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HR Law Hotline
December 27, 2017Happy new year! New labour law for India’s commercial cities Mumbai and Pune
- Maharashtra Shops and Establishments (Regulation of Employment and Conditions of Service) Act, 2017 has been made effective from December 19, 2017.
- As a result, the erstwhile Maharashtra Shops and Establishments Act, 1948 stands repealed.
- Majority of the obligations under MSEA 2017 apply to establishments employing at least 10 ‘workers’. Limited reporting requirements for smaller establishments.
- MSEA 2017 replaces the definition of ‘employee’ with ‘worker’. Individuals engaged through an agency and persons in positions of confidential, managerial or supervisory nature, are excluded.
- Besides revision to provisions relating to leaves, holidays, overtime, etc., certain new requirements such as provision of a crèche facility, canteen, etc. have been introduced.
- Enhanced penalties for non-compliance and contraventions.
- Rules to MSEA 2017 are yet to be published.
The State Government of Maharashtra has ensured that the State continues to remain at the forefront of development and reform by becoming the first Indian State to overhaul its 70-year-old labour law for shops and establishments. Maharashtra Shops and Establishments (Regulation of Employment and Conditions of Service) Act, 2017 (“MSEA 2017”) has been made effective from December 19, 2017 and replaces the erstwhile Maharashtra Shops and Establishments Act, 1948 (“MSEA 1948”). Maharashtra has two of the leading commercial cities, Mumbai and Pune, besides other important cities like Thane, Navi Mumbai, Aurangabad, Nasik and Nagpur. In fact, Mumbai is considered as the commercial capital of India.
BACKGROUND
Each Indian State has implemented a law on employment and working conditions for shops and commercial establishments operating in that State. With a view to make these shops and establishments laws more contemporary and uniform throughout the country and enhance ease of doing business in India, the Central Government had in July 20161 introduced the Model Shops and Establishments (Regulation of Employment and Conditions of Service) Act, 2016 (“Model SEA”). States could voluntarily adopt it by making suitable modifications based on state-specific requirements. In view of this, Maharashtra State has introduced MSEA 2017 which largely adopts the provisions contained in the Model SEA.
COMPARATIVE ANALYSIS (HIGH-LEVEL)
# |
Provision |
Old Provision (MSEA 1948) |
New Provision (MSEA 2017) |
1. |
Applicability |
|
|
2. |
Registration |
|
|
3. |
Close Day |
|
|
4. |
Opening and Closing Hours |
|
|
5. |
Hours of Work, Rest Interval & Spread Over |
|
|
6. |
Overtime |
|
|
7. |
Leaves (PTO) & Holidays |
|
|
8. |
Leave Encashment |
|
|
9. |
Compensatory Off |
|
|
10. |
Women working in night shifts |
|
|
11. |
Double Employment |
|
|
12. |
Employment Termination |
|
|
13. |
Enforcement & Inspection |
|
|
14. |
Penalties |
|
|
NEW PROVISIONS:
- Displaying a list of employees in managerial and supervisory role: Persons in 'positions of confidential, managerial or supervisory character' would not be included within the definition of 'worker' under the MSEA 2017 and employers would be required to list out names of such individuals on their website and in the absence of a website at a conspicuous place in their establishment. Employers would also have to send a list of such persons to the Facilitator. This change brings the definition in line with the Industrial Disputes Act, 1947 (“IDA”).
- Casual leaves: Employees are entitled to 8 days of casual leaves in a year.
- Prohibition of Discrimination: MSEA 2017 introduces a new provision prohibiting discrimination against women workers in matters of recruitment, training, transfers or promotion or wages46. This change brings the provision in line with the Equal Remuneration Act, 1976.
- Accrual of earned leaves during maternity: MSEA 2017 clarifies that women employees shall not be entitled to earn leaves during the maternity leave period, although the period would be taken into consideration for the purpose of computation of the period of 240 days for determining eligibility of annual leaves47.
- Crèche Facility: Establishments employing at least 50 workers are required to provide and maintain a crèche facility for the use of children of such workers. A group of establishments may jointly provide a common crèche facility provided that the crèche facility is within a radius of 1 km and the prior permission of the Chief Facilitator has been procured48. This provision prescribes the distance for the purposes of the Maternity Benefit Act, 1961.
- Canteen: MSEA 2017 envisages that the State Government shall require establishments employing at least 100 workers to provide and maintain a canteen for the workers. A group of establishments may jointly provide a common canteen with the prior permission of the Chief Facilitator. The rules to the MSEA 2017 may provide greater clarity with respect to this provision.
- Shift work: MSEA 2017 allows any department or any section of a department of an establishment to work in more than one shift at the discretion of the employer. If more than one shift is worked, the worker may be required to work in any shift at the discretion of the employer49.
- Identity Cards: An identity card is to be provided by the employer to each of its workers containing details of the worker, including information on blood group and Aadhar card details. Under the MSEA 1948, an identity card was required to be provided by the employer only to employees of residential hotels, restaurants etc.
- Records in electronic format: Employers are now permitted to maintain registers in electronic format provided that the hard copies of such records, duly signed by the employer or his representatives are submitted to the Facilitators upon demand at the time of inspection50. This is tune with the government’s earlier initiative to reduce compliance burden through issuance of Ease of Compliance to Maintain Registers under various Labour Laws Rules, 2017.
- Imprisonment, Compounding of offences etc.: The MSEA 2017 provides for imprisonment for certain offences unlike the MSEA 1948. Employers shall have the opportunity to compound offences that are punishable with fine.
ANALYSIS
MSEA 2017 is definitely a more business friendly legislation as compared to the previous law, which was enacted in 1948 and did not take into account the needs of the new business models, start-ups, etc. While employers could apply for certain exemptions / relaxations under the previous law based on specific situations, the new law has taken good care of those needs by incorporating the necessary provisions. For e.g, establishments will now be able to remain open on all days of the week although at the same time each employee will be entitled to a weekly holiday. Further, establishments will also be able to employ women in night-shifts if suitable measures for their protection and transportation are ensured. Another big reform that has been introduced by MSEA 2017 is to exempt smaller establishments (employing less than 10 workers) from majority of the provisions, thereby providing the much needed flexibility to such establishments. The thought process behind replacing an ‘inspector’ with a ‘facilitator’ is highly commendable.
MSEA 2017 does away with the provisions related to employment termination. Rightly so, since these provisions are already contained in the IDA. MSEA 2017 also remains silent in relation to extending some of the national level laws such as the Industrial Employment (Standing Orders) Act, 1946, Employees' Compensation Act, 1923 and Payment of Wages Act, 1936.
At the same time, given the risk of significantly larger penalties and potential imprisonment risk, there would now be a greater onus on employers to ensure compliance. In terms of immediate action items for employers, given the change in provisions relating to work hours, overtime, leaves, holidays, etc. employers would need to revisit their existing HR practices and policies to ensure compliance with the MSEA, 2017.
This progressive step by the State Government of Maharashtra will help considerably in making the State a more attractive jurisdiction for setting up operations and doing business, thereby generating greater employment opportunities. Other Indian States would be monitoring the results closely as they too will look to adopt a similar approach in the coming years.
1 http://pib.nic.in/newsite/PrintRelease.aspx?relid=146718
2 "Employee" means a person wholly or principally employed, whether directly or through any agency, and whether for wages or other consideration, in or in connection with any establishment; and includes an apprentice, but does not include a member of the employer's family
3 Section 1(3)
4 Section 3(11) of the MSEA 2017
5 Section 7 (2-A) and (2-B) of MSEA 1948
6 Section 7 of MSEA 2017
7 However, such establishments need to give an intimation of commencement of business to the Facilitator of the local area within 60 days of commencement of MSEA 2017 or date of commencement of business, by submitting an online application in prescribed form.
8 Proviso to Section 6 (1) of MSEA 2017
9 Section 6(1) of MSEA 2017
10 Section 6(3) of MSEA 2017
11 Section 18 of MSEA 1948
12 Section 16 (1) (b) of MSEA 2017
13 Based on an application, the state government has been issuing an approval letter to allow commercial establishments to work on a 24 X 7 basis and avail the other exemptions
14 Section 13 of MSEA 1948
15 Section 11 of MSEA 2017
16 Section 14 (1) of MSEA 1948
17 Section 15 of MSEA 1948
18 Section 17 of MSEA 1948
19 Section 12 of MSEA 2017
20 Proviso to Section 12 of MSEA 2017
21 Ibid
22 Section 14 of MSEA 2017
23 Section 14(2) of MSEA 1948
24 Section 15 of MSEA 2017
25 Section 35 (1) (a) of MSEA 1948
26 Section 35 (1) (b) of MSEA 1948
27 Proviso to Section 35 (1) (b) of MSEA 1948
28 Section 35 (4) of MSEA 1948: January 26th, May 1st, August 15th and October 2nd
29 Section 18 (4) of MSEA 2017
30 Section 18(3) of MSEA 2017
31 Section 18 (2) of MSEA 2017
32 Section 18 (6) of MSEA 2017
33 Section 18 (7) of MSEA 2017: January 26th, May 1st, August 15th and October 2nd and 4 such other festival holidays as mutually agreed by the employer and workers, to be determined before the commencement of the year
34 Section 35 (2) of MSEA 1948
35 Section 18 (5) of MSEA 2017
36 Proviso of Section 35(4) of MSEA 1948
37 Proviso of Section 18 (7) of MSEA 2017
38 Section 16(1) (c) of MSEA 2017
39 In Maharashtra, there is a general exemption available to IT establishments, whereunder IT/ITeS establishments are permitted to engage female employees at night (8:30 pm to 6:00 am), subject to fulfilment of certain conditions. Therefore, IT establishments in Maharashtra (i.e.; Mumbai/Pune) are not required to procure a specific permission for engaging female employees at night.
40 Section 13 of MSEA 2017
41 Section 65 of MSEA 1948
42 Notice shall not be necessary in case of employment termination for misconduct
43 Same as above.
44 Sections 52-57 of MSEA 1948
45 Sections 29 – 31 of MSEA 2017
46 Section 13 (1) of MSEA 2017
47 Section 18 (8) (b) of MSEA 2017
48 Section 23 of MSEA 2017
49 Section 16 (1) (a) of MSEA 2017
50 Section 25(2) of MSEA 2017