Shops and Establishments

This article is written by Tejashree Salvi. The article explains the Tamil Nadu Shops and Establishments Act, 1947. This article covers all the valuable content in this Act.  Several establishments are covered by this Act, like shops, organisations, and industries. This article covers how the Act protects employee rights and benefits, as well as how it assists employers in structuring their businesses.

Table of Contents

Introduction

The Tamil Nadu Shops and Establishments Act, 1947 consists of a group of regulations that help shops and establishments in the state of Tamil Nadu regulate their operations and employee rights. The Tamil Nadu Shops and Establishment Act was introduced in 1947. This Act regulates the conditions of workers in shops, commercial establishments, restaurants,  theatres, and other entertainment places, protects employee rights, and helps them provide all benefits. For any establishment or shop registered under this Act, it is mandatory to follow all rules and regulations in this Act. If any establishment is exploiting labour or not following rules and regulations, the organisation can face penalties, a fine, or even the closure of their business.

The main objectives of the Act are to provide regulations for the  payment of wages, terms of services, work hours, overtime work, rest intervals, opening and closing hours, holidays, closed days, work conditions, leaves, maternity leaves, and benefits; rules for employment of children; and records maintenance. 

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Historical aspects of Tamil Nadu Shops and Establishment Act, 1947

In order to understand the present implication of the Act, it is essential to look into the historical context of the Act. This Act replaced the old Madras Shops and Establishment Act of 1945. After gaining independence in 1947, the post-independence period witnessed a need to reframe the structure of the economy. Labour plays an important role in the economy of a nation. For the growth of the economy in the post-independence period, there was a need to secure and protect labour rights in the nation so that labour could work more efficiently. To secure labour rights after independence, many states at the time enacted the Shops and Establishments Act. Tamil Nadu is one of the states that enacted this Act to create a shield for employee rights and benefits. 

During the time of pre-independence, there was a lot of labour exploitation, which further led to several labour rights movements at that time, and this Act played a very crucial role in controlling them and creating a proper structure for employees’ working conditions. This Act ensures employee’s rights and welfare, as well as providing help to organisations to regulate their businesses. 

After independence, several states experienced growth in urbanisation and industrialization. Tamil Nadu also saw growth in these two sectors. To structure this growth, they decided to enact the Tamil Nadu Shops and Establishments Act in 1947. This Act helped the state protect the rights of employees and stop the exploitation of labour. The main goal of the labour movement was to create proper working hours for labour and stop unfair labour practices. This Act helped the state prevent the same and regulate labour working conditions.

Purpose and objectives of the Act

Applicability

This Act is applicable to several organisations, shops, and industries, including commercial and non-commercial establishments. It includes factories, shops, and public entertainment places. If an organisation falls under this Act, they must ensure that they comply with the provisions of this Act and follow all the rules and regulations of this Act to avoid any penalty.

Working hours and overtime

As per Section 9, the maximum number of permissible working hours in a day is 8 hours and 48 hours in a week. If any employee works overtime, the  timing of overtime should not exceed ten hours in a single day and not more than fifty-four hours in a week. According to  Section 9(2) of this Act, no person is required or permissible to work more than 4 hours in a day if he does not have a break of one hour for rest.

Section 2 of the Factory Act, 1948, defined a young person as follows:- “young person” means a person who is either a child or an adolescent. As per Section 18 of the Tamil Nadu Shops and Establishment Act, a younger working person is not allowed to work daily for more than 7 hours. In any establishment, a young person cannot work before 6 A.M. or after 7 P.M., and in one week they must not exceed 42 hours of working. A normal working person must not work more than 8 hours a day and not exceed 48 hours a week.

Weekly holidays and leave policy

Section 11 of this Act states that weekly holidays are mandatory to maintain the work life balance of employees. Apart from that, there are annual holidays available, like annual leave with wages, sick leave, and maternity leave, which are important for employee welfare. Once any employee completes the 12-month period of their employment, that employee is eligible for 12 days annual leave.

Safety rules for women employee

Under the Tamil Nadu Shops and Establishment Act 1947, women employees shall not be required to work after 8 P.M. And if any woman employee works after 8 P.M. and  before 6 A.M, the employer must obtain written consent from that woman employee, and employers must provide proper transportation facilities to women employees who work on shift duty. A notice of the transportation facilities available must be displayed at the main entrance of the establishment. Employees must provide restrooms, washrooms, safety lockers, and other basic amenities. Also, every employer must constitute an internal complaints committee against sexual harassment of women under the Sexual Harassment of Women at Workplace Act 2013.

Health and safety

The Act also provides for taking care of the health and safety of employees. As per Section 20, the working area of employees must be clean and free from odours arising from any drain, privy, or other nuisance. As mentioned in Section 21, work premises must have proper ventilation facilities. During working hours, they must have proper lighting, as per the provisions mentioned in Section 22. Every establishment must take precautions and maintain safety features in the workplace in case of a fire accident.

Employment of children

Children means a person who has not completed the age of 14 years. In the Tamil Nadu Shops and Establishments Act,under Section 17, there is a strict prohibition on the employment of children.

Employment of young people

Employment of young people also has a time limit for daily and weekly hours. A young person is someone who is between 15 and 18 years old. Their working hours must not exceed 42 hours on a weekly basis.

Records and Registers

Section 47 provides that employers must maintain all the records of employees, like attendance registers, wages, and leave records, accurately because it is a legal requirement and helps for effective business management. 

Inspection and Penalties 

Under Section 42 of this Act, the state government appoints the inspector. Section 43 further empowers the inspectors to enter into any organisation, which they believe to be any establishment, but they must do so within reasonable hours and make checks of the premises, registers, records, or notices as prescribed. And if any establishment fails to comply with the provisions mentioned in Section 41A, that establishment will face a punishment under Section 45 of this Act penalties, a fine, or imprisonment.

Fine

Under this Act, Section 35 provides provisions for fines. A fine can only be imposed on employees when specific acts or omissions are specified by the employer with the prior approval of the state government or appropriate authority. However, before such an imposition, notice of these specific acts and omissions must be placed where employees are working, so they can easily read this notice. Minor workers who are under 15 years of age are not eligible for any fines. Employers must collect fines within 60 days of the imposition of fines. Fines cannot exceed a certain percentage of employee wages for the wage period. Employers must maintain records of the collected fines. Employers must use this fine amount for the benefit of employees.

Important definitions

Shop 

As per Section 2(16) of the Tamil Nadu Shops and Establishment Act, shop means any premises where any trade or business is carried on or where services are rendered to customers and includes offices,store rooms, godowns, and warehouses, whether in the same premises or otherwise, used in connection with such business but does not include a restaurant, eating house, or commercial establishment.

Commercial Establishment

As per Section 2(3) of the Tamil Nadu Shops and Establishment Act, “commercial establishment” means an establishment which is not a shop but which carries on the business of advertising, commission, forwarding, or commercial agency, or which is a clerical department of a factory or industrial undertaking, or which is an insurance company, joint stock company, bank, broker’s office, or exchange, and includes such other establishments as the state government may by notification declare to be a commercial establishment for the purposes of this Act.

Establishment

As per Section 2(6) of the Tamil Nadu Shops and Establishment Act 1947, establishment means a shop, commercial establishment, restaurant, eating-house, residential hotel, theatre, or any place of public amusement or entertainment and includes such establishment as the state government may, by notification, declare to be an establishment for the purposes of this Act.

Person employed 

As per Section 2(12) of the Tamil Nadu Shops and Establishment Act 1947, person employed means:- 

  1. In the case of a shop, a person wholly or principally employed therein in connection with the business of the shop; 
  2. In the case of a factory or an industrial undertaking, a member of the clerical staff employed in such a factory or undertaking; 
  3. In the case of a commercial establishment other than a clerical department of a factory or an industrial undertaking, a person wholly or principally employed in connection with the business of the establishment, and includes a peon; 
  4. In the case of a restaurant or eating house, a person wholly or principally employed in the preparation or serving serving food or drink, in attendance on customers, in cleaning utensils used on the premises or as a clerk or cashier; 
  5. In the case of a theatre, a person employed as an operator, clerk, door-keeper, usher or in such capacity as may be specified by the State Government by general or special order; 
  6. In the case of an establishment not falling under paragraphs (i) to (v) above, a person wholly or principally employed in connection with the business of the establishment includes a peon; 
  7. In the case of all establishments, a person wholly or principally employed in cleaning any part of the premises; but does not include the husband, wife, son, daughter, father, mother, brother or sister of an employer who lives with and is dependent on such employer;

Wages

As per Section 2(18) of the Tamil Nadu Shops and Establishment Act, 1947 wages means any remuneration, capable of being expressed in terms of money, which would, if the terms of the contract of employment, express or implied, were fulfilled, be payable, whether conditionally upon the regular attendance, good work, conduct, or other behaviour of the person employed, or otherwise, to a person employed in respect of his employment or of work done in such employment, and includes any bonus or other additional remuneration of the nature aforesaid, which would be so payable, and any sum payable to such person by reason of the termination of his employment, but does not include:

  1. The value of any house-accommodation,supply of light, water, medical the value of any house-accommodation, supply of light, water, medical attendance or other amenity or of any service excluded by general or special order of the StateGovernment;
  2. Any contribution paid by the employer to any pension fund or provident fund;
  3. Any travelling allowance or the value of any travelling concession;
  4. Any sum paid to the person employed to defray special expenses entailed on him by the nature of his employment; or 
  5. Any gratuity payable on discharge.

Registration process under Tamil Nadu Shops and Establishment Act

Registering under the Tamil Nadu Shops and Establishment Act is mandatory for any business, shop, or commercial establishment operating within Tamil Nadu. The first step in the registration process is to identify whether the establishment falls under the definition of a shop or commercial establishment as per the Act. This Act covers several establishments, including shops, offices, hotels, restaurants, theatres, and other establishments.

  1. The first step in the registration process is to go to the website of the Tamil Nadu Labour Department (https://labour.tn.gov.in/) to access the required form and information for the registration process.
  2. The second step is to download the necessary form and application. 
  3. The third step is to fill out the application form with the necessary details, like the name and business details of the employer, address, and number of employees. And after this, attach the necessary documents, such as:-
  • Address proof of the establishment, rental agreement, and ownership documents.
  • Identify and address proof of the employer’s Aadhar card, PAN card, or voter ID.
  • Proof of incorporation.
  • Details of the employees working in the establishment and shops.
  • Once the application form is complete and the required documents are attached, submit the application to the Labour Department office nearest to your business. You may need to visit the office in person or send the application by post.
  • Pay the registration fees along with the application form. you will need to pay registration fees according to the number of employees working in your organisation.
  1. The fourth step is to submit the application form along with the necessary fees.

After submitting the application form, the Labour Department of the State of Tamil Nadu proceeds with the application, and if necessary, they can visit the organisation. Once they ensure that the application form and documents are true, they approve the application and provide a registration certificate. This certificate is legal proof for any organisation that comes under the Tamil Nadu Shops and Establishment Act. The registration certificate must be displayed in a prominent place in the organisation for public view. The validity of registration certificates is five years. Owners can renew their certificate’s validity every five years after paying appropriate renewal fees.

Registration charges for Shop and Establishments in Tamil Nadu

Number of EmployeesFees
1 to 15₹ 6,500
6 to 11₹ 9,000
12 to 21₹ 15,500

Exemptions under the Tamil Nadu Shops and Establishment  Act, 1947 

As per Section 4 of this Act, the establishments which are exempted are:-

  • The person employed in any establishment in a position of management;
  • The person who works involve travel, and the person employed as canvassers and caretaker;
  • Establishments that come under the central and state governments, local authorities, Reserve Bank of India, Railway administration,and cantonment authorities are exempted from registering under this Act.
  • Establishment in mines and oil fields;
  • Establishments  are  in place where fairs or festivals are held temporarily for a period not exceeding fifteen days at a time;
  • Organisations that are not factories within the meaning of the Factories  Act, 1948, are, in respect of matters relating to this act, governed by separate law for the time being in force of the state.

Benefits of registering under the Tamil Nadu Shops and Establishment Act, 1947

  • The registration document gives legal proof to the business owner.
  • Getting the establishment registered under this Act guarantees an establishment smooth inspection process.
  • Opening a current account for a business entity is only possible after registering the business.
  • Registration of shops and establishments allows owners to access benefits that the government provides to small and medium scale business owners.

Landmark case laws

Regional Manager v. A. Kalyanasundaram (2008)

In this case, the first respondent, A. Kalyanasundaram, filed an appeal against the appellate authority order. An appeal was filed under Section 41(2) of this Act. 

The first respondent worked as a bill clerk in a management retail shop in Kayalpattinam from March 14, 1975. Two more people also worked in the same shop. On October 12, 1975, the senior regional manager inspected the shops and observed a shortage of wheat, sugar, raw rice, and boiled rice. Consequently, he sent a memo to the first respondent on December 20, 1975. Meanwhile, the Taluka Supply Officer inspected the shops and submitted the report. Based on the report of the Tahsildar, the first respondent was placed under temporary suspension. And charges were framed against him. They concluded to discharge him from service, and after that, they passed an order removing him from service.

The first respondent said that the inquiry was not conducted properly and he did not get any chance to cross-examine the witness. On the other hand, management said the first respondent admitted the misconduct and he repaid the amount of the shortage. The appellate authority at the time of the hearing set aside the order of removal of the first respondent that was passed by the senior regional manager of Tamil Nadu Civil Suppliers Corporation. Because the senior regional manager agreed that a statement was recorded in his presence, and he signed it as the senior regional manager, not as an inquiry officer. 

On the other hand, the first respondent counsel submitted that there is a G.O. passed by the government of Tamil Nadu in G.O.M.S. no. 379 dated February 17, 1984, which is only conferred by Section 6 of this Act. But the Tamil Nadu government exempted all the establishments that come under the Tamil Nadu Civil Supply Corporation from all the provisions of this Act except Sections 11(1), 25, 31, 41, 43, 45, 50, and 51. Hence, the writ appeal was dismissed accordingly.

Management of TVS and Sons Ltd. v. The Appellate Authority under Tamil Nadu (2003)

In this case, Sivakumar, who worked as a customer relationship manager at TVS and Sons Ltd., claimed that a workman named “Saravnam” created a duplicate invoice and sent it to the finance company. He shared this with the sales manager, Dhandapani but the sales manager told him to keep quiet. After that, a show cause notice was issued 28-09-2009 for the dismissal of a workman. On 05-09-2009 a worker made his representation, and management was not satisfied with that, so they dismissed him from the service on October 28, 2009. 

The worker was aggrieved by the decision order, so he filed an appeal before the first respondent under the provisions of Section 41(2) of this Act. The authorities recorded both sides of the evidence; they saw that charges were not proved, so they set aside the order of dismissal. On the other hand, management said that petitioner started work as a machine operator and worked as a sales executive at the Velipurnam factory, a registered factory under the factory Act, and that petitioner is not entitled to an appeal under Section 41(2) of the Tamil Nadu Shops and Establishment Act. On the basis of this fact, the government decided to exempt all employers who are registered under the Factory Act from the Shops and Establishments Act. The writ petition was dismissed with no costs and other miscellaneous petitions were closed.

Conclusion

The Tamil Nadu Shops and Establishment Act, 1947, is an important Act for putting an end to  exploitation of labour rights and simultaneously ensuring the safety and protection of these rights. The present Act replaces the old Madras Shops and Establishment Act of 1945. The Tamil Nadu Shops and Establishments Act plays the role of a shield for employment rights. It regulates several aspects, like checking the working condition of employees, ensuring their wages amount, and taking care of the health and safety of employees. It also helps employers regulate and structure their businesses. Employees get all their rights, like paid annual leaves, a proper wage amount, proper working hours, one paid leave on a weekly basis, and women employees get maternity benefits and leaves.

After independence, the Indian government started to structure the economy, and labour plays a very crucial role in the economy of the nation. Protecting labour rights was crucial at that time. Several states enacted the Shops and Establishment Act to protect labour rights in their states. This Act helps maintain discipline and ensure proper balance in employment practices. The law is applicable to several establishments, such as shops, commercial enterprises, and public entertainment venues. Under this Act, registration and renewal of licences for establishments are mandatory. The main object of the Act is primarily to regulate the working hours, safety measures, and leave policies of employees. 

Under the Tamil Nadu Shops and Establishments Act, it is mandatory for employers to maintain a proper register and records of employees. Maintaining registers makes it easier for employers to manage their day-to-day operations. In this digital age, registration under the Act is very simple and hassle-free. Establishments can apply online for registration and licence renewal. The registration process provides legal validity to your establishment under the said Act, simplifies the inspection process, and makes the establishment eligible for government benefits. 

It creates a balance between employees and employers, safeguarding the rights and safety of employees. It further acts as a shield for protecting their rights and also helps employers regulate their businesses. Securing labour rights is important so labour can work more efficiently,which ultimately benefits the state economy and the development of the state.

Frequently Asked Questions (FAQs)

Which establishments are exempted from registration under the Tamil Nadu Shops and Establishments Act?

Establishments that come under the state or central government, RBI, local or cantonment authorities, or any establishment that involves activities in the oil or mining business, or any individual person, or any establishment that can only work for 15 days. All these establishments are exempt from registering under this act.

Which are the required documents by any establishment for registration under the Tamil Nadu Shops and Establishments Act, 1947?

At the time of registration under this Act, the documents required are a PAN card (for private limited companies), an article of association and memorandum of association (for private limited companies), Forms 18 and 32, incorporation certificates of company, address proof and identity documents of directors of companies, a rental agreement (if applicable), payment receipts, and commercial address proof.

What are the advantages of registering any establishment under the Tamil Nadu Shops and Establishments Act, 1947?

The registration process creates legal proof for any business. Business owners have one strong piece of legal proof. After completing the registration process, any business owner can open a current account. It also gives hassle-free inspections to businesses; every organisation is eligible for government benefits after completing their registration. 

What is the role played by the Tamil Nadu Shops and Establishments Act, 1947, in the post- independence period?

In times after independence, the state economy needed to create a proper structure for economic growth. Labour plays a very important role in economic growth, so there was a need to protect labour rights at that time. This Act replaced the Madras Shops and Establishment Act of 1945 and played a crucial role in establishing a stable structure for business that created growth in the economic condition of the state.

Are there any penalties for non- compliance with rules and regulations under the Tamil Nadu Shops and Establishment Act, 1947?

Establishments that register their business under this Act. It is mandatory to follow all the rules and regulations mentioned in this Act. If any establishment fails to do so, that establishment can face penalties, a fine, or the closure of their business.

On which ground can an employee file an appeal under the Tamil Nadu Shops and Establishment Act, 1947?

The grounds for appeal commonly include two reasons. First, in the case of the dismissal of an employee’s services, the employee can file an appeal to prove that the dismissal is invalid and not in accordance with the provisions of the Act. Second, when an employer alleges misconduct by the employee, the employee can file an appeal to prove their innocence through this appeal process.

References

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