Shop and Establishment Act In India: Detailed Explanation

The act that is responsible for the regulation of shops and any other commercial establishment in a state, is known as the “Shop and Establishment Act.” This act changes from state to state as every state has a different Shop and Establishment Act. But, the general provision of the Shop and Establishment Act remains unchanged. The Shop and Establishment Act is implemented by the Labor department in each state.

Shops are defined as the site where goods are sold either by a retailer or a wholesaler or where services are offered to the customers. This site may include a godown, an office, a storeroom and a warehouse which are used in connection to trades or businesses.

Whereas a commercial establishment is defined as a commercial or banking or trading or insurance administrative service where people are employed to perform office work. These commercial establishments include hotels, boarding houses, eating houses, restaurants, cafes, theatres or some other public entertainment or amusement sites. However, the Shop and Establishment Act does not include industries and factories and these are regulated by the industries Act, 1951 and the Factories Act, 1948.

The main purpose of issuing the  Shop and Establishment Act was the protection of the rights of both the employee and the employer. The  Shop and Establishment Act regulates a lot of elements like wages, hours of work, working conditions, overtime work, maternity leaves, weekly holidays, fire safety and many more.

Registering Under the Shop and Establishment Act

The Shop and Establishment Act states that any shop or commercial establishment that is covered by the Act, needs to apply for registration mandatorily under the act of the respective state. It is necessary for every business or establishment along with the people who are responsible for working and maintaining the business to possess a Shop and Establishment Registration Certificate or simply put they must have a Shop License under the Shop and Establishment Act.

Those people who run businesses from home and do not have any sort of physical stores or sites also need to acquire the Shop License. Also, proprietors of each and every ecommerce business or online store or online business need to necessarily register under the Shop and Establishment Act and acquire the Shop License. Each and every commercial establishment or shop needs to register itself under the Shop and Establishment Act within 30 days of starting the business.

The Shop License acts like a basic license for your business. This certificate/ license is required in order to acquire various other business licenses. This shop license acts as a proof of incorporation of a commercial establishment or shop. The shop license is also useful at the time when the proprietor needs a loan for business or tries to create a bank account in the bank. Most banks need this certificate in order to create your current bank account.

Regulations of Shop and Establishment Act

The Shop and Establishment Act regulates the following points:

• Payment of salaries and compensation to be offered
• Abolition of Child Labor
• Intervals of taking rest
• Dismissal Provisions
• The record keeping done by the employees
• The hours for Opening and closing
• Enforcement and Inspection of all sorts
• Prohibition of employment of women and young children in night shifts
• The hours of work, annual leaves and also the weekly holidays
• Leave Policy
• Accidents and Precautions against any fire
• Cleanliness and Ventilation

What do you need to register for Regulations of Shop and Establishment Act?

The documents that you need in order to acquire a Shop License under the Shop and Establishment Act are as follows:

• ID proof of the applicant
• Details of all the employees
• PAN Card of the applicant
• Challan of Payment
• The address Proof of the Shop or Business establishment
• Business Licences required to start the business, if any.

Penalties of the Shop and Establishment Act

There are some penalties that will be issued in sort of failure to abide by the rules and regulation set by the Shop and Establishment Act. Also, if any commercial establishment or Shop has not registered itself under the Shop and Establishment Act within the specified time period, then that establishment will have to face the consequences and penalties will be levied against that establishment. The penalty amount varies from state to state.

Procedure to obtain the Shop and Establishment Registration

The process to acquire a Shop and Establishment Registration certificate is different for different states. The process can be performed either online or offline as per the applicants wish.

In order to obtain the certificate by online processing, the owner of the business or shop needs to log onto the State Labor Website of his/her respective state. The owner needs to fill all the details in the application form for registering under the Shop and Establishment Act. Documents need to be uploaded and an online fee is to be paid. This fee also differs from state to state. Once the registration has been approved, the owner will get issued an online registration certificate under the Shop and Establishment Act.

If the applicant wants to register for the certificate offline, then the registration application needs to be filled and submission will be done to the Chief Inspector of that concerned area along with the specified fee. The registration certificate will be issued to the owner by the Chief Inspector after approving all the details.

The application form for registration includes the details of employer’s name, name of the establishment, address of the business site, type of the establishment, the total number of employees and other related information. The renewal of the registration application needs to be done before the expiry of the registration period. The validity of the Shop and Establishment Certificate varies from state to state under the Shop and Establishment Act.