Is shop and establishment compulsory?

a stop sign with graffiti on it

The Shops and Establishment Act is a state-specific law that may vary from state to state. The object is to control and improve the working conditions and rights of workers, such as wage payments, leaves, holidays and working hours, etc. 

Shop and establishment registration

Registration under the Shops and Establishments Act is regulated by the Labor Department of the state concerned and does not fall into the applicability of all business entities which are covered by the applicability or Factories Act, 1948, even in cases where employees are working from home. Compulsory, it is required to obtain registration.

Most state governments have passed their laws through the Legislative Assembly or adopted some other state government laws on shops and establishment. 

Documents required for registration under Shops and Establishments, 

  • Certificate of incorporation, MOA, and AOA / LLP agreement of the company.
  • Copy of PAN card of company or LLP.
  • List of directors or partners and their IDs and addresses and board resolutions or consent of partners.
  • Address proof of the company or LLP where the company name is mentioned.
  • Copy of license, permit, and registration is mandatory under any law obtained before starting an applicant’s business in India.

Key points to consider while registering under the Shop and Establishment Act

  • The certificate of registration should be displayed in the shop or establishment and it should be renewed at prescribed intervals.
  • Any subsequent change in the registration certificate should be reported to the Chief Inspector.
  • Failure to obtain a license under this Act will attract a penalty.
  • If any person registered under this Act carries on business or occupation with any shop or establishment, before the hours of establishment or after the closing hours of the establishment or on any subsequent day, such person shall be allowed The owner shall be deemed or the establishment who has kept it open before opening hours or after closing hours or on the nearest day and shall be liable to be punished.

Why does a shop or establishment require registration under this Act?

  • To regulate the working conditions of employees
  • Empowering employees and imposing obligations on employers;
  • Provide guidelines regarding various aspects like working hours, leave policy, payment or deduction of wages or allowances, opening, and closing of shop or establishment, precautionary measures for accidents, cleaning, lighting or ventilation, etc.
  • To ban child labor.

How do the shop and establishment help the registration / licensing unit?

  • It serves as a legal entity proof to carry on a trade, occupation, or profession;
  • It helps in availing the Government benefits which are provided from time to time to those registered under this Act;
  • It provides evidence to open a current bank account for business purpose;
  • It helps in resolving disputes arising in a shop or establishment legally.

What records are to be maintained after obtaining registration under the Shop and Establishment Act?

Employee Details –

  • Working hours
  • Interval or rest period
  • Leave with wages
  • Penalty, deduction, or advance
  • Salary or wages
  • Close day notice


Shop and establishment license registration is a basic license that provides a legal identity in the case of a business, or occupation. This license makes an entity a registered business establishment in the eyes of the law and, therefore, does not face any difficulty at the time of inspection or government survey.

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