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The Shops & Establishment Act


This act was passed to

  • Regulate the conditions of work
  • Provide for statutory obligations of the employers
  • Administer the rights of employees in the unorganized sector and other establishments in their jurisdiction.


The Shop and Establishment Act was enacted by the Government to cover unorganized sectors like the shops, residential hotels, eating houses, restaurants, commercial establishments and others. It is a state enactment and hence there are different Shop and Establishment Act(s) applicable to different States and Union Territories.

The exceptions vary in the States and each State has given a list of shops and establishments act that come into the Act, and who require the registrations under the Act to run their business in the State.

Commercial Establishment covers the following:

  • Goods are sold, either by retail, wholesale
  • Services rendered to customers. This could include an office, a store-room, godown, warehouse or work place, whether in the same premises or otherwise, used in connection with such trade/ business.

A shop however does not include a factory or a commercial establishment.


This Act covers the following:

  • Working hours per day and week
  • Guidelines for spread-over, rest interval, opening and closing hours, closed days, national and religious holidays, overtime work
  • Employment of children, young persons and women
  • Annual leave, maternity leave, sickness and casual leave
  • Employment and termination of service
  • Maintenance of registers and records and display of notices
  • Obligations of employers as well as employees

What Is The Shop And Establishment Act?

The Shop and Establishment Act  applies to all commercial establishments like offices, stores, hotels, restaurants, recreational centers, theatres, etc., all over India. It is one of the most important regulations that any business needs to comply with.

Why Was The Shop And Establishment Act  Passed?

The Shop and Establishment Act was passed mainly due to the following three reasons:

  • Regulate the work condition for any employee in any division of employment
  • Shop & Establishment provides for a statutory obligation to every employer
  • This Act was made to give rights to the workers in unorganized sectors and other similar establishments.

Objective of The Shops and Establishment Act

  • The act was made to protect the employees’ rights by giving them few benefits irrespective of their work section or the type of company they work in
  • The shop establishment act  regulated wages, the number of holidays, daily work timing, work conditions, etc. They also regulate maternity leave and benefits and see that child labor does not happen.

Benefits of The Shop & Establishment Act

The labor department manages the shop and establishment act . This department handles and regulates the rules concerning trade and commerce in the country. Nearly all business in India is Under Shop and Establishment Act. It controls any profit-making enterprises in the country.

The sectors covered by Shop & Establishment Act Are

  • Regulates the working hours, overtime, and leave policy
  • Resting time or interval of the employees
  • Opening and closing hour of the companies
  • Holidays should be given to the employees
  • Several annual leaves, duration of maternity leave, and day-offs
  • Timely payment of wages and additional mandatory perks
  • The shops and establishment act 1948 regulate conditions for deduction of wages
  • Work conditions such as lighting facilities, clean washrooms, proper ventilation
  • Proper precaution facilities to deal with accidents such as fire breakout
  • Rules of employment of children

How PionHR Help With Shop and Establishment Act?

Several services are offered by leading payroll management company PionHR in this field. A list of those services are as follow:

  • Registration and renewal of the license
  • You will be updated about the changes in the shop and establishment act
  • The registration of the deductions in form - PionHR will do II (Rule 21(4))
  • PionHR will prepare and maintain files and records as per the shop & establishment act 1948.

Summing It Up

One of the  most reliable and dependable payroll outsourcing company in Delhi India is PionHR. We help you manage all the additional taxes besides the payroll. If you are planning on outsourcing your payroll, then choose PionHR Payroll Software in India. We believe in sharing and growing. We share our experience and expertise with you and help your company flourish. If you want to know more about PionHR, please visit our website.