Delhi is considered one of the most rapidly growing states in India. The advance estimate of the Gross State Domestic Product (GSDP) of Delhi was Rs. 9.23 trillion (US$ 123.90 billion) in 2021-22, and GSDP (in Rs.) increased at a CAGR of 8.89% between 2015-16 and 2021-22.
The above statistics prove that having a shop or a commercial establishment in Delhi can be quite beneficial for every employer. However, in order to avail of the utmost benefits, the employer must ensure to comply with all the necessary compliance requirements regarding the shops and commercial establishments in Delhi as prescribed by the Shops and Establishments Act 1954.
The article discusses Compliance under the Delhi Shops and Establishments Act, 1954, which can help the employer avoid any penalties due to non-compliance with the act’s provisions and ensure the smooth functioning of a shop or commercial establishment.
What is Delhi Shops and Establishments Act, 1954?
The Delhi Shops and Establishments Act, 1954 is state legislation which deals with regulating the working conditions of the employees in the Shops or commercial establishments in Delhi.
In the case of Chief Commissioner, Delhi v. Federation of Indian Chambers of Commerce and Industry, the Court laid down the following essentials for a place to fall within the definition of “commercial establishments ” while interpreting the meaning of “commercial establishments.”
- It must be the “premise.”
- There must be some trade, profession or business carried on that premises.
- Shops are premises where services are rendered, or goods are sold by retail or wholesale.
What are the Compliance Delhi Shops and Establishments Act, 1954?
The Compliance under the Delhi Shops and Establishments Act, 1954 is –
Registration of Establishments
The first and foremost compliance under the Delhi Shops and Establishment Act 1954 is registering the Establishment within 90 days from its opening and obtaining the registration certificate for the same.
Procedure for Registration of Establishment
The occupier must follow the following procedure for registering Establishment under this Act.
- The occupier must file a statement with the chief inspector along with the payment of requisite fees. The application must contain the following information.
- The employer and the manager’s name
- The name and address of the shop/ establishment;
- It should prescribe the category of establishment indicating whether it is a shop, restuarant, theatre or any another place for public amusement
- The chief inspector will verify the details of the statement to check the correctness of the statement and the payment of fees.
- Once the inspector is satisfied with the required verification, he will issue the certificate of registration to the occupier.
- The occupier must prominently display the registration certificate at the establishment and renew the certificate at the required intervals
- If there is a difference of opinion between the occupier and Chief inspector regarding the category of the establishment. In that case, the same must be resolved by referring the matter to the Government.
- The occupier is obligated to inform the Chief Inspector about any changes regarding the information provided in the statement for registration.
- If the occupier plans to close the establishment, he should inform the Chief Inspector in writing within 15 days of closing. Upon receiving such information, the Chief Inspector would cancel the registration certificate and remove the establishment’s name from the register.
- However, if the Chief inspector believes the establishment may restart within 6 months, choose not to strike off the establishment’s name or cancel the registration.
Compliance related to Working Hours
Compliances with regards to working hours under the Delhi Shops and Establishment Act are as follows;
- The working hours of an adult must not exceed 9 hours a day or 48 hours a week except for the time of stock-taking or accounts making, which must not exceed 54 hours in a week.
- The occupier needs to inform the chief inspector about the exceed in working hours at least 3 days prior to such overtime. The worker must be paid twice the amount of his actual remuneration for that overtime.
- The same employee is prohibited from working in two or more establishments simultaneously.
- The occupier must ensure that no employee works continuously for a period of more than 5 hours without an interval and a break for a meal for half an hour.
- The occupier must intimate the Chief Inspector about the time fixed for intervals at least a week from the fixation of the time period.
- The total period of work, including the means and intervals, should not exceed more than ten hours a day.
- The occupier is prohibited from employing a child even if he is a member of the family whose family holds ownership of the business.
- The women and young children must not work between 9 pm, and 7 am or in summers between 8 pm and 8 am in winters.
- The shops or commercial establishments must operate as per the timings prescribed by the government.
- However, the government can prescribe different opening and closing times for different classes of shops or commercial establishments.
Compliance Regarding Payment of Wages
The compliance regarding payment of wages to employees are
- There shall be no deductions in an employee’s wages on a weekly holiday. If the employee is a piece wage worker, he shall be provided with the average weekly wages.
- It is the duty of the manager, employer, agent or any other designated person to fix a time period for the payment of wage, which must not exceed one month.
- The wages must be paid in cash.
There are certain kinds of deductions which can be made from the wages of the employee, such as –
- Deductions of absence from duty;
- Deductions on the loss of goods or damage to the same are expressly entrusted to the employee for custody.
- Any loss of money that he is required to account for or any other damage or loss is directly due to default or neglect.
- Deductions for house accommodations
- Deductions for such amenities and services provided by the employer as the Government may by general or special order authorise;
- Deductions regarding recovery of the advances lent to a worker, it must be noted that the advances rendered should not be more than the wage of 2 months of such employee. The EMI of such advance should not exceed the 1/4th of the wage earned in that month by the employee.
- Deductions of income tax payable by the employee
- Deductions needed to be made by order of a court or other competent authority;
- Deductions for subscription for repayment of advances from any provident fund to which the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 (19 of 1952) applies or any recognised provident fund as defined in section 2(38) of the Income-Tax Act, 1961 (43 of 1961) or any provident fund sanctioned in this regard by the Government during the continuance of such approval;
- Deductions for payment to any scheme of insurance or any co-operative societies
Compliance related to Holidays and Leaves
The compliance related to holidays and leaves under Delhi Shop and Establishment Act 1954 are
- The occupier is obligated to provide one day (twenty-four hours) leave to the shop and commercial establishment employees and observe that day as a close day.
- Every employee must be entitled to the following leaves in a year.
- 15 days of privilege leaves
- 12 Casual and sick leaves
- Employees who have completed four months of continuous employment shall be entitled to 5 days of privileged leave for every completed period.
- In case the employee has completed one month of continuous employment, he must be entitled to one day of casual leave.
- A watchman or caretaker will be entitled to 30 privilege leaves in a year.
- The privilege leaves must be carried forward in the following year, but the leaves must not exceed more than 45 days.
- The wages paid during leave must be paid at a rate equivalent to the daily average of his wage that he worked in the preceding 3 months, excluding the overtime but including the dearness allowance.
Compliance Related to the Health of the Employees
The compliance regarding the health of the employees as per the Delhi Shops and Establishments Act are as follows.
- The occupier must ensure that the establishment is adequately lighted and sufficiently ventilated during the employees’ working hours. In case the chief officer is of the opinion that these compliance are not being followed, he may serve an order prescribing the measures that can facilitate the compliance.
- There must be a suitable arrangement for drinking water for the employees in the shop or commercial establishment.
- The occupier must take adequate measures to prevent fire on the premises.
- The Workmen’s Compensation Act, 1923 provisions will apply in this act as and when necessary.
Compliance Regarding the Dismissal of Employees
There are certain compliance requirements regarding the dismissal of employees in shops or commercial establishments like –
- An employer needs to provide a one-month written notice or wages in lieu of the notice in case the employer wants to dispense the services of the employee who has been in continuous employment with the employer for 3 months.
- However, serving such notice won’t be required if the employee’s services are being dismissed on the grounds of misconduct and providing him with an opportunity of being heard in lieu of the same.
- Any employee working in continuous service of 3 months must serve a notice of not less than 1 month before terminating his services; otherwise, he would be released from his employment after being paid one month’s wages.
Compliance Regarding Maintenance of Record and Registers
The compliance regarding the maintenance of registers and records are –
- The occupier is obligated to maintain the record and register in the following manner.
- Register of the employment and wages of the employee as per Form G
- Where the opening and closing hours of employment are uniforms, the occupier can maintain the register along with the details in case the employer is called early or detained later as per Form H
- Wages and record of Leave as per Form I
- Closed day, working day, working hours, intervals in Form K.
The records and registers must be preserved till the end of the following year.
The occupier must provide a letter of appointment to every employee; it must contain the following information.
- The name of the employer,
- The name, if any, and the postal address of the establishment,
- The name, father’s name and the age of the employee,
- The hours of work,
- Date of appointment
The occupier must produce such records for inspection by the chief inspector.
Penalties for Non-Compliance of the Compliance under the Delhi Shops and Establishment Act 1954
The penalties under this Act are –
- Any occupier who contravenes any provision of the Act shall be liable for a fine of Rs 25 which may extend to Rs 250
- The non-compliance with regard to maintenance of records shall attract a penalty of Rs5 each day on which the contravention occurs
- If any person tries to obstruct the inspector in the exercise of his power or conceals ANY employee from appearing before the inspector shall be liable to a minimum fine of Rs 50 but won’t exceed Rs 250
Adherence to Compliance under the Delhi Shops and Establishment Act 1954 has several benefits, such as better working conditions for the workers, peace and harmony between the employer and employees, and better functioning of the shops and commercial establishments. Hence, fulfilling compliance requirements must be viewed not just as an obligation but as an opportunity for the unhindered growth of a business.
Read our Article: Applicability of Shop and Establishment Registration