Background
The Karnataka Shops and Commercial Establishments Act, 1961 was enacted to regulate the conditions of work and employment in shops and commercial establishments across the state. Before its introduction, there was no uniform legal framework to ensure employee welfare, working hours, weekly holidays, or leave entitlements in non-factory establishments. The Act was designed to bring consistency, safeguard employee rights, and ensure basic welfare measures such as regulated working hours, overtime pay, rest intervals, and leave with wages, thereby creating a balance between employer interests and employee welfare.
Applicability
The Act applies to all shops and commercial establishments operating within Karnataka, irrespective of whether they are registered under other laws.
Compliance requirements under the Act in accordance with the Karnataka Shops and Commercial Establishments Rules, 1963
Shops and Establishment Registration Certificate (Rule 3, Section 4)
The employer of the establishment is required to register under Shops & Establishment Act of respective state within prescribed time from the date of commencement of work in the said establishment.
Within 30 days of commencement of work, every employer must send Form “A” with the required fees to the area Inspector. Factories or establishments may use the combined form under the Karnataka Factories Rules, 1969 instead. Registration Certificate to be issued in Form C.
Registration shall be valid for 5 years
Renewal appl to be made before 90 days from the date of expiry of Reg Certificate (Rule 3A)
Form A: Notification of Changes (Rule 5, Section 5)
The employer shall notify to the Inspector concerned any change in respect of any information contained in his statement made in Form A within 15 days after the change has taken place.
Intimation of Closure of Establishment (Section 6)
The employer shall, within fifteen days of his closing the establishment, notify to the Inspector in writing the date of such closure and return the registration certificate.
Form F: Leave with Wage Register (Rule 8)
The employer shall maintain a leave with Wages Register in Form “F”. The register shall be preserved for a period of three years after the last entry in it and shall be produced before the Inspector on demand.
If the Inspector believes that any muster-roll, register, or return kept by the employer contains the necessary details for enforcing Chapter IV of the Act, he may order in writing that it be used in place of the register or return required by this rule.
The register shall be preserved for a period of three years after the last entry in it and shall be produced before the Inspector on demand.
Form H: Leave with Wages Book (Rule 9(1))
Each employee must be given a “Leave with Wages Book” in Form “H”, which remains their property. The employer must record holidays or service interruptions in it and cannot keep it for more than 10 days at a time to make entries.
The employer shall on being satisfied that the employee has lost his leave with wages book provide him with a duplicate thereof on payment of 25 paisa.
Building of More Than One Storey to be Provided with Two Stairs (Rule 18, 19)
Every building of more than one storey shall be provided with at least two sets of stairs or steps permanently fixed either inside or outside building, so as to afford direct and unimpeded access from every part of establishment to the ground level. Such stairs shall be provided with a suitable and sufficient handrail or other convenient support. In establishments employing less than 40 persons, the Inspector may accept in lieu of a second set of stairs or steps such other means of escape in case of fire as can reasonably be required in the circumstances of each case.
Every window or door giving access to an external staircase shall be so arranged as to open immediately from inside.
Precaution Against Fire (Rule 20)
No person shall smoke or use a naked light or cause or permit any such light to be used, in the immediate vicinity of any inflammable material in any establishment.
Display of Abstract of Act/Rules (Rule 24(5), (6), (10), Section 34)
Every employer must display a notice in Kannada and the language of the majority, showing extracts of the Act and rules. It must be clearly visible, readable, and replaced if unclear. All records, registers, and notices must be in English or Kannada.
Entry in Registers and Records (Rule 24(7), Section 34)
In any register or record which an employer is required to maintain under these rules the entries relating to any day shall be made on such day.
Preservation of Registers, Records and Notices (Rule 24(8), Section 34)
Save as otherwise provided in these Rules, the registers, records and notices relating to any calendar year shall be preserved till the end of the next calendar year.
Form Q: Appointment Order to Employees (Section 6-A, Rule 24(9A))
Every employer, employing any person in his establishment shall issue an appointment order in Form Q in writing indicating name, designation, wage scale of such person and terms and conditions of his employment and serve the same on such person within 30 days of appointment in his establishment.
Form T: Muster Roll (Rule 24 (9B), Section 34)
Every employer must maintain a combined Muster Roll-cum-Register of Wages in Form ‘T’ for all employees. If Form ‘T’ is maintained, there’s no need to keep separate records with the same information.
Form U: Annual Return (Rule 24(9-C), Section 34)
Every employer shall send a combined Annual Return in Form ‘U’ to the concerned Inspector on or before 31st January of every year. Provided that where an employer furnishes annual returns in Form ‘U’, he need not furnish any other annual return containing the same information.
Combined Annual return under Rule 27(9-C) of Karnataka Shops and Commercial Establishment Rules, 1963 is in lieu of :
Language in Which Registers, Records etc. to be Kept (Rule 24(10), Section 34)
All registers, records, muster-rolls and notices required to be maintained, exhibited or given under these Rules shall be either in English or in Kannada.
Maintenance of Visit Book (Rule 24 (11), Section 34)
Every employer must maintain a Visit Book for Inspectors to record any observed defects during inspections and present it when asked.
Exhibition of Name Board (Rule 24-A)
The name Board of every establishment shall be in Kannada and wherever other languages are also used, the versions in such other languages shall be below the Kannada version. The Kannada version shall be written more predominantly by providing more space than for other languages. Where an office, storeroom, godown, warehouse or work place used in connection with the trade and business of an establishment is situated at premises other than the premises of the establishment, all registers, records, muster-rolls, visit book and notices required to be maintained, exhibited or given under the Act, and these rules shall be separately so maintained, exhibited, or given in respect of and at such office, storeroom, godown, warehouse or work place.
Form R: Application for Exemption from Section 25 (Rule 24B, Section 25)
Employers (IT/ITES) seeking exemption under Section 25 to engage women in night shifts must apply in Form R to the Commissioner or Deputy Labour Commissioner, as authorized by the State Government. The application must include a list of women employees willing to work at night, and each night shift must have at least five women employees.
Display of Shops and Establishment Certificate (Section 4(2))
Registration Certificate shall be prominently displayed at the establishment at all times.
Daily and Weekly Hours of Work (Section 7)
No employee in any establishment shall be required or allowed to work for more than nine hours in a day and forty-eight hours in a week. The total number of hours of work including overtime shall not exceed 10 hours in any day except on days of stock taking and preparation of accounts. The total number of overtime hours shall not exceed 50 in a period of three continuous months.
No young person shall be allowed to work in any establishment for more than five hours in a day
Extra Wages for Overtime Work (Section 8)
Where an employee works in any establishment for more than nine hours in any day or for more than forty-eight hours in any week he shall in respect of such overtime work be entitled to wages at twice the rate of normal wages.
Interval for Rest (Section 9)
The periods of work of an employee in an establishment each day shall be so fixed that no period shall exceed five hours and that no such person shall work for more than five hours before he has had an interval of rest of at least one hour.
Spread-over (Section 10)
The periods of work of an employee in an establishment shall be so fixed that, inclusive of his interval for rest, they shall not spread over more than twelve hours in any day.
Opening and Closing Hours (Section 11)
No establishment shall on any day, be opened earlier than and closed later than such hours as may be fixed by a notification issued by the State Government.
Compliance with Weekly Holidays (Section 12, Rule 24(4))
Every establishment shall remain closed for one day in a week. The employer shall fix such day at the beginning of the year and notify it to the Inspector and specify it in a notice in Form P prominently displayed in a conspicuous place in the establishment. The employer shall not alter such day more often than once in three months.
Selling Outside Establishments Prohibited After Closing Hours (Section 13)
Unless permitted by another law, no one may sell goods on or near a street or public place after the closing hour fixed under Section 11 for shops selling similar goods in that area. However, this does not apply to newspapers or other items exempted by State Government notification.
Annual Leave with Wages (Section 15(1)-(8))
Employees are entitled to paid leave: 1 day per 20 days worked for adults and 1 day per 15 days worked for young persons. They also get up to 12 days of paid leave for sickness, accidents, or valid reasons. Discharged employees still receive earned leave and dues, including if sick or injured.
Employee to apply in writing to the manager of the establishment at least 10 days before the date he wants to go on leave. Provided that the number of times in which leave may be taken during any year shall not exceed 3 or such number as mutually agreed.
If a scheme formulated for leave with wages, it shall be posted in convenient places in the establishment and shall be in force for a period of 12 months & may thereafter be renewed with or without modification, for a further period of 12 months at a time by employer in agreement with employees representatives.
If the services of an employee is terminated before he has taken the entire leave to which he is entitled or if having applied for and having not been granted such leave, the employer shall pay him the amount payable under section 16 in respect of the leave not taken, and such payment shall be made before the expiry of the second working day after such termination.
If an employee quits service, before he has taken the leave to which he is entitled to, the employer shall pay him the amount payable under Section 16 in respect of the leave not taken on or before the next pay day.
(1) For the leave allowed to him under section 15, an employee shall be paid at the rate equal to the daily average of his total full-time earnings for the days on which he worked during the month immediately preceding his leave, exclusive of any overtime wages and bonus but inclusive of dearness allowance and the cash equivalent of the advantage accruing through the concessional sale to the employee of foodgrains and other articles. (2) The cash equivalent of the advantage accruing through the concessional sale to the employee of foodgrains and other articles shall be computed as often as may be prescribed on the basis of the maximum quantity of foodgrains and other articles admissible to a standard family.
(2) Computation of cash equivalent of certain concessions shall be as per Rule 6
An employee who has been allowed leave for not less than four days in the case of an adult, and for not less than five days in the case of a young person, shall before his leave begins, be paid the wages due for the period of leave allowed.
“(1)A woman employee who is so willing may be allowed towork in a shop or commercial establishment during night subject to the following conditions, namely:-
(a) The regulation stipulated under sections 7, 8, 9, 10 and 12 of the Act shall continue to apply to the women employee working during night shift;
(b) Willingness of women employees shall be obtained in writing;
(c) The establishment shall provide transport facilities from the residence of the woman employee to the workplace and back free of cost and with adequate security. Such transport facility shall have GPS for tracking and monitoring;
(d) Employment of women employee shall be on rotation basis;
(e) Adequate number of security guards shall be posted during night shift;
(f) Sufficient rest rooms, electricity, latrines lockers, dispensary facility and washing facilities with adequate water supply shall be provided separately for women employees so as to secure privacy;
(g) The establishment shall bear the cost of crèche obtained by the women employees from voluntary or other organisations;
(h) The establishment shall obtain Bio-data of each driver and conduct pre-employment screening of the antecedents of all drivers employed on their own. As regards the driver employed through outsourcing, the company shall ensure to its satisfaction that the collection of Bio-data and conduct pre-employment screening of the antecedents of the drivers is carried out by the service provider; (i) The Schedule of route of pick-up and drop shall be decided by the supervisory office of the company only. In case of exigencies, change of drivers/ routes/shifts shall be allowed only with the prior knowledge of supervisory officers/employees;
(j) The telephone number, particularly mobile phone numbers email ID and address of the women employees shall not be disclosed to unauthorised persons;
(k) Careful selection of routes shall be made in such a way that no women employees shall be picked up first and dropped last;
(l) The company shall provide security guards at work place and night shift vehicles when women employees are being picked up first or dropped last;
(m) The designated supervisors of the company or service provider shall randomly check the vehicles on various routes as for as possible;
(n) The establishment shall have a control room/travel desk for monitoring movement of vehicles;
(o) An App in mobile may be developed and adopted by the establishment through which the women employee can contact the concerned at the time of emergency by giving signal; and
(p) Any other condition as may be prescribed
2) Sec. 3 exempts IT/ITES estab. from Act’s provisions. Rule 24-B (inserted in 2003) requires employers seeking exemption U/s 25 to submit Form R to Labour Commissioner/Deputy Commissioner, incl list of women willing to work night shifts. A minimum of 5 women must be assigned per night shift. Exemptions are granted in Form S”
Penalty & Punishment
Under Section 25 (2):- any establishment fails to comply with the above conditions, it shall lead to cancellation of the Registration Certificate
Under Section 30: Contravention punishable with fine for first offence which may extend to Rs. 1000 and for second/subsequent offence may extend to Rs. 2000
Under Section 30(2): Fine of Rs. 250
Under Section 30(3) Whoever contravenes the provisions of 25 shall be punishable with imprisonment for a term which shall not be less than three months but which may extend to six months or with fine which shall not be less than ten thousand rupees, but which may extend to twenty thousand rupees or with both, for the first offence and for the second and subsequent offences, he shall be punishable with imprisonment of a term which shall not be less than six months but which may extend to one year
Rule 26: Penalty not less than Rs. 500 but which may extend to Rs. 1000
Conclusion
The Karnataka Shops and Commercial Establishments Act, 1961 plays a pivotal role in protecting the rights of employees in the unorganized and service sectors by mandating fair working conditions and welfare provisions. For employers, it provides a structured compliance framework that helps avoid disputes and ensures lawful operation of establishments. Overall, the Act strikes a balance between economic productivity and employee welfare, contributing to industrial harmony and social justice in Karnataka’s growing service-oriented economy.
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