I work in a mid-sized software firm and our management is concerned with a recent article that covered a few software companies being labelled as \"factories\" for ESIC.
Does this mean all software firms will have to work under the Factories Act from here onward? Are bigger companies like Infosys / Persistent etc falling under the Factories Act or the Shop&Establishment Act?
Please advise on how to interpret the recent article! Thanks in advance.
From India, Mumbai
Does this mean all software firms will have to work under the Factories Act from here onward? Are bigger companies like Infosys / Persistent etc falling under the Factories Act or the Shop&Establishment Act?
Please advise on how to interpret the recent article! Thanks in advance.
From India, Mumbai
Presently IT firms are under the state's Shops and Commercial Establishments Act. But IT firms engaged in any kind of manufacturing activities the end product of which is tangible and visible, can come under the Factories Act. Since software development etc are purely service functions, these companies come under Shops Act only.
With regard to coverage of ESI, the Act is applicable both to factories and other establishments and as such the said Act like other social legislation, Employees Provident Fund and Misc. Provisions Act, is applicable to IT firms also.
Madhu.T.K
From India, Kannur
4249With regard to coverage of ESI, the Act is applicable both to factories and other establishments and as such the said Act like other social legislation, Employees Provident Fund and Misc. Provisions Act, is applicable to IT firms also.
Madhu.T.K
From India, Kannur
I second Mr. Madhu in this context. The IT Industries are covered under Shops & Establishment Act and not under Factories Act. For the IT Industries also the PF & ESI is applicable and it can be implemented as a part of welfare activity for the employees.
From India, Kumbakonam
From India, Kumbakonam
Thank you very much for sharing your thoughts. The coverage under ESI doesn't concern us too much, since we already comply with the requirements as relevant to Shop & Establishments.
Our management is concerned that if software firms are regarded as "factories" by ESI, then wouldn't that mean that software firms will then have to comply with the Factories Act? We don't produce any "product" that is packaged... just code delivered to customers. However, the thought of being labelled a factory with the need for a creche / no late evening work for women / OT etc is of great concern to us! Are we overreacting?
From India, Mumbai
Our management is concerned that if software firms are regarded as "factories" by ESI, then wouldn't that mean that software firms will then have to comply with the Factories Act? We don't produce any "product" that is packaged... just code delivered to customers. However, the thought of being labelled a factory with the need for a creche / no late evening work for women / OT etc is of great concern to us! Are we overreacting?
From India, Mumbai
Dear all,
Please refer to the recent high court ruling (link below), which has declared IT companies as factories when it comes to ESI act.
Software Companies are 'Factories' as per New Court Ruling
As far as factories act is concerned, IT companies are yet to be included within the ambit of factories as per sec 2(m) of the act, so provisions of the factories act wont apply.
Sangeeta, since you said you dont have to worry about the ESI, then i think you would be relieved by this post....
From India, Asansol
Please refer to the recent high court ruling (link below), which has declared IT companies as factories when it comes to ESI act.
Software Companies are 'Factories' as per New Court Ruling
As far as factories act is concerned, IT companies are yet to be included within the ambit of factories as per sec 2(m) of the act, so provisions of the factories act wont apply.
Sangeeta, since you said you dont have to worry about the ESI, then i think you would be relieved by this post....
From India, Asansol
The given verdict also clarifies that ESI is applicable to 'other establishments' and not exclusively to factories. The verdict has reference to some of the other judgements which clarifies that IT firms are not engaged in any manufacturing operations and hence not factories within the meaning of Factories Act.
Both Factories Act and Shops and Commercial Establishments Acts being social security enactments meant for employees engaged there makes hardly any difference if it comes under Factories Act or Shops Act. When viewed from the employees perspective Shops Act seems to be good since it provides for better service conditions.
Regards,
Madhu.T.K
From India, Kannur
Both Factories Act and Shops and Commercial Establishments Acts being social security enactments meant for employees engaged there makes hardly any difference if it comes under Factories Act or Shops Act. When viewed from the employees perspective Shops Act seems to be good since it provides for better service conditions.
Regards,
Madhu.T.K
From India, Kannur
Thank you for your replies.. yes I agree that ESI is meant for employee benefit. Our only concern is whether we need to start working towards abiding by the requirements of the Factories Act, as I mentioned earlier.. stuff like provision of a creche, OT etc. Currently our office space doesn't have any possibility to provide a creche etc, and hence our concern.
As an "establishment" we are compliant with ESI.. we read the paper article and interpreted it to mean the possibility of all IT firms being labelled "factories" and were wondering if this is going to be the next step for IT in India.
From India, Mumbai
As an "establishment" we are compliant with ESI.. we read the paper article and interpreted it to mean the possibility of all IT firms being labelled "factories" and were wondering if this is going to be the next step for IT in India.
From India, Mumbai
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