India: Note On Changes In The Factories (Maharashtra Amendment) Act, 2015

To boost and sustain economic growth, it is important that our labour laws are revisited. The Factories (Maharashtra Amendment) Act, 2015 was notified on 2nd December 2015 is a significant step towards reforming the archaic Factories Act, 1948 ("Principal Act"). This article compares the changes brought in and highlights the implications thereof for the corporate world.

Particulars Prior to Amendment Post Amendment Remarks
Section 2(m) definition of term 'Factory' Term 'Factory' has been defined to mean premises where:
  1. manufacturing process is carried on with the aid of power and 10 or more workers work on any day in the preceding 12 months; or
  2. manufacturing process is carried on without the aid of power and 20 or more workers work on any day in the preceding 12 months;
Factory means premises where:
  1. where manufacturing process is carried on with the aid of power and 10 or more workers or such number of workers as may be specified by the State Government by notification, from time to time work on any day in the preceding 12 months; or

    Provided that the number of workers to be specified by State Government shall not exceed 20 workers.
  2. where manufacturing process is carried on without the aid of power and 20 or more workers or such number of workers as may be specified by the State Government by notification, from time to time work on any day in the preceding 12 months;

    Provided that the number of workers to be specified by State Government shall not exceed 40 workers.
Pursuant to this amendment, the State Government is empowered to classify any premises as 'Factory' even when:
  1. the manufacturing is with the aid of power and less than 10 workers are working therein; or
  2. the manufacturing is  without the aid of power and less than 20 workers are working therein.
Conversely, pursuant to this amendment, the State Government is also empowered, to issue a notification, and thereby not classify any premises as 'Factory' even if:
  1. the manufacturing is with the aid of power and 19 or less workers are working therein; or
  2. the manufacturing is without the aid of power and 39 or less workers are working therein.
Section 65(2) (Power to make exempting orders) The State Government or the Chief Inspector were empowered to exempt any or all adult workers of any factory or group/class of factories  from compliance of any or all Sections 51(Weekly hours), 52 (Weekly holidays), 54(Daily hours), 56(Spread over).

This exemption was made available to enable the factory or factories to deal with an exceptional press of work.

For this purpose, the State Government or the Chief Inspector had to pass a written order stipulating the conditions for exemption.
In order to deal with exceptional press of work, any or all adult workers of the factories shall be exempted from compliance of any or all Sections 51(Weekly hours), 52 (Weekly holidays), 54(Daily hours), 56(Spread over).

The terms and conditions for aforesaid exemption shall be prescribed in the rules.
Pursuant to this amendment, the terms and conditions for availing exemption from compliance under Sections 51(Weekly hours), 52 (Weekly holidays), 54(Daily hours), 56(Spread over) would be prescribed under Maharashtra Factories Rules, 1963.

Thus the need to approach authorities under the Principal Act for exemptions has been done away and instead the terms and conditions for the exemption will be prescribed in the rules.

Note: At present the rules for the exemption have not been notified. Once the State Government notifies the rules, it would become clear as to when and under what circumstances the factory would be exempted from compliance with aforesaid provisions of Principal Act.  
Section 65(3)(iv) (Power to make exempting orders) The exemption granted under Section 65(2) is subject to certain conditions set out in Section 65(3). One of the conditions is that no worker shall work overtime for more than 7 days at a stretch and the total overtime hours shall not exceed 75 hours in any quarter. The limit of overtime hours has been increased from 75 hours to 115 hours per quarter. The overall exemption/relaxation with respect to overtime hours that a factory can avail for dealing with exceptional press of work shall not exceed 115 hours per quarter.
Section 66(1)(b) proviso (Further restrictions on employment of women) Section 66(1) amongst others restricted women employees to work in any factory except between the hours of 6 A.M. to 7 P.M.

However, the State Government may, by a notification in the Official Gazette, vary these limits to the extent that no woman shall be employed in factory between the hours of 10 a.m. to 5 p.m.
The women workers are now allowed to work even between 7:00 p.m. and 6:00 a.m. in any factory in which prescribed adequate safety and security measures or safeguards are provided. Women workers are now allowed to work in night shift provided the prescribed rules as to their safety and safeguards is adequately provided.

Note: At present the rules for adequate safety and safeguard of women employees have not been provided in the Maharashtra Factories Rules 1963.
Section 79(1) (Annual leave with wages) In order to be eligible for leave with wages, every worker was required to work in a factory for 240 days or more during a calendar year. The requirement of working 240 days has now been reduced to 90 days.

Similar change has been incorporated in Explanation 1 which deals with computation of the period of 240 days.
Now workers will become eligible for leaves with wages in the subsequent year if they work for 90 or more days in a calendar year.
Section 85(1)(i) (Power to apply the act to certain premises) Pursuant to this section the State Government may notify applicability of any or all provisions of the Principal Act on any premises where manufacturing process is carried on:
  1. with aid of power and employing less than 10 workers;
  2. without the aid of power and employing less than 20 workers.
The State Government may notify applicability of any or all provisions of the Principal Act on any premises where manufacturing process is carried on:
  1. with aid of power and employing less than 10 workers or such number of workers as may be specified by the State Government under Section 2(m)(i);
  2. without the aid of power and employing less than 20 workers or such number of workers as may be specified by the State Government under Section 2(m)(ii).
This amendment is in lines with the amendment carried out in the definition of the term 'Factory' under Section 2(m) of the Principal Act.
Section 92A (Compounding of certain offences) and Fourth Schedule - A new Section has been introduced pursuant to which offences set out in the Fourth Schedule (new schedule) may be compounded before the institution of prosecution.

The offences shall be compounded by an officer not below the rank of Deputy Chief Inspector.

The amount of fine shall not be more than Rupees one lakh as mentioned in Section 92 of the Principal Act.

Once the offence set out in the Fourth Schedule is compounded no further proceedings shall be taken against the offender in respect of the offence.
The Fourth Schedule sets out 33 non-compliances under the Principal Act which can be compounded prior to initiation of the prosecution.
Section 105 (1) (Cognizance of offences) Court will take cognizance of any offence upon complaint by or written sanction of an Inspector. Court will take cognizance of any offence upon complaint by or written sanction of a Chief Inspector. The process of investigation into any offence under the Principal Act and subsequent prosecution for the same can start only upon complaint made/sanction given by Chief Inspector of Factories.

Conclusion:

The amendments by Maharashtra State Government to the Principal Act, 1948 are a welcome step. Permitting women employees to work in factories during night shifts will not only promote gender equality but will lead to women empowerment. The relaxation of compliance with respect to Sections 51(Weekly hours), 52 (Weekly holidays), 54(Daily hours), 56(Spread over) during exceptional press of work will bring the much needed flexibility in the functioning of the factories. The factory workers would become entitled to leave by working only for 90 days instead of the longer period of 240 days. It can be expected that the amendments will fillip the 'Make in India' drive while ensuring more fairness and equity towards the country's burgeoning working class.

* The author is a practicing advocate with Vaish Associates Advocates for over 8 years and has substantial experience advising corporates on human resources and employment laws. You can send your comments/suggestions on the article to tushar@vaishlaw.com. The views expressed here are personal.

© 2016, Vaish Associates Advocates,
All rights reserved
Advocates, 1st & 11th Floors, Mohan Dev Building 13, Tolstoy Marg New Delhi-110001 (India).

The content of this article is intended to provide a general guide to the subject matter. Specialist professional advice should be sought about your specific circumstances. The views expressed in this article are solely of the authors of this article.

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Authors
Tushar K. Shah, Principal Associate, Vaish Associates Advocates
 
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