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Shop and Establishment Act India

Shop and Establishment Act India

Shop and Establishment Act India :

One of the important regulation to which most businesses in India are subject to is the shop and establishment act, enacted by every state in India. The Act is designed to regulate the payment of wages, hours of work, leave , holidays , terms of service and other work condition of people employed in the shop and commercial establishments. In this article, we look at the salient features of the shop and establishment act.

What is a commercial Establishment?

  • Any commercial sector undertaking, such as banking, trading, or insurance establishment.
  • Any establishment where in individuals are employed or engaged to do office work or provide various services.
  • Amusement parks and entertainment places, such as theatres and cinema halls.
  • Hotels, eateries, boarding houses, small cafes or refreshment houses.

Hence, all the commercial establishments mentioned above fall under the purview of this act and must adhere to the regulations specified by it. The exceptions to the act differ between states and each state in India has a list of commercial establishments that must register under the Act. Hence, business owners need to meet with legal experts to understand local laws and their business legally in any area.

Aspects Regulated by the Shop and Establishment Act

The Act, among other things, regulates the followingmatters:-

  • Hours of work
  • Interval for rest and meals
  • Prohibition of employment of children
  • Employment of young person or women
  • Opening and closing hours
  • Close days
  • Weekly holidays
  • Wages for holidays
  • Time and conditions of payment of wages
  • Deductions from wages
  • Leave policy
  • Dismissal
  • Cleanliness
  • Lighting and ventilation
  • Precautions against fire
  • Accidents
  • Record keeping

Process for obtaining shop and establishment registration

The procedure for obtaining the shop and establishment registration certificate differ from states to states. It can be obtained online or offline .

For obtaining the registration certificate online, the proprietor or owner of the shop or business must log into the respective state labour department website. The proprietor or owner must fill the application formfor the registration under the shop and establishment act, upload the documents and pay the prescribed fees. The prescribed fees differ from state to state. Once the registration form is approved, the registration certificate will be issued online to the proprietor or owner of the business.

For obtaining the registration certificate offline, the registration application is to be filled and submitted to the chief inspector of the concerned area along with the prescribed fees. The chief inspector will issue the registration certificate to the owner of proprietor after being satisfied with the correctness of the application.

The registration application contains the details relating to the name of the employer and establishment, address and category of the establishment, number of employees and other relevant details as required. The registration application needs to be renewed before the expiry of the period of registration. The validity of the shop and establishment certificate differ from state to state. Some states provide the certificate valid for a lifetime, while other states provide the certificate valid for one to five years.

Why Register Under the Shop and Establishment Act?

The primary objective of such a registration is to secure uniform benefits for employees serving different establishments across the country. The Act also regulates work hours, payment of wages, terms of service, and holidays that employees receive. It also lays down guidelines regarding the conditions of work, the number of people employed and helps in ensuring their wellness. The registration acts as a basic license that helps in securing further registrations and certifications. All commercial establishments, except those that fall under the purview of the Factories Act, 1948, must register under this Act. However, since the Act is a state-specific regulation, each state has its laws and guidelines regarding operating such establishments.  

Documents required for shop and establishmentregistration

The documents required for Shop and establishment registration are:

  • Shop and Business Establishment address proof
  • ID proof of the proprietor
  • PAN card of the proprietor
  • Details of the employees
  • Payment challan
  • Additional business license necessary for starting the business, if any

Shop and Establishment Act License

Any shop or commercial establishment that commences operation must apply to the chief inspector for a shop and establishment act license within the prescribed time. The application for a license in the prescribed form must contains the name of the employer, address of the establishment, name of the establishment, category of theestablishment, number of employees and other relevant details as requested. On submission of the application and review by the chief inspector, the shop or commercial establishment will be registered and a registration certificate will be issued to the occupier. The registration certificate must be prominently displayed at the shop or commercial establishment and renewed periodically, as per the Act.

In case the shop or establishment would liketo close down the business, the occupier should notify the chief Inspector in writing within fifteen days of the closing. The Chief Inspector after reviewing the request for closurecan remove the shop or commercial establishment from the register and cancel the registration certificate.

CS Deepa Sharma

Author is a associate member of the Institute of Company Secretaries of India (ICSI) and apart from that she holds LLB degree and Master in Commerce degree from Rajasthan University. She is having over 5 years of experience as a Practicing Company Secretary. She is well versed with all the matters related to Company Law and ROC matters, RERA , statutory reporting, Compliance Report and Corporate Governance. She is having good exposure in maintaining secretarial records as prescribed under Companies Act, 2013.

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