Applicability of Building and Other Construction Workers (Regulation of Employment and Conditions of Service) Act to Factories

 

There have been differences of opinion about the applicability of the Building and Other Construction Workers (Regulation of Employment and Conditions of Service) Act, 1996 to such operations or civil constructions carried out within a factory premises which is part of the factory covered under Factories Act. This is mainly due to the lack of clarity in the definition of construction work as given in section 2(d) of the BOCW Act which excludes building and construction work to which the provisions of the Factories Act and Mines Act will apply. Obviously, when a construction work is carried out within the factory premises, it is natural that the employer will take it for granted and say that they are under the coverage of Factories and therefore, no cess is payable as per the BOCW Act. However, it should be understood that Factory licence is given to work connected with manufacturing activities and for a factory which is meant for manufacture of, say, cement, it is for the manufacturing of cement that the licence is issued. Similarly, the Factories Act provides for health, welfare and safety of workers employed in the factory and these workers are the workers employed for manufacturing and not those who are employed for construction of building. Therefore, such construction activities will come under the purview of BOCW Act and cess as per Welfare Fund Act should be paid. [Lanco Anpara Power Ltd vs State Of Uttar Pradesh And Ors ((2016)10 SCC 329))]

However, in Larsen and Toubro Limited vs State of Chhattisgarh and others, the HC distinguishes the building and construction activities in a proposed factory premises and the one in a factory premises which has already started manufacturing activity.

Now my interpretation is still spinning around the exclusion part of the definition of building and other construction work as per section 2(1)(d) of BOCW Act which says that construction activities TO WHICH the provisions of Factories Act will apply. A factory is registered to manufacture a given product. The operations may include the allied activities like storage of materials, warehousing etc but in no case it can include construction of building. As such a building construction is not an operation covered by Factories Act.

The definition of worker under Factories Act covers only workers who are employed for manufacturing and allied activities. When the Factories Act is mandated for ensuring the health, safety and welfare of the workers in the Factory, will the occupier take care of the health, welfare and safety of the workers engaged in construction? I don't think anybody will extend it to them. If the arrangement is like, the occupier purchases the require materials, engages workers and gets the building constructed, then there will be direct employee employer relationship between the workers and the occupier and certainly, it will be the occupier who would ensure health, safety and welfare of these workers. In such a situation the provisions of BOCW Act will not apply. However, in reality, the arrangement is that there will be a builder who will undertake to construct a building as per the specifications of the occupier and that builder will bring in materials, manpower, machines etc. Here the occupier does not know who all are engaged in the work, how many are engaged in the work. In this arrangement the construction workers are workers of the builders and as such their health, safety and welfare matters will be taken care of by the builders. Accordingly the builders being the employer of the construction workers should pay cess to the Board constituted for the welfare of the construction workers.  If the contractor of the builder fails to pay it, obviously, the occupier shall pay a certain amount, say, one percent of the cost of construction, towards cess.

Therefore, what is important is whether the builders have ensured health, safety and welfare of their workers by paying them minimum wages, providing them medical aid, and other facilities which are required as per law. This would also include Provident Fund, Insurance, Bonus etc. It is to compensate the social welfare contributions payable by the employer that the Act has mandated payment of cess. The builder being the employer in respect of the construction workers, is primarily responsible to pay the cess. Since the activity of construction of building is carried out for the occupier, and in the absence of records to show that the construction workers were given all welfare schemes etc, by the builder, the occupier shall also bear the amount.