Most businesses in India along with shops, restaurants, cafes, etc. are regulated under the provisions of the Shops and Establishment Act. It is mandatory to register your business under the Shops and Establishment Act to regulate the working environment and to ensure that the rights of the workers are protected. However, the rules and regulations differ from state to state; The objective of which is to provide proper working conditions to the laborers and take care of their holidays, wages and rights.
According to the Act, establishments include shops, commercial establishments, residential hotels, rest houses, eating houses, theaters, or other places of public entertainment and establishments notified by the State Government in the Official Gazette.
A shop means any place or premises where goods are sold and services are provided to the customers. It includes store-room, go-down, Warehouses or work places other than factories, commercial establishments or other places used for public entertainment and recreation. For the following establishments:-
- Registered profession under the Shops and Establishment Act.
- Shops and establishments of wholesalers or retailers
- Service center
- warehouse, storeroom and go-down
- In addition, any other work place.
- Eateries and Restaurants
- Amusement home, Amusement park, Theater, etc. below the form
- Legal recognition
Shop and Establishment License provides legal recognition to the concerned establishment/shop.
- Serves as business proof
For further business registration in India, the shop and establishment license serves as the business proof.
- Assistance in opening bank accounts and other formalities
Registration of shops and establishments becomes necessary for reasons like opening of bank accounts in the name of an establishment/shop.
- Provides a platform to raise new investment
Shop and Establishment License helps the proposed entrepreneur to raise investment by way of loan or venture capital for the proposed business establishment.
- Receives government benefits
By obtaining the license of shop and establishment, the entrepreneur can take advantage of government benefits in different stages of business.
- save time
As the process of shop act registration has gone online, it saves time in the registration process as well as creates less busyness during operations.
The following documents are required for shop and establishment license-
- Identity Proof like Aadhaar Card/PAN Card/Voter ID Card/Driving License of the employer.
- Passport size photograph of employer
- Affidavit, canceled check and bank statement,
- Photograph of the establishment/shop with the employer
- In case of a rented property, a copy of the rent agreement
- Any utility bill of the work premises.
Other documents required as per the establishment or business unit
- In the case of a trust, a list of the number of trustees
- Certificate of Incorporation, MOA and AOA as per Companies Act,
- In the case of co-operative societies, a list of the numbers of the members and the chairman
- The Partnership Deed contains all the important information such as the names of the partners along with their signatures and the share percentage of the partners.
Physical Registration Process:- Any business establishment/shop has to apply for license to the Chief Inspector of the concerned area within 30 days of commencement of business activities. It is applied through a prescribed form which requires some important information like-
- Name of the concerned employee,
- Name and address of the establishment,
- The number of employees in the establishment, and
- The category of proposed establishment and some other details differ from state to state.
Once the application is reviewed by the inspector, the next step is to grant the license to the establishment. The shop and establishment license should be displayed on the premises and renewed at prescribed times. Additionally, it is mandatory for all business entities to obtain a shop and establishment license, even if they are operating from home.
Note- According to the Act, in case of closure of any establishment or shop, the Chief Inspector has to be informed in writing 15 days before the closure. The Chief Inspector cancels the registration certificate of the establishment or shop by removing it from the register.
Online process to obtain shop and establishment license
- Visit Website
First of all, an applicant has to visit the website of the concerned state labor department (as applicable) and create a user ID and password through the same link.
Fill the required details to create a profile
The below mentioned details are required-
- Name of the proposed establishment/shop
- Name and details of employer
- Names and details of employees at that time
- Address of registered establishment with NOC or Rent Agreement (only for rented premises)
- PAN card details of the employer
- Form A
Click on Shop and Establishment Registration Form A.
- Fill Required Details
Select the state and district of your shop or establishment and fill the required information asked in the form.
- Upload Document
Once the form is filled, click on Upload Documents and attach the required documents.
After uploading all the documents, click on the Fee button and make payment.
- Check Status
An applicant can check the status on the Under-Scrutiny option.
- Issuance of License
If all the documents are as per the requirements of the Act, the certificate will be issued to the proposed establishment/shop.
Note: However, in case of physical submission, it may take around 15-20 working days for physical verification and issuance of registration certificate in major city areas. However, it may differ from state to state.
Under the Act, it is mandatory for all establishments to obtain registration of shops and establishments and to follow all the rules and regulations prescribed under the Act.
However, in case of any failure to obtain registration and comply with the rules and regulations of the Act, the establishment shall be liable to pay a penalty. The amount of the fine will vary from state to state.
The Shops and Establishment Act has made several provisions to regulate aspects related to the functioning of shops and establishments in India. Following are some of the major aspects regulated by them:-
- Maximum working hours of employees/laborers
- Allotted time periods for meals and rest
- Regulating laws to prohibit child labor in factories and other establishments
- Female employment
- Number of compulsory weekly holidays provided to the employees
- Closed/closed days of establishments/shops
- Opening and closing hours of establishments/shops
- Pay employees for holidays
- Accident coverage policies
- Fire prevention measures
- Proper ventilation and lighting for workers
- Neat and clean premises for workers
- Payment terms and timing
- Regulation of deduction on payment
- Skip policy
- Proper employee record keeping
With Legalstartup.in, it will take 5 to 7 working days to file the documents with respective authorities and get the registration done.
Approval from Department of Labor and Various registers giving details of employment, fines, deductions and advances, salary, holidays, etc.
All shops irrespective of the number of employees if applicable needs to take the license.
The validity of Shop license depends on the respective state shop and establishment act.
Factories are not covered by the shop & commercial establishments Act and are regulated by the Factories Act.
Q. Whether all shops and businesses have to be registered under Shops and Commercial Establishments Act?
Almost all shops and businesses need to take shop license under respective state shop and commercial establishment act.
The Shop and Establishment Act is a state-level legislation that regulates the working conditions of employees working in shops, commercial establishments, and other service sectors.
The Shop and Establishment Act covers all commercial establishments including shops, hotels, restaurants, amusement parks, and other service sectors.
The benefits of registering under the Shop and Establishment Act include the ability to open a bank account, obtain business loans, and access various government schemes and benefits.
The process for registration under the Shop and Establishment Act involves submitting the necessary documents such as proof of identity, address proof, and business registration documents to the relevant authority in the state.
Yes, registration under the Shop and Establishment Act is mandatory for all commercial establishments.
The Shop and Establishment Act stipulates that employees should not work for more than nine hours per day and 48 hours per week.
The Shop and Establishment Act provides for leave entitlements such as annual leave, sick leave, and maternity leave.
No, an employee cannot be required to work on a weekly off day except in certain circumstances such as emergencies.
The penalties for non-compliance with the Shop and Establishment Act can range from fines to imprisonment, depending on the severity of the offense.
Yes, some businesses may be exempted from the provisions of the Shop and Establishment Act based on certain criteria such as the number of employees and the nature of the business.