As an employee, it is essential for you to know about your rights and entitlements that have been granted to you by law. As an employer too, one should be aware of the limitations that have been imposed by law on terms of service of an employment contract. In this blog post, Suhani Chanchlani of Amity Law School, Delhi, GGSIPU, examines provisions of the Delhi Shops Establishment Act that every person should be aware of as an employee or employer in a shop or a commercial establishment located in the Union Territory of Delhi.




The Act extends to the whole of the Union Territory of Delhi. It applies to all shops and commercial establishments which include any premises wherein any trade, business or profession is carried out. It relates to the regulation of terms of services, leaves, wages, hours of work and other conditions of the work of employees employed to work in such shops or commercial establishments.

Salient Features of the Act

Registration of the Establishment

  • shop-establishment-act-registration-consultants-250x250The proprietor of every establishment must send a statement in the prescribed format to the Chief Inspector along with the fees. This statement must contain following particulars:-
    • Name of the employer and manager(s) if any.
    • Name of the establishment if any is designated to it.
    • Postal address of the establishment
    • Category of the establishment, if it is a shop, commercial establishment, hotel, theater or another place of amusement or entertainment, restaurant or other eating house.
    • Number of employees working in the establishment
    • Such other particulars as may be prescribed.
  • This statement with the particulars as mentioned above must be sent from 90 days of coming into force of this Act. In case a new establishment is formed, the proprietor must send the statement from the day the establishment commences work.registration
  • In the event of any difference of opinion between the Chief Inspector and the Proprietor on the category that the establishment belongs to, the matter shall be referred to the state government, and any decision made in addition to that shall be final for the purpose of this Act.
  • On receipt of the statement, the Chief Inspector after being satisfied on the correctness of the particulars of the statement shall register the establishment in the Registrar of Establishments and also issue a registration certificate in the prescribed format to the proprietor of the establishment.
  • It is the duty of the proprietor of the establishment to intimate the Chief Inspector about any changes that may occur with regards to the information submitted to the Chief Inspector in the statement at the time of the registration.
  • If the proprietor closes his establishment, it is his duty to inform the same to Chief Inspector within 15 days of closing. The Registrar would accordingly cancel the registration certificate and remove the name of the establishment from the register of establishments.

Important Provisions on Hours of Work

  • No adult can be made to work more than nine hours in a day or 48 hours in a week. But at the time of making accounts or for the purpose of any such prescribed activity, adults can be made to work for more than the prescribed hours provided that the working hours do not exceed 54 hours in a week. Moreover, any person made to work overtime is entitled to be paid at double the rate per hour he is paid to work for normal working hours.
  • No employee can be made to work for more than five hours continuously without a period of rest or meal of at least half an hour. The total period of work inclusive of time given for rest or meal must not exceed more than 10 hours in a day.
  • Employers cannot employ the child, i.e., persons below the age of 14 years regardless of the fact that the child is a member of the family that is running the business.
  • No young person or woman shall be allowed or required to work whether as an employee or otherwise in any establishment between 9 p.m. and seven a.m. during the summer season and between 8 p.m. to 8 a.m. during the winter season.
  • No shop or commercial establishment on any day, be opened earlier than such hour or closed later than such hour, as may be fixed by the Government by general or special order made in that behalf.

Important Provisions on Holidays and Leaves

  • Every shop and commercial establishment shall remain closed on a close day. The closed day is that day of the week on which the shop or the commercial establishment remains closed. Closed days can be specified for different classes of shops and establishments.
  • In addition to the closed day, every shop and commercial establishment shall remain closed on three of the National holidays each year.
  • Every employee shall be allowed at least twenty-four consecutive hours of rest (weekly holiday) in every week.
  • No deduction can be made from the salary of the employees for holidays on closed days or for national holidays. If an employee is employed on a daily wage, he shall nonetheless be paid his daily wage for the holiday and where an employee is paid on piece rates, he shall receive the average of the wages received during the week.leaves-KT-Holidays
  • Every employee is entitled to privileged leave after 12 months of continuous employment for a total period of not less than 15 days.
  • Such an employee who wants to avail the benefit of privileged leave may intimate his employer in writing about the period from which he would like to take leave. The employer is bound to respect this request unless he has a valid cause. An employer must respond to such request within seven days from the date when such a request is made.
  • An employee is also entitled to take sick leaves of not less than 12 days in a year. An employer cannot refuse leave to the employee when he is sick, his wife or child is sick, he has sustained a physical injury on account of an accident, or when there is a death in the family.
  • An employer cannot refuse sick leaves to any employee. However, if an employer doubts the correctness of the assertion of an employee to take a sick leave, then he can either ask the employee to present a medical certificate from a registered doctor or get the employee or his wife or child as the case may be, to be examined by a doctor at his expense to verify the particulars of the sick leave application.
  • An employer cannot terminate the employment of an employee who has been working continuously for more than three months without giving a notice of at least one month in writing or wages in lieu of such notice period.
  • An employer can terminate the employment of an employee if he has committed something on account of his wilful misconduct. However, such employee must be given an opportunity to explain himself before his dismissal.

Important Provisions on Wages

  • Wages must be paid to employees regularly, and payment of wages cannot be delayed by over one month.
  • An employee must be given wages without any deductions. However, an employer can deduct wages in the following manner:-
    • Fines
    • Deduction for absence from work.
    • Deduction for loss incurred from the damage caused to goods specially entrusted in the custody of the employee or for the loss of money that the employee was responsible for keeping an account.
    • Deduction for house accommodation provided by the employer. moneyfile--621x414
    • Deduction for the provision of any amenity or service by the employer as the government may authorize to be charged through a general or special order.
    • Deduction for any advances made or for adjustments of wages paid more than regular wages.
    • Deductions for the purpose of payment of income tax by the employee.
    • Deductions that have been so mandated by an order of the Court or by any other competent authority.
    • Deductions for a subscription to provident funds.
    • Deductions for a scheme of insurance that has been approved by the government or deductions for payments made to a recognized co-operative society.
  • If an employer imposes a fine on the employee, he must intimate him about the amount of the fine and must also assign a reason for the imposition of such fine. An opportunity must be given to the employee to offer an explanation in the presence of another person.

Letter of Appointment to Employee

6a00d8341bfae553ef0120a640a740970cIt is mandatory for every employer to issue a letter of appointment on the appointment of an employee in the establishment. Such document must contain following particulars:-

  • Salary or the rate of wages.
  • Designation of the employee and the kind of work for which employed whether it is manual work, clerical, supervisory or any other.
  • Concessions and benefits that have been conferred to an employee that is special to his post if any.



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