A quick stride with Model law on Shops and Establishment- a recent Indian Government initiative.

This note is only intended as a general overview and is not to be viewed as a substitute for legal advice. Brands & Bonds shall not be liable for any actions taken or not taken on the basis of this note.

All shops and commercial establishments which includes nearly all business establishments except those which involves manufacturing process are currently governed by the Shops and Commercial Establishment Acts of the respective states in India, which places a lot of restriction on the shop owners and employers in terms of working hours among other things. The prevailing Act mandates every shop to be completely shut down on one day in a week, which inevitably cause substantial revenue loss in the the present day business model.

The Central Government has taken a bold step in drafting a model law which attempts to address some of these shortcomings in the current laws. The Model Shops and Establishment (Regulation of Employment and Conditions of Service) Bill, 2016 was cleared by the cabinet on the 29th of June 2016. This Bill purportedly finalised after detailed discussions and deliberations with the representatives/associations of Employers and Employees, and the State Governments. Below is a quick glimpses into some major changes that will be brought about by this model vis a vis the existing State Act.



This Model Bill applies to all shops, establishments and business having ten or more employees with the exception of manufacturing units/factories, which would be governed by the Factories Act, 1948.


Freedom of Operation

The biggest changes proposed by this Bill is to grant freedom to the shops and establishments with regards to their operation time. While the existing Acts restricts this, the shops and establishments can decide if they would want to operate on a 365/7 days basis, as well as determine the opening and closing time under the new Bill. This would turn out to be a boon for shopping malls, cinemas, retailers and even technology companies situated outside the boundaries of Software Technology Parks and the likes enabling them to remain open for longer periods as per requirement. The move will definitely be a welcome one by consumers across the country as it will enable them more flexibility as to shopping hours and in turn results in increased revenue and job opportunities especially in the retail, IT, hospitality and Service sectors. The present scenario is that many establishment and shops would have to apply to the respective government to permit them to operate the business on all 7days and it is the discretion of the respective government to permit the same or not.


Women Employee empowerment

The Bill allows women employees to work in night shift with an intension to enhance the gender diversity at work places. At the same time the Bill ensures that employers will have to ensure safety and better working conditions for female employees by providing facilities such as late-night drops and crèches. Further the Bill also ensures non-discrimination of women employees by the employers with respect to recruitment, promotions, transfers and training. Undoubtedly, the scope and applicability of Sexual Harassment of women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 would be tested and its effective implementation would be the call of the hour.


Working Time

The Bill provides for exemption of highly skilled workers (for example workers employed in I.T., Bio-Tech and R&D) from, daily working hours of 9 hrs and weekly working hrs of 48 hrs subject to maximum 125 over-time hours in a quarter. This flexibility will enable the establishment who cater to international customers to provide better services to their clients especially in the IT sector.


Ease of Doing Business

The shops and establishment registration is proposed to be made completely online with a more simplified process on a common online portal throughout the nation and the entire process is expected to be simple which would definitely benefit new business.


Other Benefits

The other benefits proposed by the Bill includes provisions for safe drinking water, crèche, lavatory, canteen etc. It has also been stated that a group of companies can provide a common crèche, canteen etc if it is convenient for the employees, especially in the same building. It is to be noted that the Kerala Shops and Commercial Establishment Act has already incorporated these in its amendment in September 2015.

Additionally, the Bill also provides for paid holidays for the workers which will be 18 days Earned Leaves, 8 days Causal Leaves, weekly holiday and 5 festival leaves in addition to National holidays.



This Bill aims for uniform rules across the country with regards to shops and establishments and would be a welcome change expected to promote an increase in revenue especially in the retail and service sector with a more relaxed rules. An important thing to note is that, this model is only a suggestive piece of legislation. It has not been implemented yet as it has not been forwarded to the states. Once forwarded, it is the discretion of the respective State Governments to decide whether to implement, modify or incorporate the relevant changes into their existing Legislation or to entirely adopt the model bill as a whole.

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