The Government of Maharashtra, vide notification dated 7 September 2017 had notified the Maharashtra Shops and Establishments (Regulation of Employment and Conditions of Service) Act, 2017 (2017 Act). It shall come into force on a date to be specified by the State of Maharashtra in the Official Gazette (Effective Date) and from the Effective Date, the 2017 Act will repeal the Maharashtra Shops & Establishments Act 1948 (1948 Act).
The key highlights of the 2017 Act are:
- Applicability: The 2017 Act applies to and regulates the establishments employing ten or more workers. Therefore, the requirements under the 2017 Act will not apply to establishments employing less than ten workers. The only requirement for establishments with less than ten workers is intimation of commencement of business to the ‘facilitator’ appointed under the 2017 Act (Facilitator).
This is in contrast with the 1948 Act which applies to all establishments irrespective of the number of workers employed.
- Employer: The definition of employer has been expanded under the 2017 Act to specifically include (i) a partner, in case of a firm or members in case of an association, (ii) director in case of a company, and (iii) designated persons in case of Government owned or controlled entities.
- Registration & Labour Identification Number: To register an establishment, the employer shall now submit an online application within sixty days from commencement of the 2017 Act or commencement of business. Upon acceptance of the application and verification, a Labour Identification Number (LIN) will be issued by the Facilitator.
The 1948 Act does not provide for an online system of registration. Also, 1948 Act mandates registration within thirty days from commencement of business.
- Registration Certificate: The validity of registration certificate granted by the Facilitator under 2017 Act shall be for a period requested by the applicant, for a maximum of ten years. Further, the time period for submitting an online application for renewal of the certificate is not less than thirty days.
Validity period of the certificate under the 1948 Act is between one to three years, with a prescribed period of fifteen days for making an application for renewal.
- Cancellation of registration: A new provision providing for cancellation of registration has been introduced. Registration obtained through misrepresentation or suppression of material facts or by submitting false or forged documents or false declaration or by fraud, gives ground to the Facilitator to cancel registration of the establishment.
- Notifying closure of establishment: The employer shall notify the Facilitator within thirty days of closure of business, as opposed to ten days prescribed under 1948 Act.
- Opening/closing hours: The 2017 Act provides that opening and closing hours of different classes of establishments, different premises, shopping complex or malls, will be prescribed by the State Government by notifying separate rules.
This is opposed to the 1948 Act, which provides a uniform opening time, unless prescribed otherwise, for all establishments.
- Prohibition of discrimination against women: A new provision prohibiting discrimination against women workers, and separately regulating their conditions of work has been introduced. The provision prohibits discrimination of women in matters of recruitment, training, transfers or promotion or wages. Further, it provides that woman workers shall not be allowed to work except between 7:00 am and 9:30 pm. However, women workers may be allowed to work beyond these hours, if they consent and the employer ensures adequate facilities to provide them with adequate security.
The 1948 Act only provides that women shall not be allowed to work beyond 9:30 pm, though certain industry exceptions were made by the Government in the Schedule to the 1948 Act.
- Leave: A new provision has been introduced, which entitles every worker to eight days of casual leave in a year. The workers can accumulate earned leave up to a maximum of forty five days. Further, every worker who has worked for a period of two hundred and forty days or more shall be allowed paid leave for a number of days calculated at the rate of one day for every twenty days of work performed during the previous year.
- Registers: Registers can now be maintained electronically as well, by the employers.
- Welfare measures: The 2017 Act creates a specific obligation on every employer to take measures relating to the health and safety of the workers, including prevention of accidents. As opposed to the 1948 Act, these measures have been broadened further, and include cleanliness, lighting, ventilation and prevention of fire, first aid, canteen, crèche facilities, etc.
- Facilitators: The 2017 Act provides for appointment of ‘Facilitators’, instead of ‘Inspectors’ to enforce the provisions of the 2017 Act. In addition to the duties of the Inspectors, the Facilitators shall also advice the employers and workers for complying with the provisions of the 2017 Act.
- Penalties: The 2017 Act provides for enhanced penalties for violation to a maximum fine of INR 100,000 and in the case of a continuing contravention, with an additional fine which may extend to INR 2,000 every day.
This is in stark contrast to the 1948 Act, which provides for a minimum fine of INR 1,000 and a maximum fine of INR 5,000 for violations.
The 2017 Act has been introduced as one of the major labour law reforms in the State of Maharashtra, a state with a significant concentration of service industry with an objective to provide an industry friendly approach and to bring ease in compliance regarding labour and employment laws in the state.
As a welcome change, the regulation of conditions of service and employment under the 2017 Act does not apply to establishments employing less than ten workers. This comes as a significant compliance relief to smaller entities and multi-nationals who intend to or have just set up its presence in India. Another significant amendment is that for establishments with more than ten workers, the registration can now be obtained for ten years at a stretch. As a practice of good governance, the process of registration and maintenance of registers has been made electronic, and LIN has been introduced. Penalties for violation of the 2017 Act have also been made stringent.
Taking cue from market demand, the Government is expected to come up with separate opening and closing hours for different classes of establishments such as malls and shopping complexes. Though a specific prohibition on discrimination with women workers has been introduced, an option has been provided to extend their working hours with their consent. This reflects a great degree of flexibility being introduced in the functioning of shops and establishments in the State of Maharashtra.
The provisions on leave have been streamlined by providing casual leaves and earned leaves to workers. Further, the welfare provisions have also been widened, with a specific duty created on the employer to provide adequate health and safety measures. The 2017 Act has thus incorporated provisions to improve the conditions of service for the workers.
Lastly, taking cue from the concept of facilitators introduced under the Labour Code on Wages Bill 2017, the 2017 Act has attempted to achieve better implementation of the provisions of the statute by introducing Facilitators, who, in addition to powers of search and seizure, will also be responsible to advise workers and employers for better compliance.