Karnataka Allows Establishments to Operate 24×7: Who is Eligible and What are the Requirements?

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Shops and commercial establishments in Karnataka that employ 10 or more persons will be allowed to operate 24×7 as per a new notification by the state government on January 2, 2021. It will be effective for a period of three years, starting January 7, 2021.

The move is not new. Earlier, in October 2019, the Karnataka government had issued a similar notification to allow shops and commercial establishments to stay open 24×7, all days of the week, for a period of three years. The latest notification, the 2021 Notification, partially modifies the 2019 Notification.

The policy is business-friendly and will likely facilitate economic recovery in the state by stimulating market consumption and creating conditions for jobs growth through flexibility in day-to-day operations. Karnataka, like most parts of India, has been hit by multiple lockdowns and movement restrictions since the start of the COVID-19 pandemic.

Over the past six months, the state has initiated land reforms, labor reforms, auto-renewal of various licenses and clearances, and a central inspection system to ease doing business. We wrote about this here: Karnataka’s New Approval System: Ease of Doing Business Reforms in India and Karnataka’s New Industrial Policy for 2020-25: What Should India-Bound Foreign Investors Expect.

What are the requirements?

For shops and commercial establishments that choose to operate 24×7, the following requirements must be met for their enterprises to stay compliant under respective labor and commercial laws:

  • Working hours of employees should not exceed eight hours per day and 48 hours in a week. The overtime period should not exceed 10 hours in a day. The total overtime period cannot exceed 50 hours over a continuous period of three months.
  • The above requirement means hiring additional staff so that every employee can avail at least one weekly holiday on a rotation basis.
  • If women employees are required to work beyond 8pm and before 6am, they must provide written consent and the enterprise must provide the person(s) with adequate protection and transport arrangement. 
  • Wages and overtime payment should be credited into the savings account of the employee(s), as per the Payment of Wages Act, 1936.
  • Restroom, washroom, safety lockers, and other basic amenities must be provided on staff premises.
  • Under the Sexual Harassment of Women at Workplace (Prevention, Prohibition, and Redressal) Act, 2013, an internal committee must be constituted.

Enterprises that choose to operate beyond normal hours should note that the conditions stipulated in the 2021 Notification are, in addition, to expected compliance with the Karnataka Shops and Commercial Establishments Act, 1961 and Employees’ Compensation Act, 1923. Violations of provisions in these laws and the 2021 Notification will trigger penal action against the non-compliant employer or manager.

Is there any ambiguity in the applicability and scope of the 2021 Notification?

There are some provisions in the 2021 Notification that come into conflict with the provisions under the Karnataka Shops and Commercial Establishments Act.

For example, the 2021 Notification says that working beyond 8 hours a day and 48 hours in a week constitutes overtime while provisions under Section 7 and 8 of the Karnataka Shops and Commercial Establishments Act stipulates a standard work day to be nine hours.

Another legal precedent was set by the 2019 Notification, which stipulated that the period of work inclusive of overtime must not exceed 10.5 hours a day and 57 hours in a week during a three-year period since issue of this notification that has not yet lapsed. 

Legal clarity will be required from government authorities for the 2021 Notification to stand up to scrutiny in future.

Meanwhile, certain establishments, like IT and IT-enabled services enterprises, pharmacies, hotels, petrol stations, and among others, have already been exempt from standard opening and closing hours and weekly holiday requirements under the Karnataka Shops and Commercial Establishments Act.

For queries regarding labor compliance and doing business in India, you are welcome to email us at india@dezshira.com.


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India Briefing is produced by Dezan Shira & Associates. The firm assists foreign investors throughout Asia from offices across the world, including in Delhi and Mumbai. Readers may write to india@dezshira.com for business support in India.

 

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