Does Our Rented Warehouse Fall Under the Shop and Establishment Act? Seeking Quick Advice

I need guidance. We have a manufacturing plant in Vadodara, and we have obtained a Factory license with all compliance followed as per the Factory Act. Just opposite the existing factory, we have rented a warehouse property. Please guide me on whether the rental property falls under the Shop and Establishment Act or not. I am expecting the earliest reply on this.

Thank you.

Any place or space falling outside the approved plan of the factory will not form part of the premises and precincts earmarked for the purpose of registration under the Factories Act, 1948. In such a situation, the establishment-specific law applicable to that place depends on the nature of the activity carried on there only. Particularly, when the building or place just across the same street or opposite to the existing factory premises is used as a warehouse on rent, it would be covered by the State Shops and Establishments Act only if the area falls under the same Act.

If the warehouse is not situated adjacent to the factory, then the said warehouse will come under the Shops and Establishment Act, and you need to take the registration under the said Act.

The storage facility is a part of the manufacturing activity undertaken. Section 2(k) of the Factories Act 1948 defines "manufacturing process" as follows:

(i) Making, altering, repairing, ornamenting, finishing, packing, oiling, washing, cleaning, breaking up, demolishing, or otherwise treating or adapting any article or substance with a view to its use, sale, transport, delivery, or disposal.

(ii) Pumping oil, water, sewage, or any other substance.

(iii) Generating, transforming, or transmitting power.

(iv) Composing types for printing, printing by letterpress, lithography, photogravure, or other similar processes, or bookbinding.

(v) Constructing, reconstructing, repairing, refitting, finishing, or breaking up ships or vessels.

(vi) Preserving or storing any article in cold storage.

So, packing the goods or keeping goods for sale or disposal would come within the manufacturing process. The warehouse is opposite the factory, so it is appurtenant to the factory building. Furthermore, there will be regular crisscrossing of workmen between the factory and warehouse. Therefore, it should be mentioned as a part of the factory, and the Factory License should be amended to include it if it has not already been done. For practical reasons, it is advisable to avoid registering it under the Shop & Establishment Act.

You can make the storage facility a part of the factory if you have not done so already, as it falls under the manufacturing process as per the Factories Act of 1948.

You need not get confused by Mr. KK!HR's answer and mine. In fact, both are the same but expressed differently. A warehouse, godown, or similar storage facility belonging to a registered factory but situated beyond its approved periphery would normally come under the Shops and Establishments Act only. However, if any activity analogous to the manufacturing process, such as mixing different components, packing, etc., is carried out there with 10 or more employees using power or 20 or more employees without power, then it would be considered a factory falling under the Factories Act, 1948.

Please let me know if you need further clarification.

Best regards, [Your Name]

In my view, you have the option but no compulsion to include the warehouse premises as a part of the factory. However, it would be advantageous to do so if your factory operations are in shifts and you also want the warehouse to operate in shifts, aiming for uniformity in service conditions between factory and warehouse workers. If your decision favors this, you need to amend your plans to include it and obtain approval from the Factory Inspectorate.

If not, cover it under the State Shops and Establishment Act/Rules. You need to include it under either of the two Acts.

Regards,
Vinayak Nagarkar HR and Employee Relations Consultant

Mr. Rathod,

I think you want to have the warehouse as a part of the same factory license. That is allowed. Under Gujarat Factory Rules, you can make a request to include a premise in the same factory license that is not physically connected to the main factory. You will need to go through the Factory rules to find the exact provision.

In fact, there is no restriction on the distance between the two plots, though the Chief Inspector is unlikely to allow inclusion of a place that is actually far away.

The advantages are:

1. You do not need to maintain separate registers for those working in the warehouse.
2. The leave rules would be the same (Shop Act has more leaves).
3. Separate license, returns, etc., are not required.
4. You can move workers from the factory to the warehouse and vice versa as needed. You cannot do that if they are under separate licenses because you need to then have them as employees of two separate establishments, and it will mess up your payroll.
5. Any contract worker can also move between the two premises without causing any problem.