The Central Government introduced 'The Model Shops and Establishment (Regulation of Employment and Condition of Services) Act 2016 (hereinafter referred as The Model Bill) on 29th June 2016 which has been one of the key asks of the Retailers Association of India for the overall benefit and growth of the Indian retail sector. The Model Bill is a progressive move by Shri Narendra Modi Government, since it enables states to choose to keep shops and other such establishments open 24×7 all through the year. This would give a substantial boost to employment generation and will also benefit the consumers in terms of more convenience and accessibility.

Subsequently, RAI started actively engaging and working closely with various State Governments for the adoption of the Model Bill.

The Government of Maharashtra has recently amended the Maharashtra Shops & Establishments Act 1948 in line with the Model Bill. The new bill - Maharashtra Shops and Establishments Act (Regulation of Employment and Conditions of Service) 2017 was published in the Maharashtra Government Gazette on 7th September 2017 after receiving the assent of the Governor of Maharashtra this year and the notifications were issued on 19th December 2017. Click here to download the Maharashtra S&E Act 2017

SALIENT FEATURES of the new Act:

1. Applicability: The New Act is applicable to establishments employing 10 or more persons. The provisions of the Existing Act are applicable to all establishments irrespective of the number of employees.
2. Facilitator: The New Act provides for the appointment of a "Chief Facilitator" and a "Facilitator" instead of an inspector as under the Existing Act. The facilitators shall advise the employer to comply with the Act of 2017, in addition to performing the duties of the inspector.
3. Exemptions: Section 3 of the New Act lists specifically 13 categories of establishments and workers who are exempted from its provisions. There is no provision for any other establishment to apply for exemptions.
4. The wider meaning given to the term Employer: The term "employer" under the Existing Act means a person owning or having ultimate control over the affairs of an establishment. The term "employer" has been given a wider meaning under the New Act and includes in the case of a company, a Director of the company.
5. Establishment: The New Act does away with the term "commercial establishment" and instead only provides for one head i.e. "establishment" which covers (among other things) any business, trade, manufacture, establishment of any medical practitioner, architect, engineer, accountant, tax consultant or any other technical or professional consultant, a society registered under the Societies Registration Act, 1860, a charitable or other trust, shop, residential hotel, restaurant, eating house, theatre or other place of public amusement or entertainment; to whom the provisions of the Factories Act, 1948 does not apply, etc.
6. Registration for establishments employing 10 or more workers: An employer having 10 or more workers is required to register the establishment within 60 days from the date of commencement of the New Act or from the date on which the establishment commences its business by submitting an online application to the Facilitator of the local area concerned. As per Existing Act, it was within 30 days of commencement of establishment.
7. Intimation by establishments employing less than 10 workers: Establishments employing less than 10 workers are required to merely give an intimation of having commenced its business to the Facilitator by submitting the online application in the prescribed form. However, if at any point the number of workers in the establishment become 10 or more, then the employer of such establishment is required to obtain the registration certificate.
8. Labour Identification Number: On receipt of the online application the Facilitator will issue a registration certificate online along with the Labour Identification Number (LIN).
9. The validity of the registration certificate: The registration certificate will be valid for such period as may be requested by the applicant subject to a maximum period of 10 years as against 36 months under the Existing Act.
10. Opening & closing hours: The State Government has issued a separate notification to fix the opening and closing hours for different class of shops & establishments. Click here to download the notification. Subject to the said notification, other shops and establishments can remain open 24X7. A Shop or an establishment can be kept open for business on all days in a week provided every worker shall be allowed a weekly holiday of at least 24 consecutive hours of rest.
11. Prohibition of discrimination against women: The New Act prohibits discrimination against women in the matter of recruitment, training, transfers, promotion or wages. A woman can work only between 7:00 a.m. and 9:30 p.m. However, the woman employee with her consent will be allowed to work during 9:30 p.m. and 7:00 a.m. subject to adequate protection of their dignity, honour, and safety, protection from sexual harassment and transportation is provided to the doorstep by the employer as per the Act.
12. Interval of rest: Interval of rest has been reduced to 0.5 hours from the existing 1 hour after 5 hours of work under the New Act.
13. Spread-over: The spread-over of a worker in the establishment has been reduced to 10.5 hours in any day, as against 11 hours under the Existing Act.
14. Overtime: Overtime cannot exceed 125 hours in a period of 3 months as against 6 hours in a week under the Existing Act.
15. Identity card: The employer is required to furnish to every worker an identity card with details like date of joining, Aadhar Card No. etc.
16. Leave: A new provision has been introduced, which entitles every worker to 8 days of casual leave in a year, which will lapse if it is not availed at the end of the year. Every worker who has worked for a period of 240 days or more will be allowed leave with wages at the rate of 1 day for every 20 days of work performed during the previous year. Under the Existing Act every employee who worked for not less than 240 days during a year, irrespective of the date of commencement of his service, is allowed leave for a period of not less than 21 days.
17. Accumulation of leave: A worker can accumulate earned leave up to a maximum of 45 days as against 42 days under the Existing Act. Furthermore, the worker is allowed to encash leave in excess of 45 days, if the employer refuses to sanction the leave.
18. Festival holidays: The workers are now entitled to 8 festival holidays in a calendar year namely 26 January, 1 May, 15 August, 2 October and four such other festival holidays as may be agreed between the employer and the workers.
19. Welfare measures: Welfare measures such as first aid, canteen, drinking water, latrines and urinals, crèche facility have been introduced. Establishments employing 100 or more workers are required to provide and maintain a canteen for the use of its workers. Every establishment employing 50 or more workers shall provide and maintain a crèche within a radius of 1 kilometer. The state will issue appropriate guidelines in this regard.
20. Electronic records and registers: Employers can maintain registers and records electronically. Existing Act did not have the facility of maintaining record Electronically but on the visit of Facilitator hard copies to be provided for verification.
21. Penalty: The penalty for contravention of the New Act and the rules have been enhanced to INR 100,000 and in case of continuing contravention an additional fine which may extend to INR 2000 for every day during which the contravention continues. Further, for repeat offenders, the fine may extend to INR 2,00,000. The Existing Act provides for a minimum fine of INR 1,000 and a maximum fine of INR 5,000.

RAI welcomes the initiative taken by the Maharashtra Government and is committed to working with other state governments to ensure hassle-free adoption and believes that the new act will provide a big boost to ease of doing business in the state and assist the retail industry in Maharashtra to achieve new heights.

This is to invite RAI members comments / suggestions on the following matters -

1. We have been requested to provide suggestions in regard to the Legal Metrology (Packaged Commodities) Rules, 2011. Please click here to view the draft amendments to the LM Rules. We believe that the proposals in the draft are industry friendly. We can provide our suggestions on or before 17th January 2017.
2. Department of Industrial Promotion & Policy, Ministry of Commerce & Industries has proposed that boilers should be installed in a separate building and these should not be allowed to be installed in buildings where large number of persons are present like residential buildings, hotels, restaurants, hospitals, malls etc. This is for the safety of life & property from the danger of explosion of boilers. This is proposed to be made applicable to existing boiler installations also for which owners may be given two years' time for relocation of boilers. RAI has been requested to give its comments/suggestion on the subject within a period of two month form the date of issue of the letter. Please click here to view the letter.
3. Members are requested to submit the comments / suggestions on akshay@rai.net.in

The Department of Legal Metrology, Ministry of Consumer Affairs has issued an advisory relaxing packaged commodities regulations for Garments, Hosiery products.

1. The department of Legal Metrology has issued an advisory dated 16th December 2016 to Legal Metrology controllers of all the states and union territories for enforcement of Legal Metrology (Packaged commodities) Rules 2011 for Garments, Hosiery products.

2. As per the advisory, the mandatory labelling requirement under the Legal Metrology (Packaged Commodities) Rules, 2011 are applicable only for pre – packaged commodities, defined under Section 2 (I) of Legal Metrology Act, 2009.

3. The mandatory labelling requirements for pre - packaged commodities are therefor not applicable for garments sold in loose form.

4. With effect from 1st July 2017, the labelling requirements for garments sold in loose form in retail stores may include only four declarations e.g. 1. Name/Description of the product, 2. Size: Internationally recognizable size indicators – S, M, L, XL etc. along with details in metric notion in terms or cm or m as case may be, 3. MRP, 4. Name, Full address & Customer Care No. of the manufacture.

5. In the case of readymade garments sold to consumer in Pre-packaged form, declarations required under the Rules may be made. Further, the size of the garments needs to be mentioned in metres or centimetres, as the case may be, and any detail such as S, M, L, XL, XXL etc. may be treated as additional declaration. Click here to download the notification

The Legal Metrology department, Ministry of Consumer Affairs has issued the following notifications in regard to Packaged Commodities and disposing of old inventory -

1. Selling of prepackaged commodities in loose form after tearing the package is not allowed. Click here to download the notification.
2. LM department had issued a notification GSR 385 (E) dated 14th May 2015. Click here to download the notification. As per the notification, among other things, is about declaration of "Registered Office" i.e. office address of manufacturer instead of factory address. Govt had earlier deferred implementation of the said notification till 31st October 2016. The timeline is further extended till 31st March 2017 with a view to allow industries to dispose old inventory. Click here to download the notification

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

Addendum
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 creche. Group companies can together put a common creche. 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.

Retailers Association of India (RAI) has been working with Government of Karnataka (GoK) to create a retail policy for the state. RAI is pleased to inform you that the GoK announced the Karnataka Retail Trade Policy on 13 June 2016.

This is the first time that the state of Karnataka has announced a policy facilitating retail trade in the state.

The policy allows relaxation of rules under the Shops and Establishments Act with respect to working hours, work shifts and employment of part-time workers. The policy also allows the retail sector to operate 365 days a year with extended working hours from 5 am to 11 pm. Furthermore, the policy also relaxes working hours for women and permits maintenance of various records in an electronic format.

The policy will be valid for five years from the date of notification and aims to enhance ease of doing business in the state.
RAI believes that the announcement of the policy will take retail trade in the state of Karnataka to a new high.

A copy of the policy can be downloaded here.

Retailers Association of India is pleased to inform you that the Government of Telangana has renewed the notification exempting retail establishments in the state from weekly closure as mandated by the Shops and Establishments Act provided they comply with the statutory requirements laid down by the government in the notification.

The renewed notification is valid for a further period of three years starting from 16.06.2016.

Please click here to view the notification.

RAI had earlier represented the issue to the State Government. Acting on the representation, the Government issued a notification to that effect for a period of one year, which expired on 15.06.16. RAI then requested the State Government to renew the same.

RAI, on behalf of the entire retail fraternity, thanks the progressive State Government of Telangana for considering its submission.

Retailers Association of India is pleased to inform that the Government of Andhra Pradesh has issued a notification exempting retail establishments in the state from weekly closure as mandated by the Shops and Establishments Act. Please click here to view the notification.

This means that brick-and-mortar retail establishments in the state can now keep their stores open 365 days a year, provided they comply with the statutory requirements laid down by the government in the notification.
The notification also includes -

1. Extended working hours for Store from 06:00 AM to 11:00 PM
2. Employment of Part time workers
3. Permission to employ women in all shifts
4. Maintenance of employee related records in electronic format

The Ministry of Agriculture and Farmers Welfare issued the latest amendments in the in the Insecticide rules 1971. As per the latest amendment, issued by the Department of Agriculture and Co-operation, ‘A person who applies for grant for license to sell, stock, or exhibit for sale or distribute insecticides shall possess or shall employ a person possessing a graduate degree in Agriculture Sciences, or Biochemistry, or biotechnology or Life science or in science with Chemistry or Botany or Zoology as a minimum qualification.’

Subsequently RAI submitted a representation to Hon’ble Joint Secretary, Ministry of Agriculture and Farmer Welfare to exempt retailers from this mandatory requirement. The new amendment poses certain impediments to the retail industry which can be addressed without increasing the risk exposure. Most retail outlets are engaged in the sale of “household insecticides” which pose considerably less risk to life as compared to other industrial or commercial insecticides which indeed need to be regulated more strictly.

Please find the representation here.

Retailers Association of India (RAI) brought together retailers from across the country on a common platform to welcome the new guidelines stated in the DIPP Press Note 3 issued on March 29 which define the emerging new channels. “The note is testimony to the fact that the government wants to ensure a level playing field for all channels.

Retailers Association of India (RAI) brought together retailers from across the country on a common platform to welcome the new guidelines stated in the DIPP Press Note 3 issued on March 29 which define the emerging new channels. “The note is testimony to the fact that the government wants to ensure a level playing field for all channels. RAI would like to applaud the government for taking a stand on the same. The move received much appreciation from all members of RAI,” said Kumar Rajagopalan, CEO, RAI.

Retailers appreciated the clarification on several important aspects of FDI in e-commerce considering that many e-commerce players in the country have been accessing FDI funds while behaving like quasi retailers. The new guidelines seek to set this right this by clearly defining what construes an e-commerce entity following a marketplace-based model and what it can and cannot do if it seeks FDI through the automatic route.

Retailers were unanimous in their belief that this clarification can create a level playing field only if the government puts its enforcement machinery into action. They believe that it’s high time the e-commerce entities securing international funds and international e-commerce retailers adhered to the laws of the land.

Retailers were positive that, if enforced, the policy will in fact foster a new environment of collaboration between retailers and marketplaces that would ensure customer convenience and delight.

“The clarification has ensured that marketplaces, if run in the right spirit, could complement retailers by acting like malls online. Retailers would be happy to collaborate with them in the same way as they have collaborated with malls so far,” said Rajagopalan.

Enforcement will also encourage a good startup ecosystem in technology as well as retail brand spaces in line with ‘Startup India’ programme of the Honourable Prime Minister of India.

To ensure enforcement of the new DIPP guidelines on FDI in e-commerce, retailers have also submitted a collective note to DIPP. In their submission, retailers have suggested further clarifications to the clauses in the policy that will help prevent its contravention.

Note: A copy of the RAI submission to DIPP is enclosed.

Click here to Download Photos. Download Press Release, click here.