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Certificate Issued Under Shop and Establishment Act

Certificate issued under the shop and establishment act is mandatory for any kind of business in India. This act aims to provide fair working conditions to the workers and also take care of their wages, essential rights, holidays, etc. The regulations under the act vary from state to state. It is informally also known as “Shop License”.

Key Highlights of Certificate issued under Shop and Establishment Act

1. It is a mandatory certificate required by all businesses in India.

2. The certificate/license is regulated by the state.

3. The regulations differ from state to state.

4. The purpose of the certificate is to provide adequate working conditions to the laborers. It also takes care of their rights, holidays, wages, etc.

5. A Shop Establishment certificate is needed when a business starts employing people for full-time, part-time, or contract-based jobs.

6. A Shop Establishment certificate is also casually known as a “Shop License”.

7. The rules and regulations of the Shop and Establishment Act are administered and governed by the Department of Labour.

Objectives of the Shop and Establishment Act

1. The act aims to protect the benefits and rights of laborers working in the organized sector like establishments, restaurants, hotels, and the unorganized sector.

2. The act also aims to set suitable standards of employment for laborers. It administers and regulates the everyday treatment of the employees.

Benefits of Shop and Establishment License

1. It is essential registration for future registrations.

2. The license also acts as business proof hence helps in obtaining further registrations in India.

3. It gives legal acknowledgment to a shop or establishment.

4. Shop and Establishment License is mandatory for businesses to open a bank account. Hence, a shop cannot open a bank account without this license.

5. Shop and Establishment License also helps in raising funds from venture capitalists or loans for business establishments.

Who Should Apply for Shop and Establishment License in India

1. Service Centres

2. Hotels

3. Restaurants and Eateries

4. Theatres

5. Amusement parks, Entertainment, etc.

6. Retail or wholesale shops and establishments

7. Warehouses, godowns, and store-rooms

8. Any other category of workplace

Documents Needed to Apply for the Shop and Establishment License

1. Identity proof - Aadhar Card/Card/Driving License/Voter ID.

2. Employer’s latest passport-sized photograph.

3. Photo of the shop or establishment Shop with the employer.

4. Rent Agreement copy, in the case of the rented property or premise.

5. Utility bills - Electricity bills/water bills/mobile bills, etc. The utility bills should not be 2 months older.

Additional Documents required as per the Business/Establishment

1. In the case of a Trust, a list of the number of trustees is needed.

2. Memorandum of Association (MoA)

3. For a Co-operative Society, a list of the number of Members and the Chairman is required.

4. Partnership deed with all the important information regarding the firm's name, name & signature of all the partners, along with the percentage share of each partner.

5. A copy of the permission issued by the Reserve Bank of India (RBI).

6. A copy of the Certificate of Incorporation (COI) issued under the Companies Act, 2013.

7. A Resolution regarding the commencement of the society's business.

8. RTO Transportation Permit.

The Application Process for Shop and Establishment Certificate/License

Online application for the Shop and Establishment Act

1. Log in to the official website of the labor department of the respective State where you wish to set up your shop or establishment.

2. Fill out the application form with details regarding your business. The details might differ according to the state and type of company.

3. Upload the necessary documents online. The list of documents needed is mentioned above. In some states, a printout of the application and physical submission of documents is required.

4. Make the fee Payment. The fee might differ according to the license, business, and state. There could also be an option to pay online.

5. The labor department will verify your application. They might recommend an inspection of your business premises. For this, you might need to verify the form filled out and the details provided. An inspector might be assigned to carry out an inspection. However, in the majority of cases inspection is not required.

6. Once all the necessary checks and steps are done, the authorities will issue a valid Shop and Establishment License. The License has a validity of 1 year with renewal every year.

7. The entire process of getting registration takes about 15-20 days. However, the time might differ from state to state.

Key Points to be Noted while Obtaining a Shop and Establishment License

1. The assigned inspector might visit the registered premises for verification.

2. The business owner has to show the Shop and Establishment Registration certificate in such a way that it’s easily accessible from all places on the premises

3. The License issued must be timely renewed before its expiry date.

4. In case the Owner wants to close his business or establishment, they need to notify the Inspector in writing about the closure within 15 days of the closing.

5. Even after obtaining the Shop and Establishment License, the Owner of the proposed business is also required to take prior approval from the respective state’s Department of Labour for the commencement of the business activities in that State.

Key Aspects Governed by the Shop and Establishment Act

1. The Maximum number of working hours for the laborers and employees.

2. Permitted time durations for having meals and rest.

3. Regulatory Laws to forbid child labor in factories.

4. Women’s Employment

5. The number of compulsory weekly offs/holidays offered to the employees.

6. holiday or off days of the said establishments/shops/businesses.

7. Opening and closing times of the establishments/shops/businesses.

8. Wages are given to employees for holidays.

9. Accident Coverage Policy.

10. Preventive Measures against Fire accidents.

11. Proper Lighting and Ventilation for workers on the premises.

12. Hygienic, clean, and sterile premises for the workers.

13. Provisions, conditions, and timing for the payment calculation.

14. Regulatory policies regarding payment deductions.

15. Leave Policy.

16. Dismissal

17. Maintenance of records having employee details.

FAQs of Certificate Issued Under Shop and Establishment

1. What are the records that are to be maintained and kept under the Shop and Establishment Act?

The documents/records that are mandatory to be maintained under the Shop and Establishment Act include the Employment Register, Salary Details, Details of the Fine imposed, Salary Deduction Details, Advances Issued, and Holidays awarded.

2. Is it mandatory to obtain Registration under the Shop and Establishment Act?

Yes, every business/shop/establishment needs to obtain registration under the Shop and Establishment Act within a period of 30 days from the date of commencement of operations.

3. What is the objective of the Shop and Establishment Act?

The primary objective of the Shop and Establishment act is to provide uniform privileges and benefits for employees working in different establishments/shops/commercial places/residential hotels/restaurants/theatres, etc.

4. In case a business does not have any employees does it still need to take Registration under the Shop and Establishment Act?

Yes, every business and shop irrespective of the number of employees working is required to obtain a Shop and Establishment License under the Act.

5. How many days can an establishment take to get itself registered from its commencement date?

An establishment/shop has to get itself registered within 30 days from the commencement date.

6. What are the General Rules/Policies/Regulations, if I decide not to obtain a Shop License?

Continuing your business without a Shop and Establishment License is very risky as the authorities might even shut your business and seal the shop. They could also levy hefty penalties if found operating without a shop license.

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