Punjab Amends Factories Act, Raises Worker Thresholds and Introduces Offence Compounding

The Punjab Government issued The Factories (Punjab Amendment) Ordinance, 2020 (Punjab Ordinance No. 3 of 2020), which came into force upon its publication in the Official Gazette on September 24, 2020. This Ordinance, promulgated by the Governor of Punjab on August 14, 2020, under clause (1) of Article 213 of the Constitution of India, was necessitated by the Legislative Assembly of the State of Punjab not being in session, with the Governor satisfied that circumstances required immediate action. The legislative instrument primarily amends the Factories Act, 1948, as it applies to the State of Punjab, introducing significant changes to the definition of a 'factory', permissible overtime hours, and the mechanism for dealing with certain offences.

Among its key provisions, the Ordinance revised the thresholds for establishments to be classified as 'factories' under Section 2, clause (m) of the principal Act. For establishments using power, the minimum number of workers was increased from "ten" to "twenty", while for those not using power, the threshold was raised from "twenty" to "forty". Furthermore, the Ordinance amended Section 65, sub-section (3), clause (iv) of the principal Act, extending the maximum permissible overtime hours in any quarter from "seventy-five" to "one hundred and fifteen" hours. A corresponding adjustment was made in Section 85, sub-section (1), clause (i), which grants the State Government power to apply the Act to certain establishments, by substituting the worker numbers "ten" and "twenty" with "twenty" and "forty" respectively. A notable addition is the insertion of a new Section 106B, which introduces the provision for compounding of offences. The legislation provided: “The Inspector may, subject to any general or special order of the State Government in this behalf, compound any offence (except offences under Chapter IV and IV A of the Factories Act, 1948) punishable under this Act with fine only, and committed for the first time, either before or after the institution of the prosecution, on realization of such amount of composition fee as he thinks fit not exceeding the maximum amount of fine fixed for the offence; and where the offence is so compounded,- (i) before the institution of the prosecution, the offender shall not be liable to prosecution, for such offence and shall, if in custody, be set at liberty; (ii) after the institution of the prosecution, the composition shall amount to acquittal of the offender.” This provision empowers the Inspector to compound certain first-time offences, thereby offering an alternative to formal prosecution.

The legislative intent behind these amendments appears to be multifaceted, aiming to update the statutory framework governing factories in Punjab to better align with contemporary industrial practices and administrative efficiency. The increase in worker thresholds for defining a 'factory' suggests a policy rationale to exempt smaller establishments from the more stringent regulatory requirements of the Factories Act, potentially reducing the compliance burden on micro and small enterprises. This adjustment addresses the earlier legal position where lower thresholds might have disproportionately impacted smaller units. The enhancement of permissible overtime hours from 75 to 115 hours in a quarter provides greater flexibility to employers in managing their workforce, particularly during periods of increased production demand, thereby addressing potential statutory limitations on work scheduling. The introduction of Section 106B for compounding of offences marks a significant shift in enforcement mechanisms. Prior to this, all offences under the Act typically led to prosecution. This new provision aims to streamline the resolution of minor, first-time infractions punishable only by fine, by allowing for an administrative settlement. This mechanism is designed to reduce the burden on the judicial system and provide a quicker resolution for offenders, while still ensuring accountability through the payment of a composition fee. The amendments collectively seek to foster a more conducive industrial environment while maintaining essential worker protections, by focusing enforcement efforts on more serious or repeat violations.

Keywords: Factories Act, Punjab, Ordinance, Labour Law, Amendment, Worker Thresholds, Overtime, Compounding Offences, Industrial Law, Punjab Government

Geo Tags: India, Punjab District: Not Applicable