Shop & Establishment Act

Overview

The Shops and Establishment Act is a state-specific law which may differ from state to state. The object is to govern and improve the working conditions and rights of the workers, like wage payments, leaves, holidays & work hours, etc. The registration under shops and establishment act is regulated by the labour department of respective state, and it is mandatory for all business entities which do not fall within the ambit or applicability of The Factories Act, 1948. Even cases where the employees are working from home, this registration is necessary to obtain. Most of the state governments have passed their own law through the legislature assembly or have adopted some other state government legislation on shops and establishment. We are providing professional services in the matter of registration of the establishment and compliance with various provisions which may be required under respective Shops and Establishment Act.

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Applicability of Shop & Establishment Registration

Every shop and establishment needs to register itself compulsorily under this Act within 30 days of commencement of work. As this is such a basic license, many other licenses require this as proof of a commercial business.

For example, most banks will require you to furnish this license if you want to open a current account. To get this license, you would need to provide the PAN card of the business owner or the business itself if it is incorporated, a copy of the rental/lease agreement or sale deed, and details of all the employees. Premises governed by the Act are shops, commercial establishments, residential hotels, clubs, restaurants, eating houses, theaters and other places of public amusement or entertainment etc. except those who falls under Factories Act 1948.

Registration under Shop & Establishment Act

The Shop and Establishment Act registration regulates work time, payment of wages, leave, holidays, terms of service and other conditions of work of persons employed in shops, commercial establishments, establishments for public entertainment or amusement and other establishments and to provide for certain matters connected therewith. This registration is compulsory for every business place of work except those who falls under Factories Act 1948. It is a state regulation and each state has separate shop & establishment regulation.

Major Aspects of Shop and Establishment Act

The following are some of the aspects of the Shop and Establishment Act

Child Labour Prevention
In India, No child can work in any establishment. A ‘child’ means a person who has not completed fourteen years of age. Further, no young person can work in any establishment before 6 a.m. and after 7 p.m. Further, a young person can only work for seven hours in any day and forty- two hours in any week. ‘Young person’ means a person who is not a child and has not completed seventeen years.
Opening and Closing of Shops and Commercial Establishments
In India, No person employed in any shop or commercial establishment shall be required to work for more than eight hours in any day and forty eight hours in any week without overtime wages. Further, every person employed in any shop or commercial establishment should be allowed in each week a day holiday.
Holidays
Person employed in any shop or establishment shall be entitled, after twelve months of continuous service with the establishment, to holidays with wages for a period of 12 days in the subsequent period of twelve months.
Health and Safety

In India, the various aspects relating to health and safety must be maintained at all shops and commercial establishments under act

Cleanliness: The premises of every establishment must be kept clean. It should be free from effluvia arising from any drain, privy or other nuisance. It should be cleaned at regular intervals.

Ventilation: The premises of every establishment must be well ventilated.

Lighting: The premises of every establishment must be sufficiently lighted during all working hours.

Precautions against fire: In every establishment, precautions must be taken against fire.

Payment of Wages

Employers are responsible for the payment of wages to persons employed. All employer are required to fix a period in respect of which wages shall be payable. The wage periods shall exceed one month.

Benefits of the Shop & Establishment Registration

  1. Legal Entity Proof

Each shop or business required a legal entity proof like proprietorship firm or partnership firm etc. a legal entity proof which gives the right for doing the business in your area or state for the same. The Registration of the business under shop and establishment act is legal entity proof.

  1. Business Bank Account

Every banks is required a legal entity proof to open a current account. Each shop & Establishment has to open a separate bank account for the daily transactions as per the RBI Compliance. On the basis of the shop certificate you can easily open a current business bank account.

  1. Smooth inspections

The State government and local municipality conduct regular inspection visits for checking the proper working of shops and establishments along with license as well. If you have the Shop Act license, it will help in the time of inspection every time.

  1. Government Benefits

Each state has a DIC Department which creates the policy in the respective state for the all small business. On the basis of Shop License Registration Certificate you can easily avail the government benefits.

Documents required for Registration

  • Details of Employer/Manager
  • Memorandum and Articles of Association/Trust deed/Partnership Deed
  • Lease Rent Agreement /Premises purchase Agreement
  • List of Directors/Managers/ Partners
  • Bank Account Number details
  • First Income Tax Assessment order/PAN
  • BMC declaration
  • Date of commencement of business

Records to be Maintained under Shop & Establishment Registration

Under the Shop and Establishment Act, every business has to seek approval from Department of Labour and keep up-to-date registers regarding details of employment, fines, deductions and advances, salary and holidays. The requirements may vary from state to state. Files related to annual holidays and number of employees need to be submitted to the office of the Municipal Corporation annually further no Regular return is needs to be filed under this Act.