Not a welcome move

A majority of hoteliers feel that that the Shops & Establishment Act under which hotels are currently operating, is enough to take care of employees. The government's proposal to bring hotels under the Factories Act is being regarded with caution. By Praveen K Singh

Location courtesy: Marriott Resort Goa

If the Union Government succeeds in bringing about the amendment by bringing hotels under the Factories Act, the industry will have to fix shifts and pay overtime if employees work for more than eight hours a day, apart from guaranteeing them safety, health and welfare facilities. Hoteliers are not pleased with the government's intention to put hotels under the Factories Act 1948. Hotels currently fall under the service sector and are governed by a different set of rules and regulations under the Shops & Establishments Act.

Ministry's claim

The ministry of labour (MoL), which has taken up the task of bringing hotels under the Factories Act, and has finalised the draft for the amendment. It is expected to table it in front of the Cabinet soon. According to officials at MoL, most labour disputes and legal proceedings in the hospitality sector pertain to non-payment of wages, arrears, overtime, leave wages, non-maintenance of records and non-observance of working hours.

In the changed scenario, a government official will be present at the place of work to ensure that all regulations are being followed.

From the employee's prospective, a possible amendment will see more equitable rights across all restaurants in India, particularly in unorganised hotels where standards are not properly maintained. Manish Kumar, F&B executive with Hotel Amar in Agra, feels that if the amendment will bring with it more privileges. "Most of the time we work for more than 14 hours a day without proper rest that we are entitled to. The inclusion is certainly a welcome move. It will create a conducive work environment," he says.

Hotels will also have to abide by the rules relating to safety, labour welfare facilities, health, annual leave with wages, etc as part of the Factories Act. The Factories Act is a social legislation enacted for occupational safety, health and welfare of workers at the work place. Technical officers and inspectors of factories, who work under the control of chief inspector of factories and overall control of the labour commissioner, enforce it. Sunil Gulati of Uttrakhand Hospitality believes that since tourism is seasonal in many parts of the country, hotels might want to discontinue employee contracts.

Underlying principles

Expressing his viewpoint, executive director of EIH and president of FHRAI, Dinesh Khanna, explains, "This move by the government will not be of any worth as hotels fall under the service sector and are being governed by a different set of rules and regulations."

Legal expert and senior counsel of the Supreme Court, Lalit Bhasin, described the move as unsuitable. "Hotels work 24x7 and provide several services to its guests. There is no manufacturing of goods; they are just offering services," he adds.

Differentiating the hotels with factories, Bhasin explains that unlike a factory, the hotel is a service industry. "The focal point of all operations in a hotel is to provide satisfactory service to guests. The predominant activity of a factory is to manufacture a particular product. On the other hand, the predominant activity in a hotel is service," he says. He specifies that hotels and restaurants are commercial establishments that sell services. Any manufacturing activity, such as the bakery or food, is supplementary and forms part of the services rendered to guests.

The Factories Act clearly mentions that a '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 it does not include a mine subject to the operation of the Mines Act, 1952 (35 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.

Bhasin further elaborates that various departments, which are not engaged in any manufacturing activities, manage the operations of hotels. He informs that on behalf of FHRAI, he has drafted how different departments of hotels are offering only services.

The various departments in hotels include:

Front office: For receiving guests, making room reservations, handling correspondence, preparing bills and keeping account of the guests' service

Housekeeping: For keeping the hotel including rooms, restaurants and bars, clean and well turned-out

F&B: For preparing and serving food and drinks. It's purely based on service. This department comprises of the kitchen, bar, bakery and room service.

Accounts: It deals with both cash and credit transactions. It is in charge of financial transactions such as the purchase of material and offering of services to guests. It also compiles information required for budgeting, pricing of food and beverages.

Sales & marketing: This department liaisons with travel agents, tour operators and potential clients. Clients include corporate clients, to whom hotel facilities are sold. The department is also responsible for advertising and public relations.

Engineering: This department generally deals with the maintenance of the building and various machines installed in the hotel premises. It employs technically qualified persons like engineers, as well as carpenters and plumbers.

Security: This department provides security to the guests and their belongings. It is generally the work of this department to prevent the occurrence of any untoward incident in the hotel.

A hotel also has various other facilities for guests such as a health club, fitness and beauty centre and business centre.

A step forward

Bhasin believes that the present regulations serve the purpose of employee welfare. "It has sufficient legislation pertinent to hotels and restaurants, which protects the rights of employees. The Shops & Establishments Act regulates the service conditions of employees covered by the provisions of this act."

He says that it provides for the registration of the establishment; employment of adults - hours of work; intervals for rest and meals; spread over; prohibition of employment of children; employment of young persons - hours of work; young persons and women to work during the day time only; opening and closing hours of shops and commercial establishments. It also deals with closed days; period of rest (weekly off day); wages for the holidays; time and conditions for payment of wages; deductions which may be made from wages; claims relating to wages; leave and wages during leave.

Industry experts believe that the government should come up with a separate legislation for the hospitality industry as it has its own way of operations. The industry can explore immense potential and it's time that the government offers a thought whereby legislation is formulated in sync with industry's voice. An exclusive enactment on the industry needs to be devised for the promotion of the sector, which will add to the booming economy.