Shops and Establishments – What the Law Says:

by on April 16, 2012

While planning to step into the world of business, you need to draw up not only your business plan, product/service model, financing options, but also make a comprehensive list of all the compulsory regulations that your business entity will have to comply with such as the taxation legislations, licensing requirements, etc.

One such important legislation is the Shops and Establishments Act, enacted by every state in India to regulate conditions of work and to provide for statutory obligations of the employers and rights of the employees in un-organized sector of employment and other establishments in their jurisdiction.

In this article, we will discuss the applicability and requirements of the Shop and Establishments Act in greater detail.

Which businesses come under the purview of Shops & Establishments Act?

A Commercial Establishment including:

• A commercial or trading or banking or insurance establishment, or
• An establishment or administrative service in which persons employed or mainly engaged in office work, or
• A hotel, restaurant, boarding or eating house, a cafe or any other refreshment house or
• A theater, cinema or any other place of public amusement or entertainment.

Regulations Under The Act:

This act lays down the following rules:

• Working hours per day and week.
• Guidelines for spread-over, rest interval, opening and closing hours, closed days, national and religious holidays, overtime work.
• Rules for employment of children, young persons and women.
• Rules for annual leave, maternity leave, sickness and casual leave, etc.
• Rules for employment and termination of service.
• Maintenance of registers and records and display of notices.
• Obligations of employers as well as employees.

Records to be maintained for registering under S&E Act:

Every business has to be maintain the following records under Shops and Establishments act:

• Approval from Department of Labor.
• Various registers giving details of employment, fines, deductions and advances, salary, holidays, etc. The names of the register may vary from state to state, and hence, it is a prudent practice to request the exact nature of documents that your state might need from your municipal corporation. Files related to annual holidays, number of employees need to be submitted at the Office of the Municipal Corporation annually.

Procedures under this Act:

Every shop/establishment is compulsorily required to register itself under this Act within 30 days of commencement of work.

Registration Certificate:

• The business owner should send to the Inspector (Chief Inspector of Shops or other Inspectors under the Act) of the area concerned, an application form and fees detailing:
o Name of the establishment, the employer and the manager, if any;
o Postal address of the establishment;
o Such other particulars as may be prescribed.

• The Inspector, on verifying the statement, shall register the establishment in the register of establishments and issue a registration certificate. This certificate has to be prominently displayed at the establishment and needs to be renewed before it expires.
• If there is any change in the initial statement, the same has to be communicated within 15 days to the Inspector and he will make changes in the register of establishments and issue a fresh registration certificate.

Closure of Business:

And in case of closure, the same has to be communicated to the authorities within 15 days from the closing of the establishment.

Important to Note:

The rules under this act vary as per the states. We recommend you to consult the S&E Act with the Administrative Office/Municipal Corporation in your city.

Legal requirements adhered to timely and in full, ensure not only the continuity but also the smooth running of your business.