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Shops and Establishment ACT

General conditions of employment covered under Shops and Establishment ACT in services sector

The shops and establishment act of 1948, the law applies to all employees except those working in the agriculture sector.

The law provides for the health and safety of workers, minimum wages, work hours and leaves.

So what are the conditions under which you are employed? In this article, we will explore some basic rights guaranteed to you by law.

1. Working Hours

Working hours: The Act lays down a maximum of 8 working hours per day and 48 hours per week.

In the case of an employee working on shifts, he/she will be entitled to get paid double wages for each extra hour worked.

The Act also lays down that a worker cannot be made to work beyond 8 hours in a day.

If a worker has been working overtime, he/she will have the right to receive additional wages at the rate of twice their normal pay per hour.

The Act lays down a maximum of 48 hours per week. In the case of an employee working on shifts, he/she will be entitled to get paid double wages for each extra hour worked.

The Act also lays down that a worker cannot be made to work beyond 8 hours in a day.

2. Overtime & Overtime Wages

Overtime wages are paid at 1.5 times the basic wage for work done in excess of 8 hours a day or 48 hours a week.

The overtime period may be split into two equal periods, provided that no employee works more than 12 hours during any 24-hour period.

Overtime wages are paid for work done on holidays or weekly off which is not otherwise compensated by annual leave, sick leave, maternity leave, accident pay or other facilities.

The overtime rate is 1.5 times the basic wage, which is paid for every hour worked in excess of 48 hours a week or 8 hours a day.

3. Intervals for Rest & Meal

In terms of rest and meal intervals, the Act provides for a fixed number of hours in which no work can be carried out.

This is to ensure that employees have time to rest and recover from their physical exertion.

Rest interval: After every 5 hours of work, an employee must be allowed a rest period of 30 minutes during which he/she cannot be required or permitted to do any kind of work.

Meal interval: After every 5 continuous hours of work (or six continuous hours in cases where working days overlap), the employee shall be entitled to one uninterrupted period not exceeding one hour for his / her meals and toilet breaks.

The employer may provide such facilities within the premises or may allow him/her to go outside on payment if transportation charges are paid by the employer directly or indirectly through a reimbursement scheme as prescribed by the Ministry Of Labour & Employment after consultation with the Ministry Of Food Processing Industries based on norms set by International Labor Organization (ILO)

4. Weekly off & Paydays

The employee shall be entitled to one week off a week, which may include a day of rest, Sunday and public holidays.

The employer may grant leave in excess of one day per week but such excess shall not be treated as an additional benefit to the employee.

The employer may require the employee to work on a Sunday or public holidays, provided that he pays him an allowance of 50% of his basic pay.

The employer may also require the employee to work on any other day in lieu of Sunday or public holiday if such substitution is mutually agreed upon by both parties.

5. Holidays

The Shops & Establishment Act, of 1963 covers all holidays other than those mentioned in Section 23 of the Payment of Wages Act, of 1936.

Holidays are defined as a day on which work cannot be carried out by the employee because it is a holiday under any law, custom or practice applicable to him.

  • Public Holidays: These include Diwali, Eid-ul-Fitr and Eid-ul-Adha (Bakri Eid), Independence Day and Republic Day etc.
  • Religious Holidays (including Community Festivals): These include Id-ul-Zuha or Bakri Idu’l Azha, Christmas Day for Christians, Mahavir Jayanti for Jains, etc.

If an employee is required to work on a holiday, he should be paid at least 150% of his basic pay in addition to wages for normal working hours.

In case an employee is required to work on a public holiday, he should be paid at least 200% of his basic pay in addition to wages for normal working hours.

If an employee is given leave on a public holiday, he should be paid at least 200% of his basic pay.

6. Leave Benefits

Employees are entitled to certain types of leave. Generally, there are three types of leave: privilege leave, sick leave and casual leave.

The number of days an employee is entitled to these leaves depends on the state in which the establishment is located.

If an establishment has a policy that is less beneficial than the state’s Shops and Establishments Act, it will not be compliant with the law.

The framework of the Shops and Establishments Acts is similar throughout India, but there are some variations in the leave provision under each act.

Earned leave / Privilege leave

If you’re an employee, you may be eligible for Earned or Privilege leave. This is additional time off from work that you can take with pay.

The conditions for earning these kinds of leaves and the number of days that can be carried over from one year to another vary by state.

Earned leave is also called “privilege” leave because it’s not a right; it’s a privilege given to employees as an incentive for good performance.

For example, if your company has a policy that allows employees to earn three days’ worth of vacation time each year, that means they get those three days off with pay after working the required number of hours.

They don’t automatically get the time off—they have to earn it by demonstrating good performance over time.

Casual Leave

Casual Leave is a kind of leave which is granted at the discretion of the employer.

It can be availed by an employee for an unanticipated event or when the employee is unable to attend the office for a day or two due to personal exigency.

The quantum varies from state to state, per the Shops and Establishments Act. Normally companies restrict Casual leave to a short duration.

However, if an employee wishes to avail of Casual Leave for a longer period then prior permission is required or a plausible reason needs to be provided for re-joining.

Casual leave is normally not clubbed with other leave but can be availed along with other leave in case of insufficient leave balance.

Generally, Casual leave is not cashable nor it can be carried forward.

Sick Leave

In general, an employee is eligible for sick leave in accordance with the provisions of the respective state’s Shops and Establishments Act.

The number of days of sick leave is fixed by the establishment in accordance with the provisions of the respective state’s Shops and Establishments Act.

In certain states, accumulated sick leave may be carried forward and availed in the next year.

7. Retirement Age

You are required to retire at the age of 60 years. The retirement age may be reduced to 58 years in case of any employee due to his/her physical or mental incapacity or any other exceptional operational requirement.

The retirement age may be extended to 65 years for employees who have rendered continuous service for at least 10 years.

8. Notice of Termination.

The notice period depends on the employee’s length of service and whether the employer has a valid reason to terminate the employment.

The minimum statutory notice period is one week for every year of continuous service subject to a maximum of two months’ notice.

If an employee is terminated, he/she can accept or reject the notice period given by his/her employer before accepting it, if rejected then the employer may terminate his/her employment without giving any notice.

9. Posh Act

A law that is applicable to all establishments employing 10 or more employees and to all establishments in the services sector, the POSH Act requires such establishments to appoint an Internal Complaints Committee within a period of 7 days of receipt of the complaint.

Ensure you pay correct overtime wages as per the act and rules to avoid penalties and save on interest!

For the employees in the services sector, there are a few general conditions of employment covered under the Shops and Establishment Act that one must be aware of so as to ensure that they have their payroll and salary management in order.

  • Overtime wages: The overtime wages should be paid as per the act and rules to avoid penalties and save on interest!
  • Salary credits: The salary credits should be made to the bank account of the employee, who has been given an option by an employer for receiving salary either by cash or cheque/NEFT transfer through a bank account on regular basis (i.e., every month). However, if an employee wants to receive his/her salary in cash then it is mandatory for him/her not only because it’s more convenient but also because this ensures transparency which helps in avoiding any kind of corruption or malpractice-related issues happening between both parties involved while making payments via cash mode instead of electronic modes like NEFT transfers etcetera.”

Conclusion

It is important to ensure that you pay the correct wages to your employees and follow the provisions under the Shops and Establishment Act.

The act covers all workers in the services sector, who are required to work more than 8 hours a day or 40 hours a week.

Ensure that your employees are given their weekly offs as per the rules of the act so that they can enjoy the benefits of this legislation.

If you need any help in forming HR policy and Best HR practices for your organization, set up a free consultation call with our team of HR experts today.

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