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The Shops and Establishment Act: Things You Should Know

Every state in India has enacted the Shops and Establishments Act. This Act is executed in order to regulate the conditions of work, provide for statutory obligations of the employers and, administer the rights of employees in the unorganised sector and other establishments in their jurisdiction.

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The Shops Act was enacted to improve the management of working conditions and employment in shops, commercial establishments, restaurants, dining establishments, hotels, theatres, and other public places of amusement. This act is a labour law catering to the needs of the massive unorganized work sector in India which often suffers from unemployment, corruption, and exploitation and has no legal oversight. It is a piece of state legislation, and each state has its own set of rules and restrictions. The legislation applies to everyone who works in a business, whether they are paid or not. 

 What Are the Rights Governed by the Shops and Establishments Act?

Thus, the Shops and Establishments Act basically includes amendments and laws relating to :

  • the regulation of working hours,
  • payment of wages,
  • leave or holiday,
  • the terms of services,
  • Maternity benefits; and
  • any other conditions of work for people working in various establishments.

Who Do Shops and Establishments Apply to?

According to the Shops and Establishments Act, the term establishment means a shop or a commercial establishment. These include commercial spaces, residential hotels, restaurants, theaters, or other places of public amusement or entertainment.  Further, a commercial establishment means a premise where any trade, business, profession, or any work-related with it is undertaken like a society registered under the Societies Registration Act, 1860, registered or unregistered charitable or other trusts, journalistic and printing establishments, contractors and auditors establishments, quarries and mines not governed by the Mines Act, 1952, educational or other institutes run for private gain, any premises where the business of banking, insurance, stocks and shares, brokerage or product exchange is undertaken. This does not include a factory registered under the factories act, of 1948. 

Information That Needs to Be Furnished for Shops and Establishments License Registration:

  • Name of firm
  • Address of Firm
  • Name of Manager, if any
  • Nature of Establishment: Nature of shop, Like Clothing Store, Furniture Store
  • Number of Employees in Establishment
  • Day of Holiday, etc

Documents Required for Shops and Commercial Establishments Registration :

  • PAN/Aadhar card/driving license/voter ID
  • Photo of owner
  • Front view photo of the shop along with owner )
  • Rent agreement, if rented
  • Electricity bill
  • Certificate of incorporation
  • AOA/MOA of the company/LLP agreement of the company
  • Copy of the partners’ consent or the board resolution (in case of a partnership firm)
  • List of partners/directors, along with their address & ID proof (if any)
  • Details of the existing employees.

A statutory fee is also required to be supplied with these documents, the amount of which varies by state.

Procedure for the Application for a License Under the Shops Act:

Every eligible establishment needs to register for a license within 30 days of the date of commencement of their business to avoid penalties under the act. 

  • Log on to the website of the respective state where you want your business to get registered 
  • Fill out the application form. This will include certain details like the registering procedure as an individual or organization, based on the kind of establishment/business initiative getting registered
  • Fill in the details of the organization and proprietor
  • Upload the requisite documents
  • Upload the signature
  • Pay the required fees
  • Inspection of the application by the labour department and an inspector might be appointed to carry out an inspection of premises if required 
  • Approval of application by the authorities and issue of a valid license (normally valid for 1 year with renewal every year).

SHOP AND ESTABLISHMENT ACT LICENSE REGISTRATION

 Procedure for Renewal of Application:

  • First, you need to log on to the labour department website of the respective state and select the registering procedure as an individual or an organization
  • Login using the login ID received at the time of registration. Enter the details and fill in the application with your details and submit
  • Using the application ID, request a renewal of your license. The form will prompt you to re-upload all your documents
  • The fees for the renewal of license vary from state to state and also on the different categories of establishments 
  • The moment you make payment, your application status will change to ‘Under Scrutiny’. Until this status changes to ‘Completed’, your job is not done here. It usually takes up to one week for this change to happen
  • Download Certificate: once it’s done, you may ‘Download Certificate’, which is an option you will see on the right side of your screen.

Features:

  • In India, the structure, features, eligibility, fees, terms and conditions, and other aspects of this Act may vary from state to state.
  • Within 30 days after the start of commercial activities, this license must be secured.
  • Banks demand this license as a legal document before opening a business current account.
  • This license must be renewed on a regular basis, according to state rules.
  • The license serves as proof of legal entity and grants the right to conduct business
  • The central government and state government-run businesses are exempted from this act
  • All organizations need to request the approval or endorsement of the labour department and be up-to-date on their records and compliances under the Shops and Establishments Act.
  • The registration certificate must be prominently displayed at the shop or commercial establishment and renewed periodically, as per the act.

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