Cabinet approves Model Shops and Establishment Act

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The central Government introduced 'The Model Shops and Establishment (Regulation of Employment and Condition of Services) Act 2015' which has been cleared by the cabinet today.

The Model Act seeks to allow shops, malls and other retail establishments to operate throughout the year with flexibility to open and close at their convenience. In addition, the Model Act provides for women to be employed in night shifts with adequate security. The Model Act calls for better working conditions for workers which include facilities such as drinking water, canteen, first aid, lavatory and creche.

The objective of the Act is to bring uniformity in the legislative provisions related to shops and establishments across the country. It seeks to ensure uniform working conditions across the country. States may consider enforcing the Act either by adopting the central law or making necessary modification in the existing state laws.

RAI welcomes the initiative taken by the Central Government and is committed to working with the state governments to ensure hassle-free adoption.

“The move is likely to prove highly beneficial for restaurants, retailers,malls, movie theatres and other entertainment entities will also help bring incremental tax income into the government’s kitty and generate employment. It’s a win-win situation for all the parties involved - companies, employees, government and consumers," said RAI CEO Kumar Rajagopalan. The Model Act also allows women to work late hours, leading to increase in employment of women in retail in the country. IT sector in India has benefitted, thanks to women being able to work in the industry without gender based discrimination.

While he lauded the government for the initiative, he felt that this is merely one of the steps for facilitating ease of doing business as Shops and Establishments Act covers only certain aspects of retail. The need is to look at retail as a driver for the nation’s economy and address all aspects through a comprehensive national retail trade policy. “Three states in the country have already done quite a bit on this front — Karnataka, Maharashtra and Andhra Pradesh have announced retail policies for their respective states that address aspects over and above labour laws such as skill development and development of retail and entertainment zones. However, the move from the central government is a great step towards getting the state governments to start thinking retail, start thinking employment and start thinking customer efficiencies,” he concluded.

A copy of the Model Act can be downloaded here

Labour, being a concurrent subject, the State Government are required to adapt the model Act or required to carry out the changes in the existing Shops Acts.

The following are the major differences from the earlier Acts.

1. The definition of shop is elaborated. As per new definition, "warehouse or work house or work place for distribution of or packaging or repackaging or finished goods is carried on"

This will helps retailers who are using distribution centers (DC). Currently, in some places, retailers are compelled to take factory license as the activity of cold storage and repacking comes under
the definition of Factories Act.

2. Earlier, the maximum allowed overtime allowed was 120 hours per year. It is now proposed to increase it to 120 hours per quarter (3 months) with increase in wages too.

3. Establishments that employ 30 or more women, have to provide a crèche. Group companies can together put a common crèche. This is borrowed from Factories Act.

4. Records can now be maintained in electronic form.

5.  Web-based inspection is now allowed. AP and Telangana have already implemented this.

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