Shop and Establishment Act is a state-specific Act that aims to regulate all commercial establishments & shop outlets functioning within the state. Such entities are mandated to register under this Act & avail Shop and Establishment certificate from the Labour Department of the respective states.
Definition of Shop & Commercial Establishment as per Shop and Establishment Act
As per the Shop and Establishment Act, the term “shop” refers to premises used to sell goods via retail or wholesale channels or where services are facilitated to end-users. It encompasses commercial offices, storerooms, godowns, & warehouses used in association with business or trade.
Commercial establishments, on the other hand, are referred to as commercial, trading, banking or insurance establishment or administrative service in which individuals are hired for office undertaking. It encompasses hotel, eating house, cafe, restaurant, theatre, or other amusement places. But, industries & factories do not come under the regime of this Act and are administered by the Factories Act, 1948 and Industries (Development and Regulation) Act 1951.
Registration under the Shop and Establishment Act
The commercial establishment or shops that fit the legal definition of the aforesaid Act are mandated to avail shop and establishment certificate from the labour department of the respective state. The Act also covers the people running a business from home without having any physical premises. The people who are running online stores or web-based businesses must register under this Act.
Every shop outlet as well as commercial establishment must register under the aforesaid Act within 30 days of commencing the business activities. The Shop and Establishment Certificate serves as a fundamental legal license for businesses in a commercial regime.
This certificate creates the foundation for obtaining other vital certificates such as trade licenses, trademark registration, and MSME registration. It acts as legal proof of the incorporation of shops and commercial establishments. Also, it enables the business owner to avail quick loan and create a current bank account for the business transactions.
Regulations underpinned by Shop and Establishment Act
The Shop & Establishment Act regulates the following parameters in general;
- Working hours and holidays of the workers
- Workers’ wages as well as compensation
- Prohibition of child labour
- Prohibition of hiring women & under-aged people in the night shift
- Enforcement & inspection
- Rest period for workers
- Maintenance of employers’ records, including logbooks
- Dismissal provisions
Procedural steps for obtaining Shop and Establishment Certification
The procedure for availing of the Shop and Establishment Certificate differs state-wise. It can be availed offline or online.
- For obtaining such certification via online mode, the shop owner must visit the online portal of the State Labour Department.
- The shop owner must fill the e-form for the registration under the Shop & Establishment Act, upload the requested documents, and pay the standard fees. The fees for such a license differ state-wise. After the successful validation of the registration form, the shop and establishment certificate will be granted to the applicant.
- On the contrary, those who wish to avail the certificate offline need to file and submit an application to the Chief Inspector of the concerned area and the standard fees. Upon receiving the application, the said official will examine the same for any error, and after successful scrutiny, he/she will grant the certificate to the applicant.
The application for registration encloses the following details:
- Name of the employer & commercial establishment address as well as the category of the establishment
- Number of the workforce and other related details
The registration application requires to be renewed before the expiration of the registration. The validity of this certificate varies state-wise. Some states facilitate this certificate with lifetime validity; other states grant the certificate with a limited validity period, ranging from 1-5 years.
Documentation required for the Shop and Establishment Certificate
The documents required for availing the shop and establishment certificate are mentioned in the list below:
A shop and establishment certificate is a legal compulsion for every commercial establishment and shop outlet in India. Furthermore, it is also mandatory for individuals who wish to run commercial activities from home, either offline or online mode.