CU-MCOM-SEM-III-Entrepreneurship

(whenever the Board of Directors decides) are distributed among shareholders in proportion to their shareholding, but the liability is also limited. The rate of dividend is generally quite low. 9. Costs, procedure, and government regulation: This is also an important factor that should be taken into account while choosing a particular form of organisation. Different forms of organisation involve different procedure for establishment, and are governed by different laws which affect the immediate and long-term functioning of a business enterprise. From this point of view, sole proprietorships are the easiest and cheapest to get started. There is no government regulation. What is necessary is the technical competence and the business acumen of the owner. Partnerships are also quite simple initiated. Even a written document is not necessarily a prerequisite, since an oral agreement can be equally effective. Company form of ownership is more complicated to from. It can be created by law, dissolved by law, and operate under the complicated provisions of the law. In the formation of a company, a large number of legal formalities is to be gone through which entails, at times, quite a substantial amount of expenditure. For example, the cost incurred on the drafting of the Memorandum of Association, the Articles of Association, the Prospectus, issuing of share capital, etc. This cost is however, small in case of private companies. Besides, companies are subjected to a large number of anti-monopoly and other economic laws so that they do not hamper the public interest. The consideration of the various factors listed above clearly shows that: (a) These factors do not exist in isolation, but are interdependent, and they are all important in their own right. Nevertheless, the factors of nature of business and scale of operations are the most basic ones in the selection of a form of ownership. All other factors are dependent on these basic considerations. For instance, the financial requirements of a business will depend on the nature of business and the scale of operations planned. To take an example, if a business wants to set up a trading enterprise (say, a retail store) on a small scale, his financial requirements will be small. (b) The various factors listed above are only major factors, and in no case they constitute an exhaustive list. Depending upon the requirements of the business and the demands of the situation and sometimes even the personal preference of the owner, the choice of a form of ownership is made. 201 CU IDOL SELF LEARNING MATERIAL (SLM)

(c) The problem in choosing the best form of ownership is one of analysing and weighing relative advantages and disadvantages to find the one that will yield the highest net advantage. And for that, weights may be assigned to different factors depending upon their importance in each form of organisation, and the organisation that obtains the maximum weights may be ultimately selected. 10.5 SUBSIDIES AND INCENTIVES AVAILABLE FOR STARTING AN ENTERPRISE MSME stands for Micro, Small and Medium Enterprises. These industries or enterprises form the backbone of our economy and need assistance and protection from other big companies as they lack resources and technology. To do this the government provides some schemes, rebates or counselling to these enterprises. Threshold for Enterprises to be Called as Micro, Small or Medium The existing MSME classification was based on the criteria of investment in plant and machinery or equipment. So, to enjoy the MSME benefits, they have to limit their investment to a lower limit, as mentioned below: Existing MSME Classification Sector Criteria Micro Small Medium ManufacturingInvestment < Rs.25 lakh < Rs.5 crore < Rs.10 crore Services Investment < Rs.10 lakh < Rs.2 crore < Rs.5 crore These lower limits are killing the urge to grow as they are unable to scale their businesses further. Also, there has been a long-pending demand for the revision of MSME classification so that they can further expand their operations while continuing to avail the MSME benefits. Now, under the Atmanirbhar Bharat Abhiyan, the government revised the MSME classification by inserting composite criteria of both investment and annual turnover. Also, the distinction between the manufacturing and the services sectors under the MSME definition has been removed. This removal will create parity between the sectors. The following is the revised MSME classification, where the investment and annual turnover, both are to be considered for deciding an MSME. Revised MSME Classification Criteria Micro Small Medium* Investment 202 CU IDOL SELF LEARNING MATERIAL (SLM)

& Annual Turnover < Rs.1 crore & < Rs.5 crore < Rs.10 crore & < Rs.50 crore < Rs.50 crore & < Rs.250 crore * Further upward revision made by the government The revision of MSME classification allows for further scaling of business and also increases healthy competition among businesses. MSME Schemes Launched by the Government Udyog Aadhaar Memorandum Aadhaar card is a 12 digit number given to all individuals by the government. In this, the Aadhaar card is a mandatory requirement. The benefit of registering in this scheme is the ease in availing credit, loans, and subsidies from the government. Registration can be done both ways in the online mode or the offline mode. Zero Defect Zero Effect In this model, goods that are manufactured for export have to adhere to a certain standard so that they are not rejected or sent back to India. To achieve this the government has launched this scheme. In this, if the goods are exported these are eligible for some rebates and concessions. Quality Management Standards & Quality Technology Tools Registering in this scheme will help the micro, small and medium enterprises to understand and implement the quality standards that are required to be maintained along with the new technology. In this scheme, activities are conducted to sensitize the businesses about the new technology available through various seminars, campaigns, activities etc. Grievance Monitoring System 203 CU IDOL SELF LEARNING MATERIAL (SLM)

Registering under this scheme is beneficial in terms of getting the complaints of the business owners addressed. In this, the business owners can check the status of their complaints, open them if they are not satisfied with the outcome. Incubation This scheme helps innovators with the implementation of their new design, ideas or products. Under this from 75% to 80% of the project cost can be financed by the government. This scheme promotes new ideas, designs, products etc. Credit Linked Capital Subsidy Scheme Under this scheme, new technology is provided to the business owners to replace their old and obsolete technology. The capital subsidy is given to the business to upgrade and have better means to do their business. These small, micro and medium enterprises can directly approach the banks for these subsidies. Women Entrepreneurship This scheme is especially started for women who want to start their own business. The government provides capital, counselling, training and delivery techniques to these women so that they manage their business and expand it. The government has launched a number of more schemes and support system for these enterprises, to know more about the MSME schemes the following link of the government can be checked. 10.6 EXPLORING EXPORT POSSIBILITIES Follow these ten tips to help you export your products or services successfully 1. Research your market Does your prospective foreign customer need what you are selling at the price that will yield you a profit? What is the competition and how will they react? 2. Implement an export strategy and review your capabilities Ask yourself: what would my business gain from exporting? 3. Construct an export plan Define how you will enter the foreign market. Finalise human resources and marketing strategy and allocate an adequate budget to cover export start-up costs. 204 CU IDOL SELF LEARNING MATERIAL (SLM)

4. Choose your sales presence Establish whether you need a direct sales operation. Or is an agent or distributor more effective? How will you manage your overseas sales presence? 5. Promote your product How are you going to market and sell your product? Customise marketing to the target country. 6. Get the Customs side right Contact HM Revenue & Customs and the UK embassy of your destination country to clarify requirements. Make sure your reporting practices are watertight. 7. Get paid on time Ensure your cashflow will remain at a safe level. Guarantee sufficient credit for your future sales. Take out insurance cover if necessary. 8. Choose your distribution methods Consider the implications of selling over long distances and across national frontiers. 9. Transport goods effectively Assess and choose the most effective transport method and make sure the goods are insured by you or the importer. 10. After-sales policy Regularly liaise with customers, export agents and banks. Monitor political unrest or other adverse conditions in the country of destination. Manage regular servicing and warranty claims. 10.7 SUMMARY Small businesses form a turbulent part of the national economy because of the large-scale movements in and out of sector. Many new ventures are created every year but an almost equally large number of small businesses close down for various reasons. Challenges facing small businesses are a combination of less controllable internal and external factors arising from personal attributes, technical skills, management competencies and behavior of the owner-entrepreneur that influence the chances of growth of entrepreneurship. Motives vary from those factors which ‘pull’ someone into starting their own business such as search for 205 CU IDOL SELF LEARNING MATERIAL (SLM)

independence to those which ‘push’ an individual into self employment such as the lack of employment alternatives. Once the business is set up, the founder’s personal skills and management behavior largely determine how the firm is managed in crucial functional areas. Evidence from several studies suggest that the success of small enterprises depends more upon the policies it adopts rather than the buoyancy of the market in which it operates. External influences are less important than individual factors such as the management behaviors, competency and personal attribute with which to cope in the small business environment. Some individuals succeed as entrepreneurs when the ends seem stacked against them while others fail when the conditions for success are relatively good. Small businesses face challenges especially in areas of marketing, accounting, finance and management of people. Various experts describe today’s global economy as one in transformation of knowledge economy. Information technology came at the beginning of the 21st century. However, it is not only the information technology, but also working with information itself which conveys the change of thinking and creation of value in modern approaches to business management. These changes are reflected in current economy. Utilization of resources is being shifted from current capital strategic resources to strategic resources in the form of information knowledge, creative thinking and innovation. Skills and knowledge belong to critical factors of production. Enterprises can gain competitive advantage by implementing continual and on-going innovations and the managerial skills and knowledge that are at the centre of this process of innovation. Often, these facts are underestimated by small entrepreneurs and overlooked by support programmes for development of this size of entrepreneurship. 10.8 KEYWORDS  Agents An intermediary who brings buyers and sellers together and facilitates the exchange  Business brokers A business intermediary that brings sellers of their businesses together with potential buyers  Business ethics The rules of moral values that guide decision making—your understanding of the difference between right and wrong  Downsizing The practice of reducing the size of a business  e-business A business that shares information, maintains customer relationships, and conducts transactions by means of telecommunications networks 10.9 LEARNING ACTIVITY 1. How to select the type of enterprise ___________________________________________________________________________ ___________________________________________________________________________ 206 CU IDOL SELF LEARNING MATERIAL (SLM)

2. Discuss the steps for starting an enterprise ___________________________________________________________________________ ___________________________________________________________________________ 10.10 UNIT END QUESTIONS A. Descriptive Questions Short Questions 1. What do you mean by Small-scale industry? 2. Define Sole Proprietorship and discuss its advantages and disadvantages. 3. State generation of business idea 4. State the meaning of feasibility study 5. State Udyog Aadhaar Memorandum Long Questions 1. Differentiate among the Limited Liability Company (LLC), Corporation and S- corporation. 2. Explanation of the importance and business start-ups to the growth of the social economy 3. Describes the factors to be considered while selecting location for enterprise 4. Describe the different subsidies and incentives available for starting an enterprise 5. Describe the role of innovation and creativity B. Multiple Choice Questions 1. The purpose of all good small business strategy is__________. a. To achieve stated objectives. b. To achieve competitive advantage. c. To increase profitability. d. To increase turnover. 207 CU IDOL SELF LEARNING MATERIAL (SLM)

2. In stage of responsibility allocation process the entrepreneur follows: a. Highly decentralized decision making process b. Highly centralized decision making process c. Somewhat centralized decision making process d. No particular standard 3. The entrepreneur’s_______________ depends on his perception of the opportunity. a. Control of resources b. Commitment of resources c. Strategic orientation d. Commitment to opportunity 4. Why are small businesses important to a country’s economy? a. They give an outlet for entrepreneurs. b. They can provide specialist support to larger companies. c. They can be innovators of new products. d. All of these 5. Which of the following is a method of selling goods to another country by taking care of transactions? a. Direct exporting 208 b. Indirect exporting c. Importing CU IDOL SELF LEARNING MATERIAL (SLM)

d. Management contract Answers 1-a, 2-b, 3-c, 4-d, 5-a 10.11 REFERENCES References book  Entrepreneurship: Hisrich, Robert. Michael Peters and Dean Shepherd, Mathew. Tata McGraw-Hill Education, New Delhi 2017.  Entrepreneurship Development: Sangeeta Sharma, PHI, 2017.  Innovation and Entrepreneurship: Peter Drucker, Harper Collins India, 2015.  Entrepreneurship Development and Small Enterprise: Poornima M, Pearson Education, 2014. Textbook references  Entrepreneurship Development: Gordon E and Natarajan K, Himalaya Publishing House, 5th Edition, 2014.  Entrepreneurship A South Asian Perspective: T V Rao, Donald F. Kuratko, Cengage, 1st Edition, 2012.  The Innovators by Walter Isaacson.  Modern Monopolies by Alex Moazed and Nicholas L. Johnson @109.10 Website  www. Yourarticlelibrabry.com  www. Managementstudyguide.com 209 CU IDOL SELF LEARNING MATERIAL (SLM)

UNIT-11 HARVESTING REWARDS STRUCTURE 11.0 Learning Objectives 11.1 Introduction 11.2 Exit strategies for entrepreneurs 11.3 Bankruptcy 11.4 Succession and harvesting strategy 11.5 Summary 11.6 Keywords 11.7 Learning Activity 11.8 Unit end Questions 11.9 References 11.0 LEARNING OBJECTIVES After studying this unit, you will be able to:  Describe Exit Strategies  Discuss Bankruptcy  State Succession and Harvesting strategy 11.1 INTRODUCTION A business exit strategy is a plan for what will happen when you want to leave your business. This strategy describes and outlines the form that the transition will take. Just like you’ve written a business plan to guide your business throughout its life, you should have one that guides it to a conclusion. Your business exit strategy doesn’t have to mean disaster or failure, or even imminent action—in fact, many business owners start their business with the express purpose of exiting 210 CU IDOL SELF LEARNING MATERIAL (SLM)

after a certain number of years. It doesn’t mean they are less committed entrepreneurs. It just means they have a plan in place. This being said, as you think about your business exit strategy, you’ll not only want to consider how you’ll leave, but also other factors that are involved with this process:  Will you make money when you exit your business? How much money will you make?  What will happen to your business after you leave? Will it continue under new ownership?  How long will your exit take? What kind of transition period is involved? 11.2 EXIT STRATEGIES FOR ENTREPRENEURS Let’s explore some of the different options you have in terms of a business exit strategy. At the end of the day, there isn’t necessarily a wrong or a right way to exit your business, but there are certainly options that may work better for you, depending on your particular situation. Therefore, let’s take a look at these eight exit strategies—discussing what they might look like and the pros and cons of each option: 1. Continuing the Legacy in the Family Many entrepreneurs want to keep their business in the family long term, and that means making plans for transitioning the company to a child or another relative at a certain point. This may seem like an attractive business exit strategy because you can groom successors over time—just make sure your family relationships can handle the volatility and stress of business ownership. Although keeping the business in the family for multiple generations may seem like the best way to preserve your name in the business, it’s important to be practical about who is really the best person for the job of running your business. Pros:  You can choose and prepare the person you want to continue your business when you leave.  You don’t have to completely separate from your business and may be able to stay on in some sort of transitional or ongoing advisory role. 211 CU IDOL SELF LEARNING MATERIAL (SLM)

Cons:  You may not find a family member who wants to (or is capable) of taking on the business.  This process may bring a lot of emotional, financial, and general stress to your family.  Employees, business partners, or investors may not support the individual in your family you choose. 2. Merge or Become Acquired by Another Business With a merger or acquisition business exit strategy, your company is either purchased by or merges with, a company with similar or aligned goals to your business. Depending on who you merge with or sell your business to, this method could mean flexibility in terms of your involvement, or the freedom to walk away. Perhaps the best thing about this exit strategy is the ability to negotiate the price of the sell, whereas selling to the public (an IPO) would value your company relative to the industry. This process can take a long time, however, if it happens at all. BizBuySell estimates that only 20% of businesses listed for sale actually get bought.[1] If it’s your dream to merge or get acquired, you might want to have a Plan B just in case. Pros:  You’ll be able to have a clean break from your business (if that’s what you want).  You can negotiate the terms, price, and other details of your merger or acquisition. Cons:  This can be a time-consuming, costly, and perhaps even unsuccessful process.  Your business may cease to exist as it once was—with a range of possible consequences associated with this action. 3. Become Part of an “Acquihire” Different from a traditional acquisition, this exit strategy business plan is one in which a company buys out your business simply for the sake of acquiring its talented or skilled employees. 212 CU IDOL SELF LEARNING MATERIAL (SLM)

Although this means your “legacy” may not endure in name, it will help take care of your employees. In this case, you would need to negotiate terms with your employees’ specific needs in mind: After all, they came to work for you, not another organization. Pros:  You’ll be able to negotiate the terms of this special acquisition, which hopefully means profit for you and a successful future for your employees.  You’ll have a clean exit from your business and won’t have to worry about lingering responsibilities or obligations. Cons:  As we mentioned with typical mergers or acquisitions, this process can be costly, time-consuming, and difficult. Plus, you may not be able to find a buyer interested in an “acquihire.”  And, once again, you’ll be losing the legacy of your business as you created it. 4. Management or Employee Buyout Although it may be difficult to plan ahead for many of these methods, it’s possible that when you’re ready to exit your business, people who already work for you may want to buy your company from you. As these individuals know you and know how to manage the organization, this business exit strategy could result in a smoother transition and increase loyalty to your business’s legacy. Moreover, because these individuals are already part of your business and they likely know you so well, they may allow for flexibility in terms of your involvement—perhaps they’ll want to keep you on as a mentor or advisor. Pros:  You can hand off your business to someone who has experience in the organization— and that you hopefully know and trust.  As you’re still selling the business, you should be able to make some money off the deal.  If you want to remain involved in some capacity, the employees who are buying your business should be more likely to make something work.  Your business’s legacy will remain somewhat intact. 213 CU IDOL SELF LEARNING MATERIAL (SLM)

Cons:  You may not be able to find an employee or manager who wants to buy the business from you.  You may find that these management changes are difficult to implement and may have a negative effect on existing clients. 5. Sell Your Stake to a Partner or Investor If you aren’t the sole proprietor of your business, it’s possible to sell off just your stake to a business partner or other investor. This can be a relatively “business-as-usual” exit strategy, depending on the buyer. Pros:  Your business legacy will remain intact and for the most part, your business should continue to function as usual.  You can exit your business fully and hopefully earn a profit on the sale of your share.  You’re dealing with a buyer you already know and work with, meaning the process should be much easier to approach. Cons:  You may not find a buyer or investor who is willing to purchase your share.  It may be more difficult to stay involved in your business in any capacity.  The process could end up being contentious between you and your partner or investor—leading to a range of potential problems. 6. Take Your Business Public With an IPO Many entrepreneurs dream of one day selling their business to the public for a large profit. However, in the realm of small business exit strategy planning, this method certainly isn’t for everyone—business conditions need to be just right for this option to be possible. Even if your business is booming, your industry may not appeal to the public in a way that gets stock buyers excited, thus devaluing your company. Not to mention the fact that IPOs are very rare: Whereas domestic public companies in the U.S. reached about 8,000 (out of millions) in the late 90s, the number has fallen to around 3,600 in recent years.[2] 214 CU IDOL SELF LEARNING MATERIAL (SLM)

This being said, however, if it’s possible for you and the conditions are right, an IPO can be very lucrative. Pros:  Out of all of the business exit strategies out there, this is probably the one that’s most likely to earn you a substantial profit. Cons:  This is probably one of the most difficult exit strategies, requiring certain conditions and significant time, effort, and money.  Going public also means intense scrutiny from stockholders and analysts, as well as a number of requirements (like business valuation) that must be met and processes that must be completed.  IPO success is very difficult and rare—especially for many small to medium-sized businesses. 7. Liquidate Your Business As an exit strategy business plan goes, this one is the most final. If you liquidate, you’ll be closing your business and selling your assets. This being said, however, liquidation doesn’t have to mean defeat—just an ending to a chapter. If you decide this is what you want to do, just remember that you’ll need to use the cash you earn through the process to pay off any debts and payout any shareholders. You’ll also want to remember how this option may affect employees, as well as clients or customers who rely on your service. Pros:  You’ll never have to worry about the business again, free of the chains involved in trying to preserve a legacy.  Compared to some other business exit strategies, this can be one of the simplest and quickest methods. Cons:  You likely won’t get the biggest return on investment with this option. 215 CU IDOL SELF LEARNING MATERIAL (SLM)

 This strategy means possibly severing relationships with employees, partners, clients, customers, and anyone else involved with the day-to-day or general operations of your business. 8. Declare Bankruptcy As far as small business exit strategy planning goes, this last method is the option that you can’t really plan for. Ultimately, no one wants to file for bankruptcy, however, this could be your last resort if something goes wrong (or you never managed to plan ahead with any of the other exit strategies listed above). In fact, sometimes the necessity for a bankruptcy filing comes before you’re ready—but in the lifecycle of businesses, it’s not the end of the world. Although you may have assets seized and troublesome credit that will need to be rebuilt, you’ll be relieved of debts and the burden of the business if things get really bad. Unfortunately, the possibility of bankruptcy is one of the many risks involved with starting and owning a business. Therefore, if the option of bankruptcy does become a reality for you, you’ll want to be sure to understand exactly what happens when you file business bankruptcy for Chapter 7, 11, or 13. Pros:  This official step will relieve you of the responsibilities and debts of your business.  You’ll be able to move on from your business and start to rebuild your credit. Cons:  You may not be able to relieve all of your debts when filing bankruptcy.  A bankruptcy filing will likely affect your ability to borrow credit in the future.  This process will likely mean the untimely end of relationships with anyone involved with running your business, as well as clients and customers. 11.3 BANKRUPTCY Bankruptcy is a legal proceeding involving a person or business that is unable to repay their outstanding debts. The bankruptcy process begins with a petition filed by the debtor, which is most common, or on behalf of creditors, which is less common. All of the debtor's assets are measured and evaluated, and the assets may be used to repay a portion of outstanding debt. 216 CU IDOL SELF LEARNING MATERIAL (SLM)

Bankruptcy offers an individual or business a chance to start fresh by forgiving debts that simply cannot be paid while giving creditors a chance to obtain some measure of repayment based on the individual's or business's assets available for liquidation. In theory, the ability to file for bankruptcy benefits the overall economy by allowing people and companies a second chance to gain access to credit and by providing creditors with a portion of debt repayment. Upon the successful completion of bankruptcy proceedings, the debtor is relieved of the debt obligations that were incurred prior to filing for bankruptcy. All bankruptcy cases in the United States are handled through federal courts. Any decisions in federal bankruptcy cases are made by a bankruptcy judge, including whether a debtor is eligible to file and whether they should be discharged of their debts. Administration over bankruptcy cases is often handled by a trustee, an officer appointed by the United States Trustee Program of the Department of Justice, to represent the debtor's estate in the proceeding. There is usually very little direct contact between the debtor and the judge unless there is some objection made in the case by a creditor. Types of Bankruptcy Filings Bankruptcy filings in the United States fall under one of several chapters of the Bankruptcy Code, including Chapter 7, which involves the liquidation of assets; Chapter 11, which deals with company or individual reorganizations; and Chapter 13, which arranges for debt repayment with lowered debt covenants or specific payment plans. Bankruptcy filing costs vary, depending on the type of bankruptcy, the complexity of the case, and other factors. Chapter 7 Bankruptcy Individuals—and in some cases businesses, with few or no assets—typically file Chapter 7 bankruptcy. It allows them to dispose of their unsecured debts, such as credit card balances and medical bills. Those with nonexempt assets, such as family heirlooms (collections with high valuations, such as coin or stamp collections); second homes; and cash, stocks, or bonds must liquidate the property to repay some or all of their unsecured debts. A person filing Chapter 7 bankruptcy is basically selling off their assets to clear their debt. People who have no valuable assets and only exempt property—such as household goods, clothing, tools for their trades, and a personal vehicle worth up to a certain value—may end up repaying no part of their unsecured debt.2 Chapter 11 Bankruptcy Businesses often file Chapter 11 bankruptcy, the goal of which is to reorganize, remain in business, and once again become profitable. Filing Chapter 11 bankruptcy allows a company to create plans for profitability, cut costs, and find new ways to increase revenue. Their preferred stockholders, if any, may still receive payments, though common stockholders will not. 217 CU IDOL SELF LEARNING MATERIAL (SLM)

For example, a housekeeping business filing Chapter 11 bankruptcy might increase its rates slightly and offer more services to become profitable. Chapter 11 bankruptcy allows the business to continue conducting its business activities without interruption while working on a debt repayment plan under the court's supervision. In rare cases, individuals can also file Chapter 11 bankruptcy. Chapter 13 Bankruptcy Individuals who make too much money to qualify for Chapter 7 bankruptcy may file under Chapter 13, also known as a wage earner's plan. It allows individuals—as well as businesses, with consistent income—to create workable debt repayment plans. The repayment plans are commonly in installments over the course of a three- to five-year period. In exchange for repaying their creditors, the courts allow these debtors to keep all of their property, including otherwise nonexempt property. Other Bankruptcy Filings While Chapter 7, Chapter 11, and Chapter 13 are the most common bankruptcy proceedings, especially as far as individuals are concerned, the law also provides for several other types: Chapter 9 bankruptcy is available to financially distressed municipalities, including cities, towns, villages, counties, and school districts. Under Chapter 9, municipalities do not have to liquidate assets to repay their debts but are instead allowed to develop a plan for repaying them over time. Chapter 10 bankruptcy, which effectively ended in 1978, was a form of corporate bankruptcy that has been supplanted by Chapter 11. Chapter 12 bankruptcy provides relief to family farms and fisheries. They are allowed to maintain their businesses while working out a plan to repay their debts. Chapter 15 bankruptcy was added to the law in 2005 to deal with cross-border cases, which involve debtors, assets, creditors, and other parties that may be in more than one country. This type of petition is usually filed in the debtor's home country. Being Discharged From Bankruptcy When a debtor receives a discharge order, they are no longer legally required to pay the debts specified in the order. What's more, any creditor listed on the discharge order cannot legally undertake any type of collection activity (such as making phone calls or sending letters) against the debtor once the discharge order is in force. However, not all debts qualify to be discharged. Some of these include tax claims, anything that was not listed by the debtor, child support or alimony payments, personal injury debts, and debts to the government. In addition, any secured creditor can still enforce a lien against property owned by the debtor, provided that the lien is still valid. 218 CU IDOL SELF LEARNING MATERIAL (SLM)

Debtors do not necessarily have the right to a discharge. When a petition for bankruptcy has been filed in court, creditors receive a notice and can object if they choose to do so. If they do, they will need to file a complaint in the court before the deadline. This leads to the filing of an adversary proceeding to recover money owed or enforce a lien. The discharge from Chapter 7 is usually granted about four months after the debtor files to petition for bankruptcy. For any other type of bankruptcy, the discharge can occur when it becomes practical. Advantages and Disadvantages of Bankruptcy Declaring bankruptcy can help relieve you of your legal obligation to pay your debts and save your home, business, or ability to function financially, depending on which kind of bankruptcy petition you file. But it also can lower your credit rating, making it more difficult to get a loan, mortgage, or credit card, or to buy a home or business, or rent an apartment. If you're trying to decide whether you should file for bankruptcy, your credit is probably already damaged. But it's worth noting that a Chapter 7 filing will stay on your credit report for 10 years, while a Chapter 13 will remain there for seven. Any creditors or lenders you apply to for new debt (such as a car loan, credit card, line of credit, or mortgage) will see the discharge on your report, which can prevent you from getting any credit. 11.4 SUCCESSION AND HARVESTING STRATEGY In the excitement of starting a business – preparing the business plan, marketing strategies and budgets – few discuss how the business will end, which is called the harvest or harvesting strategy. They should. Every product eventually becomes obsolete as better, faster, easier or more advanced products replace it. Harvesting strategies can be planned for a product, an entire product line or the business itself, and this planning can make the difference between making or losing money on the way out. Understanding the Typical Business Cycle Every product, product line and business goes through four stages, explains an article in Forbes: 1. The startup stage at the beginning, when you're tweaking your business model and everyone is wearing many hats 2. The growth stage when marketing creates demand, you continue to gain new customers, and existing customer relationships are maturing 3. The maturity stage, when operations are smooth and revenue is steady 219 CU IDOL SELF LEARNING MATERIAL (SLM)

4. The renewal or decline stage, when you should look for new opportunities, innovations and areas to profit, or if revenues aren't growing, think about the best exit plan Explore Types of Harvest Strategy There are several methods of harvesting a business. Companies use a harvesting strategy when a business or product reaches the \"cash cow\" stage, according to Market Business News. This means it is still bringing in money without the need for further investment, and any additional money spent on it would not be enough to justify the cost. Operating as a \"lifestyle company\" is one of the types of harvest strategies. This involves taking money out of the company through the years to give yourself a good lifestyle, according to an Entrepreneur article on exit strategies written by Stever Robbins, who co- designed part of Harvard's MBA program and has been involved in numerous startups. If your business is private rather than public, you can pay yourself and partners a high salary or take big bonuses. The downside to this harvesting strategy example is that you won't have this money if you need to invest in the company later, and you'll be taxed on the high income when you take it. Two other options are liquidating or selling your business, although liquidating should be a last resort when you can't find any buyers. Assuming you have equity remaining in the business – you didn't use it for a high-end lifestyle – the U.S. Small Business Association (SBA) explains that you can sell your business outright, sell gradually by financing the sale, or lease it. Either way, you still get income. SBA recommends trying different methods to put a value on your business and see which works best in your situation. Common valuation methods are to consider the revenue you have coming in, research the sell price of similar businesses, or subtract liabilities from assets. Instead of selling or leasing, you might transfer ownership – to kids or grandkids, perhaps – so that you're relieved of day-to-day operations but still receive money from the business. Plan Early for Your Exit By having an idea of your exit plan while your business is still flourishing, you can avoid making decisions that will cost you more down the road. Putting the strategy in your original business plan makes it official and allows you to work toward it. For example, if your plan is to transfer or sell the business to your kids, you'll naturally want to involve them in the business now, train them in various aspects of the company, and turn it over to them when you know they're ready. Should you need financing at some point, a business plan with a harvesting strategy shows your preparedness. 220 CU IDOL SELF LEARNING MATERIAL (SLM)

Entrepreneur's Robbins cautions that if your strategy is to take the company public at some point, have a second strategy in your business plan. It can cost millions of dollars in preparation and fees, and few companies actually become public. It's much more likely you'll build the company enough to earn a decent salary and maybe even find the ideal buyer. 11.5 SUMMARY A harvest strategy is a calculated decision to minimize all types of spending on a specific product to maximize profitability, despite a potential decline in market share. A harvesting strategy can be developed for product or business lines and serves as an “exit” plan should a product become outdated. Harvesting strategies are usually used and put into action at the end of a product or business life cycle. At this point, it is decided that additional investment into the product or business line will not increase revenue. 11.6 KEYWORDS  Exporting Selling goods or services in a foreign country  Fixed-rate loan A loan whose interest rate remains constant  Goodwill The intangible asset that allows businesses to earn a higher return than a comparable business with the same tangible assets might generate  grid layout A type of layout used by retail stores to move customers past merchandise arranged on rows of shelves or fixtures  Harvest The stage when the owner removes himself or herself from the business. Harvesting a business can be thought of as picking the fruit after years of labour 11.7 LEARNING ACTIVITY 1. State the meaning of Declare bankruptcy ___________________________________________________________________________ ___________________________________________________________________________ 2. Understand the typical business cycle ___________________________________________________________________________ ___________________________________________________________________________ 11.8 UNIT END QUESTIONS A. Descriptive Questions 221 CU IDOL SELF LEARNING MATERIAL (SLM)

Short Questions 1. What is succession planning? 2. Why is succession planning needed? 3. What Is a Business Exit Strategy? 4. State the pros and cons of continuing legacy in the family 5. State Chapter 11 bankruptcy Long Questions 1. What are the different types of exit strategies for entrepreneurs and its pros and cons? 2. What are the benefits of becoming part of an “Acquihire” 3. Analyze the advantages and disadvantages of bankruptcy 4. Explore different types of harvest strategy 5. Discuss the merger as exit strategy B. Multiple Choice Questions 1. Early signs of bankruptcy are most often a. interrelated b. occur in isolated instances c. apparent to the entrepreneur d. unavoidable 2. The most common bankruptcies are: 222 a. S corporation bankruptcies b. individual bankruptcies c. partnership bankruptcies CU IDOL SELF LEARNING MATERIAL (SLM)

d. corporate bankruptcies 3. When should you spell out your exit strategy for investors? a. in your annual report to investors once the business is up and running b. once the business begins to show a net profit c. in your business plan d. None of these 4. If a company wishes to exit a business and can pay-off all its debts in full from the sale proceeds of its assets, it may initiate _______. a. compulsory liquidation process b. corporate liquidation process c. fast track liquidation process d. voluntary liquidation process 5. What is a succession plan? a. A formal process of planning to fill a role that will become vacant b. Dismissing an employee for a more favourable employee c. A vote of no confidence in a board member d. The formal process of acquiring a new staff member Answers 1-a, 2-b, 3-c, 4-d, 5-a 223 CU IDOL SELF LEARNING MATERIAL (SLM)

11.9 REFERENCES References book  Entrepreneurship: Hisrich, Robert. Michael Peters and Dean Shepherd, Mathew. Tata McGraw-Hill Education, New Delhi 2017.  Entrepreneurship Development: Sangeeta Sharma, PHI, 2017.  Innovation and Entrepreneurship: Peter Drucker, Harper Collins India, 2015.  Entrepreneurship Development and Small Enterprise: Poornima M, Pearson Education, 2014. Textbook references  Entrepreneurship Development: Gordon E and Natarajan K, Himalaya Publishing House, 5th Edition, 2014.  Entrepreneurship A South Asian Perspective: T V Rao, Donald F. Kuratko, Cengage, 1st Edition, 2012.  The Innovators by Walter Isaacson.  Modern Monopolies by Alex Moazed and Nicholas L. Johnson @109.10 Website  www. Yourarticlelibrabry.com  www. Managementstudyguide.com 224 CU IDOL SELF LEARNING MATERIAL (SLM)

UNIT-12 STATE INDUSTRIES ACTS STRUCTURE 12.0 Learning Objectives 12.1 Introduction 12.2 Guidelines 12.3 Factories Act 1948 12.4 Payment of Wages Act 1948 12.5 Summary 12.6 Keywords 12.7 Learning Activity 12.8 Unit End Questions 12.9 References 12.0 LEARNING OBJECTIVES After studying this unit, you will be able to:  Describe factories Act  Discuss payment of wages act  Explain the Guidelines 12.1 INTRODUCTION The quest for industrial development started soon after independence in 1947. The Industrial Policy Resolution of 1948 defined the broad contours of the policy delineating the role of the State in industrial development both as an entrepreneur and authority. This was followed by comprehensive enactment of Industries (Development & Regulation) Act, 1951 (referred as IDR Act) that provides for the necessary framework for implementing the Industrial Policy and enables the Union Government to direct investment into desired channels of industrial activity inter alia through the mechanism of licensing keeping with national development objectives and goals. 225 CU IDOL SELF LEARNING MATERIAL (SLM)

The main objectives of the Industrial Policy of the Government are (i) to maintain a sustained growth in productivity;(ii) to enhance gainful employment;(iii) to achieve optimal utilisation of human resources; (iv) to attain international competitiveness; and (v) to transform India into a major partner and player in the global arena. To achieve these objectives, the Policy focus is on deregulating Indian industry; allowing freedom and flexibility to the industry in responding to market forces; and providing a policy regime that facilitates and fosters growth. Economic reforms initiated since 1991 envisages a significantly bigger role for private initiatives. The policy has been progressively liberalized over years to at present, as would be evident in subsequent paragraphs. 12.2 GUIDELINES • Not maintaining cleanliness in the factory. • Not providing and maintaining arrangements for drinking water for the workers. • Not providing latrine and urinals. • Not providing spittoons. • Not providing and maintaining washing facilities for workers. • Not providing sitting facilities to workmen. • Not providing and maintaining first aid facilities for workmen. • Not providing and maintaining canteen facilities as further provisions. • Not providing and maintaining shelters, restrooms and lunch rooms as per the provisions. • Not complying with the rules framed under section 50 of the Act. • Not displaying the notices and not maintaining the registers of compensatory holiday. • Not maintaining the registers which are required to maintain under the Act. • Allowing worker double employment on any day. • Not displaying notice of periods of work for adult workers. • Not maintaining the register of adult workers. • Allowing workers to work not in correspond with the working hours mentioned in the notice. • If the rules while exempting the factory from certain provisions if not followed. 226 CU IDOL SELF LEARNING MATERIAL (SLM)

• If the annual leave as per the law is not provided and wages for the authorised leave is not paid. • If the advance in certain cases as per the legal provision is not paid to the workers. • The owner of the premises has not complied with the required legal provisions. • If workers have failed to discharge their legal responsibility. • If the notices under the Act are not displayed. • If employer denies the lawful and legal rights of the workers. • If employer changes the facilities and conveniences offered to workers. These are certain instances, when in the office, can be compounded before the authorised officer. By this change for every small prosecution now Factory Manager or Occupier is not required to face the prosecution before the Magistrate. It is an effort on the part of the State Government to simplify the provisions and avoid litigation for comparatively small offences. 12.3 FACTORIES ACT 1948 There has been rise of large scale factory/ industry in India in the later half of nineteenth century. Major Moore, Inspector-in- Chief of the Bombay Cotton Department, in his Report in 1872-73 first of all raised the question for the provision of legislation to regulate the working condition in factories; the first Factories act was enacted in 1881. Since then the act has been amended on many occasions. The Factories Act 1934 was passed replacing all the previous legislation in regard to factories. This act was drafted in the light of the recommendations of the Royal Commission on Labour. This Act has also been amended suitably from time to time. The experience of working of the Factories Act, 1934 had revealed a number of defects and weakness which have hampered effective administration of the Act, and the need for wholesale revision of the act to extend its protective provisions to the large number of smaller industrial establishments was felt. Therefore, the Factories Act, 1948 consolidating and amending the law relating to labour in factories, was passed by the Constituent Assembly on August 28, 1948. The Act received the assent of Governor General of India on 23 September 1948 and came into force on April 1, 1949. Objective of Factories Act, 1948 227 CU IDOL SELF LEARNING MATERIAL (SLM)

The main objectives of the Indian Factories Act, 1948are to regulate the working conditions in factories, to regulate health, safety welfare, and annual leave and enact special provision in respect of young persons, women and children who work in the factories. 1. Working Hours: According to the provision of working hours of adults, no adult worker shall be required or allowed to work in a factory for more than 48 hours in a week. There should be a weekly holiday. 2. Health: For protecting the health of workers, the Act lays down that every factory shall be kept clean and all necessary precautions shall be taken in this regard. The factories should have proper drainage system, adequate lighting, ventilation, temperature etc. Adequate arrangements for drinking water should be made. Sufficient latrine and urinals should be provided at convenient places. These should be easily accessible to workers and must be kept cleaned. 3. Safety: In order to provide safety to the workers, the Act provides that the machinery should be fenced, no young person shall work at any dangerous machine, in confined spaces, there should be provision for manÂ-holes of adequate size so that in case of emergency the workers can escape. 4. Welfare: For the welfare of the workers, the Act provides that in every factory adequate and suitable facilities for washing should be provided and maintained for the use of workers. Facilities for storing and drying clothing, facilities for sitting, first-aid appliances, shelters, rest rooms’ and lunch rooms, crèches, should be there. 5. Penalties:- The provisions of The Factories Act, 1948, or any rules made under the Act, or any order given in writing under the Act is violated, it is treated as an offence. The following penalties can be imposed:- (a) Imprisonment for a term which may extend to one year; (b) Fine which may extend to one lakh rupees; or 228 CU IDOL SELF LEARNING MATERIAL (SLM)

(c) Both fine and imprisonment. If a worker misuses an appliance related to welfare, safety and health of workers, or in relation to discharge of his duties, he can be imposed a penalty of Rs. 500/-. Applicability of Factories Act, 1948 The Act is applicable to any factory whereon ten or more workers are working, or were working on any day of the preceding twelve months, and in any part of which a manufacturing process is being carried on with the aid of power, or is ordinarily so carried on, or whereon twenty or more workers are working, or were working on any day of the preceding twelve months, and in any part of which a manufacturing process is being carried on without the aid of power, or is ordinarily so carried on; but this does not include a mine, or a mobile unit belonging to the armed forces of the union, a railway running shed or a hotel, restaurant or eating place. Importance of Factories Act, 1948 The Factories Act, 1948 is a beneficial legislation. The aim and object of the Act is essentially to safeguard the interests of workers, stop their exploitation and take care of their safety, hygiene and welfare at their places of work. It casts various obligations, duties and responsibilities on the occupier of a factory and also on the factory manager. Amendments to the Act and court decisions have further extended the nature and scope of the concept of occupier, especially vis-a-vis hazardous processes in factories. Definitions 1. Who is an Occupier? According to section 2(n) \"occupier\" of a factory means the person, who has ultimate control over the affairs of the factory? Provided that- (i) in the case of a firm or other association of individuals, any one of the individual partners or members thereof shall be deemed to be the occupier; (ii) in the case of a company, any one of the directors, shall be deemed to be the occupier: (iii) in the case of a factory owned or controlled by the Central Government or any State Government, or any local authority, the person or persons appointed to manage the affairs of the factory by the Central Government, the State Government or the local authority, as the case may be, shall be deemed to be the occupier: 229 CU IDOL SELF LEARNING MATERIAL (SLM)

Provided further that in the case of a ship which is being repaired, or on which maintenance work is being carried out, in a dry dock which is available for hire, (1) The owner of the dock shall be deemed to be the occupier for the purposes of any matter provided for by or under- (a) Section 6, section 7, section 7A, section 7B, section 11 or section 12; (b) Section 17, in so far as it relates to the providing and maintenance of sufficient and suitable lighting in or around the dock; (e) section 18, section 19, section 42, section 46, section 47 or section 49, in relation to the workers employed on such repair or maintenance; (2) the owner of the ship or his agent or master or other officer-in-charge of the ship or any person who contracts with such owner, agent or master or other officer-in-charge to carry out the repair or maintenance work shall be deemed to be the occupier for the purposes of any matter provided for by or under section 13, section 14, section 16 or section 17 (save as otherwise provided in this proviso) or Chapter IV (except section 27) or section 43, section 44 or section 45, Chapter VI, Chapter VII, Chapter VIII or Chapter IX or section 108, section 109 or section 110, in relation to- (a) the workers employed directly by him or by or through any agency; and (b) the machinery, plant or premises in use for the purpose of carrying out such repair or maintenance work by such owner, agent, master or other officer-in-charge or person. ION Exchange India Ltd. V.Deputy Chief Inspector of factories, Salem (1996).It was held that owner can nominate any person tobe in ultimate control over the affairs of a factory. If no one else has been nominated to be in ultimate control over the affairs of the company, Director of a company or any partner of partnership is deemed to be the occupier. 2. What is a factory? According to section 2(m) \"factory\" means any premises including the precincts thereof- (i) whereon ten or more workers are working, or were working on any day of the preceding twelve months, and in any part of which a manufacturing process is being carried on with the aid of power, or is ordinarily so carried on, or (ii) whereon twenty or more workers are working, or were working on any day of the preceding twelve months, and in any part of which a manufacturing process is being carried on without the aid of power, or is ordinarily so carried on, - but does not include a mine 230 CU IDOL SELF LEARNING MATERIAL (SLM)

subject to the operation of the Mines Act, 1952 (XXXV of 1952) or a mobile unit belonging to the armed forces of the Union, a railway running shed or a hotel, restaurant or eating place; Explanation I--- For computing the number of workers for the purposes of this clause all the workers in different groups and relays in a day shall be taken into account; Explanation II.---For the purposes of this clause, the mere fact that an Electronic Data Processing Unit or a Computer Unit is installed in any premises or part thereof, shall not be construed to make it a factory if no manufacturing process is being carried on in such premises or part thereof; 3. Who is a Worker? According to section 2(l) ―worker\" means a person employed directly or by or through any agency (including a contractor) with or without the knowledge of the principal employer whether for remuneration or not in any manufacturing process, or in cleaning any part of the machinery or premises used for a manufacturing process, or in any other kind of work incidental to, or connected with the manufacturing process, or the subject of the manufacturing process but does not include any member of the armed forces of the Union; 4. What is a Manufacturing Process? According to section 2(k) \"manufacturing process\" means any process for- (i) making, altering, repairing, ornamenting, finishing, packing, oiling, washing, cleaning, breaking up, demolishing or otherwise treating or adopting any article or substance with a view to its use, sale, transport, delivery or disposal; or (ii) Pumping oil, water, sewage, or any other substance; or (iii) Generating, transforming or transmitting power; or (iv) composing types for printing, printing by letter press, lithography, photogravure or other similar process or book-binding; or (v) Constructing, reconstructing, repairing, refitting, finishing or breaking up ships or vessels; or (vi) Preserving or storing any article in cold storage; 5. What is hazardous process? According to section 2(cb) \"hazardous process\" means any process or activity in relation to an industry specified in the 'First Schedule where, unless special care is taken, raw materials 231 CU IDOL SELF LEARNING MATERIAL (SLM)

used therein or the intermediate or finished products, bye-products, wastes or effluents thereof would- (i) cause material impairment to the health of the persons engaged in or connected therewith, or (ii) result in the pollution of the general environment:- Provided that the State Government may, by notification in the official Gazette, amend the First Schedule by way of addition, omission or variation of any industry specified in the said Schedule; Duties of Occupier The Duties of Occupier have been clearly mentioned in the following sections of Factories Act, 1948: - 1. Notice by Occupier (Section 7) The occupier shall, send to the Chief Inspector a written notice in respect of all establishments which come within the scope of the Act for the first time, before a factory engaged in a manufacturing process which is ordinarily carried on for less than one hundred and eighty working days in the year resumes working, whenever a new manager is appointed. During any period for which no person has been designated as manager of a factory or during which the person designated does not manage the factory, any person found acting as manager, or if no such person is found, the occupier himself, shall be deemed to be the manager of the factory for the purposes of this Act. 2. General Duties of the Occupier (Section7A) # To ensure the health, safety and welfare of all workers while they are at work in the factory. # To provide and maintain the plant and systems of work in the factory that are safe and without risk to health of the workers. # To provide arrangements in the factory for ensuring safety and absence of risk to health in connection with the use, handling, storage and transport of articles and substances # To provide such information, instruction, training and supervision as are necessary to ensure the health and safety of all workers at work. # To maintain all places of work in the factory in a condition that is safe and without risks to health and to provide and maintain such means of access to, and egress from, such places as are safe and without such risks. # To provide, maintain or monitor such working environment in the factory for the workers that is safe, without risk to health and adequate as regards facilities and arrangements for their welfare at work. 232 CU IDOL SELF LEARNING MATERIAL (SLM)

# To prepare a written statement of his general policy with respect to the health and safety of the workers at work and the organization and arrangements in force for carrying out that policy. 3. Appointment of Safety officers. (Section 40-B) It shall be the duty of the of the Occupier to Appoint a Safety officer in a factory:- (i) Wherein one thousand or more workers are ordinarily employed, or (ii) Wherein, in the opinion of the State Government, any manufacturing process or operation is carried on, which process or operation involves any risk of bodily injury, poisoning or disease, or any other hazard to health, to the persons employed in the factory, if so required by the State Government by notification in the official Gazette. 4. Compulsory Disclosure of Information by the Occupier. (Section 41-B) Compulsory disclosure of information by the occupier - # The occupier of every factory involving a hazardous process shall disclose in the manner prescribed to the Chief Inspector and the local authority. # The occupier shall, at the time of registering the factory involving a hazardous process, lay down a detailed policy with respect to the health and safety of the workers employed therein and intimates such policy to the Chief Inspector and the local authority. # Every occupier shall, with the approval of the Chief Inspector, draw up an on-site emergency plan and detailed disaster control measures for his factory and make known to the workers employed therein and to the general public living in the vicinity of the factory the safety measures required to be taken in the event of an accident taking place. # The occupier of a factory involving a hazardous process shall, with the previous approval of the Chief Inspector, lay down measures for the handling, usage, transportation and storage of hazardous substances inside the factory premises and the disposal of such substances outside the factory premises and publicise them in the manner prescribed among the workers and the general public living in the vicinity. 5. Specific Responsibility of the occupier in relation to Hazardous Process. (Section 41-C) Every occupier of a factory involving any hazardous process shall- # maintain accurate and up-to-date health records or, as the case may be, medical records, of the workers in the factory 233 CU IDOL SELF LEARNING MATERIAL (SLM)

# appoint persons who possess qualifications and experience in handling hazardous substances # Provide for medical examination of every worker. 6. Worker’s Participation in safety management. (Section 41-G) The occupier shall, in every factory where a hazardous process takes place, or where hazardous substances are used or handled, set up a Safety Committee consisting of equal number of representatives of workers and management to promote co-operation between the workers and the management in maintaining proper safety and health at work and to review periodically the measures taken in that behalf. 7. Right of Workers to be warned about imminent dangers. (Section 41-H) It shall be the duty of such occupier, agent, manager or the person in charge of the factory or process to take immediate remedial action if he is satisfied about the existence of such imminent danger and send a report forthwith of the action taken to the nearest Inspector. 8. Facilities for sitting and Canteens. (Section 42 to 49) It is the duty of occupier to provide welfare facilities like Lunch rooms, Canteen, Crèche, Washing facilities, first-aid appliances etc. to all workers and to appoint a welfare officer. 9. Annual Leave with Wage.(Section 79) For the purpose of ensuring the continuity of work, the occupier or manager of the factory, in agreement with the Works Committee of the factory constituted under section 3 of the Industrial Disputes Act, 1947 (14 of 1947), or a similar Committee constituted under any other Act or if there is no such Works Committee or a similar Committee in the factory, in agreement with the representatives of the workers therein chosen in the prescribed manner, may lodge with the Chief Inspector a scheme in writing whereby the grant of leave allowable under this section may be regulated. 10. Safety and Occupational Health Survey. (Section 91-A) The occupier or manager of the factory or any other person who for the time being purports to be in charge of the factory, undertake safety and occupational health surveys, and such occupier or manager or other person shall afford all facilities for such every, including facilities for the examination and testing of plant and machinery and collection of samples and other data relevant to the survey. Duties of Factory Manager 234 CU IDOL SELF LEARNING MATERIAL (SLM)

The Duties of Factory Manager are mentioned in the following Sections of Factory Act, 1948: - 1. Right of Workers to be warned about imminent danger. (Section 41-H) It shall be the duty of such occupier, agent, manager or the person in charge of the factory or process to take immediate remedial action if he is satisfied about the existence of such imminent danger in the factory where the worker is engaged in any hazardous process and send a report forthwith of the action taken to the nearest Inspector. 2. Notice of periods of work for adults. (Section 61) The manager of the factory shall display correctly and maintained in every factory in accordance with the provisions of sub-section (2) of section 108, a notice of periods of work for adults, showing clearly for every day the periods during which adult workers may be required to work, fix the periods during which each relay of the group may be required to work, classify them into groups according to the nature of their work indicating the number of workers in each group, shall draw up a scheme of shifts where under the periods during which any relay of the group may be required to work. 3. Register of Adult Workers. (Section 62) The manager of every factory shall maintain a register of adult workers, to be available to the Inspector at all times during working hours, or when any work is being carried on in the factory. In State of Maharashtra v. Sampat Lal Mensukh Bothra (1992),it was held that the obligation to maintain registers is imposed on the manager and 4. Annual Leave with Wage. (Section 79) For the purpose of ensuring the continuity of work, the occupier or manager of the factory, in agreement with the Works Committee of the factory constituted under section 3 of the Industrial Disputes Act, 1947 (14 of 1947), or a similar Committee constituted under any other Act or if there is no such Works Committee or a similar Committee in the factory, in agreement with the representatives of the workers therein chosen in the prescribed manner, may lodge with the Chief Inspector a scheme in writing whereby the grant of leave allowable under this section may be regulated. 5. Notice of Certain Dangerous Occurrences. (Section 88A) Notice of certain dangerous occurrences. —Where in a factory any dangerous occurrence of such nature as may be prescribed occurs, whether causing any bodily injury or disability or 235 CU IDOL SELF LEARNING MATERIAL (SLM)

not, the manager of the factory shall send notice thereof to such authorities, and in such form and within such time, as may be prescribed. 6. Notice of Certain Disease. (Section 89) Where any worker in a factory contracts any disease specified in 1[the Third Schedule], the manager of the factory shall send notice thereof to such authorities, and in such form and within such time, as may be prescribed. 7. Safety and Occupational Health Survey. (Section 91-A) The occupier or manager of the factory or any other person who for the time being purports to be in charge of the factory, undertake safety and occupational health surveys, and such occupier or manager or other person shall afford all facilities for such every, including facilities for the examination and testing of plant and machinery and collection of samples and other data relevant to the survey. 8. Notice of Certain Accidents. (Section 88) Where in any factory an accident occurs which causes death, or which causes any bodily injury by reason of which the person injured is prevented from working for a period of forty- eight hours or more immediately following the accident, or which is of such nature as may be prescribed in this behalf, the manager of the factory shall send notice thereof to such authorities, and in such form and within such time, as may be prescribed to the Chief Inspector. General Procedure As To Filing of Cases In Case of Factory Accidents Whenever an accident takes place in a factory the Occupier or Factory Manager shall inform the Chief Inspector within a period of forty eight hours or so (Section 88) and shall send Form No. 22 containing all the information regarding the said accident to Labour Department, Industrial Health And Safety, which shall inquire into the matter by factory inspector who shall inspect the accident spot, take the witness of the victims, then he shall issue a show cause notice to the Occupier and Factory Manager to reason out the causes of the mis happening. If the Factory Inspector is not satisfied with the reply given by the factory management he shall institute a case against the Occupier and Factory Manager before Judicial Magistrate First Class, Labour Court (Section 105).Then in case if the party to the disputes are not satisfied with the judgement they shall refer the case to the High Court or and to the Supreme Court respectively. Penalties under factory act, 1948 Section 92. General penalty for offences. - 236 CU IDOL SELF LEARNING MATERIAL (SLM)

Save as is otherwise expressly provided in this Act and subject to the provisions of section 93, if in, or in respect of, any factory there is any contravention of the provisions of this Act or of any rules made there under or of any order in writing given there under, the occupier or manager of the factory shall each be guilty of an offence and punishable with imprisonment for a term which may extend to two years or with fine which may extend to one lakh rupees or with both, and if the contravention is continued after conviction, with as further fine which may extend to one thousand rupees for each day on which the contravention is so continued. Provided that where contravention of any of the provisions of Chapter IV or any rule made there under or under section 87 has resulted in an accident causing death or serious bodily injury, the fine shall not be less than twenty-five thousand rupees in the case of an accident causing death, and five thousand rupees in the case of an accident causing serious bodily injury. Explanation. - in this section and in section 94 \"serious bodily injury\" means an injury which involves, or in all probability will involve, the permanent loss of the use of, or permanent injury to, any limb or the permanent loss of, or injury to sight or hearing, or the fracture of any bone, but shall not include, the fracture of bone or joint (not being fracture of more than one bone or joint) of and phalanges of the hand or foot. General Manager, Wheel & A. P, Bangalore v. State of Karnataka (1996) .It was held in this case that the requirement of obtaining sanction to prosecute is mandatory and taking cognizance of an offence in the absence of sanction cannot be allowed to stand and has to be quashed. Provincial Government v. Ganpat, AIR 1943 Nag 243.It was held in this case where the occupier or the manager of the factory admits the guilt under Section 92 of the Act, but alleges the clerk of the Factory to be the actual offender, the onus of establishing the innocence is on such occupier or the manager as the case maybe. Section 94. Enhanced penalty after previous conviction. - (1) If any person who has been convicted of any offence punishable under section 92 is again found guilty of an offence involving a contravention of the same provision, he shall be punishable on a subsequent conviction with imprisonment for a term which may extend to three years or with fine, which shall not be less than ten thousand rupees but which may extend to two lakh rupees or with both; Provided that the Court may, for any adequate and special reasons to be mentioned in the judgment, impose a fine of less than ten thousand rupees: Provided further that where contravention of any of the provisions of Chapter IV or any rule made there under or under section 87 has resulted in an accident causing death or serious 237 CU IDOL SELF LEARNING MATERIAL (SLM)

bodily injury, the fine shall not be less than thirty-five thousand rupees in the case of an accident causing death and ten thousand rupees in the case of an accident causing serious bodily injury. (2) For the purpose of sub-section (1), no cognizance shall be taken of any conviction made more than two years before the commission of the offence for which the person is subsequently being convicted. Section 95. Penalty for obstructing inspector. - Whoever wilfully obstructs an Inspector in the exercise of any power conferred on him by or under this Act, or fails to produce on demand by an Inspector any register or other documents kept in his custody in pursuance of this Act or of any rules made there under, or conceals or prevents any workers, in a factory from appearing before, or being examined by, an inspector, shall be punishable with imprisonment for a term which may extend to six months or with fine which may extend to ten thousand rupees or with both. Section 96A. Penalty for contravention of the provisions of sections 41B, 41C and 41H.- (1) Whoever fails to comply with or contravenes any of the provisions of sections 41B, 41C or 41H or the rules made there under, shall, in respect of such failure or contravention, be punishable with imprisonment for a term which may extend to seven years and with fine which may extend to two lakh rupees, and in case the failure or contravention continues, with additional fine which may extend to five thousand rupees for every day during which such failure or contravention continues, after the conviction for the first such failure or contravention. (2) If the failure or contravention referred to in sub-section (1) continues beyond a period of one year after the date of conviction, the offender shall be punishable with imprisonment for a term which may extend to ten years. Section 97. offences by workers. - (1) Subject to the provisions of section 111, if any worker employed in a factory contravenes any provision of this Act or any rules or orders made thereunder, imposing any duty or liability on workers, he shall be punishable with fine which may extend to five hundred rupees. (2) Where a worker is convicted of an offence punishable under sub-section (1) the occupier or manager of the factory shall not be deemed to be guilty of an offence in respect of that contravention, unless it is proved that he failed to take all reasonable measures for its prevention. 238 CU IDOL SELF LEARNING MATERIAL (SLM)

Exemptions of occupier or manager from liability in certain cases Section 101. Exemption of occupier or manager from liability in certain cases.- Where the occupier or manager of a factory is charged with an offence punishable under this Act he shall be entitled, upon complaint duly made by him and on giving to the prosecutor not less than three clear days' notice in writing of his intention so to do, to have any other person whom he charges as the actual offender brought before the Court at the time appointed for hearing the charge; and if, after the commission of the offence has been proved, the occupier or manager of the factory, as the case may be, proves to the satisfaction of the Court - (a) that he has used due diligence to enforce the execution of this Act, and (b) that the said other person committed the offence in question without his knowledge, consent or connivance, that other person shall be convicted of the offence and shall be liable to the like punishment as if he was the occupier or manager of the factory, and the occupier or manager, as the case may be, shall be, discharged from any liability under this Act in respect of such offence: Provided that in seeking to prove as aforesaid, the occupier or manager of the factory, as the case may be, may be examined on oath, and his evidence and that of any witness whom he calls in his support, shall be subject to cross-examination on behalf of the person he charges as the actual offender and by the prosecutor: Provided further that, if the person charged as the actual offender by the occupier or manager, cannot be brought before the court at the time appointed for hearing the charge, the court shall adjourn the hearing from time to time for a period not exceeding three months and if by the end of the said period the person charged as the actual offender cannot still be brought before the court, the court shall proceed to hear the charge against the occupier or manager and shall, if the offence be proved, convict the occupier or manager. Changes brought about by the Factory Act,1948 The following changes were made by the factories Act, 1948: - # The definition of the term “Factory†was widened to cover all industrial establishments employing ten or more workers where power was used and 20 or more workers in all other cases. # The distinction between seasonal and non-seasonal factories was abolished. 239 CU IDOL SELF LEARNING MATERIAL (SLM)

# Under the Act of 1934 the State Governments had power to extend the application of the Act to establishments where more than 10 Workers were employed. Under the Act of 1948, the State Government may extend the provisions of this Act to any establishment irrespective of the number of the workers employed therein and irrespective of the number of the workers employed on therein and irrespective of the fact that manufacturing work is carried by power or otherwise. The only exception is an establishment where the work is done solely by the members of a family. # Chapter III of the Act of 1934 was split into three parts, dealing with health, safety and welfare of workers. The Act specifies very clearly the minimum requirements under three heads stated above. # The basic provisions of the old Act relating to Health, safety, and welfare are extended to all work places irrespective of the number of workers employed, except premises where processes are carried on by the occupier with the sole aid of his family. # The minimum age for the admission of children to employment has been raised from 12 to 14 years and the minimum permissible daily hours of work of children were reduced from five to four and a half hour. # Provisions are made for the licensing and registration of factories and the prior scrutiny by the Factories Inspectorate of the Plans and specifications of factory buildings. # Employment of Children and women between 7 p.m. and 6 a.m. is prohibited. For overtime work the workers are entitled to twice their normal rate of wages. # The State Government are empowered to make rules requiring the association of the workers in the management of arrangements for the welfare of the workers. # State Government is obliged to see that all the factories are registered and take a licensing for working, which should be periodically renewed. Prior approval of the State Government has been made necessary for every New The installation of a Factory or for the extension of an existing factory. Besides mines, the new Act also excludes railway running sheds from the definition of Factories. Changes made in Factories Act, 1948in 2016 The Factories (Amendment) Bill, 2016 The Factories Act 1948was an Act of Parliament passed in the United Kingdom by the Labour government of Clement Attlee. It was passed with the intention of safeguarding the health of workers and adopted by India. 240 CU IDOL SELF LEARNING MATERIAL (SLM)

The Factories (Amendment) Bill, 2016 was introduced in Lok Sabha on August 10, 2016 by the Minister for Labour and Employment, Mr. Bandaru Dattatreya. The Bill amends the Factories Act, 1948. The Act regulates the safety, health and welfare of factory workers. The Bill amends provisions related to overtime hours of work. Key Amendments # (Section 2) Power to make rules on various matters: The Act permits the state government to prescribe rules on a range of matters, including double employment, details of adult workers to be included in the factory’s register, conditions related to exemptions to certain workers, etc.The Bill gives such rule making powers to the central government as well. Powers to make rules for exemptions to workers:Under the Act, the state government may make rules to (i) define persons who hold management or confidential positions; and (ii) exempt certain types of adult workers (e.g. those engaged for urgent repairs) from fixed working hours, periods of rest, etc. The Bill gives such rule making powers to both, the central and state governments. Under the Act, such rules will not apply for more than five years. The Bill modifies this provision to state that the five-year limitation will not apply to rules made after the enactment of this Bill. # (Section 64) Overtime hours of work in a quarter: The Act permits the state government to make rules related to the regulation of overtime hours of work. However, the total number of hours of overtime must not exceed 50 hours for a quarter. The Bill raises this limit to 100 hours. Rules in this regard may be prescribed by the central government as well. # (Section 65) Overtime hours if factory has higher workload: The Act enables the state government to permit adult workers in a factory to work overtime hours if the factory has an exceptional work load. Further the total number of hours of overtime work in a quarter must not exceed 75. The Bill permits the central or state government to raise this limit to 115 Overtime in public interest: The Bill introduces a provision which permits the central or state government to extend the 115-hour limit to 125 hours. It may do so because of (i) excessive work load in the factory and (ii) public interest 12.4 PAYMENT OF WAGES ACT1948 OBJECT AND SCOPE The main object of the Act is to eliminate all malpractices by laying down the time and mode of payment of wages as well as securing that the workers are paid their wages at regular 241 CU IDOL SELF LEARNING MATERIAL (SLM)

intervals, without any unauthorized deductions. In order to enlarge its scope and provide for more effective enforcement the Act empowering the Government to enhance the ceiling by notification in future. The Act extends to the whole of India. Definitions “Employed person” includes the legal representative of a deceased employed person. {Section 2(ia)} “Employer” includes the legal representative of a deceased employer. {Section 2(ib)} “Factory” means a factory as defined in clause (m) of section 2 of the Factories Act 1948 (63 of 1948) and includes any place to which the provisions of that Act have been applied under sub-section (1) of section 85 thereof. {Section 2(ic)} “Industrial or other establishment” means any – (a) Tramway service or motor transport service engaged in carrying passengers or goods or both by road for hire or reward; (aa) air transport service other than such service belonging to or exclusively employed in the military naval or air forces of the Union or the Civil Aviation Department of the Government of India; (b) Dock wharf or jetty; (c) Inland vessel mechanically propelled; (d) Mine quarry or oil-field; (e) Plantation; (f) Workshop or other establish establishment in which articles are produced adapted or manufactured with a view to their use transport or sale; (g) establishment in which any work relating to the construction development or maintenance of buildings roads bridges or canals or relating to operations connected with navigation irrigation or to the supply of water or relating to the generation transmission and distribution of electricity or any other form of power is being carried on; (h) any other establishment or class of establishments which the Appropriate Government may having regard to the nature thereof the need for protection of persons employed therein and other relevant circumstances specify by notification in the Official Gazette. {Section 2(ii)} 242 CU IDOL SELF LEARNING MATERIAL (SLM)

“Wages” means all remuneration (whether by way of salary allowances or otherwise) expressed in terms of money or capable of being so expressed which would if the terms of employment express or implied were fulfilled by payable to a person employed in respect of his employment or of work done in such employment and includes – (a) any remuneration payable under any award or settlement between the parties or order of a court; (b) any remuneration to which the person employed is entitled in respect of overtime work or holidays or any leave period; (c) any additional remuneration payable under the terms of employment (whether called a bonus or by any other name); (d) any sum which by reason of the termination of employment of the person employed is payable under any law contract or instrument which provides for the payment of such sum whether with or without deductions but does not provide for the time within which the payment is to be made; (e) any sum to which the person employed is entitled under any scheme framed under any law for the time being in force, but does not include – (1) any bonus (whether under a scheme of profit sharing or otherwise) which does not form part of the remuneration payable under the terms of employment or which is not payable under any award or settlement between the parties or order of a court; (2) the value of any house-accommodation or of the supply of light water medical attendance or other amenity or of any service excluded from the computation of wages by a general or special order of Appropriate Government; (3) any contribution paid by the employer to any pension or provident fund and the interest which may have accrued thereon; (4) any travelling allowance or the value of any travelling concession; (5) any sum paid to the employed person to defray special expenses entailed on him by the nature of his employment; or (6) any gratuity payable on the termination of employment in cases other than those specified in sub-clause (d). {Section 2(vi)} Responsibility for payment of wages 243 CU IDOL SELF LEARNING MATERIAL (SLM)

Section 3 provides that every employer shall be responsible for the payment to persons employed by him of all wages required to be paid under the Act. However, in the case of persons employed in factories if a person has been named as the manager of the factory; in the case of persons employed in industrial or other establishments if there is a person responsible to the employer for the supervision and control of the industrial or other establishments; in the case of persons employed upon railways if the employer is the railway administration and the railway administration has nominated a person in this behalf for the local area concerned; in the case of persons employed in the work of contractor, a person designated by such contractor who is directly under his charge; and in any other case, a person designated by the employer as a person responsible for complying with the provisions of the Act, the person so named, the person responsible to the employer, the person so nominated or the person so designated, as the case may be, shall be responsible for such payment. It may be noted that as per section 2(ia) “employer” includes the legal representative of a deceased employer. Fixation of wage period : As per section 4 of the Act every person responsible for the payment of wages shall fix wage-periods in respect of which such wages shall be payable. No wage-period shall exceed one month. Time of payment of wages Section 5 specifies the time payment of wages. The wages of every person employed upon or in any railway factory or industrial or other establishment upon or in which less than one thousand persons are employed, shall be paid before the expiry of the seventh day. The wages of every person employed upon or in any other railway factory or industrial or other establishment shall be paid before the expiry of the tenth day, after the last day of the wage-period in respect of which the wages are payable. However, in the case of persons employed on a dock wharf or jetty or in a mine the balance of wages found due on completion of the final tonnage account of the ship or wagons loaded or unloaded as the case may be shall be paid before the expiry of the seventh day from the day of such completion. Where the employment of any person is terminated by or on behalf of the employer the wages earned by him shall be paid before the expiry of the second working day from the day on which his employment is terminated. However, the employment of any person in an establishment is terminated due to the closure of the establishment for any reason other than a weekly or other recognised holiday the wages earned by him shall be paid before the expiry of the second day from the day on which his employment is so terminated. 244 CU IDOL SELF LEARNING MATERIAL (SLM)

However, the employment of any person in an establishment is terminated due to the closure of the establishment for any reason other than a weekly or other recognised holiday the wages earned by him shall be paid before the expiry of the second day from the day on which his employment is so terminated. The Appropriate Government may by general or special order exempt to such extent and subject to such conditions as may be specified in the order the person responsible for the payment of wages to persons employed upon any railway or to persons employed as daily- rated workers in the Public Works Department of the Appropriate Government from the operation of this section in respect of wages of any such persons or class of such persons. All payments of wages shall be made on a working day. Wages to be paid in current coin or currency notes As per section 6 of the Act, all wages shall be paid in current coin or currency notes or in both. However, the employer may, after obtaining the written authorisation of the employed person, pay him the wages either by cheque or by crediting the wages in his bank account. Deductions from the wages of an employee Section 7 of the Act allows deductions from the wages of an employee on the account of the following:- (i) fines; (ii) absence from duty; (iii) damage to or loss of goods expressly entrusted to the employee; (iv) housing accommodation and amenities provided by the employer; (v) recovery of advances or adjustment of overpayments of wages; (vi) recovery of loans made from any fund constituted for the welfare of labour in accordance with the rules approved by the State Government, and the interest due in respect thereof; (vii) subscriptions to and for repayment of advances from any provident fund;(viii) income-tax; (ix) payments to co-operative societies approved by the State Government or to a scheme of insurance maintained by the Indian Post Office; (x) deductions made with the written authorization of the employee for payment of any premium on his life insurance policy or purchase of securities. Fines Section 8 deals with fines. It provides that : (1) No fine shall be imposed on any employed person save in respect of such acts and omissions on his part as the employer with the previous approval of the State Government or of the prescribed authority may have specified by notice under sub-section (2). (2) A notice specifying such acts and omissions shall be exhibited in the prescribed manner on the premises in which the employment carried on or in the case of persons employed upon a railway (otherwise than in a factory) at the prescribed place or places. 245 CU IDOL SELF LEARNING MATERIAL (SLM)

(3) No fine shall be imposed on any employed person until he has been given an opportunity of showing cause against the fine or otherwise than in accordance with such procedure as may be prescribed for the imposition of fines. (4) The total amount of fine which may be imposed in any one wage-period on any employed person shall not exceed an amount equal to three per cent of the wages payable to him in respect of that wage period. (5) No fine shall be imposed on any employed person who is under the age of fifteen years. (6) No fine imposed on any employed person shall be recovered from him by installments or after the expiry of ninety days from the day on which it was imposed. (7) Every fine shall be deemed to have been imposed on the day of the act or omission in respect of which it was imposed. (8) All fines and all realisations thereof shall be recorded in a register to be kept by the person responsible for the payment of wages under section 3 in such form as may be prescribed; and all such realisations shall be applied only to such purposes beneficial to the persons employed in the factory or establishment as are approved by the prescribed authority. It may be noted that when the persons employed upon or in any railway, factory or industrial or other establishment are part only of a staff employed under the same management all such realisations may be credited to a common fund maintained for the staff as a whole provided that the fund shall be applied only to such purposes as are approved by the prescribed authority. Maintenance of registers and records Section 13A provides that every employer shall maintain such registers and records giving such particulars of persons employed by him, the work performed by them, the wages paid to them, the deductions made from their wages, the receipts given by them and such other particulars in prescribed form. Every register and record required to be maintained shall be preserved for a period of three years after the date of the last entry made therein. Claims arising out of deductions from wages or delay in payment of wages and penalty for malicious or vexatious claims Section 15 deals with claims arising out of deductions from wages or delay in payment of wages and penalty for malicious or vexatious claims. It provides that the appropriate Government may, by notification in the Official Gazette, appoint- (a) any Commissioner for Workmen’s Compensation; or 246 CU IDOL SELF LEARNING MATERIAL (SLM)

(b) any officer of the Central Government exercising functions as,- (i) Regional Labour Commissioner; or (ii) Assistant Labour Commissioner with at least two years’ experience; or (c) any officer of the State Government not below the rank of Assistant Labour Commissioner with at least two years’ experience; or (d) a presiding officer of any Labour Court or Industrial Tribunal, constituted under the Industrial Disputes Act, 1947 or under any corresponding law relating to the investigation and settlement of industrial disputes in force in the State; or (e) any other officer with experience as a Judge of a Civil Court or a Judicial Magistrate, as the authority to hear and decide for any specified area all claims arising out of deductions from the wages, or delay in payment of the wages, of persons employed or paid in that area, including all matters incidental to such claims. Provided that where the appropriate Government considers it necessary so to do, it may appoint more than one authority for any specified area and may, by general or special order, provide for the distribution or allocation of work to be performed by them under this Act. Sub-section (2) of section 15 provides that where contrary to the provisions of the Act any deduction has been made from the wages of an employed person or any payment of wages has been delayed such person himself or any legal practitioner or any official of a registered trade union authorised in writing to act on his behalf or any Inspector under this Act or any other person acting with the permission of the authority appointed under subsection (1) may apply to such authority for a direction under sub-section (3) : However, every such application shall be presented within twelve months from the date on which the deduction from the wages was made or from the date on which the payment of the wages was due to be made as the case may be. Any application may be admitted after the said period of twelve months when the applicant satisfies the authority that he had sufficient cause for not making the application within such period. As per sub-section (3) when any application under sub-section (2) is entertained, the authority shall hear the applicant and the employer or other person responsible for the payment of wages under section 3, or give them an opportunity of being heard, and, after such further enquiry, if any, as may be necessary, may, without prejudice to any other penalty to which such employer or other person is liable under this Act, direct the refund to the employed person of the amount deducted, or the payment of the delayed wages, together with the payment of such compensation as the authority may think fit, not exceeding ten times the amount deducted in the former case and not exceeding three thousand rupees but not less than 247 CU IDOL SELF LEARNING MATERIAL (SLM)

one thousand five hundred rupees in the latter, and even if the amount deducted or delayed wages are paid before the disposal of the application, direct the payment of such compensation, as the authority may think fit, not exceeding two thousand rupees. A claim under the Act shall be disposed of as far as practicable within a period of three months from the date of registration of the claim by the authority. It may be noted that the period of three months may be extended if both parties to the dispute agree for any bona fide reason to be recorded by the authority that the said period of three months may be extended to such period as may be necessary to dispose of the application in a just manner. No direction for the payment of compensation shall be made in the case of delayed wages if the authority is satisfied that the delay was due to- (a) a bona fide error or bona fide dispute as to the amount payable to the employed person; or (b) the occurrence of an emergency, or the existence of exceptional circumstances, the person responsible for the payment of the wages was unable, in spite of exercising reasonable diligence; or (c) the failure of the employed person to apply for or accept payment. As per sub-section (4) if the authority hearing an application under this section is satisfied that the application was either malicious or vexatious the authority may direct that a penalty not exceeding three hundred seventy five Rupees be paid to the employer or other person responsible for the payment of wages by the person presenting the application; or in any case in which compensation is directed to be paid under sub-section (3) the applicant ought not to have been compelled to seek redress under this section the authority may direct that a penalty not exceeding three hundred seventy five Rupees be paid to the State Government by the employer or other person responsible for the payment of wages. 12.5 SUMMARY The present Factories Act in operation for the last 37 years has provided ample benefits to the factory workers. It has considerably improved their working and employment conditions. The Government is actively considering the introduction of some vital amendments to the Act to keep it in tune with time and make it more effective While dealing with the duties of the Occupier and Factory Manager under Factories Act 1948, altogether we can conclude that the Occupier and Factory Manager has a vital role to play in assuring the health, safety and welfare of the workers as they are the backbone of the industrial sector. It is, however necessary that the workers and their representatives make themselves aware of the various provisions of the Act and safeguard their interests on their own and force the defaulting employer to be conscious of his legal obligations. 248 CU IDOL SELF LEARNING MATERIAL (SLM)

12.6 KEYWORDS  Adult:An ‘Adult’ means a person who has completed his eighteenth year of age.  Adolescent: An “Adolescent” means a person, who completes his fifteenth year of age but not his eighteenth year. Hence, he is someone who crosses the age of a child but is not an adult yet.  Competent Person: A “competent person”, in relation to any provision of this Act, means a person or an institution recognized as such by the Chief Inspector for the purposes of carrying out tests, examinations and inspections required to be done in a factory  Transmission machinery: It means any shaft, wheel, drum, pulley, a system of pulleys, coupling,clutch, driving belt or other appliance or device by which the motion of a prime mover reaches any machinery or appliance.  Worker: “Worker” means a person employed, directly or by or through any agency (including a contractor) with or without the knowledge of the principal employer, whether for remuneration or not, in any the manufacturing process, or in cleaning any part of the machinery or premises used for a manufacturing process, or in any other kind of work incidental to, or connected with, the manufacturing process, or the subject of the manufacturing process but does not include any member of the armed forces of the union. 12.7 LEARNING ACTIVITY 1. Discuss the applicability of Factories Act, 1948 ___________________________________________________________________________ ___________________________________________________________________________ 2. Analyze the importance of Factories Act, 1948 ___________________________________________________________________________ ___________________________________________________________________________ 12.8 UNIT END QUESTIONS A. Descriptive Questions Short Questions 1. Discuss the object and scope of the Factories Act, 1948. 249 CU IDOL SELF LEARNING MATERIAL (SLM)

2. What are the provisions regarding annual leave with wages? 3. List out different Acts and omissions suggested under Payment of Wages Act?What are the penalties prescribed under the PW Act for breach of acts? 4. What is a Manufacturing Process? 5. What is a factory? Long Questions 1. Discuss the rules regarding approval, licensing and registration of Factories Act, 1948? What are their duties and powers? 2. What are the responsibility for payment of wages? 3. Describe the penalties under factory act, 1948 4. Discuss the maintenance of registers and records 5. Describe the responsibilities for payment of wages B. Multiple Choice Questions 1. Which of the following diseases is not mentioned in the section 89 of factories act? a. Pneumonia b. Phosphorus c. Asbestosis d. Anthrax 2. Which Section of the Factories Act 1948 defines the term \"occupier\" of a factory as a person who has ultimate control over the affairs of the factory a. Section 2(m) b. Section 2(n) c. Section 2(h) d. Section 2(k) 250 CU IDOL SELF LEARNING MATERIAL (SLM)