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Shop & Establishment Registration

What is Shops and Establishment Act and why the registration under the act is required?

Shops And Establishment act was enacted to regulate the working hours, weekly/monthly off, payment of wages, terms and condition of employment, holidays, leave etc. of persons employed in shops, commercial establishments.

Every employer shall within 30 days from the date on which the establishment commences its work shall file statement together with fees to the Chief Inspector of the area concerned.

Note: Period for applying registration may differ from state to state.

Which establishments need to register under the Act?

The definitions for the establishment, commercial establishment and shop given in S. 2 of the the Act are:

S. 2 (i) “establishment” means a shop or a commercial establishment;

S. 2 (e) “commercial establishment” means a commercial or trading or banking or insurance establishment, an establishment or administrative service in which persons employed are mainly engaged in office work, a hotel, restaurant, boarding or eating house, a cafe or any other refreshment house, a theatre or any other place of public amusement or entertainment and includes such establishments as the State Government may by notification declare to be a commercial establishment for the purposes of this Act;

S. 2 (u) “shop” means any premises where any trade or business is carried on or where services are rendered to customers, and includes offices, storerooms, godowns, or warehouses, whether in the same premises or otherwise, used in connection with such trade or business, but does not include a commercial establishment or a shop attached to a factory where the persons employed in the shop fall within the scope of the Factories Act, 1948;

On analyzing the above definitions we see that the act virtually cover all types of business establishment and thus making it necessary for all business establishments (with or without any employees). This is an important labour state level compliance requirement. The only case where one doesn’t need to register under the Act is when either the establishment is a factory when it will be covered under the Factories Act, 1948 or when it is exempted under the s. 3(1) of the act. As per this section following establishments are not covered by the Act:

(a) offices of or under the Central or State Governments or local authorities, except commercial undertakings;

(b) any railway service, water transport service, postal, telegraph or telephone service, any system of public conservancy or sanitation or any industry, business or undertaking which supplies power, light or water to the public;

(c) railway dining cars;

(d) establishments for the treatment or care of the sick, infirm, or the mentally unfit;

(e) establishments of the Food Corporation of India;

(f) offices of legal practitioners and medical practitioners in which not more than three persons are employed;

(g) offices of a banking company.

Who is an employee under the Act?

Under the Act the employee is defined as:

S. 2 (g) “employee” means a person wholly or principally employed in or in connection with, any establishment whether working on permanent, periodical, contract or piece-rate wages, or on commission basis, even though he receives no reward for his labour and includes an apprentice, any clerical or other member of the staff of a factory or industrial establishment who falls outside the scope of the Factories Act, 1948, but does not include a member of the employer’s family; and “employed” shall be construed accordingly;

Thus by this definition the Act covers every single person directly or indirectly employed in the establishment, that person might be a permanent employee of the establishment or might be an intern working with the establishment, who may or may not derive wages (i.e. all remunerations (whether by way of salary, allowances or otherwise) expressed in terms of money or capable of being so expressed which would, if the terms of employment, express or implied, were fulfilled, be payable to a person employed in respect of his employment or of work done in such employment) from the establishment.

Who are not covered as an employee under the Act?

The only persons not covered in the definition of the employee are given in the s. 3 (1), i.e.:

  • (a) persons occupying positions of management in any establishment;
  • (b) persons whose work is inherently intermittent such as drivers, care-takers, watch and ward staff, or canvassers; and
  • (c) persons directly engaged in preparatory or complementary work, such as, clearing and forwarding clerks responsible for the despatch of goods.

The act does not provide for any minimum or maximum number of the employees as a parameter for the registration of the establishment, an establishment can have any number of employees and even no employee. The only exception to this is given in s. 3 (1) (e) which states that the offices of legal practitioners and medical practitioners do not come under the ambit of the Act but, if offices of legal practitioners and medical practitioners employ more than three persons then it will be covered under this Act and will have to register under the Act.

What is the Procedure of registration under the Act?

Application in Form-A duly completed with supporting documents are required to be submitted to the local Labour Inspector with necessary payment towards registration fee. The jurisdiction of the Labour Officer is based on the locality in which the business is housed from.

Businesses with special needs i.e. long hours and women workers:

Establishments working on holidays or beyond working hours are required to apply separately for permission from Labour Officer. Similarly, establishments seeking to employ women beyond the permitted closing hours should obtain permission separately from concerned Labour officer.

Is it possible to renew and make any changes under the Act?

Renewals and Changes For any changes such as increase in working hours, change in address etc. same form – Form A is to be used. Certificate of registration is required to be renewed once in 5 years. If the company has more than one office/ branches each branch has to be registered separately. Each Company / branch has to be registered in different circles based on their locality. (Locality will be on PIN code basis)

What are the prohibited activities under the Act?

Prohibited activities

  • The employment of children below 14 years is prohibited.
  • Young persons and woman shall not be employed during night, between 8 pm to 6 am for Bangalore and 9 pm to 6 am in other cities. Establishment requiring them to work between 8 pm to & 6 am for Bangalore and 9 pm to 6 am in other cities are required to obtain a special permission after fulfilling certain welfare measures such as providing security & transport facilities for employees engaged in Night shift, etc.

Who are not required to register under the Shop and Establishment Act?

This provision does not applies to certain establishments listed in s. 3 (2) of the Act i.e.:

(a) shops dealing mainly in medicines or medical or surgical requisites or appliances;

(b) clubs, residential hotels, boarding houses, hostels attached to schools or colleges, and establishments maintained in boarding schools in connection with the boarding and lodging of pupils and resident-masters;

(c) stalls and refreshment rooms at railway stations, bus stands, ports or aerodromes;

(d) shops of barbers and hairdressers;

(e) shops dealing mainly in meat, fish, poultry, eggs, dairy produce (except ghee), bread, confectionery, sweets, chocolates, ice, ice-cream, cooked food, fruits, flowers, vegetables or green fodder;

(f) shops dealing in articles required for funerals, burials or cremations;

(g) shops dealing in pan (betel leaf), pan with beedies or cigarettes, or liquid refreshments sold retail for consumption on the premises;

(h) shops dealing in newspapers or periodicals, editing sections of newspaper offices and offices of news agencies;

(i) cinemas, theatres and other places of public entertainment and stalls and refreshment rooms attached to such cinemas, theatres and places of public entertainment;

(j) establishments for the retail sale of petrol;

(k) shops in regimental institutes, garrison shops and troop canteens in cantonments;

(l) tanneries;

(m) retail trade carried on at an exhibition or show, if such retail trade is subsidiary or ancillary only to the main purpose of the exhibition or show;

(n) oil-mills and flour-mills not registered under the Factories Act, 1948;

(o) brick and lime kilns;

(p) commercial establishments engaged in the manufacture of bronze and brass utensils so far as it is confined to the process of melting in furnaces.

(q) Information Technology Establishments;

(r) Information Technology enabling services or establishments;

(s) Bio-Technology and Research Centres or establishments of epidemic and other diseases.

What are the important registers to be maintained by the shops, under this Act?

Important registers to be maintained under the Rules

(a) Register of leave with wages Form–F

(b) Visit book

(c) Appointment order in Form –Q

(d) Notice to be exhibited on weekly holidays in Form P

(e) Registration certificate to be exhibited in Form C

What are the documents required for registration?

1. Copy of the Pan Card of the company/Firm.

2. Nature of Business.

3. Self attested copy of Pan Card, Voters Identity Card/Aadhar Card Card/Passport/Driving license as a proof of identity of proprietor/partners /directors/trustees etc.

4. Self attested copy of Bank Statement/Electricity Bill/Mobile Bill/Telephone Bill, Voters Identity Card/Aaadhar Card Card/Passport/Driving license as a proof of address of proprietor/partners /directors/trustees etc.

5. Premises Address Proof
- If Rented: Rent Agreement and utility bill likely electricity bill, telephone bill, etc & No Objection Certificate from Owner.
- If Owned: Ownership proof. Receipt of Municipality tax paid.

6. Details of Bank account along with a Cancelled cheque.

7. Memorandum/Articles of Association/List of Directors. (In case of company)

8. Front photo of shop or commercial establishment covering the surroundings of the said establishment.

9. Details of Employee along with address, date of joining and working hours etc.