Section 2 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
"Establishment" is the unit the Code registers, counts and charges. This article takes the place-of-work definitions in section 2 of the Code on Social Security, 2020: establishment (s.2(29)), factory (s.2(32)), seasonal factory (s.2(74)), mine, oilfield, port, dock work, railway, plantation, building or other construction work, audio-visual production and company.
An establishment is a place where any industry, trade, business, manufacture or occupation is carried on, or a factory, motor transport undertaking, newspaper establishment, audio-visual production, building and other construction work or plantation, or a mine, port or vicinity of a port where dock work is carried out. A factory needs ten or more employees with power, or twenty or more without, on any day of the preceding twelve months. A plantation is land of five hectares or more for the crops named. Building and other construction work excludes work employing fewer than ten workers in the preceding twelve months.
Establishment: s.2(29)
| Limb | What is an establishment |
|---|---|
| (a) | A place where any industry, trade, business, manufacture or occupation is carried on |
| (b) | A factory, motor transport undertaking, newspaper establishment, audio-visual production, building and other construction work or plantation |
| (c) | A mine, port or vicinity of a port where dock work is carried out |
Explanation: for Chapter III (EPF), where an establishment consists of different departments or has branches, whether in the same place or different places, all of them are treated as parts of the same establishment. This is why a company with branches counts headcount across branches for EPF coverage.
Our ESI and PF registration service can help if you need to work out how your branches aggregate. For how registration works under the Code, see section 3.
Factory and seasonal factory: s.2(32) and (74)
A factory is any premises including the precincts where:
- (a) ten or more employees are working, or were working on any day of the preceding twelve months, and a manufacturing process is being carried on with the aid of power, or is ordinarily so carried on; or
- (b) twenty or more employees are working, or were working on any day of the preceding twelve months, and a manufacturing process is carried on without the aid of power, or is ordinarily so carried on.
It does not include a mine, a mobile unit of the Armed Forces of the Union, a railway running shed or a hotel, restaurant or eating place.
Explanation 1: to count employees, all employees in different groups and relays in a day are taken into account. Explanation 2: the mere installation of an electronic data processing unit or computer unit does not make premises a factory if no manufacturing process is carried on there.
A seasonal factory (s.2(74)) is a factory exclusively engaged in cotton ginning, cotton or jute pressing, decortication of ground-nuts, the manufacture of indigo, lac, sugar (including gur), or any manufacturing process incidental to or connected with these, and includes a factory engaged for a period not exceeding seven months in a year in a manufacturing process the Central Government specifies by notification. The First Schedule carves seasonal factories out of the Chapter IV (ESI) coverage test: see sections 1 and 164.
| Test | With power | Without power |
|---|---|---|
| Employees working on any day of the preceding twelve months | Ten or more | Twenty or more |
Mine, oilfield, port, dock work and railway
| Clause | Term | Meaning |
|---|---|---|
| 2(46) | Mine | As in clause (j) of sub-section (1) of section 2 of the Mines Act, 1952 |
| 2(53) | Oilfield | As in clause (e) of section 3 of the Oilfields (Regulation and Development) Act, 1948 |
| 2(62) | Port | As in clause (4) of section 3 of the Indian Ports Act, 1908 |
| 2(25) | Dock work | Any work in or within the vicinity of any port connected with, or required for or incidental to, loading, unloading, movement or storage of cargoes into or from a ship or other vessel, port, dock, storage place or landing place; includes preparing ships for receipt or discharge of cargoes or leaving port, repairing and maintenance processes connected with a hold, tank, structure or lifting machinery on board or in the docks, and chipping, painting or cleaning of those |
| 2(66) | Railway | As in clause (31) of section 2 of the Railways Act, 1989 |
| 2(67) | Railway company | Includes any persons, incorporated or not, who are owners or lessees of a railway or parties to an agreement for working a railway |
These terms matter for gratuity and maternity benefit, where the First Schedule names factories, mines, oilfields, plantations, ports and railway companies. See section 53 on gratuity in our plan for the operative rule.
Plantation: s.2(59)
| Limb | What counts |
|---|---|
| (a)(i) | Land used or intended to be used for growing tea, coffee, rubber, cinchona or cardamom which admeasures five hectares or more |
| (a)(ii) | Land for growing any other plant, five hectares or more, in which ten or more persons are employed or were employed on any day of the preceding twelve months, if the State Government, after obtaining Central Government approval, so directs by notification |
| (b) | Land the State Government declares by notification, used or intended for growing a plant referred to in (a), even if under five hectares (no such declaration for land under five hectares immediately before commencement of the Code) |
| (c) | Offices, hospitals, dispensaries, schools and any other premises used for a purpose connected with a plantation under (a) and (b), but not a factory on the premises |
The Explanation to (a) deems a piece of land under five hectares to be a plantation if it is contiguous to other land not so used but capable of being so used, both under the same employer's management, and the total is five hectares or more.
Building or other construction work: s.2(6), (7), (8)
Building or other construction work means construction, alteration, repairs, maintenance or demolition in relation to buildings, streets, roads, railways, tramways, airfields, irrigation, drainage, embankment and navigation works, flood control works, generation, transmission and distribution of power, water works, oil and gas installations, electric lines, internet towers, wireless, radio, television, telephone, telegraph and overseas communications, dams, canals, reservoirs, watercourses, tunnels, bridges, viaducts, aqueducts, pipelines, towers, cooling towers, transmission towers and other work the Central Government specifies.
It does not include: work related to any factory or mine; work employing fewer than ten workers in the preceding twelve months; or work for an individual's or group's own residence where the total cost does not exceed fifty lakh rupees (or a higher amount, with a higher number of workers, as the appropriate Government notifies).
A building worker (s.2(7)) is a person employed to do skilled, semi-skilled or unskilled, manual, technical or clerical work for hire or reward, express or implied, in connection with such work, excluding a person employed mainly in a managerial, supervisory or administrative capacity. The Building Workers' Welfare Board (s.2(8)) is the State board constituted under s.7(1).
Example. A builder puts up a house for a family's own residence at a total cost of forty lakh rupees. It falls within the exclusion for own-residence work (cost not over fifty lakh rupees, or a higher amount as notified), so it is not "building or other construction work" under the clause. A contractor building a road with twelve workers in the preceding twelve months is within it.
Audio-visual production and company
Audio-visual production (s.2(4)) means audio-visual produced wholly or partly in India and includes animation, cartoon depiction and audio-visual advertisement; digital production or activities in making it; and feature films, non-feature films, television, web-based serials, talk shows, reality shows and sport shows. Company (s.2(14)) has the meaning in clause (20) of section 2 of the Companies Act, 2013.
Need help fixing your establishment's coverage?
Coverage under the Code turns on whether you are a factory, plantation, construction site or ordinary shop, and on how many employees you had on any day in the last twelve months. Our ESI and PF registration team can help you classify each unit before you register. Bring your headcount history and the nature of work at each site.
Key takeaways
- Establishment covers places of trade or business, specified undertakings, mines, ports and dock-work areas.
- For EPF, branches and departments are treated as parts of one establishment.
- A factory needs ten or more employees with power, twenty or more without, tested over the preceding twelve months.
- A plantation is generally land of five hectares or more for tea, coffee, rubber, cinchona or cardamom.
- Building work excludes work with under ten workers, factory or mine work, and own-residence work up to fifty lakh rupees (or a notified higher amount).
Read next
- Section 3: registration of establishments
- Section 2: definitions of gig worker, platform worker and unorganised worker
- Section 2: definitions of employee, employer and contract labour
- ESI for construction workers: special provisions
Disclaimer: Based on the Code on Social Security, 2020 (as enacted) and, where noted, the Code on Social Security (Central) Rules, 2026 (G.S.R. 344(E), 8 May 2026), as on 30 September 2026. The Code is in force from 21 November 2025; some provisions may be notified later, and State Governments make their own rules for establishments where the State is the appropriate Government. Verify the current position before acting.