Why kiosks in shopping malls (Shop In Shop) may need separate registrations
Kiosks in malls or in-store stores operate in an apparently win-win situation: lower rents than full-service outlets and a general impression that there are no requirements for separate registrations under applicable employment laws, including Shops and Establishments Laws (“S&E”).
S&E legislation, unlike other Indian labor laws, is formulated as state-specific laws and therefore requires multiple registrations for each location. In addition, it applies regardless of the number of employees in the stores/establishment and the salaries received.
It is generally assumed that since shopping centers have their own S&E registrations, it is not necessary to obtain a separate S&E registration to operate from kiosks outside of shopping centers.
However, such an assumption may be incorrect as explained below.
Provisions of Law
* The S&E Laws apply broadly to ‘Shops’ and Commercial Establishments.
* “Stores” is generally interpreted as any establishment where any trade or business is carried on/goods are sold (whether retail or wholesale) or where any service is provided to customers and includes offices, etc. ‘ used primarily in connection with such trade or business.
* Commercial Establishments refer to any premises where any trade, business or profession or work related to, auxiliary or incidental to it is carried out.
* The duty of registration under the S&E Law is imposed on the Employer of the Establishment (an Establishment includes Commercial Establishments and Stores).
* Employer means a person who owns or has ultimate control over the affairs of an Establishment and when the Establishment is not managed by the owner, means the manager, agent or representative of such.
* Employee means a person wholly or principally employed, either directly or through an agency, and whether for wages or other consideration in connection with any Establishment.
Previous Judicial
Judge Shah in State of Bombay V. Jamnadas Gordhandas., (1956)II LLJ 307 has observed, among other things:
There is nothing in the Act to suggest that a store may contain only one store or that a store may contain only one store. It is not the unit of premises that makes a store, it is the unit of commerce or commercial establishment that distinguishes one store from another. A number of different establishments belonging to different owners or under different managements, but carrying on business or business on the same premises are not unknown and it cannot be suggested that such independent establishments for the purposes of the Bombay Stores and Stores Act are considered as one establishment only. trade. Again, a single business establishment may occupy separate and independent structures built or adapted for separate activities of the establishment, such as executive administration, accounting, consulting, preparation and manufacture of goods, and for the sale of goods and the rendering of services. Free-standing structures in which different activities are carried out may make them separate premises, but would not make them separately registrable as a store. In each case, it would be a matter of fact whether the office is a part of the store in which the goods are sold or services are provided, or whether the office is a separate store.
The above observation may have been made long before the advent of shopping malls in India, however the same can be applied even to shopping malls.
Things to be aware of KioskCo
In light of the above comments, as well as the legal provisions discussed above, the following issues are relevant in determining whether a kiosk must separately apply for S&E registration:
Kiosk Company (KioskCo) as Employer
A kiosk staffed by a KioskCo employee may be construed as a separate and independent store/store in a mall, especially if KioskCo has ultimate control over the affairs of that particular kiosk/store and is therefore the ‘Employer’. ‘. While it is debatable whether KioskCo or Mall have ‘ultimate control’, generally KioskCo will have substantial control over delegated employees, their hours of work, products sold/services provided at these kiosks.
Also, if the question ever comes up (during an inspection by the S&E department), each of these employees will also identify themselves as a KioskCo employee and not a mall employee.
Mall as an employer
If the executed Agreements between Mall and KioskCo do not allow KioskCo to have “ultimate control” over the affairs of the store/kiosk, Mall may be construed as “Employer”.
However, it is unlikely that the Mall or KioskCo will want to list KioskCo employees as employees of the Mall. Registration forms and forms to be submitted notifying the change require the submission of employee details. KioskCo employees would not have been included in the mall’s application. Legal registration of employees and permits obtained, etc. Maintained by the mall will obviously not contain details of KioskCo employees.
Furthermore, the issue must be approached from the point of view that the S&E Acts are charitable Acts intended to grant certain rights to employees. If KioskCo employees are not covered by an M&E registration/compliance applicable to the KioskCo or Mall registration/compliance, it may amount to depriving KioskCo employees of their prescribed right under the S&E laws.
While it may be argued that Mall is the Employer, including for common cash reasons for KioskCo’s products/services, failure to cover KioskCo employees under Mall’s registration may cast such argument to the detriment of KioskCo.
From the above, it appears that there may be a requirement for KioskCo to apply for and obtain registration and to comply with other legal requirements.
Compliance for KioskCo:
In practice, in-store stores in India do not obtain separate registrations from the main store, due to the fact that it is onerous for KioskCo to obtain registration for each of its kiosks and also to ensure compliance with S&E laws when only one or two KioskCo employees are assigned to a shopping center.
Below is a non-exhaustive list of records and records that must be maintained (which may also need to be displayed in the store/establishment) and compliances that must be made in four states:
1.Delhi:
(a) Provide advance notice to the appropriate authority in the event overtime is proposed for employees.
(b) Maintain records in the prescribed manner, including:
* A closing day notice
* Record of hours worked, the amount of vacations taken by employees, intervals allowed for rest and meals, details of overtime, etc.
* Notice of hours in a week that an employee may work
* Employment record and remuneration
2. Maharastra
(a) Application for registration
(b) Request timely registration renewal
(c) Notify changes in the information presented in the registration application, as appropriate.
(c) Inform the competent authority in advance in the event that overtime is proposed for employees.
(d) Maintain records in the prescribed manner, including:
* Registration regarding the denial of vacations
* Record of opening and closing hours, rest intervals, details of overtime, etc. of each employee
* Register leave and also provide each employee with a ‘leave book’
* Guest book relating to visits by S&E Inspectors
3. Karnataka:
(a) Application for registration
(b) Request timely registration renewal
(c) Notify changes in the information presented in the registration application, as appropriate.
(d) Maintain records in the prescribed manner, including:
* License with Salary Registry
* Provide each employee with a ‘leave book with wages’
* Notice of closing day
* Guest book relating to visits by S&E Inspectors
4.Madhya Pradesh:
(a) Application for registration
(b) Request timely registration renewal
(c) Notify changes in the information presented in the registration application, as appropriate.
(d) Notification of the day of rest/weekly closure to the corresponding authority and any change in it
(e) Notify the change of dates, if any, for the additional overtime hours prescribed by Law.
(f) Provide prior notification to the appropriate authority in the event that overtime is proposed for employees.
(g) Maintain records in the prescribed manner, including:
* Record attendance, wages, overtime, fines and wage withholdings
* Record of daily hours to work, intervals allowed for rest and meals,
*Vacation registration
* Holiday list
* Copy of license rules
* Excerpts from the Law and the S&E Rules in the specified language
Consequences for KioskCo:
KioskCos’ exposure arising from failure to register is in the form of fines and penalties (generally nominal) imposed by the S&E Acts for non-compliance with the provisions. Below is a general summary of the consequences of violating S&E laws:
1.Delhi:
The prescribed penalties for infringement generally range from Rs 25 to Rs 250. However, for non-compliance with prescribed records, Rs 5 may be paid for each day of non-compliance. Also, false entries in registers and registers make the person liable to imprisonment for less than 3 months or a fine of Rs 250 or both.
2. Mumbai:
The prescribed penalties for infringement generally range from Rs 1,000 to Rs 5,000. In certain cases, an additional fine of Rs 100 per day may apply. In addition, a ‘enhanced penalty’ is prescribed for second, third and subsequent offenses which can range up to Rs 15,000/- fine as an addition to the employer and manager.
3. Karnataka:
The prescribed penalties for contravention generally range from Rs 250 to Rs 2,000.
4.Madhya Pradesh:
The prescribed penalties for infringement generally range from Rs 50 to Rs 500. In certain cases, an additional fine of Rs 50 per day may apply. In addition, a ‘higher penalty’ is prescribed for second, third and subsequent offences, which can range up to Rs 1,500/-. Also, false entries in registers and registers make the person liable to imprisonment for less than 1 year or a fine of Rs 1000 or both.