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Sep 08, 2021
4 min read

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Today, bricks and mortar businesses compete with digital commerce companies, in a 24x7, globally connected economy. Additionally, the services sector, which is about 57% of the GDP works round the clock. It’s high time we started recognising these trends and addressing the demands created by them.

Since Independence, the Indian workplace has undergone a dramatic transformation. The work day has transitioned from the traditional 9 to 5 office hours to flexitime, work-from-home models, from factory shifts to US shifts. Yet, labour laws in India are adapting now, to align with the new workplace. Take the Shops and Establishments Act, 1948, for example, a legislation enacted by State governments. In 2016, the Union cabinet approved the Model Shops and Establishment (Regulation of Employment and Conditions of Service) Bill, 2016 that provided uniform guidelines for the regulation of establishments throughout India. Maharashtra took the lead among all states and drew upon the provisions of the model bill to update its existing legislation. The Maharashtra Shops and Establishments (Regulation of Employment and Conditions of Service) Act, 2017 and the Maharashtra Shops and Establishments (Regulation of Employment and Conditions of Service) Rules, 2018 replaced the earlier Act of 1948 and Rules of 1961 respectively.

What has changed?

1. Micro and small enterprises excluded

In contrast to the earlier Act, establishments with less than 10 workers are now outside the purview of the Act and do not require a registration certificate. Small firms and startups would enjoy greater operational freedom at a time when it is most needed: at inception.

2. Enhanced digitization

Establishments can now use the online process for registration and renewal. The Act also provides for electronic record keeping with an increased retention period from 2 years to 3 years. This means that organizations can do away with physical registers and simply use their existing digital mechanisms. The new Act requires an annual return (Form ‘R’) to be uploaded to the website, where changes can be declared.

3. Compliance enforcement

The new Act introduces Facilitators who are empowered to inspect as well as advise, guide, and assist organizations to comply. The cost of poor compliance has shot up with fines increasing to Rs 5 lacs, up from Rs 15,000 previously. The Act also stipulates additional per day and per worker fines for repeated non-compliance, as well as up to 6 months imprisonment for specific cases.

4. Adapting to business realities

The Act allows businesses to keep flexible hours and stay open for all days of the week.

5. Better inclusion and diversity

In a bid to improve workforce inclusion by increasing the participation of women in the workforce, the Act has introduced several new provisions. Women workers can now work beyond 9.30 P.M. with their consent. Additionally, the Act provides for crèches in firms with 50 workers or more, improving the options for women in the workforce.

6. More overtime, leaves and holidays

The new Act increases the overtime limit to 125 hours per 3 months, almost 400% of the earlier limit of 36 hours per 3 months. It also introduces eight casual leaves a year, and increases earned leave from 42 to 45 days. Additionally, it specifies 12 festival holidays.

The Act has dramatically improved regulation in Maharashtra by including basic digitization, online registration and record keeping, flexible working hours, better inclusion, diversity, and worker welfare, making for a progressive step ahead. However there is still much left for action in terms of straight- through filing and the centralization of the law to bring about uniformity for companies which have pan- India presence.

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