Factory canteen management: subsidy, bookings, coupons and FSSAI basics
Factory canteen management for plants: the welfare duty, FSSAI registration, who pays what, meal booking to cut waste, contract worker coupons and billing.
Last checked 6 min read
A factory canteen is a welfare duty, a food business and a monthly accounting exercise all at once. The HR manager deals with complaints about the dal, the admin team deals with the caterer's bill, and payroll deals with deductions nobody can explain. Good factory canteen management brings those three together: clear rules on who pays what, a count of who will eat, and a bill that matches the meals actually served.
Factory canteen management starts with the welfare duty
For decades the Factories Act, 1948 let state governments require a canteen in factories employing more than 250 workers, with state rules on the building, the menu and the price. The Occupational Safety, Health and Working Conditions Code, 2020, in force since 21 November 2025, replaced the Factories Act and carries canteen facilities into its welfare provisions. How the duty applies to your establishment depends on the Code and the rules your state has made under it, so confirm the current position with your labour law adviser.
State rules have long required a canteen managing committee, with worker representatives, to advise on the menu and approve prices. Keep the committee's minutes and the rates it approved. When a worker questions a deduction, the approved rate card is your answer.
FSSAI registration for the canteen
A canteen is a food business. Under the Food Safety and Standards Act, 2006, whoever runs it needs an FSSAI registration or licence, depending on turnover and scale. Applications and renewals are made on FSSAI's FoSCoS portal.
| If the canteen is run by | Who holds the FSSAI registration or licence |
|---|---|
| The company itself | The company, for that premises |
| A caterer on contract | Usually the caterer; check it covers your premises |
| A central kitchen sending food in | The kitchen, plus a check at your end on how food is held and served |
Ask the caterer for a copy every year, note the expiry date, and keep the certificate displayed at the canteen. FSSAI also sets general hygiene and sanitation requirements for food businesses and expects trained food safety supervisors; ask your caterer how they meet them, and inspect against them yourself once a quarter.
Canteen subsidy policy: who pays what
Most plants subsidise meals. Write down the rule, by group and by meal:
| Group | Lunch (cost ₹75) | Tea and snacks |
|---|---|---|
| Permanent workers | Worker ₹15, company ₹60 | Free |
| Staff and managers | Worker ₹25, company ₹50 | Free |
| Trainees and apprentices | Free | Free |
| Contract workers | Coupon charged to the contractor or the company | Free |
| Guests | Charged to the host department | Free |
A few points to decide up front:
- Monthly caps. For example, subsidised lunches up to 26 a month; extra meals at full price.
- Tax. The company's share of a meal is tax-free up to ₹200 a meal from tax year 2026-27, and tea and snacks are left out entirely. Our post on the meal perquisite of ₹200 per meal has the detail.
- Recovery. The worker's share is usually recovered from wages as an authorised deduction, within the overall limit on deductions under the Code on Wages. Show it on the payslip.
Count before you cook: bookings cut canteen food waste
The biggest avoidable cost in most canteens is food cooked for people who do not turn up. A kitchen cooking for 900 every day, when 760 actually eat, throws away 140 meals. At ₹75 a meal that is ₹10,500 a day, or roughly ₹2.7 lakh over a 26-day month.
Two booking models work:
- Opt-out: everyone on shift is counted unless they skip by the cut-off. Good for plants where nearly everyone eats.
- Opt-in: only those who book are counted. Good for offices and plants with variable attendance.
Each meal needs its own cut-off: the evening before for lunch is common, two hours before for dinner on the night shift. Leave and shift changes should update the count automatically, so a worker on leave is not counted or charged.
Pre-orders for specific dishes, picked up with a code, help in larger canteens with more than one counter. Keep them optional.
Contract workers and coupons
Contract workers often eat in the same canteen, and the cost question becomes "who pays, the contractor or us?". Decide it in the contract and then issue meal coupons, paper or digital, for each contractor's workers, charged to that contractor or to a company cost centre. At month end the coupons used become a deduction from the contractor's bill or a cost to the right department. Our guide to contract labour compliance under the OSH Code covers the principal employer's wider duties for these workers.
A worked example from a Sanand plant
A plant near Ahmedabad has 900 people on three shifts: 550 permanent and 350 contract. Lunch and dinner are subsidised; tea is free.
- Booking: opt-out for permanent workers, coupons for contract workers issued per contractor each week.
- At the counter: each person scans a meal QR, taps their card or enters a code and PIN. The counter screen shows whether the meal is allowed and how it is charged.
- Month close: HR reviews meals per person, workers have three days to dispute, then the month is locked and the deductions go to payroll.
- Canteen vendor bill: the caterer bills 23,400 lunches. The counter records show 22,950 served, plus 300 guest meals approved by departments. The bill is settled on 23,250, with the gap explained in writing.
The canteen vendor bill: reconcile every month
Pay the caterer on meals served, not meals planned. Each month compare:
- Meals served by meal type, from counter records.
- Guest and event meals, with approvals.
- Coupons used by contract workers.
- The caterer's bill.
Differences above a small tolerance should be explained before payment. GST on the caterer's bill is a separate question; credit on food for employees is generally blocked, with exceptions, so ask your CA.
Feedback and hygiene
Give workers a simple way to rate meals and report hygiene problems from their phone or a counter tablet, and route reports to HR and the canteen committee. Act on patterns, not single complaints, and share what changed. Nothing builds trust in a canteen faster than a menu that visibly responds.
Checklist for the plant
- Welfare duty and state rules confirmed with your adviser.
- FSSAI registration or licence current, in the right name, displayed.
- Rate card approved by the canteen committee, with minutes kept.
- Booking cut-offs per meal, linked to leave and shifts.
- Coupons for contract workers, charged to the right party.
- Monthly reconciliation of meals served against the vendor bill.
- Deductions locked and sent to payroll only after a dispute window.
The Vatsin Canteen module covers rate cards by group, opt-in or opt-out booking with cut-offs, counter scans by QR, card or PIN, contractor coupons, month close to payroll and vendor bill checks. The rules above apply whichever system you use.