Factory Compliance Checklist and Guide for Employers in India

Executive answers

The Occupier carries personal, non-delegable liability. Under Section 2(n) of the Factories Act, 1948, the Occupier is the person with ultimate control over the affairs of the factory. For a company, the Occupier must be one of its directors, nominated as such. Courts have held that a company factory cannot be validly occupied by a manager or other non-director for purposes of statutory liability (see J.K. Industries Ltd. v. Chief Inspector of Factories and Boilers, Supreme Court, 1996). The Occupier answers for contraventions committed by the manager and by any person on the floor, subject to the limited defence in Section 101, available only where the Occupier proves the offence occurred without knowledge, consent or connivance and that all due diligence was exercised.

Three approvals precede lawful occupation of a factory: approval of plans for construction or extension (Section 6 and state rules), a factory licence issued by the Chief Inspector of Factories or the Director of Industrial Safety and Health (DISH), and a written notice of occupation at least 15 days before the premises are occupied or used as a factory (Section 7). In hazardous process units, Site Appraisal Committee clearance (Section 41A) applies before commissioning.

Statutory safety appointments depend on size and process risk:

• Safety Officer: required in factories notified by the State Government under Section 40B, with qualifications and duties set in state rules. Larger factories (1,000 or more workers) and hazardous process units are the usual triggers.
• Welfare Officer: required where 500 or more workers are ordinarily employed (Section 49).
• Competent persons, certifying surgeon, medical officer, ambulance room attendants, canteen manager and creche attendants as the state rules prescribe by headcount.

Criminal exposure is direct and escalates by offence type.

• General contraventions (Section 92): imprisonment up to two years, fine up to Rs 1,00,000, or both, with a continuing-contravention fine per day.
• Repeat offences (Section 94): imprisonment up to three years and enhanced fines.
• Contravention of hazardous process provisions (Section 96A): imprisonment up to seven years and fine up to Rs 2,00,000, with imprisonment extending to ten years where the contravention continues beyond one year.
• Failure to notify accidents and dangerous occurrences (Sections 88 and 88A) and to report notifiable diseases (Section 89) are independent offences, and each is cited in prosecutions arising from workplace injuries.

Scope and applicability

Definition and thresholds

Under Section 2(m) of the Factories Act, 1948, a factory is any premises, including the precincts, where:

• 10 or more workers are working, or were working on any day of the preceding 12 months, and a manufacturing process is carried on with the aid of power; or
• 20 or more workers are working, or were working on any day of the preceding 12 months, and a manufacturing process is carried on without the aid of power.

Mines, mobile units of the armed forces, railway running sheds, and hotels, restaurants and eating places are excluded. Section 85 empowers the State Government to declare other premises to be factories, including those with fewer workers, for the purposes of the Act.

Points that auditors check:

• Workers under Section 2(l) include persons employed directly or through any agency, including a contractor, with or without the knowledge of the principal employer. Contract workers count toward the threshold.
• The "any day in the preceding 12 months" test means a unit that has crossed the threshold even once in the year is a factory for that year, regardless of present strength.
• Manufacturing process under Section 2(k) is wide: making, altering, repairing, finishing, packing, oiling, washing, cleaning, breaking up, demolishing, adapting for use, sale, transport, delivery or disposal; pumping oil or water; generating or transforming power; composing, printing and bookbinding; and ship building, breaking and repair.
• Each premises is a separate factory with its own licence, Occupier and Manager. An industrial estate, a campus with several buildings, or leased shed units cannot be covered by a single licence unless the State rules permit, and the area within the precincts must be clearly described.
• Under the OSH Code, the factory thresholds are 20 or more workers with power and 40 or more without power, and the appropriate government may notify different thresholds. Units between the old and new thresholds should obtain written confirmation of their status from the State.

Hazardous process classification

A hazardous process under Section 2(cb) is a process listed in the First Schedule, which includes industries such as ferrous and non-ferrous metals, thermal power, coal and fuel, glass and ceramics, fertilizers, pesticides, petrochemicals, dyes, pharmaceuticals and drugs, paper and pulp, cement, asbestos, rubber, electroplating and several others, where raw materials or products can cause material impairment to health or serious risk of physical injury, pollution or accident. Such units attract Chapter IVA obligations:

• Site Appraisal Committee clearance for the location (Section 41A).
• Compulsory disclosure of information on hazards to workers, the Chief Inspector and the public, a safety policy and an On-Site Emergency Plan (Section 41B).
• Specific Occupier responsibilities, including health records of exposed workers, qualified supervisors and medical examination (Section 41C).
• Permissible exposure limits for toxic substances (Section 41F) and workers' participation in safety management (Section 41G).
• The Manufacture, Storage and Import of Hazardous Chemicals Rules, 1989 and the Chemical Accidents (Emergency Planning, Preparedness and Response) Rules, 1996 apply in parallel.

State-specific amendments

The Factories Act is a concurrent-list statute administered through State Factories Rules and State DISH or Directorate of Factories offices. Several States have enacted or notified amendments changing:

• Threshold definitions (some States raised thresholds to 20 and 40).
• Overtime limits per quarter (the central limit of 50 hours has been raised in many States to 75, 100 or more, and the OSH Code adopts a higher cap).
• Daily hours, spread-over and weekly overtime in exempted establishments.
• Women's employment between 7 pm and 6 am, with prescribed safeguards.
• Licence validity, fee schedules and online self-certification and third-party inspection schemes.
• Safety Officer, Welfare Officer, canteen, creche and ambulance room thresholds.

A multi-State manufacturer should maintain a State-wise annex to its safety management system rather than rely on a single group standard.

Detailed guide

Building plan approval and licensing

• Plan approval (Section 6, State rules): Plans of the factory, including layout of machinery, storage, effluent systems and ventilation, are submitted to the Chief Inspector or DISH with fee, and construction or extension proceeds only on approval. Extensions that alter layout, add machinery or increase load, or change use of a section, need fresh approval or amendment.
• Notice of occupation (Section 7): Written notice with prescribed particulars at least 15 days before occupation, including the names of the Occupier and Manager, power installed, number of workers and the nature of manufacturing process.
• Licence and renewal: Licence is issued for a stated period under State rules and is renewed before expiry, with fee. Licence is tied to installed horse-power and maximum number of workers, so any increase of either requires an amendment before the increase takes effect.
• Notice of change (Section 7 and rules): Change of Manager, change of Occupier, change of the nature of the manufacturing process, and installation of additional power must be notified.
• Pre-commissioning: For hazardous process units, Site Appraisal Committee clearance, emergency plan, and consents under the Water Act, Air Act and fire, explosives and electrical safety authorisations must be in place.

Mandatory health measures (Chapter III, Sections 11 to 20)

• Cleanliness (Section 11): Daily sweeping and cleaning, washing of floors in wet processes, drainage, and periodic lime-washing, painting or varnishing within the prescribed cycle, with a dated record.
• Disposal of wastes and effluents (Section 12): Effective arrangements for treatment and disposal of solid and liquid waste within the premises, aligned with the pollution control board consents and the approved plan.
• Ventilation and temperature (Section 13): Adequate ventilation by circulation of fresh air and a reasonable temperature for health and comfort, with measures such as insulation and cooling of hot sections.
• Dust and fume (Section 14): Effective exhaust and extraction at the point of origin for any manufacturing process giving off dust or fume, and prevention of inhalation and accumulation.
• Artificial humidification (Section 15), overcrowding (Section 16): Prescribed water quality and humidity limits, and a minimum of 14.2 cubic metres of space per worker for factories built after 1948, excluding space above 4.25 metres.
• Lighting (Section 17): Sufficient and suitable natural or artificial lighting, with prevention of glare and formation of shadows, measured by lux survey against State rules.
• Drinking water (Section 18): Wholesome drinking water at suitable points, marked as such and located away from latrines, with cooling arrangements in hot weather where the State rules require.
• Latrines and urinals (Section 19): Separate, adequately screened facilities for male and female workers, in the prescribed ratio, kept clean and sanitary.
• Spittoons (Section 20): Sufficient number of spittoons in convenient places, maintained in a clean and hygienic condition, with a prohibition notice on spitting except in spittoons.

Machine safety and pressure plant certifications (Chapter IV)

• Fencing of machinery (Section 21): Every dangerous part of any machinery, including moving parts of prime movers, flywheels, transmission machinery, and dangerous parts of other machinery, must be securely fenced by safeguards of substantial construction, kept in position while the parts are in motion.
• Work on or near machinery in motion (Section 22): Only trained adult male workers, wearing tight-fitting clothing, may examine or lubricate machinery in motion, and only where the State rules permit. Women and young persons are barred from this work.
• Employment of young persons on dangerous machines (Section 23): Only after instruction, training and supervision.
• Hoists and lifts (Section 28): Good mechanical construction, sound material, adequate strength, proper maintenance, thoroughly examined by a competent person at least once in six months, with the register kept in the prescribed form.
• Lifting machines, chains, ropes and lifting tackles (Section 29): Thorough examination at least once in 12 months by a competent person, annealing of chains and slings at the prescribed intervals, and display of safe working load.
• Revolving machinery (Section 30): Notice of maximum safe working peripheral speed on grinding wheels and similar machinery.
• Pressure plant (Section 31): Where any operation is carried out at pressure higher than atmospheric, effective measures ensure that the safe working pressure is not exceeded, with periodic testing and a pressure gauge, safety valve and stop valve fitted and certified.
• Boilers, unfired pressure vessels, compressed gas cylinders and storage tanks: Boilers are certified under the Indian Boilers Act, 1923 and the rules and regulations made under it, by the Boiler Inspectorate, with annual certification and thorough examination for steam boilers. Unfired pressure vessels, and mobile and static pressure vessels, are governed by the Static and Mobile Pressure Vessels (Unfired) Rules, 2016 administered by PESO. Confirm the status of the Boilers legislation in force on the date of audit.
• Precautions against dangerous fumes, explosive or inflammable dust, gas (Sections 36, 37): Confined space entry permits, gas testing, and explosion-proof equipment.
• Fire (Section 38): Means of escape, fire alarms, extinguishers, training and mock drills, with a State Fire Service clearance as required.
• Safety of buildings and machinery (Sections 34 to 40): Maximum load limits displayed, protection of eyes, and notice to the Inspector of the dangerous conditions.
• Dangerous operations (Section 87): State prohibitions or restrictions on specified dangerous operations.

Welfare amenities (Chapter V)

Thresholds shown are the Act's standard thresholds. State rules may reduce them.

• Washing facilities (Section 42): Adequate, clean, separate for men and women.
• Storing and drying clothing (Section 43), sitting facilities (Section 44): Where workers work standing.
• First aid (Section 45): A first-aid box or cupboard for every 150 workers, with the prescribed contents, in the charge of a trained person. An ambulance room with a qualified medical and nursing staff for factories with more than 500 workers.
• Canteen (Section 46): Where more than 250 workers are ordinarily employed, subject to State rules on management committee, prices and food quality.
• Shelters, rest rooms and lunch rooms (Section 47): Where more than 150 workers are employed, with drinking water and shelter.
• Creche (Section 48): Where more than 30 women workers are employed, suitable rooms for children under six, with State rules on staff and facilities. The Maternity Benefit Act, 1961 also requires creche facility in establishments with 50 or more employees, with prescribed visits per day.
• Welfare Officers (Section 49): Where 500 or more workers are ordinarily employed, appointed with prescribed qualifications and conditions of service.

Working hours, shifts and women's night work (Chapters VI and VII)

• Weekly hours (Section 51): No adult worker works more than 48 hours in a week.
• Weekly holiday (Section 52): A day of rest on the first day of the week, with compensatory holiday where the weekly holiday is substituted.
• Daily hours (Section 54): Not more than nine hours in any day.
• Intervals (Section 55): A rest interval of at least half an hour after not more than five hours of work.
• Spread-over (Section 56): Inclusive of intervals, not more than ten and a half hours in a day.
• Overtime (Section 59): Wages at twice the ordinary rate of wages, with a quarterly cap under the Act and State rules, and a register.
• No double employment (Section 60), notice of periods of work (Section 61), register of adult workers (Section 62): A displayed notice of hours, and a muster roll that reconciles with attendance and wage records. Shift rotations must follow the pattern in the displayed notice.
• Annual leave with wages (Section 79): One day for every 20 days worked by an adult worker who has worked 240 days or more in the previous calendar year. The OSH Code reduces the qualifying period to 180 days.
• Employment of women (Section 66): Women may be employed in the hours stated in the Act, which are 6 am to 7 pm, unless the State Government varies them. Several States have notified variations permitting women in factory night shifts under stated conditions. Typical conditions are written consent, adequate protection of dignity, honour and safety, safe transport between residence and factory, CCTV and lighting, a Prevention of Sexual Harassment Internal Committee, restrooms and creche, and information to the Inspector. The OSH Code permits women to work at night with their consent and subject to prescribed safety conditions. Women are barred from certain hazardous operations by rule, including work on or near machinery in motion for cleaning and lubricating, and some hazardous processes.
• Young persons (Sections 67 to 77): Adolescents with fitness certificates and token numbers, with restricted hours and prohibited work, and no child under 14 may be employed.

Records, notices and reporting

• Accidents and dangerous occurrences (Sections 88 and 88A): Notice of fatal accidents or accidents causing disablement for 48 hours or more to the Inspector, to the District Magistrate and, where State rules require, to the next of kin, in the prescribed form and time, together with a written report to follow. Dangerous occurrences, whether or not injury occurs, are reportable.
• Notifiable diseases (Section 89): Notice of any disease in the Third Schedule, by the Occupier and by the medical practitioner.
• Registers and returns: Register of adult workers, attendance, wages and overtime, leave with wages, accident book, inspection book, health register, register of examination of hoists, lifts and lifting tackles, register of whitewashing, annual return, half-yearly return and, for hazardous processes, health records, monitoring and the emergency plan.
• Display: Abstract of the Act and rules, notice of hours and holidays, name and address of the Inspector and the certifying surgeon, licence, and prohibitions as applicable.

Inspection powers

Under Section 9, an Inspector of Factories may enter any place which is used or which he has reason to believe is used as a factory, at any reasonable time and without prior notice, to examine premises, plant, machinery and records, take statements, take samples and require production of registers. Obstruction is itself an offence. The Occupier or Manager is entitled to accompany the Inspector, receive a copy of the inspection note, and respond to observations within the time stated.

Checklist

Illustrative audit matrix on the Factories Act, 1948 and State Factories Rules. Section references remain the audit benchmark for existing licences and savings. Confirm forms, frequencies and limits against the State rules and the rules framed under the OSH Code.

Common mistakes

1. Failing to update the factory licence on expansion. Installing new machinery, increasing horse-power, adding a shed or adding a shift beyond the licensed worker count without amendment. Consequence: operation beyond licence is a contravention under Section 92, plan non-conformity can lead to prohibitory orders, and insurers and lenders treat it as a coverage and covenant issue.
2. Appointing the wrong Occupier. A Plant Head or Manager is notified as Occupier of a company factory. Consequence: the nomination does not satisfy Section 2(n), the real Occupier (a director) may be prosecuted, and the company loses the Section 101 defence.
3. Uncalibrated or uncertified pressure vessels. Gauges and safety valves not calibrated, certificates expired, hydraulic tests missed. Consequence: Section 31 contravention, Boiler and PESO action, and, after a vessel failure, prosecution under Section 92 or Section 96A and, where injury or death results, offences on negligence under the Bharatiya Nyaya Sanhita, 2023.
4. Missing machine guards. Guards removed for maintenance or productivity and not reinstalled; interlocks bypassed. Consequence: Section 21 offence, the most frequent cause of amputations, and prosecution of the Occupier and Manager.
5. Not reporting accidents to the Inspector. Treating a minor injury or a near miss as an internal matter, or filing late. Consequence: separate offence under Sections 88 and 88A, loss of credibility in the inquiry, and adverse inference against the Occupier.
6. Lifting tackle and hoists examined late or by an uncertified person. Consequence: breach of Sections 28 and 29, and invalid examination records.
7. Leaving contract workers out of the headcount. Canteen, creche, rest room, ambulance room, Welfare Officer and Safety Officer thresholds are computed on direct employees only. Consequence: amenity thresholds are missed, because the Inspector counts the real strength on the floor.
8. Hours and overtime that do not reconcile. Biometric logs, muster roll and overtime register tell different stories, and the quarterly overtime cap is exceeded. Consequence: Section 59 and 62 offences, wage claims, and a defence that cannot be proved.
9. Women's night shifts without conditions met. No consent, no transport log, no CCTV coverage, no Internal Committee, no intimation to the Inspector. Consequence: the permission is conditional and lapses on breach, prosecution under Section 66, and aggravated exposure after any incident.
10. Non-submission of annual returns and no inspection-ready registers. Consequence: offences under Section 110, and inability to establish due diligence under Section 101.
11. Hazardous process units without a tested On-Site Emergency Plan. Consequence: Section 41B breach, which attracts Section 96A prosecution, with imprisonment of up to seven years and up to ten for continuing contravention.
12. Delegating safety to a junior safety officer without authority or budget. Consequence: the court looks to the Occupier's control; delegation without resources is not due diligence.

Action Plan: 30-60-90 Day Shop-Floor and Documentation Audit

Days 1 to 30: Baseline and Statutory Exposure Map

1. Confirm legal identity of each unit. Factory licence number, Occupier and Manager nominations, licence validity, horse-power and worker limits against actual.
2. Reconcile drawings to the plant. Approved plan against as-built layout, machinery list and storage.
3. Build the statutory register of certificates. Boilers, pressure vessels, hoists, lifts, lifting tackles, cranes, fire NOC, pollution consents, electrical inspection, PESO licences, with expiry dates.
4. Walk the floor with a guard and hazard checklist. Fencing, interlocks, lock-out and tag-out, emergency stops, housekeeping, lighting, ventilation, confined spaces.
5. Test the reporting chain. Accident, dangerous occurrence and disease reports of the last 36 months, reconciled against injury and first-aid records.
6. Score threshold-based obligations. Headcount including contract workers against canteen, creche, rest room, ambulance room, Safety Officer and Welfare Officer thresholds.
7. Rank the findings by prosecution exposure and injury potential.

Days 31 to 60: Remediation and Documentation

1. Close critical physical gaps. Guards, interlocks, pressure relief, calibration, hoist and tackle examinations, fire systems.
2. File amendments and renewals. Licence amendment for expansion, change of Occupier or Manager, renewals, and plan approval for pending changes.
3. Regularize appointments. Safety Officer, Welfare Officer, competent persons, certifying surgeon, first aiders, with training records.
4. Rebuild registers. Adult workers, attendance, overtime, leave, accident book, examination registers, health records, with owners and review dates.
5. Issue the safe work system. Permit to work, lock-out and tag-out, confined space, hot work, working at height, with training.
6. Close the women's night shift file. Consent, transport, security, CCTV, lighting, restrooms, Internal Committee, intimation.
7. Hazardous process units: update the On-Site Emergency Plan, run a mock drill, and update disclosure and health surveillance.

Days 61 to 90: Governance and Inspection Readiness

1. Install a statutory calendar by unit with owner, due date and escalation for examinations, renewals and returns.
2. Establish a Safety Committee rhythm, with minutes, action tracking and worker participation.
3. Prepare the inspection protocol. A named escort, a records room, a response template, and a rule that the Inspector's observations are logged and answered in time.
4. Run a mock DISH inspection with an independent auditor, and close findings with evidence.
5. Set management reporting. Leading indicators (near misses, guard audits, overdue examinations) and lagging indicators (lost time injuries), with monthly review by the Plant Head and quarterly review at Board or Occupier level.
6. Track rule changes under the OSH Code and State rules, with a documented position on licence, registration and threshold status for every unit.

Frequently asked questions