Shop and Establishment Licences

Businesses with 10 or more employees at any location must possess a Licence under the Shops & Establishments. Licencing is overseen by State Governments. Each separate branch of a company needs its own Licence. Meant to safeguard working conditions, non-compliance attracts stiff penalties; even closure of business. We provide services for:

Applying for and Obtaining S & E licenses in all States of India
Auditing/examining Compliance
Resolving issues connected with the S & E Act

Definition

PROCEDURE

documents

FAQ’S

The Shops and Establishments Act goes back to the post-Independence era when Central and State Governments felt that proper working conditions needed to be ensured for its citizens working in such places. Accordingly, individual States set about making rules and introducing a licensing system within the broad framework of the Act.Trade License and S & E License are different. A Trade License is permission by Municipal Authorities to conduct a defined business. It is a safeguard for the welfare of the community and the legality of the business. But, a License under the Shops and Establishments Act is issued by the Labour Department Authorities who have jurisdiction over the location of the business and focus on the working conditions of employees.

A Shop is a place from where goods and services are sold or distributed and examples include offices, warehouses or storerooms. An establishment on the other hand includes commercial establishments such as for trading, banking or insurance, where the employees are engaged in office work or, hotels, cafes, restaurants, or cinemas and such like. All of these must have a licence if it is a place of work for ten or more employees.

Scope

Broadly speaking, the rules cover the following aspects:

Duration related:Namely

Stipulation of opening and closing hours of the establishment
Hours of work for different categories of employees and rest periods
Weekly shut days if any

Wages:have to abide by the provisos of the Payment of Wages Act, 1936 as well as the provisos of the Workmen’s Compensation Act, 1932

Employers must follow a uniform policy for payment that should not exceed a month’s time between successive wages
Overtime Policy
Wages due to a terminated employee must be settled within a day
Deductions from wages are allowed and cover: absenteeism, negligence, adjustment of advances, income tax, insurance – if employer has paid premiums, court injunctions, and all subsidized amenities such as housing
Wages must be at least equal to the declared Minimum Wages

Holidays & Leave

Weekly and national holidays – when the establishment may be shut
Leave Policy – typically 21 days privilege leave for every 240 working days in addition to at least 7 days casual leave and 7 days medical leave
Encashment of un-availed leave

Welfare: Working Environment; Sanitation & Safety

Standards of Cleanliness
Adequacy of Lighting and Ventilation
Fire Precautions: stipulations for fire extinguisher and emergency exits
Accidents and their prevention: such as a first-aid box in working order

Exploitation

Prohibition of employment of children under14; restrictions on employment of those under 18
Employment of young person or women
Interval for rest and meals

Termination of service of Employee

Closure of the Business: typically a notice period of at least 15 days has to be served.
Enforcement & Inspection; Record keeping: An Inspector and assistants can visit without notice to conduct due inspection and collect evidence in cases of violation. The Registration Certificate must be on prominent display. And, Registers (employee details with specifics of wages/leave records and so on) must be maintained.

Frequently Asked Questions (FAQ)

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When did the Act come into effect?

After receiving assent from the President on 19th June, 1954, the Shops & Establishment Act came into force with effect from the 1st of February, 1955; vide Notification No. F.5/51-1 & L.

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What are Minimum wages?

It is mandated for employers to pay a minimum per day wage rate to employees regardless of whether or not under the purview of The S & E Act. Minimum wages are declared periodically by State Governments and differ somewhat in timing and amount. In lieu of a daily rate, a weekly or monthly rate may be adopted. For instance in Odisha, the rate (inclusive of VDA) is Rs. 448 per day for Skilled Labour; and that for Unskilled Labour is Rs. 298 per day w.e.f. 1st October 2019. Meanwhile Delhi around that same time operated a monthly minimum wages structure of Rs. 19,060 per month for graduates (roughly equivalent to skilled) and Rs.14,468 per month for the unskilled category. The S & E Inspector is empowered to see to its implementation by businesses.

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