Definition: Contract Labour, Employer, Factory & Manufacturing Process
Topic Overview
Core Definitions
Detailed study of key terms under Section 2 including Contract Labour, Contractor, Dependant, Employer, and Employee.
Factory & Manufacturing
Breakdown of what constitutes a Factory and Manufacturing Process along with prominent landmark case laws governing these terms.
Detailed Concepts
· Definition:
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- Section 2(19) defines contract labour –
“Contract Labour” means a worker who: Ishired through a contractor; and Works in connection with the work of an establishment.
The worker may be hired with or without the knowledge of the principal employer.
However, it does not include a worker who is:
- i. Regularly employed by the contractor in connection with the establishment; and
- ii. Provided with:
Periodic pay increments
Social security benefits
Other welfare benefits available to permanent employees under law.
- Section 2 (20). Defines of contractor –
“Contractor” means a person who: Undertakes to produce a given result for the establishment through contract labour; or Supplies contract labour to the establishment.
- Section 2(24) – Dependant
Means any of following relative of deceased employee –
- a. Widow
A minor legitimate child or adopted son
An unmarried legitimate or adopted daughter
Widowed mother - b. Dependants if wholly dependants on earing of employee at time of death – legitimate son or daughter above 18 years but physically or mentally weak
- c. Dependants if wholly of partially dependents:
These relative must prove the depends (fully of partly) on the employee:
a. Widower
b. Parents
c. Minor illegitimate son
d. Unmarried illegitimate daughter
e. Minor brother
f. Unmarried sister
g. Widowed sister
h. Widowed daughter in law
i. Minor child of predeceased son
j. Granddaughter
- Section 2(27) – Employee
“Employer” means a person who employs one or more employees in an establishment, either: Directly, or Throughanother person.
1. Government Establishment
Where the establishment belongs to the Central or State Government, the authority specified by the Head of the Department (HOD) is treated as the employer. If no authority is specified, the Head of the Department is the employer.
2. Local Authority
Where the establishment is run by a local authority, the Chief Executive Officer (CEO) or the head of that authority is treated as the employer.
3. Factory
In a factory, the occupier of the factory or the manager of the factory is treated as the employer under the applicable factory law.
4. Other Establishments
For establishments other than factories, the person having ultimate control over the affairs of the establishment is treated as the employer.
The Term “Employer” Also Includes: Contractor and Legal representative of a deceased employer
- Section 2 (26) - Employee” means any person employed on wages in an establishment to do:
- Skilled work
- Semi-skilled work
- Unskilled work
- Manual work
- Supervisory work
- Managerial work
- Administrative work
- Technical work
- Clerical work
However, it does not include an apprentice appointed under the Apprentices Act, 1961.
- Section 2(32) – Factory
A factory is any premises where a manufacturing process is carried on, subject to minimum number of workers:
- a. 10 or more employee working, proceeding 12 months and any part of which manufacturing process in carried with help of power
- b. Without power – 20 or more employee
- Manufacturing process is carried on without power
But does not include – mines, armed force, mobile unit, railway, running, hotels, restraunts
Explanation I – While counting employees include all worker from different shifts, group or rally in a day
Explanation II – Just Having computer or data processing unit does not make it factory. There must be actual manufacturing process
The Term Manufacturing Process
- Section 2(42) – Manufacturing Process:
Means any process for –
- a. Make, altering, repairing, finishing, polishing, ornamenting, wasting, cleaning, breaking up, demolishing, reefing
- b. Pumping – oil, water, sewage or any other substance
- c. Power related activities: generating electricity, transforming power, transmitting power
- d. Printing work: include – 3D printing and prototyping, book binding
- e. Construction, Repair, Breaking or dismantling ships
- f. Cold Storage
- g. Any other process by central govt
Ardeshir Bhiwandi Wala V. Bombay
Salt produce by: letting sea water into bed and evaporated by sunlight and collecting salt
Issues:- a. Salt Manufacturing – considering as factory
- b. Is this manufacturing process
- c. Whether natural person like evaporation is manufactory process
Salt beds are factory, even though sunlight is used there is human control and systematic activity hence manufacturing process
State of Bombay V. Ali Saheb Kashir Tamboli
Accussed engaged in proceeding cloth i.e. washing, cleaning, finishing etc, no new product was created; court held this as manufacturing process
- Section 2(33) – Factory
Mean all of the following relatives of an employee or an unorganised worker –
- a. Spouse
- b. Minor legitimate or Adopted child
- c. Child who is wholly dependent on earing of employee or worker
- d. Child who is suffered form physical and mental disability – include as long as disability continues
- e. Partners and parent-in-law
- f. If employee is unmarried and parents not alive – minor brother or sister is indeed