Understanding Labor Law: Do Office Staff Fall Under Its Scope Alongside Production Workers?

Sir, I wanted to know which kind of employees come under labor law. Our company is registered under the Factory Act and has 45 employees. There are 20 employees in Production (15 ITI, other helpers, and store staff) and 25 employees in Sales, Design, Accounts, HR, IT, Commercial, and other departments. The salaries range from 30k to above 1 lac. Do only production employees come under labor law, or does this apply to office staff as well? Please reply to me as soon as possible.

Thanks and Regards,
Alka Singh

At the outset, I would restrict my reply to the query with reference to the term "worker" as defined under section 2(l) of the Factories Act, 1948. For the purpose of interpreting the term, one should read it together with the definitions of "factory" and "manufacturing process." All those employed directly or indirectly in any manufacturing process or any other kind of work incidental to or connected with the manufacturing process or the subject of the manufacturing process are workers. If the administrative or other office is situated within the premises where a manufacturing process is being carried on, the entire area will be treated as a factory, and all the people employed therein would be included in the numerical criterion required for the Act's application. Salary/wages are not determinants in this connection. However, if any of them have to perform their work normally outside the premises, they will not be workers under the Act for its purpose. Therefore, the 20 people directly engaged in the manufacturing process and all others doing their work within the premises like accounts, HR, IT, design, watch and ward are workers under the Factories Act.

Since the post has started with a blanket question, I would also like to add that the application of labor law in general would depend upon the purpose of a particular law, salary/wage, and the capacity/status of employment of the employees. For example, any employee irrespective of their employment capacity/status and salary would be eligible for gratuity under the Payment of Gratuity Act, 1972, if it applies to the establishment. The Industrial Disputes Act, 1947 would apply to all employees who fall within the ambit of the definition of the term "workman" for the purpose of protection of the employment rights ensured therein.

Applicability of Labor Laws

I believe you have raised an important issue. However, to determine the sphere in which a particular labor law is applicable or enforceable, it is defined and laid down within the law itself. It is a positive aspect that the legislature has specified the coverage or applicability of a particular labor law based on its requirements or nature, without establishing uniform principles or rules. For example, under the ESI Act of 1948, the coverage threshold is 10 or more persons, but its implementation is restricted to specific areas only, including J & K. In contrast, the applicability of the EPF & MP Act of 1952 begins when a particular establishment engages 20 or more persons, with its applicability extending to all areas in India except J & K. Therefore, to ensure compliance with various labor laws, employers must review all labor laws, determine their applicability, and meet the requirements accordingly.

Proposed Changes to Labor Laws

The 2nd National Labor Commission, in its report in 2002, recommended merging or amalgamating all such labor laws in the Central list into four separate codes. The present Central Government has drafted Labor Codes on some labor laws; however, the proposed amendments or unification of labor laws are strongly opposed by Trade Unions on various grounds. I believe the contentions and arguments of the Trade Unions appear to be correct and genuine to some extent. It may take a considerable amount of time for the Central governments to decide on the unification of all labor laws under their jurisdiction.

Thank you.

Dear Mr. Harsh, all your blue-collar workers will be covered by labor laws. In fact, most of the labor laws are applicable once the strength of the employees crosses 20. Therefore, the Employees Provident Fund Act, ESI Act, Payment of Bonus Act, Industrial Disputes Act, Payment of Gratuity Act, Factories Act, Payment of Wages Act, Minimum Wages Act, Maternity Benefit Act, Industrial Employment Standing Orders Act, Prevention of Sexual Harassment of Women at Workplace Act, Contract Labor Regulation and Abolition, as well as all other Acts, will be applicable to your factory.