to them will be cancelled by the department, and the factory's name will be deleted from the department's records.

My question to you is this: when the department rejects your renewal stating the reason that you have only 15 workers and therefore do not fall under the Factory Act, why do you worry?

Though I am a junior, I want to share my views on this platform. Koregaonkar Sir rightly said in the above comment, and we have also received a similar letter stating that our license will be canceled because the employee strength was not as per their requirement. However, we have submitted a letter at the factory office in which we mentioned, and in fact requested, that due to low production, we have less manpower. We also mentioned that in the coming days, we are going to increase our production and will hire more workers. Due to our good relationship with the Factory Inspector, our license was not canceled by them. You can try the same if you want.

Thanks