Compliance Confusion: What Rules Apply to My Small Proprietor Firm with 4 Employees?

I am running a proprietor firm with 4 employees and myself as the Proprietor, totaling 5 people. I would like to know which acts or rules apply to my firm for compliance. Please advise me on the necessary steps for further work.

Thank you.

Kindly elaborate on the nature of your business. Is it a shop, an industry, or a factory?

Thank you.

The Shop and Establishment Act will be applicable to your firm. The ESI and PF Acts will be applicable once you have a minimum of 10 employees.

The Tamil Nadu Shops and Establishments Act, 1947 will be applicable to you, and accordingly, other compliances mentioned in the Act.

ESIC will be applicable once the employee strength reaches 10 or more.

PF will be applicable once the employee strength reaches 20 or more.

Regards

Dear all, is there no minimum employee strength required for the Shop & Establishment Act? For example, is it 5 or 10 or any other number?

Payments Required Under the Shop & Establishment Act

If this act applies, then the following payments have to be made:
1. Annual leave/CL/SL/Maternity Leave
2. Bonus
3. Paid Holidays, etc.

Yes, the Shop and Establishment Act will be applicable.

Dear Prem Chanda, from your profile, you are from Mumbai and a Labour Laws Consultant. I hope you are not testing us.

Applicable Laws in Mumbai

In Mumbai, the Maharashtra Shops and Establishment Act 2017 is applicable to you. Since you have fewer than 10 employees, you need to submit an intimation online under the MS&E Act 2017. You need to pay your employees' salaries according to the Minimum Wage rate applicable to Shops and Commercial Establishments. You also need to provide a weekly day off, with eight hours of work per day.

Leave Entitlements

Employees are entitled to one day of leave with wages for every 20 days worked in the previous year if they work for 240 days in the calendar year. Please refer to section 18(4) for clarity on employees employed for more than 3 months. Leave accumulation is allowed up to 45 days, with encashment of leave in excess of 45 days.

Additional Leave and Holidays

In addition to leave with wages, you must provide 8 days of casual leave and 8 days of festival holidays in the calendar year, with 26th Jan, 1st May, 15th Aug, and 2nd Oct being compulsory holidays. Maternity Leave should be granted as per the Maternity Act, while the Bonus Act does not apply to you.

I hope you will give me a 10 out of 10 rating, considering you are a Labour Laws Consultant. If you have any further queries, please consider hiring me in your company. I am also from Mumbai.

Thank you.

Thank you for the brief reply. Most rules and acts are defined with minimum strength and are accordingly applied. However, in the shop and establishment act, most acts cover aspects such as working hours, leave, compensation, bonus, wages, and minimum wages. What other things are left uncovered?

I am asking this question not to test anyone, but to clarify my doubts so that I can provide a proper reply to the authority. I am expecting more information to ensure that we are safe from any future liability. 珞

Compliance Requirements for Service Providers

A service provider needs to obtain:

1. Shop and Establishment Act license.
2. Registration under GST, subject to the limit of business turnover.
3. If employing 10 or more employees, registration is required with:
a) PTEC and PTRC.
b) EPF.
c) ESIC.
d) If contracting more than 50 manpower in Maharashtra, a Contract Labour License is required.

Dear Bijay_majumdar, I have written about the S&E Licence. Yes, I have not written about GST, since it does not fall under Labour Laws. Thanks for mentioning this.

I also forgot to write about PTRC and PTEC. PTRC has to be obtained even if he employs one person. PTEC has to be obtained when starting the business. PTEC will be in his name as the owner, i.e., Proprietor or all Directors/Designated Partners/Partners, etc. If the owner already has it, he is not required to have it again. PTEC also has to be obtained in the name of the company in the case of an LLP, Private Limited, or Limited company. PTEC in the name of a Proprietary Firm and Partnership Firm is not required. Tax has to be paid against every certificate/enrolment as applicable.

EPF is applicable to 20 employees, not 10 as you stated.

ESI is applicable in Maharashtra on 20 coverable employees when falling under shops and commercial establishments.

The Contract Labour Act will not be applicable to him since he is not a contractor. He is a Labour Law Consultant. In fact, what we are discussing is his jurisdiction, and he is supposed to be an expert in it.