Shops and Commercial Establishments Act – India
The Shops and Establishments Act sets the ground rules of employment for most businesses in India that are not factories: when people may work, how long, what leave they earn, how and when they are paid, and who may be employed at all. There is no single national act. Every state and union territory has passed its own, and this page explains what they have in common and where to find each one.
State-wise Shops and Establishments Acts
The rules that bind an employer are those of the state the establishment is located in. A business with branches in several states registers each branch under that state's act and follows its limits. Choose a state for its act, registration process and forms:
A Brief History
Factories came under national regulation early, through the Factories Act. Shops, offices, hotels and similar workplaces did not, and after independence the states filled that gap themselves, each drafting its own law from a common model. Bombay (now Maharashtra) was among the first, with the Bombay Shops and Establishments Act, 1948.
Because the state laws grew from the same template, their structure is similar, but the numbers differ: daily hours, overtime caps, leave entitlements and opening times all vary.
In 2016 the Central Government circulated the Model Shops and Establishments (Regulation of Employment and Conditions of Service) Bill for states to adopt or adapt. It allows establishments to operate all days of the year, permits women to work night shifts where safety and transport are provided, and moves registration online. Maharashtra was the first large state to enact a law based on it, the Maharashtra Shops and Establishments (Regulation of Employment and Conditions of Service) Act, 2017; several other states have since followed.
Applicability
The acts cover establishments where people are employed for trade, business or a profession, typically including:
- Shops and retail outlets, including those inside malls
- Offices and commercial establishments, including IT and IT-enabled services companies
- Hotels, restaurants, eating houses and cafés
- Theatres, cinemas and other places of public amusement or entertainment
- Banks, insurance offices, brokers and other service businesses
Factories and mines are outside their scope; they are governed by their own legislation. Many states also exempt small establishments below a set number of employees from some or all provisions, and the threshold differs by state.
What the Acts Regulate
- Working hours: the maximum hours per day and per week, and the spread-over of a working day.
- Rest intervals: a break after a set number of continuous working hours.
- Weekly off: at least one paid day off each week, or a compensatory day where the establishment works through it.
- Overtime: a cap on overtime hours and a higher rate of pay for them, usually twice the ordinary rate.
- Leave: earned (privilege) leave, casual leave and sick leave, with rules on accumulation and encashment.
- Holidays: national and festival holidays with pay.
- Wages: the time and manner of wage payment and the deductions that may be made.
- Opening and closing hours: where a state still prescribes them.
- Employment of women and young persons: a bar on child labour, and conditions on night work for women.
- Termination: notice or pay in lieu of notice before an employee is dismissed.
Employer Compliance
Although the details vary, most state acts expect an employer to:
- Register the establishment within the period the state allows from the date business begins, and renew the registration where the state requires it.
- Report changes such as a new address, owner or employee count, and notify closure.
- Display the registration certificate and the prescribed notices (working hours, weekly off, holidays) at the premises.
- Maintain the prescribed registers and records of employees, attendance, wages, overtime and leave.
- Issue appointment letters and, where required, identity cards and wage slips.
- File returns where the state prescribes them.
Consequences of Non-Compliance
Every state act sets penalties for running an unregistered establishment, breaching the limits on hours, leave or wages, and failing to keep records or display notices. Penalties are usually fines, which increase for a repeated or continuing offence, and some acts also provide for imprisonment. Inspectors appointed under the act can enter the premises, examine registers and require documents to be produced. The amounts differ by state; see the relevant state page.