Factories Act Registration

July 11, 2021


Section 2(m) of the Factories Act, 1948 defines ‘factory’ as any premises-

  • Where ten or more workers are working or were working on any day of the preceding twelve months, and in any part of which a manufacturing process is being carried on with the aid of the power, or is ordinarily so carried on, or
  • Where twenty or more workers are working or were working on any day of the preceding twelve months, and in any part of which a manufacturing process is being carried on with the aid of the power, or is ordinarily so carried on, but does not include:
  1. Mines subject to the operation of the Mines Act, 1952,
  2. A mobile unit belonging to the armed forces of the Union,
  3. Railway running shed or a hotel, restaurant or eating place.



Section 6 of the Factories Act,1948 governs the registration of the factories. All Factories(as defined above under section 2(m)) need to be registered with the government as per the regulations of Factories  Act 1948. Also such Factories need to insure their employees as per the regulations of Employee State Insurance Act 1948( provide certain benefit to employees in case of sickness, maternity, and employment injury).

Section 6 of the Factories Act governs the registration of factories and establishments. The details are as follows:

  1. Rules for Submission

The state government may make rules for the submission of plans or description of factories. The organization requires previous permission from the state government or Chief inspector for the construction or extension of any factory. But the addition or replacement of existing machinery does not come into extension if does not reduce the safe working space and is also not hazardous to the safety and health of the employees.

  1. Nature of Plans and Fees Payable

The plans and specifications need to be submitted for acquiring these permissions (Permit applications). It prescribes the nature and specifications of such plans, and from whom it shall be certified. It also prescribes the fees payable for registration/ licensing/ renewal of licenses.

  1. Renewal of Licenses

The Act requires the notice period to be given before granting or renewal of licenses. Section 7 of Factories act 1948 explains the provisions relating to this. As per this section, the occupier of the factory premises needs to serve a written notice to the related authorities 15 days prior to occupying the premises.

  1. Contents of Notice

It shall contain:

  • Name and address of factory, Occupier, and Owner.
  • Address for communication.
  • Nature of manufacturing process.
  • Total horsepower installed in the factory
  • Name of Factory manager
  • The number of employed employees.
  1. Appointment of a new Manager

In the case of appointment of a new manager, the management shall duly and timely inform this to the chief inspector i.e. within 7 working days of the joining. However, in the absence of a designated manager, we consider the occupier of the factory as the manager of the factory.


If the permission request (duly completed) is sent to the state government or chief Inspector via registered post, and if no communication has been sent in return within 3 months of the sent date, then the said application is deemed to be approved. It is called as automatic approval.

The rules require the licensing authority to issue a license on the satisfaction of all legal requirements. The authority cannot refuse a license only on a direction from Government. (S. Kunju v. Kerala, (1985) 2 LLJ 106).

If the Chief inspector refuses to grant permission to the construction/ extension of the factory then the applicant can re-appeal to the state government about the same. Or if the state government refuses to grant the permission then the applicant can re-appeal to the central government. The time limit for re-appealing is 30 days from the date of refusal.



ESI scheme:-

  • The ESI Scheme is a social security scheme. It was implemented in the State of Rajasthan with effect from 02.12.1956 under section 58 of the ESI Act 1948. The main objective of the scheme is to provide health care facilities to the employees of various industrial, commercial organization,  private educational, medical and other organization which employ 10 or more employees and whose salary is Rs. 21000/- per month or less.


The beneficiaries include all the insured employees along with spouse, son up to age 21 years receiving education, unmarried daughter and any offspring having any infirmity irrespective of age and also dependant parents.


  • Payment of Bonus Act, 1965 provides for companies to pay bonus of 8.33% of the annual basic salary for employees whose monthly salary is below Rs. 21000. The basic amount could go up to 20% if company wants to pay due to higher profits.


Registration Under Labour Laws

Service Provider of a wide range of services which include Factory License (Including Factory Building Plan Approval), Contract Labour Registration (Labour Licence), Principal Employer Registration, Registration Under Provident Fund Act, Fire Safety Plan Approval and State Pollution Control NOC Certificate.

Factory License

As per the provision of Factories Act and Rules applicable to the state every Factory employing 10 or more workers with use of power or 20 or workers without the aid of Power have to take Factory License before start of Factory. This has to be renewed every Year. Before applying for Factory License every owner of factory has to apply for factory building Plan approval. Under Factory Building plan approval Maps and Drawing of the Factory is to be submitted to get them approved as per the State Factory Rules. The Procedure for Building approval and Factory License takes about 20-25 working days.




As per the Provisions of the Contact Labour (Regulation and Abolition) Act, 1970 any contractor getting and performing outsourced work and employing more than 20 workers at any time during year has to take Labour License. There are separate rules applicable to state. Time required for the Labour License 5-7 Working Days.





Labour law compliances are enforced by the State as well as the Central Government. Following are the conditions required for an Act to be enforced


The Contract Labour (Regulation and Abolition) Act, 1970

  • If an establishment has 20 or more than 20 workers employed there for the past 12 months as contract labour.
  • 20 or more than 20 workers employed by the contractor in the past 12 months as contract labour.

It is not applicable places where the nature of the work is casual. If the employer does not register under the act, then the employer cannot contract labour.


Building And Other Construction Workers Act, 1996

It applies to the workplaces where 10 or more than 10 workers were employed directly through a Contractor in a construction site. This act is not applicable to building and construction work where the Factories Act,1948 or Mines Act, 1952 applies.

The objective of the act is to collect cess from the construction work and use that money for the welfare of the construction site workers who are registered under the act. The amount to collect is 1% of the total cost to build the building.


Minimum Wages Act, 1948

Section 12 of the minimum wages, says that the contractor is liable to pay minimum wages to its workers who are employed as scheduled workers. Section 14 says that the wages will be doubled if a worker is doing over time. The wages per hour will be doubled during overtime.


Payment of wages Act, 1936

Section 4 talks of the about the fixation of minimum wages which shall not exceed more than 1 month. Section 5 of the Act says that the payment of the wages will be done before the 7th day of the last day of the wage period in the case where there are less than 1000 employees. 10 days before in other cases. Section 13-A talks about the maintenance of registers and records.



Employment State Insurance Act, 1948

Section 2(12) of the Act talks its applicability to Non- Seasonal factories who employ 10 or more persons. Section 1(5) extends the scope of applicability to hotels, shops, restaurants and cinemas, newspaper factories where 20 or more persons are employed. The scheme also applies to Educational Institutes and Private medicals.


Industrial Employment (Standing Order) Act, 1946

According to this Act, it applies to the industries where 100 or more than 100 workers are employed previously in the past 12 months.


Factories Act, 1948

This Act is applicable to the factories which are defined under this act. Where there are 20 or more people employed in the factory in the previous 12 months.

Events of Non- Compliance

  1. Fines
  2. Penalties
  3. Lawsuit
  4. Loss of Credibility
  5. Loss of Contract
  6. Closure of business

Labour Law compliance rules in India are governed by all these Acts which are very old. These rules are ever evolving and it is on the companies to keep a close eye on these changes.











Mr. Nipun Khanna is the founder of this firm- Startup Solicitors LLP