New act for shops and establishments in Maharashtra

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New act for shops and establishments in Maharashtra

2018

Introduction

The government of Maharashtra notified the Maharashtra Shops and Establishments (Regulation of Employment and Conditions of Service) Act, 2017 (New Act) on 07 September 2017. The New Act came into effect on 19 December 2017.

The New Act replaces the Bombay Shops and Establishments Act, 1948 (Old Act).

This update describes the key changes introduced under the New Act.

Change in definitions

Some of the changes introduced in the definitions under the New Act are described below:

Employer: The definition of “employer” has been widened under the New Act to include:

(i) In the case of a firm or association of individuals, a “partner” or “members of the firm or association”

(ii) In the case of a company, “director” of a company

(iii) The person(s) appointed to manage the affairs of the establishments owned and controlled by the Central Government, state government or local authority

Establishment: The Old Act distinguished between “commercial establishment” and “establishment.” The New Act does not draw any such distinction. It provides a wide definition of “establishment” and enumerates certain establishments and persons to whom the New Act does not apply.

Worker : The term “worker” was not defined under the Old Act. Under the New Act, a “worker” is any person employed to do any manual, unskilled, skilled technical, operational or clerical work for hire or reward, whether the terms of employment are expressed or implied. The definition of “worker” expressly excludes an apprentice as defined under the Apprentices Act, 1961.

Exemption for establishments with fewer than 10 workers

The Old Act applied to all establishments regardless of the number of workers. However, the New Act only applies to establishments having 10 (ten) or more workers. Thus, establishments with fewer than 10 (ten) workers are exempted from complying with the provisions of the New Act.

The only compliance requirement under the New Act for establishments with fewer than 10 (ten) workers is a requirement to intimate the facilitator at the time of commencement of business of the establishment and at the time of closure of the establishment.

Existing establishments with fewer than 10 (ten) workers:

Establishments existing on the commencement of the New Act with fewer than 10 (ten) workers and having a valid registration or renewal under the Old Act are exempted from:

  1. Complying with the New Act
  2. Providing intimation to the facilitator under the New Act until the expiry of their registration or renewal.

If, however, the number of workers in such establishment becomes 10 (ten) or more, the provisions of the New Act will apply to the establishment and the establishment will have to obtain registration under the New Act.

Appointment of facilitator mandated

The New Act provides for the appointment of a “facilitator” and a “chief facilitator” by the state government in place of an “inspector” under the Old Act. The facilitator shall, in addition to performing the duties of an inspector, advise employers on how to comply with the New Act.

Process for registration of establishments eased

The New Act relaxes provisions for the process of registration of establishments:

Time period for registration : Under the Old Act, an establishment was required to register within 30 (thirty) days of the commencement of the establishment. Under the New Act, this registration period has been extended to 60 (sixty) days from the date of commencement of the New Act or the date on which the establishment commences business.

Validity of registration certificate : Under the Old Act, the registration certificate was valid up to the end of the year for which it was granted. The employer could request the certificate to be granted (or renewed) up to a maximum period of 3 (three) years. Under the New Act the registration certificate is valid for a period requested by the employer with the maximum period permitted being 10 (ten) years.

Existing establishments with 10 (ten) or more workers:

The requirement for establishments with 10 (ten) or more workers to register under the New Act is not applicable to establishments already having a valid registration or renewal under the Old Act, until the expiry of their registration or renewal.

Provisions for protection of women introduced

The New Act prohibits discrimination against women workers in the matter of recruitment, training, transfers, promotion or wages. The Old did not have any such provision.

Under the Old Act, women workers were only allowed to work between the hours of 7:00 a.m. and 9:30 p.m. The New Act allows women workers to work beyond 9:30 p.m., provided that the woman’s consent is taken and provisions are made by the employer for her protection and transportation from the establishment to the doorstep of her residence.

Opening and closing hours of establishments relaxed

Under the Old Act, no commercial establishment was permitted to be opened earlier than 8:30 a.m. and closed later than 9:30 p.m. The New Act has removed this restriction and permits establishments to remain open 24×7.

However, the state government is at liberty to fix, by way of notification, opening and closing hours of different classes of establishments in public interest.

Additional welfare provisions introduced

The New Act has expanded the welfare provisions for workers. In addition to the provisions existing in the Old Act such as ventilation, cleanliness, lighting, first aid and precaution against fire, the New Act additionally provides for the following:

  1. Drinking water
  2. Latrines and urinals
  3. Crèche facility for establishments with 50 (fifty) or more workers
  4. Canteen for establishments with more than 100 (hundred) workers

Higher penalties for contravention of the New Act

In the case of contravention of certain provisions of the New Act, the maximum fine may extend to INR 200,000. Where the contravention is a continuing one, the New Act imposes a further fine, up to a maximum of INR 2,000 for every day during which the contravention continues.

Under the Old Act, the maximum fine for contravention of certain provisions was INR 5,000 and for a continuing contravention, INR 100 was payable for every day during which the contravention continued.

Implications

The New Act relaxes certain compliances for employers in terms of types of establishments required to be registered, validity of registration certificate, opening and closing hours etc. At the same time, it also provides for a greater number of compliances for establishments in terms of employee welfare provisions and imposes higher penalties in case of contravention.

Overall, it may be a beneficial legislation for smaller establishments, which will not be burdened with the compliances under the New Act. However, larger establishments will have additional compliances to follow under the New Act (for example, canteen facility and crèche facility).

In addition to the above, there are certain issues that are yet to be addressed under the New Act. For instance, the notice period for termination of a worker, which was expressly provided under the Old Act, has been omitted under the New Act. Thus, there is a lack of clarity on the notice period for termination of a worker under the New Act.