Employment Coverage: Can a Factory Lose Coverage if Staff Numbers Drop Below Minimum?

Can a factory or establishment once covered go out of coverage if the number of persons employed therein goes down to the minimum limit prescribed?

Organizational Life Cycle and Workforce Management

Each and every organization has its own life cycle, which changes with the phases of products and services, workforce dynamics, and the introduction of new talent and developments. Paving the way for new blood and development is crucial.

In the present scenario, you can provide benefits to existing staff as the number of employees may decrease due to various reasons. However, authorities should be informed of any such changes. Additionally, the reasons for downsizing should be documented for permanent employees.

Managing Contract Workers

As for contract workers, you need to adjust the size and duration of contracts, with the contractor updating the records accordingly. Explore avenues for progress rather than resorting to downsizing. Remember, better prospects always lead to more progress.

No, if you're covered once, you cannot go out.

Dear Aarambh Consultancy,

Please note that factories coming under the purview of the Factories Act and establishments come under the purview of the Shops and Commercial Establishments Act. After coverage under the relevant act, irrespective of a reduction in strength, the act continues to apply until functioning. However, necessary amendments regarding changes taking place need to be made.

Thank you.

As far as ESI, EPF, Gratuity, and Bonus Acts are concerned, they will apply to establishments even if the number of employees falls below the threshold.