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Small Factories (RECS) Bill, 2014

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Ministry f Labour and Employment, Government of India has come out with Draft Bill. Highlights and Impact of the same on Small Manufacturing Sector has been presented herein.

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Small Factories (RECS) Bill, 2014

  1. 1. Thursday, 06th November, 2014 FSIA & I am SME of India Team AGBians
  2. 2. SF(RECS) Bill, 2014 AT A GLANCE Team AGBians  CHAPTERS – 14  CLAUSES – 55  EXEMPTIONS FORM REGISTRATION UNDER 14 SPECIFIC ACTS  CREATES SPECIAL CATEGORY OF MANUFACTURERS  GAME CHANGER  SHOWS THE WILL AND DESIRE TO SET THE TREND
  3. 3. KEY HIGHLIGHTS No More………………Laws Clause 54 Ch XIV Team AGBians  The Factories Act, 1947  The Industrial Disputes Act, 1947  The Industrial Employment (Standing orders) Act, 1946  The Minimum Wages Act, 1948  The Payment of Wages Act, 1936  The Payment of Bonus Act, 1965  The Employees State Insurance Act , 1948
  4. 4. KEY HIGHLIGHTS No More……………… Laws Clause 54 Ch XIV •The Employees Provident Funds and Miscellaneous Provisions Act, 1952 Team AGBians •The Maternity Benefit Act , 1961 •The Employees Compensation Act, 1923 •The Inter State Migrant Workmen (RECS) Act, 1979 •(State) Shops and Establishments Act •The Equal Remuneration Act, 1976 •The Child Labour (Prohibition and Regulation) Act, 1986
  5. 5. Small Factory Clause 2(f) “Any Premises wherein a manufacturing process is carried on and which employs less than forty workers.” KEY HIGHLIGHTS Team AGBians
  6. 6. Manufacturing Process Clause 2(e): Making, altering, repairing, ornamenting, finishing, packing, oiling, washing, cleaning, breaking up, demolishing, or otherwise treating or adapting any article Pumping oil, water, sewage or any other substance excludes petrol pumps work Generating, transforming or transmitting power KEY HIGHLIGHTS Team AGBians
  7. 7. KEY HIGHLIGHTS Manufacturing Process Clause 2(e): Composing and processing for printing, printing by letter press, lithography, offset, photogravure screen printing, flexography or other similar process or binding Constructing, reconstructing, repairing, refitting, finishing or breaking up ships or vessels or any other process notified by Government time to time in the Official Gazette Team AGBians
  8. 8. KEY HIGHLIGHTS E – filing of compliance return  Single compliance report for select labour laws Team AGBians
  9. 9. KEY HIGHLIGHTS Implementation Authority Clause 2 (a)  Government of the State/  Government of Union Territory  Not the Central Government Team AGBians
  10. 10. KEY HIGHLIGHTS Worker Clause 2(j) Team AGBians
  11. 11. KEY HIGHLIGHTS Registering officers Clause 3 Team AGBians
  12. 12. KEY HIGHLIGHTS clause 6 Ch. III 1. Registration of Small Factory • Intimate the Concerned authority Electronically • Within 60 Days 2. Change Occurs • Intimation to Chief Inspector Electronically • within 30 Days 3. Close Down • Intimate the Chief Inspector Electronically • Within 15 days Team AGBians
  13. 13. clause 6 (2) • Certificate of Registration • Unique LIN (Labour Identification Number) to the Employer KEY HIGHLIGHTS Team AGBians
  14. 14. KEY HIGHLIGHTS Payment of Wages Clause 7 Ch IV  Cash payments up to 1K  Direct transfer into bank account  Responsibility of Bank Account shifted on Employer Team AGBians
  15. 15. KEY HIGHLIGHTS Deductions from Wages Clause 10 Ch IV  Absence from duty  Damage to or loss of goods or money  House accommodation  Amenities and Services as by order of Government  Recovery of advance & Over –payment of wages  Income – Tax Payment Team AGBians
  16. 16. KEY HIGHLIGHTS Deductions from Wages Clause 10 Ch IV  By order of Court or Competent Authority  Repayment of advances from any provident fund  Payment to Co-operative Societies / scheme of Insurance  Subscription to Health Insurance Scheme Team AGBians
  17. 17. KEY HIGHLIGHTS Powers of Authority Clause 13 Ch IV  All the Powers of a civil court under the code of Civil Procedure 1908 (5 of 1908)  Powers of Code of Criminal Procedure 1973 (2 of 1974) Ch. XXVI Team AGBians
  18. 18. KEY HIGHLIGHTS Working hours for woman Clause 18 (1)(iii)Ch. VI  6 A. M. to 7 P.M. Overtime Hours Clause 18 (1) (iv) Ch. VI  96 Hrs. in a quarter Team AGBians
  19. 19. KEY HIGHLIGHTS Leave and Holidays Clause 23 Ch. VII Team AGBians
  20. 20. KEY HIGHLIGHTS Welfare Facilities Clause 40 Ch. XII Flatted Factories Complex Taken Care Off  Common washroom and toilet facilities for their combined workers  Due to constraint in space Team AGBians
  21. 21. Group Absence Clause 22 Ch. XI  10 or More Worker at a time  Without Notice & Reasonable Cause  Cut down 8 Days wages of each worker KEY HIGHLIGHTS Team AGBians
  22. 22. KEY HIGHLIGHTS Collective Dispute Clause 27 (2)  51% or more workers directly or Team AGBians through trade unions  Raise General Demand to Conciliation officer *Settlement Time – 90 Days
  23. 23. KEY HIGHLIGHTS Maintenance of Register and Records Clause 43 Ch. XIII • Soft or hard • Register of workers • Attendance register • Weekly offs • Hours of work • Wages paid • Deductions made • Leave Place the records on website Exemption – Non submission of records to inspector Team AGBians
  24. 24. Pain Areas & Suggestions Name of Bill - Small Factories (Regulation of Employment and Conditions of Services) Bill, 2014 Team AGBians Pain Area : • old story comes back • Small Factories became obsolete with Introduction of MSME Development Act, 2006 Suggestion : Replace ‘..Factories’ with ‘..Enterprises’
  25. 25. Pain Areas & Suggestions Definition of Small Factory clause 2(f) Pain Area : Team AGBians • Minimum No. ofWorkers not given • Maximum No. of FortyWorkers are very less Suggestion : • Mention Minimum No. of Workers also so that Micro remain out of purview • Maximum No. of Workers ≥ 100 Workers So that seasonal industry is taken care of.
  26. 26. Pain Areas & Suggestions Definition of Manufacturing process Clause 2 (e) Pain Area : Emerging Sectors will not be benefitted Suggestion : Vibrant sectors should also be included *For Example: Hospitals, Nursing Homes, Educational Institutions – Schools, Colleges, coaching centers, ITES Segment, Hotels, Restaurants, Eating Joints, IT Industry – call center, BPO/ KPO/ LPO, whole of service sector and many more sectors ……… Team AGBians
  27. 27. Pain Areas & Suggestions Definition of Manufacturing process Clause 2 (e) Pain Area : Ambiguity – Likely to result into different interpretation by different stakeholders Team AGBians Suggestion : More clarity by clearly defining the manufacturing process
  28. 28. Pain Areas & Suggestions Team AGBians Definition of Worker Clause 2 (j) Pain Area: • Seems that workers involved in non-productive work will also be included in the definition of workers *For Example : Security Guards / plumbers / mechanics Suggestion : • Definition shall clarify about Position of Indirect Workers, security personnel, etc.
  29. 29. Pain Areas & Suggestions Team AGBians Registering Officer Clause 3 Pain Area: • Absence of District level Officer for issuing Registration • Any Central Act implemented by State Governments has its own challenges Suggestion : • Create the Position of DLO or DFO
  30. 30. Pain Areas & Suggestions Team AGBians Powers of Inspector Clause 5 Pain Area: • Extensive – Including invoking Criminal code • Non – elimination of Inspector – Raj Suggestion : • Random or complaint based Inspections. • Time to Move for Self certification rather than Inspection
  31. 31. Pain Areas & Suggestions Registration of Small Factory Clause 6 Pain Area: • Criteria for Registration not prescribed clearly • Large Business will take benefit by splitting large factories in Team AGBians small units • LIN (Labour Identification Number) not right word Suggestion : • Provide criteria for Registration (Single LIN for each Employer) • Define Large Employer in the same Act • Change the Word LIN (Labour Identification Number)  EIN: (Employer Identification Number)  EIN: (Enterprise Identification Number)  FIN: (Factory Identification Number)
  32. 32. Pain Areas & Suggestions Shifting / Changes Pain Area Shifting form one state to another will require closer at one place and new LIN at another place Suggestion Inter State shifting of Factories to be dealt under same LIN Team AGBians
  33. 33. Pain Areas & Suggestions Payment of wages clause 7 Pain Area: • Employer responsible for open of Zero Balance Bank account for workers. That means onus on employer to check credentials of prospective worker thoroughly. Suggestion : • Employer shall help (not responsible) in Bank Account opening Team AGBians
  34. 34. Pain Areas & Suggestions Minimum Wages clause Pain Area: • Against the work of 12 months Small Factories Owner is expected to pay for 18 months. Suggestion : • Time to move on and adopt the concept of Cost to the Company (CTC) Team AGBians
  35. 35. Pain Areas & Suggestions Young person as Trainee clause 15 (2) Pain Area: • Requires written authorization of Chief Inspector Suggestion : • Authorization – likely to become time consuming and money extracting exercise • Replace with the word ‘Intimation’ in place of ‘authorization’. Team AGBians
  36. 36. Pain Areas & Suggestions Overtime Hours Clause 18 (1) (IV) Pain area : • No. of overtime hours – 96 hours (In a quarter) – Very less Seasonal Industries will not be able to take the benefits of SF(RECS) Bill, 2014 Suggestion: • 96 hours in a month • Different Limits for Seasonal Industries – like cracker industry Team AGBians
  37. 37. Pain Areas & Suggestions Paid leave and holidays clause 23 (1) Pain area : • Approx 6 months extra wages without work • Employer pays for 18 months and worker work for 12 months Suggestion: • Challenge – Can we shift to 15 for 12 in totality? Team AGBians
  38. 38. Pain Areas & Suggestions Non – Application of certain Laws Clause 54 • Compliances under 14 Acts Removed Suggestion : • Gratuity Act should also be included in the said Acts Team AGBians
  39. 39. Pain Areas & Suggestions PF and Insurance Clause 25 Pain Area : • 20% contribution by Employer – Boon or Bane? • In certain cases contribution will work out even more than present contribution Suggestion : • Need to rationalize the %ages – downward to 8% from 10% Team AGBians
  40. 40. Pain Areas & Suggestions Maintenance of Register and Records clause 43 Pain area: • Print outs to be compulsorily provided to Inspectors at the time of Inspection • Does it mean that Inspectors will remain computer illiterate? Suggestion: • E-mail or soft form shall be allowed as green Initiative Team AGBians
  41. 41. Pain Areas & Suggestions RETRENCHMENT COMPENSATION Cl26 Pain Area • One month wages/Notice plus 15 days salary per year. • 240 days in twelve consecutive calender months Suggestion This is additional burden on Small Factories Let it be consecutive 240 days rather than 240 days in 12 consecutive months. Team AGBians
  42. 42. Acknowledgement In addition to inputs form Faridabad, I am SME of India received inputs form various parts of some India. Few inputs are acknowledged here……………  Ruchir Gupta/ Ashok Gupta – Mechcutters India, Indore  Rajat Bajaj, Partner – Jamuna Udyog, Delhi  Suresh kumar Gupta, Owner – S.K. Gupta & Co., Gurgaon
  43. 43. Team AGBians agbcorplegal@gmail.com www.agbcorplegal.com 09811386723

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