Update: Notification under the Karnataka Shops & Commercial Establishments Act

Businesses, operating across the spectrum, have been struggling to stay afloat in the throes of the pandemic. In a recent step to aid the beleaguered businesses, the Labour Department of the Government of Karnataka has, through a notification dated January 2, 2021 (“the Notification”), allowed all shops and establishments in the State, employing ten or more persons, to operate on a 24 x 7 basis throughout the year for a period of three years from the date of its publication in the Official Gazette, on a conditional basis. The Notification has been issued by the Karnataka Government in exercise of the powers conferred upon it under the Karnataka Shops & Commercial Establishments Act, 1961 (“the Act”).

Amended Notification

Interestingly though, the Notification has only resulted in a partial modification of the previously existing situation.  Prior to this, a notification dated October 11, 2019 (“Earlier Notification“), having similar undertones, was in force. The Earlier Notification, too, had allowed for 24 x 7 operation of all shops and establishments in the State for a continuous period of three years.

Some of the pre-requisites that have been stipulated in the Notification are as follows:

  1. Additional staff shall be employed such that each employee can be granted one day holiday in the week on a rotational basis.
  2. The wages of the employees, including any overtime wages, has to be credited to the savings bank account of the employees.
  3. The working hours of employees must not exceed eight hours in any day and forty-eight hours in any week. The working hours of the employees, including overtime hours, shall not exceed ten hours in any day and fifty hours in a continuous period of three months.
  4. The provision of certain basic amenities like restroom, washroom and safety lockers shall be ensured to the workers.

Enumerated below are the essential conditions that need to be fulfilled to ensure decent working conditions for women employed in such establishments. These include:

  1. Normally, women employees shall not be allowed to work beyond 8 pm on any given day. However, written consent should be obtained by the employer from the women employee if they are required to work between 8 pm and 6 am. Additionally, adequate facilities should be arranged for their transportation. Refer to our previous blogpost on the amendment to allow women to work nightshifts in factories (Karnataka), here.
  2. An internal complaints committee shall be constituted to ensure the safety of the women employees against any sexual harassment in accordance with the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. See our article on the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

Analysis

The relief granted under the Notification is only in the nature of a short-term benefit that will extend for a limited period of three years. The measure may help to bring some temporary relief to the unemployed segment of the workforce. Though the Notification has not explicitly stated that things will automatically revert back to their original state after the lapse of three years but the same can be safely assumed. Businesses must adopt effective strategies to optimise the level of benefits they derive from the given measure. At the same time, workers must realise this opportunity to create value for the sectors in which they are employed along with securing their own livelihood.

More importantly, there is no clarity about the rational for providing a threshold of ten employees. All shops and commercial establishments in the State of Karnataka, without any exception, are governed by the Act. The Notification has not allowed any relaxations to the entities employing less than ten persons in running their operations. Consequently, these entities have been left in a lurch with no measure afoot to aid their recovery.

Almost all the conditions set out above resemble the ones provided under the Earlier Notification, except for one. The Earlier Notification had provided that the number of working hours, including the overtime hours, shall not exceed ten and a half hours in any day and fifty-seven hours in any week. This is where the Notification deviates from its predecessor. Unlike its predecessor, the Notification has not stipulated any weekly upper limit on the number of working hours in case of overtime.

The Act empowers the state government to fix the working hours for all the establishments operating within its boundaries.[1] Nevertheless, it contains a clear mandate providing for an upper limit on the number of working hours, which cannot be exceeded. It states that no employee shall be permitted to work beyond ten hours, including overtime work, on any day and the total amount of overtime work shall not exceed beyond fifty hours in a period of three continuous months.[2] By amending the Earlier Notification, the Notification has attempted to revise the situation to be in greater tandem with the Act.

In Sum

Despite appearing to be a minor revision, it holds some vast implications for all the commercial establishments encompassed by the Notification. The Notification has, in effect, augmented the level of flexibility available to the employers in organising and planning the structuring of their operations by removing the cap on the weekly working hours. Essentially, therefore, the move will not only act as a stimulus for economic activities in the State but also promote the spirit of employment generation. On the other hand, employees now will be greatly disadvantaged given that employees would be on call 24X7.

The Karnataka Government does seem to want to infuse some positivity amongst the entrepreneurs and ameliorate the crisis-like situation created by Covid-19.

Archana Balasubramanian (with assistance from Simran Jalan – Intern)


[1] Sec. 11, the Karnataka Shops & Commercial Establishments Act, 1961.

[2] Sec. 12, the Karnataka Shops & Commercial Establishments Act, 1961.

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