“Explore compliance essentials under Karnataka and Delhi Shops and Commercial Establishment Acts. Learn about registrations, rules, and penalties for employers.”
Compliances, Registration, Registers and Returns under Shops and Commercial Establishment Acts for State of Karnataka and Union Territory of Delhi
Under the Constitution of India, power to make Labour laws is a subject in the Concurrent List where both Union and State Governments are competent to enact legislation subject to certain matters being reserved for the Central Government.
Rationale behind enacting Shops and Commercial Establishment is to provide set guidelines for regulation of conditions of employment and other conditions of service of workers employed in shops, residential hotels, restaurants, eating houses, theatres, other places of public amusement or entertainment and other establishments and for matters connected therewith or incidental thereto.
The Shops and Commercial Establishment Acts comes under the ambit of Department of Labour of respective State Governments.
In India the Shops and Commercial Establishment Act marginally differ from state to state and each state has its own set of rules, regulations, and guidelines. This Act applies to everyone who works in a business, whether they are paid or not.
In this article, we will go through the Compliances under Karnataka Shops and Commercial Establishment Act, 1961 & Delhi Shops and Establishment Act, 1954.
Karnataka Shops and Commercial Establishment Act, 1961 (Act) read with Karnataka Shops and Commercial Establishment Rules, 1963 (Rules)
Applicability of Karnataka Shops and Commercial Establishment Act, 1961 in State of Karnataka
At the first instance, it applies to areas specified in Schedule to this Act, which generally contains names of places, cities, districts of Karnataka State.
Further, it shall apply to any other area with effect from such date as the State Government may by notification specify which date shall not be earlier than the expiry of three months from the date of publication of such notification in the official Gazette. [Section 1(4) of the Act]
Exemptions
List of Establishments where this Act will not apply:
a) Offices of or under the Central or State Governments or local authorities, except commercial undertakings;
b) Any railway service, water transport service, postal, telegraph or telephone service, any system of public conservancy or sanitation or any industry, business or undertaking which supplies power, light or water to the public;
c) Railway dining cars;
d) Establishments for the treatment or care of the sick, infirm, or the mentally unfit;
e) Establishments of the Food Corporation of India;
f) Offices of legal practitioners and medical practitioners in which not more than three persons are employed;
g) Offices of a banking company;
h) Any person employed about the business of any establishment mentioned in clauses (a) to (g) aforesaid;
i) Persons occupying positions of management in any establishment.
j) Persons whose work is inherently intermittent such as drivers, care-takers, watch and ward staff, or canvassers; and
k) Persons directly engaged in preparatory or complementary work, such as, clearing and forwarding clerks responsible for the dispatch of goods.
Definitions
Commercial Establishment means a commercial or trading or banking or insurance establishment, an establishment or administrative service in which persons employed are mainly engaged in office work, a hotel, restaurant, boarding or eating house, a cafe or any other refreshment house, a theatre or any other place of public amusement or entertainment and includes such establishments as the State Government may by notification declare to be a commercial establishment for the purposes of this Act. [Section 2(e) of the Act]
“Employee” means a person wholly or principally employed in or in connection with, any establishment whether working on permanent, periodical, contract or piece-rate wages, or on commission basis, even though he receives no reward for his labour and includes an apprentice, any clerical or other member of the staff of a factory or industrial establishment who falls outside the scope of the Factories Act, 1948, but does not include a member of the employer’s family. [Section 2(g) of the Act]
“Employer” means a person having charge of or owning or having ultimate control over the affairs of an establishment and includes members of the family of an employer, a manager, agent or other person acting in the general management or control of an establishment. [Section 2(h) of the Act]
“Shop” means any premises where any trade or business is carried on or where services are rendered to customers, and includes offices, storerooms, godowns, or warehouses, whether in the same premises or otherwise, used in connection with such trade or business, but does not include a commercial establishment or a shop attached to a factory where the persons employed in the shop fall within the scope of the Factories Act, 1948. [Section 2(u) of the Act]
Registration
1) Employer of every shop or commercial establishment shall apply for registration with Inspector of concerned department by making an application in Form A within 30 days of starting the business with such fees as may be prescribed, containing:
- Name of the Employer and the Manager, if any;
- Postal Address of the Establishment;
- Name of the Establishment, if any;
- Such other particulars as may be prescribed [Section 4(1) of the Act read with Rule 3 of the Rules]
2) After due verification of the application so filed, Inspector shall issue Certificate of Registration in Form “C” and enter the name of establishment in Register of Establishments which shall be in Form “B”. [Section 4(2) of the Act read with Rule 4 of the Rules]
3) Validity: Registration Certificate so issued in Point 2 above will be valid for 5 years and shall be renewed before the expiry of the period of registration certificate in Form “A” at least 90 days before the expiry of such registration certificate. [Section 4(4) of the Act read with Rule 3A of the Rules]
Compliances under the Act and the Rules
1) Employer or Occupier of establishment shall ensure the washrooms, passages, stairs, hoists, establishment grounds shall during working hours be sufficiently light to ensure safety of movement or passage through them. [Rule 17 of the Rules]
2) Every building of more than one storey shall be provided with at least two sets of stairs or steps permanently fixed either inside or outside the building, to afford direct and unimpeded access from every part of the establishment to the ground level. Such stairs shall be provided with a suitable and sufficient handrail or other convenient support.
In establishments employing less than 40 persons, the Inspector may accept in lieu of a second set of stairs or steps such other means of escape in case of fire as can reasonably be required in the circumstances of each case. [Rule 18 of the Rules]
3) Every window or door giving access to an external staircase shall be so arranged as to open immediately from inside. [Rule 19 of the Rules]
4) No person shall smoke or use a naked light or cause or permit any such light to be used, in the immediate vicinity of any inflammable material in any establishment. [Rule 20 of the Rules]
Registers and Returns under the Act and the Rules
Every employer shall keep, maintain, and display at the premises of the establishment following registers, records and notices:
1. Leave with Wages Book in Form “F”. Such register shall be preserved for a period of 3 (three) years after the last entry in it and shall be produced before the Inspector on demand. [Section 34 of the Act read with Rule 8 of the Rules]
2. Employer shall furnish to each employee with a book called “Leave with Wages Book” in Form “H”. Further, if the employer is satisfied that the employee has lost his leave with wages book provide him with a duplicate on payment of 25 paise. [Section 34 of the Act read with Rule 9 of the Rules]
3. Notice in Form “P” specifying the day or days of the week on which the persons employed by him shall be given a holiday. The notice shall be exhibited before the persons to whom it relates cease work on the Saturday immediately preceding the first week during which it is to have effect. [Section 34 of the Act read with Rule 24(4) of the Rules]
4. Exhibition of abstract of the Act and the Rules in “Kannada” and in the language of the majority of the employees. [Section 34 of the Act read with Rule 24(5) of the Rules]
5. Muster Roll cum Wages Register in Form “T” in respect of the employees employed in the establishment.
Provided that where an employer has maintained Form ‘T’, he need not be required to maintain other Muster Roll or Register of Wages separately which contains the same information already available in Form ‘T’. [Section 34 of the Act read with Rule 24(9-B) of the Rules]
6. Annual Return: Every employer shall furnish or send a combined annual return in Form “U” to the concerned inspector on or before 31st January of every year. [Section 34 of the Act read with Rule 24(9-C) of the Rules]
7. Every employer shall maintain a Visit Book in which an Inspector visiting the establishment may record his remarks regarding any defects that may come to light at the time of his inspection and shall produce it whenever required to do so by an Inspector. [Section 34 of the Act read with Rule 24(11) of the Rules]
8. The name Board of every establishment shall be in Kannada and wherever other languages are also used, the versions in such other languages shall be below the Kannada version. The name Board in Kannada version shall be written more predominantly by providing more space than for other languages, if any. [Rule 24-A of the Rules]
It is pertinent to note here that:
- all registers, records, muster- rolls and notices required to be maintained, exhibited or given under these Rules shall be either in English or in Kannada.
- Where an office, storeroom, godowns, warehouse or workplace place used in connection with the trade and business of an establishment is situated at premises other than the premises of the establishment, all registers, records, muster-rolls, visit book and notices required to be maintained, exhibited or given under the Act, and these rules shall be separately so maintained, exhibited, or given in respect of and at such office, storeroom, godowns, warehouse or work place.
Penalty under the Act and Rules
1) Whoever contravenes the provisions of Section 4 (Registration of Establishments), 34 (Maintenance of Registers and records and display of notices) shall, on conviction, be punished with fine, for the first offence, which may extend to 1,000/- and for a second or subsequent offence, may extend to Rs. 2,000/-. [Section 30(1) of the Act]
2) Whoever contravenes any of the provisions of Section 34 shall on conviction be punished with a fine which may extend to 250/-. [Section 30(2) of the Act]
3) Whosoever contravenes Rules 8 (Leave with wages Register),9 (Leave with Wages book of the persons employed), 24 (Maintenance of registers and records and display of notices) shall on conviction be punishable with fine which shall not be less than 500/- but which may extend to Rs. 1,000/-. [Rule 26 of the Rules]
4) Whosoever contravenes Rules 24-A (Exhibition of Name Board) shall on conviction be punishable with fine which shall not be less than 10,000/- and for each continued offence be punishable with fine which shall not be less than Rs. 10,000/-. [Rule 26 of the Rules]
Delhi Shops and Establishment Act, 1954 (Act) read with Delhi Shops and Establishment Rules, 1954 (Rules)
Applicability of Delhi Shops and Establishment Act, 1961 in Union Territory of Delhi
In the first instance, it shall apply to the Municipal Areas, Notified Areas and Cantonment limits of Delhi, New Delhi, Shahdara, Civil Lines, Mehrauli, Red Fort and Delhi Cantonment but Government may, by notification in the Official Gazette, direct that it shall come into force in any other local area or areas or shall apply to such shops or establishments or class of shops and establishments in such other areas as may be specified in the notification. [Section 1(4) of the Act]
Exemptions
List of Establishments where this Act will not apply:
a) Establishment of doctors and medical practitioners.
b) Establishment of legal practitioners.
c) Banks bound by the awards of the National Tribunal (Bank Disputes) popularly known as Desai Award published in the Gazette of India dated 30.6.1962.
d) Foreign News Agencies.
e) Stall of Central and State Government at Fairs or Exhibitions, which are organized mainly for showing development of industries, arts and science and are primarily meant to be educative and informative to the public. [Section 4(1) of the Act read with Schedule]
Definitions
Commercial Establishment means any premises wherein any trade, business or profession or any work in connection with, or incidental or ancillary thereto is carried on and includes a society registered under the Societies Registration Act, 1860 (21 of 1860), and charitable or other trust, whether registered or not, which carries on any business, trade or profession or work in connection with, or incidental or ancillary thereto, journalistic and printing establishments, contractors and auditors establishments, quarries and mines not governed by the Mines Act, 1952 (35 of 1952), educational or other institutions run for private gain, and premises in which business of banking, insurance, stocks and shares, brokerage or produce exchange is carried on, but does not include a shop or a factory registered under the Factories Act, 1948 (43 of 1948), or theatres, cinemas, restaurants, eating houses, residential hotels, clubs or other places of public amusements or entertainment. [Section 2(5) of the Act]
“Employee” means a person wholly or principally employed, whether directly or otherwise, and whether for wages (payable on permanent, periodical, contract, piece rate or commission basis) or other consideration, about the business of an establishment and includes an apprentice and any person employed in a factory but not governed by the Factories Act, 1948 (43 of 1948), and for the purpose of any matter regulated by this Act, also includes a person discharged or dismissed whose claims have not been settled in accordance with this Act. [Section 2(7) of the Act]
“Employer” means the owner of any establishment about the business of which persons are employed, and where the business of such establishment is not directly managed by the owner, means the manager, agent, or representative of such owner in the said business. [Section 2(8) of the Act]
“Establishment” means a shop, a commercial establishment, residential hotel, restaurant, eating-house, theatre or other places of public amusement or entertainment to which this Act applies and includes such other establishment as Government may, by notification in the Official Gazette, declare to be an establishment for the purpose of this Act. [Section 2(9) of the Act]
“Occupier” means a person owning or having charge or control of establishment and includes the manager, agent, or representative of such occupier. [Section 2(17) of the Act]
“Shop” means any premises where goods are sold either by retail or wholesale or where services are rendered to customers, and includes an office, a storeroom, godown, warehouse or workhouse or workplace, whether in the same premises or otherwise, used in or in connection with such trade or business but does not include a factory or a commercial establishment. [Section 2(27) of the Act]
Registration
1) Occupier of every Establishment within 90 days of the commencement of work of his Establishment shall send to the Chief Inspector a statement in online form on the Shop and Establishment Portal of Labour Department with such fees as may be prescribed containing:
- Name of the Employer and the manager, if any;
- Postal Address of Establishment;
- Name of the Establishment, if any;
- Category of the Establishment, i.e. whether it is a shop, commercial establishment, residential hotel, restaurant, eating houses, theatre or other place of public amusement or entertainment;
- Number of Employees working about the business of the Establishment; and
- Such other particulars as may be prescribed. [Section 5(1) of the Act read with Rule 3 of the Rules]
2) After due verification of the application so filed, the Chief Inspector shall issue Certificate of Registration in Form “C” and enter the name of establishment in Register of Establishments. [Section 5(2) of the Act read with Rule 4 of the Rules]
3) Validity: Registration Certificate so issued in Point 2 above shall be displayed at a prominent place at the establishment & will be valid for 21 years and shall be renewed within 30 days of the expiry of Registration Certificate originally granted or subsequently renewed by making an application for renewal in Form “L”. [Section 5(3) of the Act read with Rule 5 of the Rules]
Compliances under the Act and the Rules
1) Cleanliness:
i. All the inside walls of the rooms and all the ceiling tops of such rooms and all the passages and stair cases of every establishment shall be lime washed or colour washed at least once in 2 (two) years dating from the time when they were lime washed or colour washed, and shall be maintained in a clean state.
ii. All beams, rafters, doors, floors, window-frames and other wood-work with the exception of the floors, shall be painted at least once in 4 (four) years dating from the period when last painted and shall be kept in a clean state.
Provisions of cleanliness shall not apply to:
- Rooms used only for the storage of articles;
- Walls or tops of rooms which are made of galvanised iron-sheets, tiles, asbestos sheets or similar material or glazed bricks
- ceiling of rooms in which the lowest part is at least 20 feet from the floor
- any other establishment or parts thereof in which lime-washing, colour-washing, or painting is, in the opinion of the Chief Inspector, unnecessary to satisfy the requirements of Section 25 in regard to cleanliness.
iii. No rubbish, filth, debris shall be allowed to accumulate or to remain in any premises in an establishment in such position that effluvia therefrom can arise within the establishment.
iv. The area around the place where drinking water is distributed to the employee shall be kept clean and properly drained. [Rule 11 of the Rules]
2) No persons shall smoke or use a naked light or cause or permit any such light to be used in the immediate vicinity of any inflammable material in any establishment. [Rule 11 of the Rules]
Registers and Returns under the Act and the Rules
Every occupier shall keep, maintain, and display at the premises of the establishment following registers, records and notices:
1) Every occupier of shop and commercial establishment shall intimate in Form “E” regarding close days to the Chief Inspector and shall keep exhibited in the shop or establishment a notice setting forth the close day. [Section 33(1) of the Act read with Rule 8(a) of the Rules]
2) Every employer shall maintain a Register of Employment and Wages in Form “G”. Every such register shall be duly bound and its pages serially numbered. However, where the closing and opening hours are ordinarily uniform, the Employer may maintain such register together with a separate register of wages and record of leave. [Rule 14(1) & (1A) of the Rules]
3) The occupier shall exhibit in a conspicuous place in his establishment a notice in Form ‘J’ specifying the day or days of the week on which his employees shall be given weekly holidays. The notice shall be exhibited before the employees, to whom it relates, cease work on the Saturday immediately preceding the first week during which it is to have effect. [Rule 14(2) of the Rules]
4) Preservation Period: Registers, records and notices maintained under this Act shall be preserved till the end of the following year. [Rule 14(3) of the Rules]
5) Every occupier shall exhibit in his establishment a notice showing the close day, the daily working hours and the usual period of rest interval fixed for employees in Form ‘K’. [Section 33(2) & (3) of the Act read with Rule 14(6) of the Rules]
6) Letter of Appointment to employees:
Employer shall furnish to every employee with a letter of appointment which shall contain following particulars namely:
- Name of Employer;
- Name and postal address of establishment, if any;
- Name, father’s name, and age of the employee;
- Hours of work;
- Date of appointment
- Rate of wages or salary;
- Designation or nature of work for which employed (whether clerical, supervisory, managerial, manual work etc.)
- Other concessions or benefits, if any, that may be special to his appointment.
[Section 34 of the Act read with Rule 15 of the Rules]
Penalty under the Act and Rules
1) If any shop or establishment is found to be contravention of any of the provisions of this Act like Section 5 (Registration) Section 34 (Employer to furnish letters of appointment to employees), the proprietor, the Employer or the manager as the case may be, shall on conviction be punished with fine which shall not be less than 25 but which may extend to Rs. 250/-. [Section 40(1) of the Act]
2) If any person contravenes the provisions of Section 33(Records), he shall be liable on conviction to a fine of 5 for every day on which the contravention occurs or continues. [Section 40(2) of the Act]
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