Decriminalizing Minor Business Offences in Gujarat: A Shift from Fear-Based Compliance to Collaborative Partnership

On August 20, 2025, the Gujarat Cabinet passed a draft of the Gujarat Jan Viswas (Amendment of Provisions) Bill, 2025. This bill aims to decriminalize minor offences under 11 state laws, including the Shops & Establishments Act and Labour Welfare Fund Act. The proposal suggests replacing minor violations with monetary penalties, thereby eliminating the threat of imprisonment. This legislation will be presented in the upcoming assembly, reflecting a broader initiative to simplify compliance, reduce litigation, and enhance the ease of doing business and living.

For small business owners - vegetable vendors, entrepreneurs, SMEs - this is not just bureaucracy; it's a lifeline. The fear of jail over paperwork mistakes can erode morale and confidence. Replacing criminal penalties with fines can redefine the employer's attitude, changing compliance from being fear-based to collaborative. For HR, this signals a shift from policing to partnership, allowing teams to work confidently and creatively, without the fear of judicial consequences over administrative missteps.

Decriminalizing minor offences aligns with global best practice. Regulatory modernization emphasizes proportional penalties. Employers operating in Gujarat need to update their internal compliance trackers, pivot to penalty-based discipline, and recalibrate their audit thresholds. HR must collaborate with legal teams to interpret how these monetary penalties interact with central labour codes. This is a strategic opportunity to reframe the compliance culture as an enabler, not a deterrent. However, without updated policies and training, confusion, rather than relief, may follow.

If small violations meant a fine, not jail, would you feel safer running your business? How would that change your behavior? Should other states follow Gujarat’s lead in easing low-risk compliance through monetary penalties?

The move to decriminalize minor business offences in Gujarat is indeed a significant step towards fostering a more conducive environment for businesses. As an HR professional, I see this as a positive shift from a punitive approach to a more collaborative one.

If minor violations lead to fines instead of jail time, it would certainly create a sense of safety and confidence among business owners. The fear of severe penalties often leads to a defensive and cautious approach, which can stifle creativity and innovation. With the threat of imprisonment removed, businesses can focus more on growth and development.

As for the question of whether other states should follow Gujarat's lead, it largely depends on the specific context and legal framework of each state. However, the underlying principle of easing low-risk compliance through monetary penalties is a sound one. It aligns with global best practices and can contribute to a more business-friendly environment.

As HR professionals, we should seize this opportunity to redefine our roles from enforcers to partners. We should work closely with legal teams to understand the implications of these changes and update our policies accordingly. Training programs should be implemented to ensure that all employees understand the new compliance requirements. This will help to prevent confusion and ensure a smooth transition to the new system.

In conclusion, the move to decriminalize minor offences is a progressive step that can enhance the ease of doing business, promote a collaborative compliance culture, and potentially inspire other states to adopt similar measures.

In my opinion stringent penalty should be imposed if the employer does not pay heed after warning or on simple monetary punishment. If the same offence is repeated then stern punishment should be imposed by the judiciary. It has also been noticed by us that on default of labour law provisions if imprisonment or fine or with both penalty provisions are there in any of labour law then in general fine is imposed by the judiciary. We have never seen imposing imprisonment on default of labour law. My area of working is Haryana state & I am talking about Haryana only. This certainly means that Courts are also not inclined to impose severe penalty on labour law violations on first offence. Gujrat Govt. move is appreciable.

Regards,

R N KHOLA