In this blog post, Sayan Mukherjee, a student of University of Calcutta, who is currently pursuing a Diploma in Entrepreneurship Administration and Business Laws from NUJS, Kolkata discusses the intent behind the enactment of the Shops and Establishment Act.

Unfortunately, a country like India is, at its economic essence, known for the widespread unemployment and unequal employment which degrades the national grandeur. The alarming rate of population and other grave factors has resulted into a chain of economic vices in India.

About 94% of India’s working population is the part of the unorganized sector. In the Indian context, organized sector refers to licensed organizations, i.e., those who are registered and pay income tax, sales tax, etc. For example, incorporated entities, publicly traded companies, shopping malls, corporations, factories, hotels, and large businesses. On the other hand, unorganized sector or own account enterprises involve all unlicensed, unregistered or self-employed economic activities. These include shops, handicrafts, commercial establishments, rural traders, farmers, and residential hotels, restaurants, eating houses, theaters and other places of public entertainment.  

To develop and control the fallen state of economic activities, the Government of India enacted The Shops and Establishments Act, 1953 with the sole intention of providing statutory obligation and rights to both employees and employers in the unorganized sector of employment. Before going into the detailed purpose, it should be made clear that the law for each and every state is different as the State frames this law and not the Centre. The basic objective would remain the same while there will be the difference in prescribed fee for registration and renewal, etc. by the concerned state. Thus, justice will be done if we analyze the purpose of enactment in connection with the West Bengal Shops & Establishments Act, 1963.

The intent behind enactment of shops and establishment Act may be summarized hereunder:

• To empower the State Governments to make legislations and frame its rules for the Act

The first thing the government wanted through this enactment was to reach out to the most remote parts of the nation for providing benefits of the statute. The Act of 1953 provides for, in its scope, that a state has the power to formulate law in this regard. It further provides that the state government can exempt, either permanently or for a specified period, any establishment from all or any provisions of the Act.  Likewise, in West Bengal, the Act of 1963 came into force to regulate these matters.

• To organize the unorganized sector of the economy

As most of the working population is engaged in the unorganized sector, the lawmakers, through this enactment, attempt to merge the characteristics of both organized and unorganized sector.

• To mandate registration

Vide Section 16 of the West Bengal Shops & Establishment Act, 1963, it is compulsory for every employer to send a statement in prescribed form along with the prescribed fee to Inspector of the local area, within 30 days of commencement of the shop or establishment. The statement should contain:

1. Name of employer or manager if any;
2. The postal address of the establishment;
3. Category of the establishment;
4. Declaration of weekly closing days in the case of a shop;
5. The name of the shop or the establishment;
6. Such other particulars as may be prescribed.

If the Inspector is satisfied with the correctness of the statement, he shall register the shop or the establishment in such manner prescribed and shall issue a certificate of registration in prescribed form to the shop-keeper or the employer. It’s also expressly notified that closing of the shop or the establishment must be informed to the Inspector within 10 days so that, the name can be removed from the registrar and the registration certificate is formally canceled. Thus, this whole process is a perfect way to keep track of all unorganized occupation and attempts to organize them in a nutshell.

• To regulate wage policy

The Act tries to stop arbitrary wage policy in the unorganized sector. Through its machinery, it ensures that employees get their due remunerations as per the provisions of Payment of Wage Act, 1936 and the Workmen’s Compensation Act, 1932. Vide Section 14 of the West Bengal Shops & Establishment Act, 1963, all wages payable to a person employed shall be paid within the 10^th day of the month of which such wages are payable. Further, the Act also looks after u/s 13 that wages for overtime work shall be calculated at ‘the rate one and one-half times of’[1] The ordinary rate of wage payable to the employee. A terminated employee must also be paid his dues within a day of termination. However, an employer is also entitled to deduct a certain amount from the wages of the employees for:

• Absence from duty,
• Fines,
• Advance or overpayment already made,
• Income tax deduction,
• The deduction made as per an order of the court, etc.

Thus, this Act looks forward to securing wages for the employees and enhance its smooth transfer after that.

• To restrict employment of children

The Act of 1953 provides that no child less than 14 years of age may be allowed to work. Further, it lays down that young person less than 17 years may be allowed to work but maximum of 6 hours a day along with a recess of at least half an hour. Again, a working time gate of 1.00am to 7.00pm has been established for young person or woman, subject to the declaration of respective State Government. Similarly, the WB Act of 1963 shows equivalent provisions defined under Section 8 of Section 11.

• To regulate working conditions and avail benefits

The Act also intends to provide proper working conditions and benefits to both the employees and the employers. From recess, closed days and holidays, and overtime work to annual leave, maternity leave, and other related benefits, all are provided for under this Act. It also sends for benefits for a terminated employee. Here, a person who has continuously served for 1 year has to be provided with a 30 days’ notice in writing or wages in lieu of such notice before termination of his service. A similar provision has been laid down under section 15 of the West Bengal Shops & Establishment Act, 1963. Hence, the sole intention behind this is to keep the employees satisfied and extract better quality of service from the national asset.

• To prescribe legitimate working hours

Section 6 and 7 of the West Bengal Act of 1963 provides details of the working hours in a shop and an establishment respectively. The legitimacy of the work hour prescribed is clear which directs and provides security to the employee from the bossy approach of the shop-keeper. Thus, this Act works itself to ensure that even in the unorganized sector a human being is not unreasonably exploited by forcing him to labor more than 48 hours a week.

• To look after health and safety of both the employer & the employee

Provisions of the Shops & Establishment Act, 1953 ensures that the premises must be clean and free from effluvia. Further, there must be prescribed precautions against fire and in the case of a manufacturing unit, a first aid box should be maintained. Therefore, the Act clearly intends to eradicate unhygienic working conditions which endanger the labor quality of the nation.

• To punish the offenders under the Act

Under section 20, 21 and 22 of West Bengal Shops & Establishment Act, 1963, the process of adjudication of any wrong under the Act have been summarily enumerated. Thus for the persons violating the provisions of these rules, well defined legal machinery work in aid and secures the rights of involved parties in a shop or an establishment.

• To organize and maintain records

The Act provides that a State Govt. has to provide appropriate order so that the employer is bound to maintain and keep a register of employees and such other registers, records, and documents, and produce them on demand by the Inspector. Under West Bengal Shops & Establishment Act, 1963 this provision is enumerated under Section 17. It further provides that these documents shall be inspected and signed by the employees regularly. Thus, this provision intends to provide a security and acts as a proof of evidence when disputes arise.

To conclude, it can be rightly declared that the Shops & Establishment Act, 1953 has not only helped in organizing and systematizing the economic working of the indigenous and self-reliant labor force, but also it formed a stepping stone for various state governments to turn its attention to these productive units and frame various legislations and rules to guide them as per the requirements of each locality.

Footnotes:

[1]Inserted by s.6 of the West Bengal Shops and Establishments (Amendment) Act. 1988.