Factory Act

The Factories Act, 1948 was the reference point for Indian manufacturing compliance for over seventy years. It was repealed on 21 November 2025, when the Occupational Safety, Health and Working Conditions Code, 2020 was brought into force.

The Code does not simply re-enact it. The Factories Act applied to factories; the OSH Code applies to establishments generally, and a factory is one category inside it, alongside mines, docks, building and other construction work, plantations, and contract and inter-state migrant labour. Section 143 repealed thirteen central enactments into this one Code, among them the Contract Labour (Regulation and Abolition) Act, 1970, the Mines Act, 1952 and the Inter-State Migrant Workmen Act, 1979.

One boundary is worth stating because it is widely misread. The Code repeals thirteen central enactments and does not mention shops and commercial establishments anywhere. It therefore does not repeal or displace the state Shops and Establishments Acts, which continue to apply on their own terms to the establishments within their scope.

The practical consequence for a manufacturer that previously tracked four or five separate statutes, with separate registrations, returns and inspectors, is one Code, one registration and a consolidated return. That is the intended simplification. It also means that every reference to the Factories Act in a contract, policy, tender document or audit checklist is now a reference to a repealed statute, and each one has to be reread rather than find-and-replaced, because the underlying position may have changed and not merely moved.

Section 2(w) defines a factory as premises where twenty or more workers work with the aid of power, or forty or more work without the aid of power, on any day of the preceding twelve months. Three things are expressly excluded: a mobile unit of the armed forces, a railway running shed, and a hotel, restaurant or eating place.

Then comes the proviso that decides the question in a good many states, and it is the part most often missed. Where a state law in force immediately before the Code commenced specified a higher or a lower number, that state number prevails in that state until the competent legislature amends it. So the twenty and forty figures are the Code's default, not a national answer. Before applying them to a premises, establish what the state number was immediately before 21 November 2025, because that is the number that may still govern.

Falling below the factory threshold is also not the same as falling outside the Code. Section 2(v) defines an establishment to include a place where any industry, trade, business, manufacturing or occupation is carried on with ten or more workers, and expressly includes a factory with ten or more workers for the purposes of Chapter II. A premises below the factory numbers can therefore still be an establishment, with the obligations that follow. The worker threshold does not apply at all to establishments carrying on a hazardous or life-threatening activity as notified.

Two practical points remain worth recording, and neither is stated here as a rule of the Code because neither was checked against the enacted text: how contract workers are counted towards the factory number, and whether the count is taken at peak or on average. The reference period in section 2(w) is any day of the preceding twelve months, which makes a seasonal peak the number that matters. Confirm the counting treatment against the Code and the applicable state rules before recording a conclusion.

Registration under section 3 runs on a clock. An establishment coming into existence after the Code commenced applies electronically to the registering officer within sixty days. If the officer neither registers it nor entertains the application within the prescribed period, the establishment is deemed registered, the certificate is generated automatically, and the failure is the officer's responsibility rather than the employer's. That is a real protection and it is worth knowing before chasing an officer for a certificate you may already hold.

Changes in ownership, management or the registered particulars are to be intimated within thirty days. So is closure, certifying that all dues have been paid.

Section 33 carries the record-keeping. The employer maintains a register, electronically or otherwise, in the form prescribed by the appropriate government, covering work performed, normal working hours, the rest day in each period of seven days, wages paid and receipts, leave and leave wages, overtime, attendance, dangerous occurrences, and the employment of adolescents. Notices are displayed, wage slips are issued, and returns are filed electronically to the Inspector-cum-Facilitator.

Two things follow from reading that list closely. The register is the compliance artefact: an establishment whose practice is sound but whose records are late is in a materially worse position than the same establishment filing on time, because the record is what gets inspected. And the form is prescribed by the appropriate government rather than by the Code, so the state rules are where the actual layout lives.

This is the part of the old Factories Act most people want a number for, and it is the part this entry deliberately does not give.

Daily and weekly hour limits, the overtime rate and the quarterly overtime ceiling, rest intervals, spread-over, weekly rest, the annual leave accrual ratio, the qualifying period, the carry-forward ceiling and the encashment rule are all governed by the Code and the rules under it. None of those provisions has been checked against the enacted text for this entry, so no figure for any of them appears here. That includes figures that circulate widely and are probably right: an eight-hour day, a forty-eight-hour week, overtime at twice the ordinary rate, a qualifying period reduced from the 240 days of the 1948 Act. Widely repeated is not the same as verified, and a payroll configured from a glossary entry is a poor defence in an inspection.

What can be said from the record is narrower and still useful. Section 33 requires the register to cover normal working hours, the rest day in each period of seven days, leave, leave wages and overtime, so all of those concepts exist under the Code as live obligations with a documentary trail. What it does not tell you is the rates and limits.

Two structural points also survive without needing a figure. Hours worked create the liability, so a policy requiring prior approval for overtime governs whether working late is permitted, not whether it is paid. And most of the operative detail sits in state rules, which are made separately and commence on their own timetable, so the Code alone will not answer a compliance question for a specific state.

Factories are heavy users of contract labour, and the Code puts that in the same instrument rather than a separate Act.

Chapter XI Part I applies to an establishment in which fifty or more contract labour are employed, or were employed on any day of the preceding twelve months. It does not apply where only intermittent or casual work is performed, and work done for more than one hundred and twenty days in the preceding twelve months is not intermittent. Contractors need a licence under section 47.

Two liabilities reach the principal employer directly, and both are stronger than most vendor contracts assume. Under section 53 the welfare facilities specified in sections 23 and 24 are provided by the principal employer to contract labour in the establishment: that is its own duty, not a fallback on the contractor's default. Under section 55 the contractor pays wages electronically and informs the principal employer of the amount, and where the contractor fails to pay or pays short, the principal employer is liable and may then recover from the contractor.

Section 57 bars contract labour in the establishment's core activities, subject to three exceptions, with core activity defined at section 2(p) and eleven categories excluded from it where the establishment is not set up for them. For a factory the question is usually whether a production-adjacent function is core, and it is decided by the appropriate Government where it is disputed.

The repeal is a live compliance event rather than a drafting change, and it rewards a short deliberate exercise over a document search.

Re-answer coverage, and start with the state number rather than the Code's. Establish what the applicable state law specified immediately before 21 November 2025, because under the section 2(w) proviso that figure prevails until the state legislature amends it. Apply the resulting threshold to current headcount, using any day of the preceding twelve months rather than an average, and record the conclusion together with the count that produced it.

If the premises falls below the factory number, check section 2(v) before standing down: ten workers is enough to make it an establishment, and a factory counts as one at ten for the purposes of Chapter II.

Register within sixty days where the establishment came into existence after commencement, and note that a registering officer who does not act leaves you deemed registered rather than unregistered. Intimate changes and closure within thirty days.

Rebuild the record-keeping against the section 33 list rather than against the old Factories Act registers, and confirm the prescribed forms in each state of operation, including whether those rules have actually commenced.

Do not carry forward hours, overtime or leave figures from the 1948 Act, and do not take them from a summary. Get them from the Code and the applicable state rules, and configure payroll from that.

Update the references. Policies, contracts, tender responses, customer audit packs and internal checklists citing the Factories Act, 1948 now cite a repealed statute, which is a finding in any competent audit.