The Andhra Pradesh Shops and Establishment Act, 1988: Scope, Registration, and Compliance

Shops, factories, and other business establishments in Andhra Pradesh state need a license under the Andhra Pradesh Shops and Establishment Act, 1988 (“Shops Act”).

The Act applies to all the factories, shops, commercial establishments, restaurants, theatres, societies and trusts.  

The Act provides a threshold to working conditions of an employee in any commercial establishment with respect to working hours, holidays, annual leaves, wages and compensation, employment of women and children, and other HR aspects.  

Businesses that have yet to set up in the states should review the document to understand key statutory requirements, while employers that have already set up in the state should review the Act to ensure their HR policies and handbook are compliant.

How to register under the Act

Every establishment is required to file for registration under the Shops Act within 30 days from the date of commencement of business.

This registration forms as a basic license and a proof of the business to apply for other registrations required to run a business in India. It is also mandatory for the opening of the current account in a bank.

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An establishment can obtain the registration certificate from the chief inspector of the Shops Act, or from other inspectors delegated to the area where the establishment runs the business.

To apply for the certificate, the establishment must make an application on the official website of the Andhra Pradesh state government, along with the prescribed fees and the following documents:

• The name of the establishment along with the postal address;
• The category of the establishment, that is, whether it is a shop, commercial establishment, residential hotel, restaurant, theatre or any other place of public amusement or entertainment;
• A copy of sale deed or rental agreement;
• Name and details of the owner (employer) and the employees (at the time of incorporation of business); and
• The permanent account number (PAN) card details of the business or the owner.

Any changes in establishment

In case of any change in respect of any information contained in the registration certificate, the registered entity must notify the chief inspector within 15 days of the day the change has taken place.

Renewal of registration certificate

A registration certificate must be renewed at an interval of every one-year, or at the interval prescribed by authorities, and will commence from the date of its expiry.

Businesses must note that the application for the renewal of the registration certificate must reach the inspector no later than thirty days before the date of its expiry.

Closing of the establishment

The occupier must notify the chief inspector in writing within 15 days of closing an establishment. The inspector removes the establishment from the register of establishments and cancels the registration certificate only after an investigation is completed and approved.

Key provisions for employers

Below, we provide some of the key aspects of the Shops Act.

Daily or weekly hours of work

The Act provides that no employee must work for more than eight hours in a day and 48 hours in any week. It also mandates employees to provide for an interval of rest, given that an employee works for more than five hours a day.

Overtime limit and overtime wages

Recent amendments to the Shops Act allow employees to work beyond the normal working hours by receiving overtime wages, given overtime meets the following conditions:

• The total number of work hours, including overtime does, not exceed twelve hours a day;
• The spread of work hours, inclusive of intervals of rest, does not exceed thirteen hours a day;
• The total number of hours of work in any week, including overtime, does not exceed sixty -two hours;
• No employee works overtime for more than seven days continuously at a stretch;
• The total number of hours of overtime work in any month does not exceed fifty hours.

Every employee who works overtime is entitled to wages at twice the normal rate of wages.

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Hours of operation of an establishment

The government may fix different hours for different classes of establishment or for different areas or for different times of the year. Employers should seek to review these changes during any internal HR reviews conducted during the year.

Employment of women and children

The Act prohibits the employment of children under 14 years of age. Young persons between the age of 14 and 18 are allowed to work only between six in the morning and seven in the night.

With respect to women employees, the Act does not allow women to work in any establishment before six in the morning and after eight thirty in the night.

However, an amendment to the Act in 2019, now allows women employees to work in the night if the establishment provides for the following:

• Shelter, rest rooms, lunch rooms, night crèche facility, and women-only toilets;
• Adequate protection of women’s privacy, dignity, honor and safety, protection from sexual harassment;
• Employment of at least five women employees together in the nightshift; and
• Secure pick and drop facilities between factory premises and the doorstep of their residence.

The Act also mandates maternity leave with pay, allowing young mothers the time to take care of their infants without fearing loss of pay.

Weekly holidays

Every employee in any establishment is entitled to a one day holiday every week. The Act requires every shop, whether with or without employees, to remain closed on every Sunday.

Work leaves

After every twelve months of continuous employment, every employee is entitled to 15 days of privilege leave (or annual leave). This paid leave may be accumulated up to a maximum period of sixty days.

Further, every employee is entitled to yearly sick leaves of 12 days, and casual leaves of 12 days for the first twelve months of continuous service and during every subsequent twelve months of such service.

The Telangana Shops and Establishment Act, 1988

Since the bifurcation of the two states Andhra Pradesh and Telangana, in 2014, the Telangana state government is following the Andhra Pradesh Shops and Establishment Act of 1988.

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