Factories Act, 1948 – Audit Management

Factories Act, 1948 Audit Management

Provision to ensure the health and safety of Indian workers

3 people died and 11 were injured each day on an average between 2017 and 2022, Reportedly, as many as 3331 deaths were recorded between 2018 and 2020 but only 14 people were imprisoned for offences under the Factories Act 1948.

Ministry of Labour & Employment

The Factories Act, 1948 is a social welfare legislation that regulates the working conditions in factories. 

The Act mandates certain provisions related to the health, safety, and welfare of workers employed in factories. 

As a part of compliance with the Act, factories are required to undergo regular audits to ensure that they are adhering to the regulations.

The Factories Act, 1948 is a legislation enacted by the Government of India to regulate the working conditions in factories. Act applies to all factories engaged in any industry specified in the Act and employs ten or more workers using power, or twenty or more workers without the use of power, on any day of the preceding twelve months.

It lays down rules and regulations to ensure the safety, health, welfare, and working conditions of workers in factories. It covers various aspects such as employment of workers, working hours, overtime wages, leave entitlements, safety measures, health provisions, welfare facilities, and so on. The Act also requires the maintenance of various registers, records, and notices related to employment and safety.

Objective of the audit

The objective of the audit is to verify the compliance of the factory with the provisions of the Factories Act, 1948. The audit will assess the working conditions in the factory and identify any areas of non-compliance. The audit will also provide recommendations to improve the working conditions in the factory. The factory management to identify the areas of non-compliance with the Factories Act, 1948 and take corrective actions to improve the working conditions in the factory. 

The audit report will serve as a tool for the management to monitor the compliance of the factory with the Act and ensure the health, safety, and welfare of the workers.

It also prevent the exploitation of workers and to provide for their safety, health, and welfare. The Act is enforced by the state governments, and the state factory inspectorate is responsible for ensuring compliance with the provisions of the Act. Failure to comply with the provisions of the Act can result in penalties, fines, and legal action.

Areas of Scope

The audit will cover the following areas:

  1. Health and Safety
  2. Welfare provisions for workers
  3. Working conditions
  4. Compliance with the provisions of the Factories Act, 1948
  5. Record-keeping related to the Act

Audit criteria and Methodology

 
Audit criteria:
 

The audit will be conducted based on the following criteria:

  1. Compliance with the provisions of the Factories Act, 1948
  2. Compliance with state-specific rules and regulations related to factories
  3. Compliance with international standards related to health, safety, and welfare of workers
  4. Best practices related to the working conditions in factories
Audit methodology:
 

The audit will be conducted in the following phases:

  1. Planning phase: Identify the audit team, scope of the audit, audit criteria, and the audit plan.
  2. Fieldwork phase: Conduct site visits, collect data, review records, and interview workers.
  3. Analysis phase: Analyse the data collected during the fieldwork phase and identify areas of non-compliance.
  4. Reporting phase: Prepare the audit report, including the findings, recommendations, and observations.

Factories Act, 1948 by States.

While the Factories Act, 1948 is a central legislation, the Act can be implemented differently in different states of India. This is because while the Act provides a framework for regulating the working conditions in factories, certain provisions of the Act are open to interpretation, and the state governments have the power to modify the provisions to suit the local conditions.

As a result, certain states may have different rules and regulations under the Act. For example, some states may have different rules for the registration of factories, working hours, and the provision of welfare facilities, while other states may have stricter rules for safety and health provisions.

It is important for factories operating in different states to be aware of the state-specific provisions of the Act and comply with them. It is also advisable to consult with a legal expert or an industry association to understand the state-specific rules and regulations under the Act. This can help ensure compliance with the Act and avoid any legal penalties or fines.

While the provisions of the Factories Act, 1948 remain the same across all states, some states have made certain amendments to the Act to suit the local conditions. For example, some states have extended the coverage of the Act to smaller factories, while others have increased the number of hours that workers can work overtime.

The implementation of the Act also varies from state to state. Some states have more stringent enforcement mechanisms in place, while others have been criticized for lax implementation of the Act. The penalties for non-compliance with the Act can also vary from state to state.

It is important for factories operating in India to comply with the specific provisions of the Act as enforced in the state where the factory is located. It is also advisable to consult with a legal expert or an industry association to understand the state-specific rules and regulations under the Act. This can help ensure compliance with the Act and avoid any legal penalties or fines.

Here is a list of the Indian states and union territories where the Factories Act, 1948 is applicable:
 
  1. Andaman and Nicobar Islands
  2. Andhra Pradesh
  3. Arunachal Pradesh
  4. Assam
  5. Bihar
  6. Chandigarh
  7. Chhattisgarh
  8. Dadra and Nagar Haveli and Daman and Diu
  9. Delhi
  10. Goa
  11. Gujarat
  12. Haryana
  13. Himachal Pradesh
  14. Jammu and Kashmir
  15. Jharkhand
  16. Karnataka
  17. Kerala
  18. Lakshadweep
  19. Madhya Pradesh
  20. Maharashtra
  21. Manipur
  22. Meghalaya
  23. Mizoram
  24. Nagaland
  25. Odisha
  26. Puducherry
  27. Punjab
  28. Rajasthan
  29. Sikkim
  30. Tamil Nadu
  31. Telangana
  32. Tripura
  33. Uttar Pradesh
  34. Uttarakhand
  35. West Bengal

 

Factory Rules for Maharastra

Maharashtra, the state government has formulated the Maharashtra Factories Rules, 1963, to implement the provisions of the Factories Act, 1948.

Here are some of the key rules under the Maharashtra Factories Rules, 1963:

  1. Registration of factories: The rules specify the procedures for the registration of factories, including the information to be provided, the documents to be submitted, and the fees to be paid.

  2. Working hours: The rules specify the maximum working hours for adult workers (48 hours per week), the intervals for rest and meals, and the rules for overtime work.

  3. Leave entitlements: The rules specify the leave entitlements for workers, including annual leave with wages, sick leave, and maternity leave.

  4. Safety provisions: The rules specify the safety provisions that factories must provide for their workers, including the use of safety equipment, the maintenance of machinery, and the training of workers on safety procedures.

  5. Welfare provisions: The rules specify the welfare provisions that factories must provide for their workers, including drinking water, toilets, washing facilities, and first aid facilities.

  6. Employment of young persons: The rules specify the conditions for the employment of young persons, including the minimum age for employment and the maximum number of hours that young persons can work.

NOTE : It is important for factories operating in Maharashtra to comply with the specific provisions of the Maharashtra Factories Rules, 1963, as enforced by the state government. It is also advisable to consult with a legal expert or an industry association to ensure compliance with the rules and regulations under the Act

Audit report format

The audit report will include the following sections:

  1. Executive summary
  2. Introduction
  3. Scope of the audit
  4. Audit criteria
  5. Methodology
  6. Findings
  7. Recommendations
  8. Observations
  9. Conclusion

What are the main provisions of the Act

  1. Registration of factories: The Act requires all factories to register with the state government and obtain a license to operate.

  2. Working hours: The Act regulates the working hours of adult workers and sets the maximum number of hours of work per week to 48 hours. It also requires that workers be given a weekly rest day.

  3. Health and safety provisions: The Act mandates that factories provide basic health and safety provisions such as clean drinking water, adequate ventilation and lighting, and proper waste disposal facilities. It also requires that machinery and equipment are properly maintained and inspected regularly.

  4. Employment of women: The Act sets out specific provisions to ensure the safety and welfare of female workers, such as restrictions on working hours and the prohibition of night shifts.

  5. Employment of young persons: The Act sets out provisions for the employment of young persons, including restrictions on the types of work they can perform and the maximum number of hours they can work.

  6. Leave entitlements: The Act specifies the leave entitlements for workers, including annual leave with wages, sick leave, and maternity leave.

  7. Penalties for non-compliance: The Act specifies penalties for non-compliance with its provisions, which may include fines, imprisonment, or both.

The provisions of the Act are aimed at protecting the interests of workers in factories and promoting a safe and healthy working environment. It is important for factories to comply with the provisions of the Act to ensure the safety, health, and welfare of their workers and to avoid penalties for non-compliance.

 

Questioner for Factories Act - Audit Management

Here is a comprehensive questionnaire for auditing a factory’s compliance with the Factories Act, 1948:

  1. General information
  • What is the name and address of the factory?
  • What is the nature of the industry or process carried out in the factory?
  • What is the number of workers employed in the factory?
  • Is the factory registered under the Factories Act, 1948?
  • What is the name of the factory manager or the person responsible for compliance with the Act?
  1. Registration and licensing
  • Has the factory obtained the necessary registration and licenses from the authorities?
  • Are the registration and licenses up to date and renewed as required?
  • Have the factory’s plans and specifications been approved by the Chief Inspector of Factories?
  • Are all the necessary documents and records related to registration and licensing available and up to date?
  1. Health and safety
  • Are there fire extinguishers installed in the factory? If yes, how many and what type?
  • Is there a fire detection and alarm system installed in the factory?
  • Are there emergency exits and escape routes in the factory? If yes, are they clearly marked and free of obstructions?
  • Are the emergency exits and escape routes tested periodically and are they in good working condition?
  • Are there first-aid boxes available in the factory? If yes, are they adequately stocked?
  • Are personal protective equipment (PPE) such as gloves, goggles, helmets, and masks provided to workers? If yes, are they used by the workers?
  • Are hazardous areas in the factory marked clearly and effectively?
  • Is there a safety committee in place as required by the Act?
  • Are safety inspections conducted regularly by the safety committee?
  • Are safety records maintained properly as required by the Act?
  1. Welfare provisions for workers
  • Are there separate restrooms for male and female workers?
  • Are there sufficient washing facilities available in the factory?
  • Is there a canteen or dining facility available for workers? If yes, is it clean and hygienic?
  • Are there separate lockers or storage facilities available for workers to store their belongings?
  • Are there proper ventilation and lighting arrangements in the factory?
  • Are the workers provided with clean drinking water?
  • Are the workers provided with adequate and clean toilet facilities?
  • Are there rest areas provided for workers during their working hours?
  • Are the workers provided with adequate medical facilities as required by the Act?
  1. Working conditions
  • Are the workers provided with regular breaks during working hours?
  • Are the workers provided with weekly holidays?
  • Is overtime work restricted to a maximum of 50 hours in a quarter?
  • Is there a system in place for regular medical check-ups of the workers?
  • Is there a system in place for reporting and investigating accidents in the factory?
  • Are the workers provided with protective clothing as required by the Act?
  • Are the workers provided with a safe and healthy working environment as required by the Act?
  • Are the workers provided with suitable work hours and leave as required by the Act?
  • Are the workers provided with proper training as required by the Act?
  1. Child labour and young persons
  • Are there any young persons or children employed in the factory?
  • Are the young persons or children employed in accordance with the provisions of the Act?
  • Are the records related to the employment of young persons and children maintained properly as required by the Act?
  1. Employment and conditions of service
  • Are the workers provided with appointment letters, identity cards, and other necessary documents?
  • Are the workers provided with statutory benefits such as paid leave, bonus, and provident fund?
  • Are the workers paid wages in accordance with the provisions of the Act?
  • Are the workers provided with suitable conditions of work as required by the Act?
  • Are the workers provided with proper working hours and overtime wages as required by the Act?
  • Are the workers provided with proper working hours and overtime wages as required by the Act?
  • Are the workers provided with proper leave entitlements as required by the Act?
  • Are the workers provided with adequate notice in case of termination of employment?
  • Are the workers provided with a grievance redressal mechanism as required by the Act?
  1. Records and registers
  • Are all the registers and records required by the Act maintained properly and up to date?
  • Are the registers and records available for inspection by the authorities as required by the Act?
  • Are the registers and records maintained in a format as required by the Act?
  1. Contract labour
  • Are there any contract workers employed in the factory?
  • Are the contract workers employed in accordance with the provisions of the Contract Labour (Regulation and Abolition) Act, 1970?
  • Are the records related to the employment of contract workers maintained properly as required by the Act?
  1. Environmental compliance
  • Is the factory complying with the environmental laws and regulations applicable to the industry or process carried out in the factory?
  • Is the factory maintaining proper records related to environmental compliance?
  • Is the factory following the guidelines issued by the authorities for environmental compliance?
  1. Conclusion
  • Based on the audit findings, does the factory comply with the provisions of the Factories Act, 1948?
  • Are there any areas where the factory needs to improve its compliance with the Act?
  • What are the recommendations for improving the compliance of the factory with the Act?
  • What are the corrective actions that the factory needs to take to improve its compliance with the Act?
Shreenath Iyer

Shreenath Iyer

Product & Business Development / Author @ Rampart.ai
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