Shop and Establishment Act

Shop and Establishment Act Every Indian state has enacted certain rules and regulations with regard to conditions of work. The objective is to secure uniform benefits for employees working in different establishments, from shops, commercial establishments and residential hotels to restaurants, theatres and other places of public amusement or entertainment. The Act is designed to regulate payment of wages, hours of work, interval for rest, opening and closing hours, holidays, overtime work, annual leave, sick leave, casual leave, condition of the employment etc. 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 it if you want to open a current account. 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. The shop & establishment act is applicable to every office and shop where commercial activities are carried on even on employing one employee. There are some changes from state to state. Question: What is the difference between Factories Act and Shops and Establishment Act? Answer: Both are Acts to regulate conditions of service of workers engaged. While the Factories Act is applicable to establishments wherein a manufacturing activity is carried out the Shops and Commercial Establishments Act is applicable to establishments which do not fall under the definition of factory, mine or plantations. Concept of leaves Employees are entitled to a certain number of days of leave per year aside from the holidays and days off. Generally three types of leave are mentioned under the Shops and Establishments Act i.e. Privilege leave, Sick leave and Casual leave. This varies from state to state. So, the number of leaves entitled to an employee depends upon the state in which the establishment is located in. The leave policy of an establishment should be in consonance with the leave provision of the respective state’s Shops and Establishments Act. The said leave policy cannot be less beneficial than that mentioned by the respective state’s Shops and Establishments Act. Generally, the framework of the Act is similar throughout. However, the leave provision under the Act varies for every state. Types of Leave 1. Earned leave / Privilege leave These are the additional leave of absence awarded to an employee with wages for the day’s work performed by him for specific number of days as prescribed under the Shops and Establishments Act. The condition to avail the Earned / Privilege leave may differ in every establishment. The total number of days of Earned / Privileged leave that may be carried forward to a succeeding year is prescribed under the Shops and Establishments Act. The employee is entitled for encashment of Earned leave / Privileged leave as per the respective state's Shops and Establishments Act and Rule. 2. Casual Leave: The Casual Leave is granted for an unanticipated event or when an employee is unable to attend the office for a day or two due to any personal exigency. The quantum varies from state to state, as per Shops and Establishments Act. Normally companies restrict Casual leave to a short duration. However, if an employee wishes to avail Casual Leave for a longer period then prior permission is required or a plausible reason needs to be provided on re-joining. Casual leave is normally not clubbed with other leave, but can be availed along with other leave in case of insufficient leave balance. Generally Casual leave is not cashable nor it can be carried 3. Sick Leave: An employee is entitled to avail Sick leave in case of sickness. During Sick leave, wages are paid to the employees when they are out of work due to illness. The number of Sick leave are fixed by the establishment in accordance with the provisions of the respective state’s Shops and Establishments Act. Sick leave accumulated in a year, may be carried forward and availed in the next year in certain states. Overtime Work Overtime refers to the time worked in excess of one's regular working hours which, in India, is eight to nine hours per day and forty-eight to fifty hours per week, depending upon the establishment one is employed with. Overtime wages are to be paid at the rate of twice the ordinary rates of wages by the employer, if an employee works more than the working hours as prescribed under the Act. Several statutes regulate overtime and overtime payment, and different legal acts provide for different periods of working hours. Spread Over Hours Spread Over hours mean, total working hour of an employee, inclusive of rest breaks and overtime. Interval for rest Interval for rest is a break taken during working hours. Note: As with most of the Acts, shops and establishments which are very small don’t take the license. Now many states are making changes in the paper work/renewal frequency for ease of business.