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Model Shops and Establishments (Regulation Of Employment And Conditions Of Service) Bill, 2016 – an outline

Recently (end of June 2016), the Model Shops and Establishment (Regulation of Employment and Conditions of Service) Bill, 2016 (“Model Bill”) was finalized and approved by the central government. The salient features of the Model Bill are as under:

* Applicable to establishments employing ten or more workers (except manufacturing units);

* Provides for freedom to operate 365 days in a year and opening/closing time of establishment. Due to enhanced working hours, more job opportunities would be created;

* Women to be permitted during night shift, if the provision of shelter, rest room ladies toilet, adequate protection of their dignity, transportation and such other amenities are available. This is aimed to enhance the gender diversity at work places and will also do away with the “protective discrimination” faced by women, who were exempted from working in night shift. The establishments will have to ensure safety and better working conditions for female employees by providing facilities such as late-night drops and crèches;

* Absolutely no discrimination against women in the matter of recruitment, training, transfer or promotions;

* Introduction of one common online registration through a simplified procedure;

* Adequate provisions on provisioning of clean and safe drinking water;

* A progressive step for providing lavatory, crèche, first aid and canteen by group of establishments, in case, it is not possible due to constraint in space or otherwise by individual establishment;

* It provides for paid holidays for the workers which will be 18 days Earned Leaves, 8 days Causal Leaves, weekly holiday and 5 festival leaves in addition to National holidays;

* Exemption of highly skilled workers (e.g. workers employed in IT sector, R&D divisions etc.) from daily working hours of 9 hours and weekly working hours of 48 hours subject to maximum 125 overtime hours in a quarter. This flexibility will enable the establishment to better services to respective clients / international customers especially in the IT Sector.

Without a doubt, the Model bill is intended to, including without limitation, (i) improving the working conditions of workers (ii) creating many more job opportunities for women along with safer working environment and (iii) providing favorable environment for doing business. At the moment almost all states have and follow modified and adopted version of the central Shops & Establishment Act and rules made thereunder. Likewise, the States have the discretion to either adopt the Model Bill or modify its provisions based on practical requirements or otherwise. Having said that, in case the Model Bill is adopted as it is by the states, the uniformity in legal provisions across states will enable the employers to have uniform human resource policies / manuals for all of its establishments in different states. This will also promote and improve the governance and ease of doing business across nation.

The Model Bill is expected to generate competitive and challenging spirit amongst the States and create an environment which is conducive for large scale employment generation at every level, especially in smaller and medium towns. It will also give a boost to employment opportunities to women as they will be permitted to work during night shifts with adequate safety and security provisions. Hailed as a welcome legislation the Model Bill is intended to encourage trade and commerce and bring uniformity in the varied laws applicable to establishments across all states and encourage conducive employment conditions across the Indian jurisdictional landscape.

Another underlying / indirect benefit from the Model Bill is the elimination of the licensing bureaucracy (since introduction of online registration) and therefore a lot of interaction with officials and/or procedural delays are done away with. This could be particular interest to foreign companies having or planning to have business operations in India.

The Model Bill is also seen as a medium for the State governments to accelerate economic activity(ies) and generate higher revenues; hence the law should be adopted immediately. Having said that, few areas that need attention for proper implementation of Model Bill may include:

i. Steadfast, capable and trustworthy public transport;

ii. strong law enforcement;

iii. security arrangements to ensure safe travel;

iv. apt health care support (by way of standalone or group insurance policies), etc.

It is sincerely hoped that these issues will be tackled by the government agencies while adopting the Model Bill in letter & spirit.

Definitely issued in ‘public interest’, this piece of legislation is very promising and should uplift the working standards and make better the existing procedural mechanism; hence favorable to both employees and employers.

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