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What is a Commercial Establishment?

According to the Shop and Establishments Act, a commercial establishment is a place where any trade, profession, business or any work related to any of this is undertaken. Under the Act, a commercial establishment can be,

  • A society registered under SRA 1860
  • Registered or unregistered trusts (Charity/Non-charity)
  • Journalistic or related printing businesses
  • Contractors & auditors
  • Quarries and mines not included in the Mines Act 1952
  • Private educational institutions
  • Cinema theatres and entertainment halls
  • Businesses such as banking, insurance, stocks exchange etc
  • Restaurants and cafes
  • Hotels and clubs
  • Any other entertainment-related businesses

Understanding the provisions of the Shop and Commercial Establishment Act is necessary if you are looking forward to opening a business.

The Act act comes under the purview of the state legislature and protects the rights of the employees of unorganised sectors and ensures that they work in fair conditions and receive fair treatment and payment.

‘Commercial Establishment’, as given in the Act is:

  1. Commercial Sectors such as banks, trading or insurance establishments.
  2. Any establishment where people are employees provide service or do office work.
  3. Hotels, small cafes, boarding houses, refreshment houses.
  4. Entertainment places such as amusement parks, theatres, etc.,

Applicability of Shop & Establishment Act

  • Shop and Commercial Establishment Act applies to all shops, restaurants, eating houses, hotels, theatres, places of public entertainment and amusement and other commercial establishments.
  • All the aforementioned establishments need to register under the Act within 30 days of the commencement of work.

The Shop and Establishment Act essentially regulates the following –

    1. Hours of work
    2. Payment/ Deductions of wages
    3. Terms of Service of employees
    4. Working conditions of employees
    5. Leaves and Holidays they get.
    6. Prohibition of employment of children.
    7. Employment of young person or women.
    8. Cleanliness, lighting and ventilation of the establishment.
    9. Precautions in place against fire accidents.

    Objectives

    • The most basic objective of this act is to protect the rights of employers and employees.
    • It strives to serve employees with uniform benefits irrespective of the establishments they belong to.
    • It doesn’t matter if the employee is working in shops, residential hotels/restaurants, commercial establishments or theatres or other places of public entertainment. There are provisions to protect their rights nonetheless.

    How to register an establishment under this act

    Shop and establishment regulations, the registration fee, time for processing etc may vary according to the state where the shop or establishment is registered.

    • Within 30 day of the establishment, the employer should send an application to the inspector who is in charge. It should be in agreed form with prescribed fees.
    • It should contain the following details of the employer and establishment.
      • Name of the employer
      • Name of the establishment
      • Address of the establishment
      • The category of the establishment
      • Number of employees
      • The date on which the establishment started working
    • The Labour department of each state is responsible for the establishment act processing and registration.
    • Usually, the district labour officer takes charge as the Inspector in charge under the Shop and Establishment Act.
    • The inspector has the authority to grant shop and establishment registration certificates.
    • If your registration meets certain requirements put forth by the inspector in charge, the employer will receive the registration certificate.
    • The registration certificate must be displayed at the shop or establishment.
    • It must be renewed periodically.

    What is the fee for new registration?

    The registration fee for any shop or establishment varies according to the legal framework of the state. There is no fixed rate of registration at a nationwide level. The fee depends on the number of workers in the business or establishment. Every employer must submit the accurate number of workers while filling up the registration form. The registration fee will be decided by the inspector in charge i.e., the labour officer. 

    Benefits of the Shop and Commercial Establishment Registration

    • A shop or establishment registration certificate acts as a legal entity proof. It gives businesses the right to conduct work in a particular state.
    • The certificate acts as proof to open a current business bank account.
    • You can quickly round out state government inspections — on licences and proper working of the business — if you have the certificate.
    • The Shop and Commercial Establishment Registration opens the doorway to government benefits — for small businesses — set up by the Department of Industries and Commerce.

    Shop and Commercial Establishment Act Registration

    • You need to obtain the registration certificate from the Chief inspector/inspectors delegated to your (establishment’s) area.
    • You are then required to submit an application to the inspector. You can obtain this application from the official website of your respective state.
    • The applications must contain –
      – Name of your establishment
      – Name and details of the employer and the employees.
      – Address of the establishment.
      – Copy of sale deed/rental agreement of the shop.
      – PAN card of business/owner.
    • You need to submit the application along with the prescribed fees.
    • The inspector will then check all the details, visit the establishment (if required), and provide a registration certificate.
    • The whole process along with certificate issuance takes 10-20 days.
    • You need to display the registration certificate in a prominent place within your shop premises and renew it in case of any changes or on expiry.

    Documents Required for the Shop & Commercial Establishment Registration

    1. Photo of the Shop/Establishment that must have the name board at the entrance.
    2. Incorporation Certificate.
    3. MOA & AOA of Company or LLP Agreement of the Company or LLP.
    4. PAN card/Passport/ Aadhar Card/ Driving License/ Voter ID Card.
    5. List of the Directors/ Partners and their ID and Address proof.
    6. Commercial address proof.
    7. Board Resolution or Partners Consent.
    8. Details of all the employees.

    Note that you need to compulsorily register your shop or establishment and follow the rules under the Shop and Commerical Establishment Act. Failing this attracts penalty as prescribed by your state government.


    FAQ’s

    1. What is the fee for shop and commercial establishment registration?
      The registration fee for any shop or establishment varies according to the legal framework of the state. There is no fixed rate of registration at a nationwide level. The fee depends on the number of workers in the business or establishment.
    2. What is an intimation receipt?
      Any employer with less than 10 workers must mandatorily submit an online intimation of commencement of the business and attach all required documents. Only after receiving this information along with all the required shall a receipt of in Form ‘G’ be issued to the applicant online.
    3. Which establishments fall under the jurisdiction of the Shop Act?
      Under the Shop Act, the premises governed include shops, restaurants, residential hotels, commercial establishments, clubs, eating houses, theatres and other such places for public entertainment or amusement.
    4. Does the Act apply to any establishments run by the Central Government of India and State Governments?
      No. All premises run by the GOI and state governments are exempted from the provisions of the Shops and Commercial Establishment Act.
    5. What is the purpose of e-Karmika?
      Under the Karnataka Shops & Establishments Act 1961, e-Karmika is a user-friendly application for the online registration of shops and establishments.

     

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    Shalini L

    One of the prime contributors for this blog, Expertise in Staffing and Recruitment, Content Strategist by Profession. A Music Lover & Traveller by Choice.

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