People who are planning to enter the business world need to understand the provisions of the shop and establishment act in India. Registration under this act i.e. shops and establishment act is mandatory for most businesses. A shop is defined as a place where goods are sold and services are offered. A shop or an establishment is the smallest form of entities where both goods and services are sold.
Any shop or establishment that begins operations must apply to the chief inspector for shop and establishment Act license within the prescribed time. The application for the license must consist of the name of the employer, a number of employees, address, etc.
Shop and establishment act is covered under the state legislation and also each state has framed its own rules and regulations for it. Rules are framed by the state government therefore; they will be different for different states. These rules must be followed in order to obtain the registration. The main objective of the shop and establishment was to provide statutory obligation and rights to the employer and employees. The shop and establishment aim to regulate the payment of wages, an hour of work, holidays, terms of service and other work conditions of people employed in the shop and commercial establishments.
The shop and establishment act comes under the category of the state legislature and covers all the persons employed in the establishment with or without wages, except for the employer’s family. As the rules are framed by the state government, it holds the right to either exempt any enterprise permanently or for a limited period of time from all or any provision of the Act.
The main provisions of the act are the following:
1. Every shop has to get itself registered under the shop and establishment act within 30 days of starting work.
2. In case the establishment is shut down the same must be communicated within 15 days of the closure of the establishment.
3. The act lays down the hours of work per day and per week.
4. It also notifies the minimum wage that is required to be paid.
5. Also states the provisions for annual leaves, maternity leaves, sickness, and casual leaves, etc
6. Act also states the rules of termination of service and also the obligations of employees and that of the employers.
1. PAN card of company/partnership/LLP/proprietor
2. Aadhar card of partners/ directors/ proprietor
3. Partnership deed in case of a partnership
4. Premises proof (electricity bill, rent agreement, NOC from the landlord, etc)
5. In the case of company AOA, MOA and COI is required
6. Key plan
7. Canceled cheque
8. Authorization letter from all other partners
9. NOC (No objection certificate) from the landlord in case the premises are on rent.
As the owner of the shop and establishment, you are mandatorily required to get the registration under the shop & establishment Act. Below are some of the prescribed rules:
1. Submit an application to the inspector of the area in a prescribed form within 30 days of starting work in shop/ establishment. The application should be submitted along with the requisite fee and should contain the following information:
Name of the employer
Postal address of your establishment
Name of shop/establishment
2. On receiving the application and the fee for registration, the verification is done by the inspector. On successful inspection, the inspector will enter the details in the register of establishments and issue the registration certificate of the establishment. This certificate will be valid for a period of 5 years and have to be renewed afterward.
1. What is the purpose of the Shop & Establishment Act?
The objective of the shops & establishment act is to secure benefits for the employer working in the shops/ establishments, residential hotels to restaurants and other public amusement and entertainment places.
2. Is shop and establishment license mandatory?
Yes, the license is mandatory for all the business entities, even if the individual is working from home. Every establishment needs to register itself within 30 days of starting the work.
3. Is there a single law for the entire country?
No, there are different laws for different regions in the country. There is Bombay shops and establishments Act, 2018, Delhi Shops and Establishment Act, 1954 and the Karnataka shops and establishment act 1961 and many more. So before registering you need to go through the applicable law which affects you.
4. Is the act applicable to the establishments of the state and central government?
No, establishments of the state and central government are exempted from all the provisions of this act.
5. What are the rights and privileges of the employees under this Act?
Every employee has a right to take 15 days paid leave, 12 days casual leave and 12 days sick leave
Every employee is authorized for the overtime wages worked beyond the normal working hours.
Every employee is applicable for the weekly holiday with wages and also the national and festival holidays.
Every employee is entitled to get the wages for the period of work rendered to the employees.
6. What types of premises are governed by shop act?
The premises governed by the acts are Shops, Commercial establishment, residential hotels, theaters, and other public entertainment places.
7. What are the documents required for shop & establishment registration?
PAN card of company/partnership/LLP/proprietor
Aadhar card of partners/ directors/ proprietor
Partnership deed in case of a partnership
Premises proof (electricity bill, rent agreement, NOC from the landlord, etc)
In the case of company AOA, MOA and COI is required
Authorization letter from all other partners
NOC (No objection certificate) from the landlord in case the premises are on rent.
8. Is it necessary to notify the closing of the establishment?
It is mandatory for an employer to notify the inspector regarding the closing of his establishment within 10 days. The inspector thereafter will cancel the registration of the establishment.
9. What is the validity and renewal of the certificate?
Certificate will be valid up to the end of the every year. It should be renewed every year. The renewal application has to be made not less than 15 days before the expiry date of the certificate.
10. What are the powers of the Inspector appointed under the Act?
Can enter in any place which is an establishment
Has a right to take evidence of any person
To verify the records, registers, and notices
If the inspector suspects that the employer has committed any offense under section 52 or 55, he can seize the necessary registers,records and other documents and can retain them for a reasonable period for examination.