Start-Up And Any Other Business Type That Requires Establishing A Small Office
Start-up and any other business type that requires establishing a small office entails more than building a product or getting a team. Adherence to the labour laws, particularly, the Shop and Establishment Act which governs the majority of commercial enterprises in India is one of the most important tasks. It does not matter whether you run a co-working office, a consultancy or an IT firm, or a retail unit you must comply with this Act.
This manual includes full compliances of labour laws that small offices and start-ups have to adhere to according to Shops and Establishment Act, as well as procedures, documents, time schedules, and penalties.
What Is The Shops & Establishment Act?
The state specific labour law, Shops and Establishment Act regulates:
- Working hours
- Employment conditions
- Employee rights & welfare
- Wages & holidays
- Workplace status in business premises.
In India each state has its variant of the Act (e.g. Maharashtra S&E Act, Karnataka S&E Act, Delhi S&E Act), although there are some basic compliance requirements that are similar.
Applicable To Businesses
- Start-ups
- IT/Tech companies
- Freelance offices
- Co-working spaces
- Private offices
- Retail stores
- Service-based firms
Mandatory Registration Under The Shops & Establishment Act
Who Must Register?
All start-ups or offices with at least one employee or in business should be registered.
Deadline For Registration
Usually 30 days after commencement of business (depends on state).
Documents Required
- PAN Card of the employer
- Aadhar Card of the employer
- Evidence of rent or ownership of property.
- List of employees
- Business activity specifics.
- Board decision (to companies)
Registration Is Important Because Of The Following Reasons
- Requirements when opening bank accounts
- The government tender essentials
- Proof of business existence
- Avoidance of penalties
Other Registrations Required Under The Labour Law
Key Labour Law Compliances Under The Shops & Establishment Act
Working Hours & Overtime
- Maximum number of working hours on days: 8-9
- Maximum 48 hours per week
- The overtime should be remunerated twice the regular salary
- Weekly working hours with overtime normally 60 hours
Weekly Holidays
- One mandatory weekly holiday
- Weekly off should be written in notice
Opening & Closing Hours
- State governments set the limits on permissible working hours
- Most states (with conditions) permitted flexible timing of IT/ITeS
Employee Welfare & Working Conditions
Leave Rules
| Leave Type | Entitlement |
|---|---|
| Casual Leave (CL) | -6 12 (variable by state) days |
| Earned/ Privilege Leave (EL/PL) | -12-21 days |
| Sick Leave (SL) | – 6–12 days |
| National Holidays/ Festival Holidays | -7 days to 10 days |
The unused earned leave should be carried forward (mostly, up to 45 days)
Maternity Benefits
- 26 weeks paid maternity leave
- Telecommuting after maternity when possible
- Workers with 50+ employees have Crèche facility
Child Labour Prohibition
- Children below 14 years
- Teenagers working in risky professions
Health, Safety & Workplace Conditions
Start-ups must ensure:
- Sanitary premises and facilities
- Potable drinking water
- Effective lighting and air conditioning
- Fire safety equipment
- First-aid kits
- Men and women have separate washrooms
Employment Records & Registers To Maintain
Even small start-ups have to keep the following (physical or digital):
- Employee Register (Form A/B in accordance with the state)
- Muster Roll/ Attendance Register
- Wage Register
- Leave Register
- Overtime Register
- Working hours and weekly holiday Register
- Register of the personal details of employees
The majority of states permit online self-certifications and digital registers
Display Requirements
Each office should have posted on a high profile place:
- Registration certificate
- Weekly holiday notice
- Working hours
- Name of employer and place of establishment
- Abstract of the Shops and establishments act
- Emergency contact numbers
Intimation Of Changes
Start-ups have to inform authorities in case there is a change in:
- Address
- Number of employees
- Ownership
- Nature of business
- Closure of establishment
The notification has to be filed within 30 days (depending on the state).
Penalties For Non-Compliance
- Penalties vary state-wise and may include:
- Fines ranging from ₹1,000 to ₹1,00,000
- Penalties on further violation on a daily basis
- Shutting down of facility in extreme cases
- Repeat offence prosecution
Start-ups can be inspected physically or digitally to make sure that they are compliant.
Benefits Of Complying With The Shops & Establishment Act
- Legal protection
- Improved work culture
- Professional brand image
- Smooth hiring & retention
- Escaping government fines
- Loan, registration and funds qualifications
Compliance gives operation stability which is a very necessary aspect in scaling.
