Businesses employing 10 or more employees at any location are required to obtain a license under the Shops and Establishments Act. This license is regulated by the respective State Governments, and each branch or office of a company must obtain a separate registration.

The objective of the law is to protect employee rights and ensure proper working conditions. Non-compliance may lead to heavy penalties, legal action, or even closure of the business.

Our Services Include:

• Application and procurement of Shop & Establishment Licenses across all States in India

• Compliance audit and review

• Advisory and resolution of issues related to the S&E Act

Background of the Shops and Establishments Act

The Shops and Establishments Act was introduced in the post-independence era to regulate working conditions in shops and commercial establishments. While the framework is broadly similar across India, each State has formulated its own rules and procedures under the Act.

Difference Between Trade License and S&E License

• Trade License: Issued by Municipal Authorities, allowing a business to carry out a specific trade or activity. It focuses on public safety and legality of operations.

• Shop & Establishment License: Issed by the Labour Department of the respective State, focusing on employee welfare, working hours, wages, and workplace conditions.

Both licenses serve different purposes and may be required simultaneously depending on the nature of the business.

What is Covered Under the Act?

Definition of Shop

A shop includes any premises where goods or services are sold or distributed. This may include offices, warehouses, or storerooms.

Definition of Establishment

An establishment includes commercial entities such as:

• Trading firms

• Banking and insurance offices

• Hotels, cafes, and restaurants

• Cinemas and entertainment venues

If such places employ ten or more employees, registration under the Act is mandatory.

Scope of the Shops and Establishments Act

The Act broadly regulates the following areas:

1. Working Hours and Duration

• Opening and closing hours of establishments

• Employee working hours and rest intervals

• Weekly holidays or mandatory closure days

2. Wages and Compensation

Employers must comply with provisions of the:

• Payment of Wages Act, 1936

• Workmen's Compensation Act, 1932

Key wage-related provisions include:

• Wages must be paid regularly (not exceeding one month between payments)

• Overtime payment policy

• Settlement of dues within one day of termination

• Permissible wage deductions (absenteeism, advances, income tax, insurance, court orders, etc.)

• Wages must not be less than the prescribed Minimum Wages

3. Holidays and Leave

• Weekly and national holidays

• Leave entitlement (commonly 21 days of privilege leave for every 240 working days, plus casual and medical leave)

• Encashment of unused leave

4. Employee Welfare and Safety

• Clean and hygienic working conditions

• Adequate lighting and ventilation

• Fire safety measures (extinguishers and emergency exits)

• First-aid facilities and accident prevention measures

5. Protection Against Exploitation

• Prohibition of employment of children below 14 years

• Restrictions on employment of minors and women in certain conditions

• Mandatory rest and meal intervals

6. Termination and Closure

• Notice period requirements (generally at least 15 days in case of closure)

• Proper settlement of employee dues

7. Enforcement and Record Maintenance

Authorities may conduct inspections without prior notice. Businesses must:

• Display the Registration Certificate prominently

• Maintain registers containing employee details, wages, and leave records

• Cooperate with inspectors during compliance checks

Obtaining and maintaining a Shop & Establishment License ensures legal compliance, promotes employee welfare, and safeguards your business from penalties and operational disruptions.