The Shops and Establishment Act (“S&E Act”) is a State-specific legislation, i.e. each State of India has formulated its own law. The Act of each State aims at streamlining the regulation of working hours, payment of wages, leave entitlements, holidays, terms of service, and other working conditions for employees in shops, commercial establishments, entertainment venues, and other similar workplaces. It aims to ensure fair treatment, promote employee welfare, and address matters connected to the efficient management and oversight of such establishments.
Applicability of the Shops and Establishments Act :
The S&E Act of each State applies to the shops, establishments and commercial establishments located within such State and is tailored by the legislature to cater the type of employers located in that State. Generally, S&E Acts do not prescribe a threshold of minimum number of employees for their applicability on a Shop or Establishment and may become applicable at the time of setup itself.
Understanding Shops and Commercial Establishments :
The definitions of “Shop” and “Commercial Establishment” under majority of the S&E Act are broadly outlined below. However, it is important to note that these definitions may vary across States, as each State Act provides its specific interpretation based on regional requirements and conditions:
- Shop: Shops refers to any premises where goods are sold, whether by retail or wholesale, or services are rendered to customers. This includes offices, warehouses, godowns, storerooms, or any workplace used in connection with such trade or business. Factories are specifically excluded from this definition, as they are governed by the Factories Act.
- Commercial Establishment: Establishment are premises where trade, business, or professional activities are conducted. This includes organizations such as societies, charitable trusts, journalistic and printing establishments, contractors and auditors, educational institutions, and financial businesses like banking, insurance, stock trading, and brokerage. It also covers hospitality and entertainment establishments, including restaurants, hotels, clubs, theatres, and other venues of public amusement or recreation.
Focus areas of the Shops and Establishments Act :
The following are the focus areas of S&E Acts are as follows:
- Timely payment of wages: In addition to other labour laws, S&E Acts also emphasise on the timely payment of wages to the employees, stipulating conditions for the day of payment and frequency of payment of wages.
- Working hours, rest periods and overtime: S&E Acts stipulate working hours, rest periods and overtime for employees. S&E Act allows the recognised authorities to exempt certain type of shops and establishments from the provisions of the Act. Certain S&E Acts also allow specific shops and establishments to seek exemptions from the authorities under the Act.
- Child Labor: In addition to other labour laws, S&E Acts also prohibit child labour.
- Night Work: S&E Acts prescribe conditions which employers must comply; in case night shifts are allowed.
- Closed days, leaves and holidays: S&E Acts stipulate closed days, leaves and holidays for employees and these are different for each State.
- Working conditions: Proper ventilation, proper lighting, access to clean drinking water, fire safety and other conditions are generally prescribed.
- Termination Notice: Provisions related termination, resignation and related pay are also prescribed, ensuring fair treatment and job security.
Features of Shops and Establishment Act :
- Mandatory Registration : The S&E Act mandate registration for the shops and establishments to ensure strict compliance with labour laws, promote fair and safe working conditions, and enhance transparency in business operations. The employers are also required to report changes in the registration and file for cancellation of registration of in case of closure of shops and establishments.
- Annual Returns : S&E Acts of several states require submission of annual returns, which require the shops or establishments to state number of employees, gender of employees, details of close days, working hours, holidays, working hours and amenities available to the employees
- Maintaining Records : Under the S&E Act, employers are required to keep accurate records of employees and other essential documentation as specified therein
- Penalizing Violators
The S&E Acts outline legal measures and related penalties for violators. The S&E Acts also specify authorities in-charge for ensuring compliance with the provisions.
Typical oversights by Employers :
It is commonly noted that employers being subject to penalties under S&E Act due to the following lapses:
- Definition interpretation: it commonly noted that many employers misinterpret the definition of “Shops” and “Establishments” applicable in their State and do not register themselves with the authorities within the timeline prescribed.
- Leave provisions: it is seen that employers fail to comply with the leave provisions and leave application provisions.
- Maintenance Records: Considering the volume of records to be maintained under other labour laws, it is seen that employers decide (on their own volition) to not maintain registers under the applicable S&E Act, considering other labour laws cover the same subject. This may be a major violation, as authorities under S&E Act and other Acts may be different.
- Compliances: Since each State has its own set of compliances under its S&E Act, employers may have offices in several States and may fail to meet compliance requirements applicable to each of their offices.
It is advised that all employers to seek advise for each of their offices.
Author : Shruti Mishra