The Karnataka Shops And Commercial Establishments Act, 1961 & Rules, 1963


Objective:The Act aims to provide for the regulation of conditions of work and employment in shops and commercial establishments in the state of Karnataka.

Application:The act, in the first instance applies to the areas specified in the Schedule attached to the Act. The government is authorised to bring in other areas under the operation of the act.

Important definitions:

Adult:  a person who has completed his eighteenth year.

Child:  a person who has not completed his fourteenth year.

Commercial establishment: means a commercial or trading or banking or insurance establishment, oran establishment or administrative service in which persons employed or mainly engaged in office work, ora hotel, restaurant, boarding or eating house, a café or any other refreshment house, ora theatre or any other place of public amusement or entertainment.

Employee: means a person wholly or principally employed in or in connection with, any establishment whether working on permanent, periodical, contract or piece rate wages, or on commission basis, even though he receives no reward for his labour and includes an apprentice, any clerical or other member of the staff of a factory or industrial establishment who falls outside the scope of the Factories Act, 1948.

Establishment:  means a shop or a commercial establishment;

Shop: means any premises where any trade or business is carried on or where services are rendered to customers, and includes offices, storerooms, godowns, or warehouses, whether in the same premises or otherwise, used in connection with such trade or business.

Young person:  a person who is not a child and who has not completed his eighteenth year.

Exemptions: (1) This act is not applicable to-

(a)   officers of or under the Central or State Governments or local authorities, except commercial undertakings;

(b)  any railway service, water transport service postal telegraph or telephone service, any system of Public conservancy or sanitation or any industry, business or undertaking which supplies power, light or water to the public;

(c)  railway dining cars;

(d)  establishments for the treatment or care of the sick, infirm, or the mentally unfit;

(e) Establishments of the Food Corporation of India.

(f) Offices of legal practitioners and medical practitioners in which not more than three persons are employed:

(g) Officers of a banking company

(h) Any person employed about the business of any establishment mentioned in clause (a) to (g) aforesaid;

(i) Person occupying positions of management in any establishment;

(j) Persons whose work is inherently intermittent such as drivers, caretakers, watch and ward staff, or canvassers; and

(k) Persons directly engaged in preparatory or complementary work, such as clearing and forwarding clerks responsible for the dispatch of goods. Section 3(2) of the Act gives a list of establishments for which  sections 11(which deals with opening and closing hours of establishments) and sub-section (1) of section 12(dealing with weekly holidays) are not applicable.

Registration of Establishments:  Within 30 days from the date of commencement of work in an establishment,  the employer of every establishment shall send to the Inspector of the area concerned, a statement in the prescribed form together with such fees as may be prescribed, containing:

(a)   the name of the employer and the manager, if any;

(b)  the postal address of the establishment;

(c)  the name, if any , of the establishment; and

(d)  such other particulars as may be prescribed.

On receipt of the statement and the fees, the Inspector shall, on being satisfied about the correctness of the statement, register the establishment in the register of establishments and shall issue, a registration certificate to the employer. The registration certificate shall be prominently displayed at the establishment. A registration certificate shall be valid for five years and shall be renewed before the expiry of the period of registration certificate.

Change to be communicated to Inspector: The employer shall notify to the Inspector, in the prescribed form any change in respect of any information contained in his statement given earlier, within fifteen days after the change has taken place.

Closing of establishment to be communicated to Inspector: The employer, shall within fifteen days of his closing the establishment, notify to the Inspector in writing the date of such closure and return the registration certificate. The Inspector shall, on receiving the information and being satisfied about correctness, remove such establishment from the register of establishments and cancel the registration certificate.

Issue of appointment Orders: Every employer, employing any person in or in connection with his establishment, shall issue an appointment order in writing indicating the name, designation, wage scale of such person and terms and conditions of his employment and serve the same on such person within 30 days from the date of appointment in his establishment;

Hours of work:

a. No employee in any establishment shall be required or allowed to work for more than nine hours on any day or forty-eight hours in any week.

b. The total number of hours of work including overtime shall not exceed ten hours in any day except on days of stock taking and preparation of accounts.

c. The total number of overtime hours worked by an employee shall not exceed fifty in a period of three continuous months.

d. No young person shall be allowed to work in any establishment for more than five hours in a day.

e. Where an employee works in any establishment for more than nine hours in any day or for more than forty-eight hours in any week he shall in respect of such overtime work be entitled to wages at twice the rate of normal wages.

f. The periods of work of an employee in an establishment each day shall be so fixed that no period shall exceed five hours and that no such person shall work for more than five hours before he has had an interval of rest of at least one hour.

g. The periods of work of an employee in an establishment shall be so fixed that, inclusive of his interval for rest, they shall not spread over more than twelve hours in any day.

h. Every establishment shall remain closed for one day of the week. The employer shall fix such date and notify it to the Inspector and specify it in a notice prominently displayed in a conspicuous place in the establishment.

i. The State Government may allow an establishment to remain open throughout the week if it is satisfied that the establishment employs additional staff for meeting the requirements of sub-section (3) of this section.

j. Every employee in an establishment shall be given at least one whole day in a week as a holiday for rest.

k. It shall not be lawful for an employer to call an employee at, or for an employee to go to, his establishment or any other place for any work in connection with the business of his establishment on a day on which such establishment remains closed.

l. No person shall carry on, in or adjacent to a street or public place, the     sale of any goods after the hour (if a closing hour is fixed by the government) for the closing of establishments dealing in the same class of goods in the locality in which such street or public place is situated.

Annual Leave with Wages

a. Every employee in an establishment shall be entitled to leave with wages and shall be to avail such leave for the number of days calculated at the rate of-

(i)                one day for every twenty days works performed by him in case of an adult;

(ii)              one day for every fifteen days of work performed by him in case of a young person;If an employee does not in any one calendar year take the whole of the leave allowed to him, any leave not taken by him shall be added to the leave to be allowed to him in the succeeding calendar year. However the total number of the days of leave that may be carried forward to a succeeding year shall not exceed thirty days in the case of an adult and forty days in the case of a young person. An employee may at any time apply in writing to the manager of the establishment, not less than ten days before the date on which he wishes his leave to begin, to take all the leave or any portion thereof allowable to him during the calendar year. However the number of times in which leave may be taken during any year shall not exceed three.

b. Every employee shall also be entitled during the first twelve months of continuous service and during every subsequent twelve months of such service in any establishment to leave with wages for a period not exceeding twelve days, on the ground of any sickness incurred or accident sustained by him or for any other reasonable cause. For this leave, prior notice/ application may not be required

c. An employee who has been allowed leave for not less than four days in the case of an adult, and for not less than five days in the case of a young person, shall before his leave begins, be paid the wages due for the period of leave allowed.

Application of the Workmen’s Compensation Act: The provisions of the Workmen’s Compensation Act, 1923 and the rules made there under by the State Government shall apply to employees and employers of shops and commercial establishments.

Employment of children and women:

a. No child shall be required or allowed to work in any establishment.

b. No woman, or a young person shall be required or allowed to work whether as an employee or otherwise in any establishment during nights.  The  State Government may, by notification exempt any establishment of Information Technology or Information Technology enabled service from the provisions of this section relating to, employment of women during night subject to the condition that the establishment provides facilities of transportation and security to such women employees and subject to any other condition as may be specified in the notification.

Inspectors: The State Government may appoint Inspectors and Assistant Inspectors for the purposes of this Act. The Commissioner of Labour in Karnataka shall be the Chief Inspector for the purposes of this Act, for the whole of the State of Karnataka.


a. Whoever contravenes any of the provisions of sections 4,5,6, 6-A,7,9,10,11,12,13,15,16, 25 and 39, shall, on conviction, be punished with fine, which , for a first offence, may extend to one thousand rupees and, for a second or any subsequent offence may extend to two thousand rupees.

b. Whoever contravenes any of the provisions of sections 8, 17, 29 and 34 shall, on conviction, be punished with a fine which may extend to two hundred and fifty rupees.

c. Whoever contravenes the provisions of sections 24 and 25, shall be punishable with imprisonment for a term which shall not be less than three months but which may extend to six months or with fine which shall not be less than ten thousand rupees, but which may extend to twenty thousand rupees or with both, for the first offence and for the second and subsequent offences, he shall be punishable with imprisonment of a term which shall not be less than six months but which may extend to one year.

d. Any person who wilfully obstructs an Inspector in the exercise of any power conferred on him under this Act, or any person lawfully assisting an Inspector in the exercise of such power or who fails to comply with any lawful direction made by an Inspector shall be punishable with fine which may extend to five hundred rupees.

Compounding of Offences.- The jurisdictional Labour Officer, in lieu of Prosecution may compound the offences punishable under this Act or the rules made there under, except the offences punishable under Sections 24 and 25, at the option of the offending employer before or after the institution of the prosecution by levying a sum not exceeding rupees two thousand but not less than rupees one thousand for the first offence and for the second or subsequent same offence, a sum not exceeding rupees five thousand but not less than rupees two thousand.

Saving of certain rights and privileges: Nothing in this Act shall affect any rights or privileges which an employee in any establishment is entitled to under any other law, contract, custom or usage, applicable to such establishment, or any award, settlement or agreement binding on the employer and the employee in such establishment, if such rights or privileges are more favourable to him than those to which he would be entitled under this Act.

Dismissal of employees:If an employee has put in service continuously for a period not less than six months, he cannot be dismissed or removed by his employer, except for a reasonable cause and unless one month’s previous notice or pay in lieu has been given to him.If an employee is dismissed, he has a right of appeal to the Assistant Commissioner of Labour.

Repeal of the Weekly Holidays Act, 1942: The Weekly Holidays Act, 1942 shall stand repealed in areas where the Karnataka Shops and Commercial Establishments Act, 1961 apply.

Schedule: The schedule attached to the Act, contains the names of places where the act applies.


Registration: The statement for registration of an establishment shall be sent by the employer in Form A. The Registration Certificate issued shall be renewed once in five years before the date of its expiry. For renewal, a statement in duplicate in Form A has to be sent to the Inspector before ninety days from the date of expiry of such registration certificate. The Inspector shall register the establishment in the register of establishments in Form B and shall issue a Registration Certificate to the employer in Form C.

Changes how notified: The employer shall notify to the Inspector concerned any changes in respect of  his establishment within 15 days after the change has taken place.

Leave with wages register: The employer shall maintain a leave with Wages Register in Form F. This register shall be preserved for a period of three years after the last entry in it and shall be produced before the Inspector on demand.

Leave with wages book of the persons employed:  The employer shall provide each employee with a book called the ‘Leave with Wages Book’ in Form ‘H’. The book shall be the property of the employee and entries of the date of holidays or interruptions in service shall be made therein by the employer from time to time.

Maintenance of registers and records and display of notices:

a. Every employer shall exhibit in his establishment a notice in Form ‘P’ specifying the day or days of the week on which the persons employed by him shall be given a holiday.

b. Every employer shall exhibit in his establishment a notice containing such extracts of the Act and the rules in Kannada and in the language of the majority of the employees.

c. The registers, records and notices relating to any calendar year shall be preserved till the end of the next calendar year.

d. The appointment order issued by the employer under Section 6-A shall be in Form ‘Q’.

e. Every employer shall maintain a combined Muster Roll-cum-Register of Wages in Form ‘T’ in respect of the employees employed in the establishment. Where an employer has maintained Form ‘T’, he need not be required to maintain other Muster Roll or Register of Wages separately which contains the same information already available in Form ‘T’.

f. Every employer shall send a combined Annual Return in Form ‘U’ to the concerned Inspector on or before 31st January of every year:

g. Every employer shall maintain a Visit Book in which an Inspector visiting the establishment may record his remarks regarding any defects that may come to light at the time of his inspection and shall produce it whenever required to do so by an inspector.

h. Where an office, store room, go down, warehouse or work place used in connection with the trade and business of an establishment is situated at premises other than the premises of the establishment, all registers, records, muster-rolls, visit book and notices required to be maintained, exhibited, or given under the Act, and these rules shall be separately so maintained, exhibited or given in respect of and at such office, storeroom, go down, warehouse or work place.

Exhibition of name board: The name of board of every establishment shall be in Kannada and wherever other languages are also used, the versions in such other languages shall be below the Kannada version.

Exemption under Section 25:Every employer who intends to seek exemption under section 25 to engage women employees during night shift, shall make an application in Form R to the Commissioner for Labour or the Deputy Labour Commissioner having jurisdiction, with the list of women employees willing to work in night shifts. There shall be at least five women employees in one night shift. On receipt of the application the Commissioner for Labour or the Deputy Labour Commissioner concerned may, grant exemption in Form S.

Penalty for contravention: Whoever contravenes rules 8,9,9-A, 9-B and 9-C,17,18,19,20,22,24, 24-A, 24-B, shall on conviction, be punishable with fine which shall not be less than one hundred rupees but which may extend to two hundred and fifty rupees.