Advanced Factories Act & Rules Compliance Audit Checklist
Ensure Legal Compliance, Avoid Penalties & Boost Workplace Safety
The Factories Act, 1948 is the backbone of industrial safety and labour welfare in India. As operations scale and legal scrutiny intensifies, it’s critical for every factory to perform periodic compliance audits based on the Factories Act and respective State Factory Rules.
In this article, we provide a detailed and legally structured audit checklist with actionable steps, legal provisions, necessary documents, and consequences of non-compliance.
📘 What is the Factories Act Audit?
A Factories Act Audit is a statutory and preventive compliance review of a factory’s physical, documentation, operational, and welfare systems to ensure it adheres to:
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The Factories Act, 1948
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Relevant State Factory Rules
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Notifications, Circulars, and Court Judgments
Failure to comply with even a single section can result in heavy penalties, factory closure, and criminal prosecution.
🏗️ I. Factory Registration, Licensing & Notification
| Compliance Area | Legal Provision | Action Required | Form/Document | Consequences |
|---|---|---|---|---|
| Factory Licence | Sec. 6 & Rule 3 | Apply and renew licence annually | Form 1 | ₹1 lakh fine or prosecution |
| Notice of Occupation | Sec. 7 | Submit before starting operations | Form 2 | ₹1,000/day fine |
| Building Approval | State Rules | Get layout plan approval from inspector | Layout + Machinery Details | Licence may be cancelled |
🕒 II. Working Hours, Leave & Attendance
| Compliance | Legal Ref. | Requirement | Records | Penalty |
|---|---|---|---|---|
| Working Hours | Sec. 51–54 | 9 hours/day, 48 hours/week | Form 11 + Duty Roster | ₹75,000 fine |
| Overtime | Sec. 59 | Double wage, register maintained | Form 10 | Recovery + fine |
| Weekly Holiday | Sec. 52 | 1 weekly off (Sunday preferred) | Display Notice | ₹20,000 fine |
| Leave with Wages | Sec. 79 | 1 leave for 20 working days | Form 14 | Complaint + direction |
| Compensatory Holiday | Rule 98 | Must be granted for overtime Sundays | Form 9 | Legal penalty |
⚕️ III. Health & Hygiene
| Requirement | Section | Action | Record | Risk of Violation |
|---|---|---|---|---|
| Clean Premises | Sec. 11 | Daily cleaning & whitewashing | Cleaning Log | ₹1 lakh |
| Ventilation | Sec. 13 | Exhaust fans, airflow audit | Temperature Records | ₹50,000 |
| Waste Disposal | Sec. 12 | Drainage system & PCB norms | Drainage Map | Factory closure order |
| Artificial Humidification | Rule 18 | Hygrometers + approval | Permission Letter | Cancellation |
⚠️ IV. Safety Management (Especially for Hazardous Industries)
| Safety Area | Legal Reference | Mandatory Action | Register/Document | Penalty |
|---|---|---|---|---|
| Machine Guarding | Sec. 21 | Interlocked and fenced | Checklist | ₹2 lakh + accident risk |
| Confined Spaces | Sec. 36A | Permit to Work (PTW) | PTW Register | IPC case in fatality |
| Safety Committee | Rule 73W (MH) | Equal worker/management members | Minutes Book | Show Cause Notice |
| Safety Audit | Sec. 41B | Mandatory for hazardous units | Audit Report | Factory sealing |
| Medical Checkup | Sec. 41C | Twice a year | Form 32 | ₹50,000 per worker |
🧼 V. Labour Welfare Provisions
| Requirement | Section | Who Must Comply | Documentation | Failure Penalty |
|---|---|---|---|---|
| Canteen | Sec. 46 | >250 workers | Food Safety Licence | ₹10,000 |
| Crèche | Sec. 48 | >30 women | Crèche Certificate | ₹1 lakh |
| Welfare Officer | Sec. 49 | >500 workers | Appointment File | Prosecution |
| Drinking Water | Sec. 18 | All factories | Water Test Reports | ₹25,000 |
📜 VI. Registers, Returns & Display Obligations
| Compliance Item | Law Ref | Record Format | Timeline | Violation Risk |
|---|---|---|---|---|
| Muster Roll | Rule 110 | Form 16 | Daily | ₹10,000 |
| Wages Register | Sec. 61 | As per Wages Act | Monthly | ₹20,000 |
| Accident Reporting | Sec. 88 | Form 18 | Within 12 hours | FIR & WC Claim |
| Annual Returns | State Rules | Online Form | By Jan 31 | SCN & Penalty |
| Display Notices | Sec. 108 | Abstracts, Manager's name, Hours | Permanent | ₹1,000/day |
🧑⚖️ Key Judicial Interpretations
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Consumer Education & Research Centre vs UOI – Art. 21 interpreted to include workplace health.
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Voltas Ltd vs State of Maharashtra – Interplay of State rules and Factories Act.
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SM Datta vs State of Gujarat – Employer liability in unsafe work environments.
📂 Bonus: Related Acts for Full Compliance
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CLRA Act – For factories employing contract labour
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Payment of Wages Act – For salary compliance
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BOCW Act – For construction-related factories
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EPF & ESI Acts – Social security compliance
🛠️ Tools for HR/Compliance Heads:
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Write to us for demo - boardhr@gmail.com
📢 Final Advice
With increasing labour inspections, digital compliance tools (Shram Suvidha Portal, FoSCoS), and worker awareness, it's imperative that every factory carries out:
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Quarterly internal audits
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Mock inspections
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Training sessions for safety & HR staff
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