Model Shops and Establishment (Regulation of Employment and Conditions of Service) Bill, 2016

The Union government has come up with the Model Shops and Establishment (Regulation of Employment and Conditions of Service) Bill, 2016 to boost employment generation. The Bill is supposed to be sent to States/UTs so that they will be able to modify their individual Acts, if they so desire {intra-state trade comes under state list}. The States/UTs can either adopt the Bill as it is or modify its provisions as per their requirements.

Salient Features of the Bill

The key features of this bill are as follows:

Workers’ Rights and Welfare measures
  • Paid holidays for workers – 18 days earned Leaves, 8 days casual Leaves, weekly holiday, 5 festival leaves and national holidays.
  • Highly skilled workers (employed in IT, Bio-tech and R&D) will be exempted from daily working hours of 9 hours and weekly working hours of 48 hours. However, this provision is to subject to maximum 125 over-time hours in a quarter for the skilled workers. It will enable establishments serving international customers especially in IT sector.
  • Provision of clean and safe drinking water in the establishments.
  • Provision for common lavatory, crèche, canteen, and first aid facilities by a group of employers. It will be applicable if individual establishments cannot provide these facilities due to constraint in space or otherwise.
  • Empowers Government to make rules regarding adequate measures to be taken for the safety and health of workers by the employer.
Provisions for Women
  • Does not allow discrimination against women in the matter of recruitment, training, promotions or transfer.
  • Permits women during night shift, if the establishments have provisions of shelter, rest room, ladies toilet, transportation and adequate protection of their dignity etc. This will enhance gender diversity at work places and will do away with “protective discrimination” faced by woman.
  • Safety and better working conditions have to be ensured by the establishments. Facilities such as late-night drops and crèches have to be provided.
  • Covers only those shops and establishments employing ten or more workers. It does not cover manufacturing units. It covers banks, stocks, brokerages, journalistic or printing work, cinema halls, malls, shops, warehouses, bars, restaurants and more.
  • Provides freedom to the establishment to operate 365 days and also in choosing their opening/closing time. The provision of operating 24×7 is aimed at providing customer flexibility and boosting retail market across the country. The enhancement of working hours will result in generation of additional employment opportunities. There will be growth in jobs especially in retail, IT, hospitality and services sector.
  • Establishing a simplified one common online Registration procedure.
  • There will be uniformity in legal provisions across States/UTs. It can facilitate the establishments to have uniform HR and leave policies. This would promote competition among the states in improving governance and ease of doing business.

Questions and Answers

  • What are the positives aspects of the draft bill?
  • What are the negative aspects of the draft bill?
  • What are the challenges and way forward?
What are the positives aspects of the draft Bill?

The model law is hailed as a step in right direction to generate competitive environment among the states and in generating large scale employment opportunities especially in smaller and medium towns. It tries to create more job opportunities and conducive working environment for women. It has questioned “protective discrimination” faced by women by debarring them from being employed in the night shifts. Further, it improves the working condition of workers; provides uniformity in legislative provisions and working conditions across the country. It also allows establishments like shops, malls and cinema halls to operate 24×7 throughout the year.

It tries to provide favourable environment for doing business by addressing problems like difficulties in registration and renewal; rigidities in opening and closing of establishments; difficulties in maintenance of records and arbitrariness in inspections.

Lastly, the simplified online common registration procedure provided in the model law will go a long way in elimination of corruption and licensing bureaucracy.

What are the negative aspects of the draft bill?

There are several criticisms of the bill. Firstly, it is silent with respect to the minimum wages. Secondly, instead of focusing on developing skills, productivity and innovation, the model law focuses primarily on raising output by using more labour. This will give a competitive edge only in the short run. Thirdly, there exists confusion due to the inconsistencies between the draft law and labour laws with respect to manufacturing.  This is imminent particularly in an integrated workplace engaged in various roles under a single roof. Fourthly, by leaving out the small establishments, it may lead to sweat shop conditions for employees in them. With the use of ‘family labour’, now permissible under the amended child labour laws, these establishments may extract more work from the employees. Lastly, the provision of operating 24×7 may lead to increased energy requirements and sudden spikes especially in the urban areas.

What are the challenges and way forward?

The main challenge lies in implementing the provisions of the model law along with other labour-related laws. It will be a challenge to ensure the entitlements of workers while making sure the rules are simple and labour law inspections minimum.

The model law follows a reformist approach in a labour surplus economy. The states should come forward to adopt the provisions of the law in their own interest.

The government should make it mandatory for the employers to cover their employee medical expenses through standalone or group insurance policies. Also, steps should be taken to widen the social safety net through pension and insurance schemes. The labour ministry can also set up online complaint registration portals to protect the rights of the workers.

The other areas that need urgent reforms are affordable public transport and strong law enforcement. To support operations of establishments round-the-clock requires adequate security arrangements and reliable public transport network.