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Centre puts onus on States to set factories threshold limit

With labour law reforms back on the Centre’s agenda, fresh discussions begin with trade unions today to push through a long-pending overhaul of the Factories Act of 1948. However, the Labour Ministry has tweaked its draft amendments to put the ball on contentious issues in the domain of State governments.

Instead of increasing the threshold limit set for the number of workers in an industrial unit to be statutorily covered by the factories law, the Centre is now proposing an enabling provision that lets State governments decide the threshold over which a unit will be considered a factory for the purpose of the law.

“The definition of factory is proposed to be modified as in the original Bill by giving powers to the State governments to increase the threshold limit of workers up to 20 and 40 for factories working with and without the aid of power respectively,” the Labour Ministry said in a note sent to central trade unions on February 2.

Earlier, the Centre had proposed that the Factories Law be applicable to all factories that employ at least 40 workers – a move that was strongly opposed by the central trade unions.

The present Factories Act 1948 applies to establishments with 10 or more workers, if the premise is using power and to establishments with 20 or more workers, without electricity connection.


According to the previous proposal, Factories with less than 40 workers were to be covered under a new law for small factories. However, the fate of the proposed Small Factories Bill, 2015 is unclear as the Labour Ministry note has no mention about the proposed law.

The Centre has now said that all factories below the threshold limit could be brought under the purview of the Act through notifications issued by state governments. “Flexibility has been given to the States to decide on the threshold limit,” the Labour Ministry added.

Labour Minister Bandaru Dattatreya will meet central trade unions today to discuss the proposed amendments.

A central trade union leader, requesting anonymity, said that the unions are likely to oppose the move to give flexibility to state governments on deciding the threshold limit for the Factories Act and instead ask the Centre to cover all manufacturing establishments “since manpower of industrial establishments is reducing as a result of automation and advancements in technology.”

Source: The Hindu - 14 feb. 2017