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CS Executive · Setting Up of Business, Industrial and Labour Laws · The Labour Laws (Simplification of Procedure for Furnishing Returns and Maintaining Registers by Certain Establishments) Act

Sundaram Fasteners, a small unit in Coimbatore, has a factory in which 12 persons were employed on some day of the preceding twelve months. Under the Labour Laws (Simplification of Procedure for Furnishing Returns and Maintaining Registers by certain Establishments) Act, 1988, how is this establishment classified?

The unit is a small establishment because the Act defines it as one employing not less than ten and not more than forty persons on any day of the preceding twelve months, and twelve employees fall within that range.

  1. AVery small establishment, because fewer than 40 persons are employed
  2. BSmall establishment, because not less than ten and not more than forty persons are employedCorrect
  3. CNeither, because small establishments must have at least 20 persons
  4. DVery small establishment, because it is a factory

Explanation

A small establishment is one employing not less than ten and not more than forty persons on any day of the preceding twelve months. Twelve falls in this band. A very small establishment has not more than nine persons, so the first option is wrong. The threshold of 20 is outdated since the 2014 amendment, which replaced nineteen with forty.

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