Two Different Companies: Factory and Transport Service Provider
The boss owns two different companies: one is a factory, and the other is a transport service provider with less than 10 employees from the beginning. The transport business does 80% of the work providing transport facilities to her own factory and 20% of the work for other clients.
Post-Lockdown Changes and Employee Concerns
After the lockdown, to reduce her rent burden, she shifted all her transport staff to her factory. They solely perform transport work and are in no way related to the factory work.
Employee Benefits and Work Responsibilities
Can we, as employees of the transport service, claim benefits that are given to factory workers, such as bonuses, ESI, PF, etc.?
If she is making us do the work of the factory, how can we prove that we are working for the factory since we were never appointed for the factory? We are doing very small tasks, but we are concerned that in the future, she might require us to do a lot of work for both the factory and the transport, making this shift to the factory a permanent one.
From India, Bengaluru
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The boss owns two different companies: one is a factory, and the other is a transport service provider with less than 10 employees from the beginning. The transport business does 80% of the work providing transport facilities to her own factory and 20% of the work for other clients.
Post-Lockdown Changes and Employee Concerns
After the lockdown, to reduce her rent burden, she shifted all her transport staff to her factory. They solely perform transport work and are in no way related to the factory work.
Employee Benefits and Work Responsibilities
Can we, as employees of the transport service, claim benefits that are given to factory workers, such as bonuses, ESI, PF, etc.?
If she is making us do the work of the factory, how can we prove that we are working for the factory since we were never appointed for the factory? We are doing very small tasks, but we are concerned that in the future, she might require us to do a lot of work for both the factory and the transport, making this shift to the factory a permanent one.
From India, Bengaluru
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Functional Integrality in Factory and Transport Businesses
The different locations of a factory and a transport business do not make them separate establishments in the eyes of the law, and vice versa. For PF & ESI purposes, the test of functional integrality is applied. A very significant factor is that 80% of the work of the transport business relates to the factory, so the main activity of the transport business is an integral part of the factory. In this scenario, all benefits and provisions such as gratuity and bonuses applicable to the factory must also be extended to the transport personnel. These regulations apply even if the total strength is ten or more.
From India, Mumbai
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1593The different locations of a factory and a transport business do not make them separate establishments in the eyes of the law, and vice versa. For PF & ESI purposes, the test of functional integrality is applied. A very significant factor is that 80% of the work of the transport business relates to the factory, so the main activity of the transport business is an integral part of the factory. In this scenario, all benefits and provisions such as gratuity and bonuses applicable to the factory must also be extended to the transport personnel. These regulations apply even if the total strength is ten or more.
From India, Mumbai
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Thank you for responding, sir. That is great news. We all can demand our boss now. But just to be 100% sure before demanding from our boss, I will give all details here for more clarity, so that we get all those benefits.
Business Details
Transport (PAN) = 5 employees; Factory (GSTIN) = 24 employees. The factory and transport are separate businesses with separate names and separate PAN, but with the same owner. Previously, the transport business was situated 9 km away from the factory.
Location and Benefits
Does what you said mean we get the benefits even if the location of our work is different as it was before? I am asking if she (our owner) finds another rented/own office and we shift there, then do we lose our benefits? Also, does that mean all employees who resigned from the transport business before can complain and claim gratuity (only if applicable) and complain that PF, ESI, bonus were never given?
Benefits for Female Employees
Also, as a lady, what all benefits should be given to me as I work in the transport business?
Proving Work for the Factory
Also, please clarify regarding this: If we do work for the factory also, how can we prove that we are working for the factory since we have never been appointed for the factory and only have an appointment letter for the transport business.
From India, Bengaluru
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Business Details
Transport (PAN) = 5 employees; Factory (GSTIN) = 24 employees. The factory and transport are separate businesses with separate names and separate PAN, but with the same owner. Previously, the transport business was situated 9 km away from the factory.
Location and Benefits
Does what you said mean we get the benefits even if the location of our work is different as it was before? I am asking if she (our owner) finds another rented/own office and we shift there, then do we lose our benefits? Also, does that mean all employees who resigned from the transport business before can complain and claim gratuity (only if applicable) and complain that PF, ESI, bonus were never given?
Benefits for Female Employees
Also, as a lady, what all benefits should be given to me as I work in the transport business?
Proving Work for the Factory
Also, please clarify regarding this: If we do work for the factory also, how can we prove that we are working for the factory since we have never been appointed for the factory and only have an appointment letter for the transport business.
From India, Bengaluru
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Employee Entitlements and Regulatory Statutes
The location of the business has no impact on your entitlements. According to various regulatory statutes, an employee is entitled to EPF, ESIC, bonus, and gratuity, provided certain terms and conditions of employment are met for eligibility.
Additionally, the principal employer must fulfill obligations towards applicable statutes as per the terms and conditions.
From India, Vadodara
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The location of the business has no impact on your entitlements. According to various regulatory statutes, an employee is entitled to EPF, ESIC, bonus, and gratuity, provided certain terms and conditions of employment are met for eligibility.
Additionally, the principal employer must fulfill obligations towards applicable statutes as per the terms and conditions.
From India, Vadodara
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Compliance of Factory and Transport with Laws
The main issue is that the factory and transport services both comply with the law when considered individually. However, when viewed as a single entity owned by the same person, the transport service does not comply because it has fewer than 10 employees. Despite this, it should comply since its owner also has a factory. Currently, the transport service only provides us with our normal salary and CL, SL, EL, without any additional benefits.
From India, Bengaluru
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The main issue is that the factory and transport services both comply with the law when considered individually. However, when viewed as a single entity owned by the same person, the transport service does not comply because it has fewer than 10 employees. Despite this, it should comply since its owner also has a factory. Currently, the transport service only provides us with our normal salary and CL, SL, EL, without any additional benefits.
From India, Bengaluru
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Dear colleague, it appears that the business of the factory establishment and the transport service are perhaps two distinct legal entities. They are not interconnected in many ways, even prior to or after the relocation of the factory. Although the owner is the same for both, if a separate balance sheet is being prepared, it is questionable whether transport employees are entitled to legal bonuses, leaves, and other benefits on par with the factory staff.
The right approach for transport employees is to persuade the owner through cordial talks to consider providing better service conditions than currently offered, rather than asking for benefits on par with factory employees. Raising demands through legal routes at this stage could put the owner off and may trigger vindictive actions from her.
By appealing to her ego, see if you can persuade her to accept your expectations.
Regards, Vinayak Nagarkar HR and Employee Relations Consultant
From India, Mumbai
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The right approach for transport employees is to persuade the owner through cordial talks to consider providing better service conditions than currently offered, rather than asking for benefits on par with factory employees. Raising demands through legal routes at this stage could put the owner off and may trigger vindictive actions from her.
By appealing to her ego, see if you can persuade her to accept your expectations.
Regards, Vinayak Nagarkar HR and Employee Relations Consultant
From India, Mumbai
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