Shop And Establishment Act – A Comprehensive Guide


Even if you are a shopaholic, you have hardly been interested in knowing about the acts regarding shop establishment. But they matter a lot if you own a store or think of starting a new business. Any shop you visit, bigger or smaller, comes under the Shop and Establishment Act of the state. 

According to the act, shops are defined by their premises from where customers can render services or a place where trade takes place. These shops can be offices, warehouses, storerooms, or anything else, not attached to any factory. Shop Act Registration helps the retailers and smaller shops in empowerment as per the labor associations.

Commercial establishments refer to the administrative services, commercials, trading, insurance, or other establishments where employees are working. It can be office work, a restaurant, an entertainment park, or anything else. Shop Act is an important part that you can never ignore if you will run a business commercially. The Labor Department of each state is in charge of the Shop and Establishment Act. 

The general provisions of the Shop and Establishment Act are the same in every state. Both the smaller and commercial shops fall under the regulation of this act. Each state issues Shop Act Registration, and they differ a little from each other. 

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How do you apply for Shop and Establishment Registration?

Anyone with a small or commercial shop can apply for Shop and Establishment Registration online or offline within a month of initiating your business. The application you need to fill up will contain the establishment’s name, the employer’s name, the number of employees, your business category, and other relevant details. If you have the proper documents, you will receive your registration certificate.

When you receive the certificate, you must display the same inside the premises. The registration certificate has a validity of five years and is eligible for renewal. With time, the employer or the owner must keep changing the address, employee database, or other details.

Which documents you should submit for Shop and Establishment License Registration:

  • ID proof or address proof of the owner, including voter’s ID, Aadhar Card, or Driving license
  • PAN card and passport size photograph of the owner 
  • Owner’s photograph of the commercial establishment
  • Affidavit 
  • Get the rent agreement if your property is rented
  • Address proof of Commercial establishment or SOP
  • Memorandum of Article of Incorporation certificate
  • Detailed bank statement
  • Payment receipt
  • If you are the owner, have a self-attestation letter or an authorization letter
  • Utility Bill
  • Duly filled registration form (make sure the owner signs it)

If you are the owner, you must mention the establishment type and your business’s commencement date in the application form. For establishment closure, you must surrender the registration certificate to the authority. A shop and Establishment License is an introductory document that any business requires to prove commercial establishment. Make sure that you have a copy to produce in the bank when applying for a business loan. 

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Know about the regulations covered by Shop and Establishment Act

  • Working hours, number of annual leave, weekly holidays
  • Compensation and Wages
  • Enforcement and Inspection
  • Prohibition of child employment 
  • Rest Interval
  • Prohibition of employing women on the night shift
  • Opening and closing hours
  • Employers’ Record keeping
  • Dismissal provisions

How to obtain Shop and Establishment License

If you are willing to register your business for Shop and establishment license online for the license, a few steps are there to follow.

Go to the labour department website

Each state has its labor department website where a commercial establishment can go through instructions and an online registration form. In some states, the process is online, while few have a semi-online process.

Fill in the application form

Nextly, you have to fill up the online application form with all your business. The required details may differ depending on which state your business belongs to and your business type. 

Upload the required documents 

Once the form is completed, all you have to do is upload all required documents online. For some states, it is necessary to submit physical documents and an application printout.

Make the payment

The fee entirely depends on the type of business or company and the type of license you are looking for. Some states have online payment facilities, while cash payments or Demand Drafts are also accepted.

Inspection of your application

Upon submission, the labor department will go through your application. Depending on the details filled in your application, the department will decide if there is a requirement for business premises’ inspection. 

Approval for license and issuance

Once the submitted application is reviewed or business premises visit, authorities will take some time for approval. Your Shop Act License will be issued for one year, and you will have to renew the same every year.

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Benefits of Shop And Establishment registration:

  • Under the Shop Act, small businesses can enjoy the facility of employee welfare.
  • Under the jurisdiction of the Shop and Establishment Act, your business comes with legal validation once the process of registration is completed.
  • As per RBI guidelines, your establishment must have a bank account of its own, and you must present a copy of the registration for opening the bank account.
  • With frequent access to Municipal council checks, the shops maintain their quality.
  • The establishments gain access to frequent checks by the municipal council, which helps the shops keep quality control checks and keep up the standards
  • Once you have the establishment registration certificate, you can enjoy different subsidies and schemes to run your business smoothly.

When your business is secured with Shop Act License, there are a few facilities your establishment will receive include,

  • Settlement of disputes
  • In the case of the Industrial workforce, there will be Healthcare facilities 
  • Facilities for skill up-gradation
  • Technology up-gradation and training facilities 
  • Responsive and responsible administration
  • Child labor vigilance
  • Evaluation of the safety of the workplace and monitoring them
  • Quality health care measures 
  • Schemes for social security

The Shop and establishment registration helps improve the scope of your business and protects employee rights. The workload is improved, and the certification allows the facility to avail of the government schemes.

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