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Model Shops and Establishment Bill

Model Shops and Establishment Bill

Model Shops and Establishment Bill

The Union Cabinet chaired by the Prime Minister Shri Narendra Modi after discussions with employee representatives, business, State Governments and the general public has approved the Model Shops and Establishment (Regulation of Employment and Conditions of Service) Bill, 2016. The Bill has not been sent to the State Governments and Union Territories to enable them to modify existing Shops and Establishment Act enforced by each of the State Government. In this article, we look at some of the major changed expected from the approval of the Model Shops and Establishment (Regulation of Employment and Conditions of Service) Bill, 2016.


The Model Shops and Establishment Bill applies to establishments or businesses employing ten or more workers except manufacturing units. The operation of manufacturing units would governed by other Act like the Factories Act. Further, small businesses and establishments employing less than 10 persons are exempt from the application of the proposed Bill.

Employee Benefits

The Model Shops and Establishment Bill provides that every shop or establishment must provide clean and safe drinking water to its employees on its premises. Further, shops and establishments are also required to provide the facility of lavatory, creche, first aid and canteen for its employees, either by a group of establishments, if an individual establishment by itself is not able to provide such facilities due to space or resource constraints.

Highly skilled workers (for example workers employed in IT, Biotechnology and R&D division) would be exempted from daily working hours of 9 hours and weekly working hours of 48 hours subject to maximum 125 over-time hours in a quarter. In addition, the Bill has also called for five paid festival holidays in addition to national holidays for all employees.

Women Employee Empowerment

The current Shops and Establishment Act in force restricts the use of Women employees in night shifts. The proposed Shops and Establishment Bill would do away with many restrictions and permit Women to work during night shifts. However, when an establishment employs Women employees in night shift, it has to provide for provision of shelter, safe transportation, rest room for women and ensure adequate protection of their dignity. Further, establishments cannot discriminate against women in recruitment, training, transfer or promotions.

Open and Closing Time for Businesses

One of the biggest changes proposed through the Model Shops and Establishment Act is that shops and establishments would have the freedom to operate 365 days in a year and operate 24/7. As per the existing Shops and Establishment Act, the definition of shops and establishments are as under:

  • Shop: “shop” means any premises where goods are sold either by retail or wholesale or where services are rendered to customers, and includes an office, a store-room, godown, warehouse or workhouse or work place, whether in the same premises or otherwise, used in or in connection with such trade or business but does not include a factory or a commercial establishment.
  • Establishment: “establishment” means a shop, a commercial establishment, residential hotel, restaurant, eating-house, theatre or other places of public amusement or entertainment to which this Act applies and includes such other establishment as Government may, by notification in the Official Gazette, declare to be an establishment.

Hence, restaurants, malls, theatres and offices can soon be open 24/7 and operate 365 days without any restrictions.

Shops and Establishment Act Registration

With the Model Bill being adopted by the State Governments, shops and establishment act registration is expected to become simpler through an online common registration portal with simplified procedure. Further, the Bill has proposed providing powers to the Government to make rules to ensure the safety and health of workers.