The government will table a Bill to regulate small factories with less than 40 workers in the Budget session of Parliament beginning next week.
“Labour Ministry has sought approval of the Union Cabinet for The Small Factories (Facilitation and Regulation of Employment and Conditions of Services) Bill. It will be pushed for passage in this Budget Session,” a source said.
Ministry of Law and Justice has already vetted the legislation, which aims to regulate the employment and other conditions of service of employees in small factories.
The Bill is significant as it aims to improve ease of doing business in the country and creating an ecosystem for encouraging small businesses.
It seeks to exempt small units with less than 40 workers from tedious compliance of 14 labour laws including Employees’ Provident Funds & Miscellaneous Provisions Act and Employees State Insurance (ESI)Act.
As per the Bill, such units can buy health insurance and provident funds products available in the market instead of subscribing to the mandatory social sector schemes of Employees’ State Insurance Corporation and Employees Provident Fund Organisation (EPFO).
The proposed law would mainly combine provisions of various labour laws applicable to small factories at one place, thus facilitating ease of compliance and reporting.
It will be beneficial to workers also as provision has been made for severance compensation to them in case of retrenchment, lay-off and closure to 45 days of wages from the present 15 days under the Industrial Disputes Act, 1947.
However, the Central trade unions have been protesting against the Bill saying that it would lead to a compromise with safety of workers at work place and the social security benefits available to them under various labour laws.