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What is the Shops and Establishments Act?


The Act, which received the assent of the President on 19th June, 1954, came into force with effect from the 1st of February, 1955, vide Notification No. F.5/51-1 & L. The main objective is “to provide statutory obligation and rights to employees and employers in the unorganized sector of employment, i.e., shops and establishments.

Shops and Establishments Act
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What is a shop?

A shop is defined as a building/property established for the sole purpose stocked with merchandise for selling goods or services. A shop may have only one person working which is the owner himself or he can hire any number of employees as per his requirements but he follows a set of rules and regulations. A shop however does not include a factory or a commercial establishment.

What is an establishment?

According to the Shops and Establishments Act, the term establishment means a shop or  a commercial establishment. A commercial establishment refers to a business organization, public institution, household, financial unit or banking sector that produces or sells goods and services from a specific location. Establishment may be restaurants, coffee shops, residential hotels, movie theatres, amusement parks, financial institutions and so on.

Shops and Establishments Act in India

The Shop and Establishment Act is regulated by the Department of Labor and regulates premises wherein any trade, business or profession is carried out. Any shop/commercial establishment in India must register under the act within 30 days of establishment. Each state has different rules and regulations for registration under the act and requires approval from the department of labor. The department must issue a certificate of registration upon application and this must be displayed at the shop. The registration should be renewed periodically as per the act.

The act not only regulates the working of commercial establishments, but also societies, charitable trusts, printing establishments, educational institutions run for gain and premises in which banking, insurance, stock or share brokerage is carried on. This act regulates areas such as working hours, rest interval for employees, opening and closing hours, closed days, national and religious holidays, overtime work, rules for employment of children, annual leave, maternity leave, sickness and casual leave, etc.,

Also Read: What Is a Will?

Shop and Establishment Act License

Any shop or commercial establishment that commences operation must apply to the Chief Inspector for a Shop and Establishment Act License within the prescribed time. The application for license in the prescribed form must contain the name of the employer, address of the establishment, name of the establishment, category of the establishment, number of employees and other relevant details as requested. On submission of the application and review by the Chief Inspector, the shop or commercial establishment will be registered and a registration certificate will be issued to the occupier. The registration certificate must be prominently displayed at the shop or commercial establishment and renewed periodically, as per the act.

In case the shop or establishment would like to close down the business, the occupier should notify the Chief Inspector in writing within 15 days of the closing. The Chief Inspector after reviewing the request for closure can remove the shop or commercial establishment from the register and cancel the registration certificate.


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