The Shops and Establishment Act is a state-specific law that varies from one state to another. Its purpose is to regulate working conditions and protect the rights of employees.
When an entity hires individuals, whether as full-time employees, casual workers, or on a contractual basis, it is mandatory for the entity’s owner to obtain a registration under the Shops and Establishment Act or labor law.
The registration application for the shops and establishment license must be submitted to the labor department that has jurisdiction over the entity’s registered office, LLP, and any other place of business where employees are employed.
The application for the registration of a shop or establishment must be filed within 30 days of the establishment of the business premises.
The Shops and Establishment Act governs various rights, including:
- Regulation of working hours.
- Payment of wages.
- Leave or holidays.
- Terms of service.
- Maternity benefits.
- Any other conditions of work for employees in different establishments.
There are several benefits to obtaining a Shops and Establishment registration:
-
Ease of Opening a Current Bank Account: Businesses registered under the Shops and Establishment Act can easily open a current bank account in any bank. The registration serves as proof of address for the entity.
- Peace of Mind for Employers and Employees: The Act prioritizes the well-being of employees within the entity. It protects employees’ rights and ensures their safety in terms of health and financial status. This fosters a positive working environment for employees.
- Prevention of Unethical Business Practices: The Shops and Establishment Act contains strong provisions against child labor. Entities operating under this act are prohibited from employing minors for any tasks, thereby discouraging unethical labor practices.
-
Enforcement of Fair Wages and Holiday Management: Many entities in the unorganized sector of India lack proper policies regarding wages and holidays. The Shops and Establishment Act mandates that establishments focus on these areas and maintain transparency with employees and auditing authorities. This helps enforce better wage practices and holiday management.
By obtaining a Shops and Establishment registration, businesses can avail themselves of these benefits, ensuring compliance with labor laws and creating a favorable working environment for their employees.
Checklist of the requirements typically needed for obtaining a Shops and Establishment registration:
- Identity Proof: PAN card, Aadhar card, driving license, or voter ID of the owner.
- Photograph: A photograph of the owner.
- Shop Photo: A front-view photograph of the shop or establishment along with the owner.
- Rental or Ownership Proof: Rent agreement if the premises are rented, or tax paid receipt if the premises are owned.
- Proof of Address: Electricity bill or any other document that serves as proof of address for the shop or establishment.
- Certificate of Incorporation: If the entity is a company, the certificate of incorporation is required.
- AOA/MOA or LLP Agreement: The Articles of Association/ Memorandum of Association for a company or the LLP agreement for a Limited Liability Partnership (LLP).
- Partnership Firm: In the case of a partnership firm, a copy of the partners’ consent or the board resolution is required.
- Partner/Director Details: A list of partners or directors along with their addresses and ID proofs, if applicable.
- Employee Details: Details of existing employees, including their names, addresses, and any relevant identification information.
Please note that these requirements may vary slightly depending on the specific state and its regulations. It is advisable to consult the relevant authority or seek professional assistance to ensure compliance with the specific requirements of your state.
The process for obtaining a Shops and Establishment registration:
Step 1: Gather the necessary documents and information as per the checklist provided.
Step 2: Create a user account on the online portal designated for the registration process.
Step 3: Fill out the application form for the registration of the shop or establishment. Provide all the required details and information accurately.
Step 4: Attach the necessary documents as specified in the checklist. This may include identity proofs, photographs, proof of address, rental or ownership documents, certificates, agreements, and employee details.
Step 5: Make the required payment for the registration process. The fees may vary depending on the state and the type of establishment.
Step 6: Once the application is submitted, reviewed, and approved by the relevant authority, you will receive the shops and establishment license. This license serves as proof of your registration and compliance with the applicable labor laws.
It is important to note that the specific steps and procedures may differ slightly based on the state in which the registration is being obtained.
The key deliverables upon successful completion of the Shops and Establishment registration process typically include:
- Certificate of Shops and Establishment: This is the official certificate issued by the relevant authority, confirming the registration of the shop or establishment under the Shops and Establishment Act. The certificate serves as proof of compliance with the labor laws and regulations.
- Login Credentials: Upon registration, you will receive login credentials or user credentials for the online portal or system used for managing the registration. These credentials will enable you to access and update your registration details as required.
- Challan: A challan or payment receipt may be provided as proof of payment for the registration fees. This document confirms that the necessary fees for the registration process have been paid.
It’s important to note that the specific deliverables may vary depending on the state and the procedures followed by the respective labor department.
What do you want to know?
Once after taking the shops and establishment license it is valid for Five years. (this may differ from one state to another)
Under the Shop and Establishment Act, every business has to seek approval from Department of Labor 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.
Yes, even cases where the employees are working from home, this registration is necessary to obtain.
Start up or no start up, if you have a shop, office or employees working under you or your company you are required to get a shop and establishments license.