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Termination Requirements Under New Shops And Establishments Act

Madhu Sweta and Raveena Dewan
7 Jan 2022 5:09 AM GMT
Termination Requirements Under New Shops And Establishments Act
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These days, everyone is witnessing major reforms happening in Indian labour laws in order to replace the archaic regulations which does not fit in the current regime. One of such reforms is the enactment of new Shops and Establishments Act ("S&E Act") on the lines of Model Shops and Establishments (Regulation of Employment and Conditions of Service) Bill, 2016 ("Model S&E...

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These days, everyone is witnessing major reforms happening in Indian labour laws in order to replace the archaic regulations which does not fit in the current regime. One of such reforms is the enactment of new Shops and Establishments Act ("S&E Act") on the lines of Model Shops and Establishments (Regulation of Employment and Conditions of Service) Bill, 2016 ("Model S&E Act"). There were three major reasons behind introducing this Model S&E Act; first, it modernizes existing legal provisions; second, it is intended to simplify business operations; and third, it is an effort to harmonize national legislation.

Significant reforms that have been introduced in the S&E Act for workers includes working hours, regulations related to women employment, limit on working overtime and appointing facilitators to enforce the provisions of the S&E Act. A substantial increase in penalties has been made under the new legislation to ensure that they are an effective deterrent.

Some of the States such as Maharashtra, Gujarat and Uttarakhand have also notified their S&E Act on the same lines proposed by Model S&E Act.

As we all understand that the S&E Act is the primary law governing the employment conditions of workforce working in a shops and commercial establishment. Such employment conditions inter-alia includes leaves, working hours, overtime and termination of employment (cause/no-cause), etc. Though these new clauses seem to provide better results however, at the same time, it has excluded certain important requirements which may adversely impact the employees.

These excluded requirements, inter-alia, include the termination notice (cause or no-cause). That means, new S&E Act does not provide the requirement of serving notice (or payment in lieu of notice) at the time of no-cause termination/resignation. It is silent on the termination on the ground of misconduct as well. Exclusion of these provisions from the S&E Act have increased the ambiguity as the Standing Orders Act and Industrial Disputes Act, 1947 does not apply in all cases. In such cases, the employee not covered under the Standing Orders Act and Industrial Disputes Act may be terminated at the will of the employer, and they may not be able to even seek legal aid under the S&E Act.

Till the time, this loophole has not been recognized by the Government and necessary amendments are made in the Model S&E Act (especially in the S&E Act of Maharashtra, Gujarat and Uttarakhand), the employees should be diligent while signing the employment agreements and do negotiate with the employer to include both sides of notice requirements and for categorically specifying grounds of misconduct and the process of termination (including inquiry procedure).

Authors:- Madhu Sweta - Partner and Raveena Dewan – Associate. Views are personal.

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