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Coverage of factory/establishment

The Government of Tamil Nadu has extended the provisions under Section 1(5) of the Act to the following categories of Establishments in areas where the provisions of Sections 1(3) are already in force and where 20 or more persons are employed or were employed for wages during the preceding twelve months.

SHOP
The essential ingredient of a shop is that 'sale' or 'service' must be rendered to the customer for a price. Departmental Stores, Super-Bazaar, Financial Institutions, Chit Fund Companies will be covered as a Shop by counting the number of employees working in various branches whether situated in the same area or at different areas.

The Supreme Court has given a wide meaning to the expression "shop" and it has been interpreted to include a "place where systematic economic or commercial activities are carried on". The concept of "Sale" need not be confined to buying and selling of goods and commodities only, but includes selling of services for remuneration.

While considering the coverage of shops, facilities such as departmental canteens, educational institutions, hospitals, dispensaries, doctor's clinics, banks, insurance companies are excluded. In case a departmental store is functioning like a super bazar, it would be covered as one shop by counting the number of employees working in various branch offices / depots and the retail outlets working as sub tenants.

 

ESTABLISHMENTS
The establishment is understood to be an organized body of men or the institution not necessarily confined to a premises or place and has therefore, a wider meaning. In case the establishment employs the minimum prescribed number of 20 persons for wages, it will stand covered under the Act, whether these persons are employed in one place or at a number of places, so long as they are engaged in the organized activity of the same establishment.

HOTEL AND RESTAURANTS
The Hotel and Restaurants that are not covered under Section 2(12)(a) or (b) may be covered under Section 1(5) as an establishment provided they are employing 20 persons for wages.

CINEMA INCLUDING PRE-VIEW THEATRES: 
In case of Cinema theatres, not only the persons employed in Cinema Theatre, but those employed in the Canteen/Restaurant within the premises, and the persons employed in Cycle/Scooter stand, Pan-shop, Bookstall etc. within the premises, are taken into consideration for counting 20 employees for the coverage of the theatre and also for coverage of those employees, even though the subsidiary units are run by independent contractors/licensees.

ROAD MOTOR TRANSPORT ESTABLISHMENTS: 
In case of a Road Motor Transport Establishment, the office may have only a minimum staff of clerks, manager, accountant etc, but most of the employees would normally be working outside the premises, such as drivers, conductors, cleaners, mechanics, booking clerks, traffic inspector etc., and loading and unloading Hamelies. For coverage of the establishment and 'employee', all such persons are taken into account irrespective of the fact whether they are working in the premises where the main business of the motor transport is located or otherwise. If the Road Motor Transport Establishment is having a workshop or service station run with the aid of power, its coverage can also be examined under Section 2(12)(a) in which case employment of 10 persons for wages is sufficient.

NEWSPAPER ESTABLISHMENTS
In case of a Newspaper Establishment, if their printing press is covered as factory, under Section 2(12)(a) of the Act, various offices of these factories connected with the purchase, sale or distribution whether located in same station or else where are covered including its branch offices, under the amended provisions of the term 'Employee' with effect from 28.1.68.

However, newspaper establishments dealing only in sale or distribution can be covered as an 'Establishment' under Section 1(5) if it is employing 20 or more persons for wages including the strength of its branches, if any.

Did you know?

A factory, or establish-ment once covered under the ESI Act, remains covered even if the number of employees at any later stage falls short of the stipulated number of 10/20 employees or the manufacturing process therein ceases to be carried on with the aid of power.

  Definitions
  Factory
  Seasonal Factory
  Employee
  Wages
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