The Karnataka Shops and Commercial Establishments (Amendment) Bill, 2026 proposes to make registration lifelong, shift compliance to digital mode, align the Act with the new Labour Codes, and replace imprisonment with monetary penalties across most offences.
Instrument: LA Bill No. 23 of 2026Gazette: Karnataka Gazette, Part IVA, 24 August 2026Amends: Karnataka Act 8 of 1962Status: Bill — pending passage & assent
At a glance
Registration becomes lifelong — valid until closure or cessation of business; the five-year validity and renewal cycle is removed.
Compliance goes digital — filing, issue of certificate, fee payment and closure notification move to electronic or digital mode.
OSH&WC Code overlap addressed — establishments with 10+ workers already registered under the OSH&WC Code, 2020 are exempt from separate S&E registration.
Two new employer duties — issue a service certificate within seven days, and stop retaining employees’ original documents.
Alignment with the Codes — references to the Payment of Wages Act and Workmen’s Compensation Act are replaced with the Code on Wages, 2019 and the Code on Social Security, 2020.
Decriminalisation — imprisonment is removed from key offences and fines are sharply enhanced, with a new compounding and appeal mechanism.
The Karnataka Government has introduced the Karnataka Shops and Commercial Establishments (Amendment) Bill, 2026 to further amend the 1961 Act — the primary law governing shops, offices, retail, service businesses and commercial establishments in the State. The Bill, tabled by the Minister for Labour and Employment, carries a “nil” financial memorandum and is squarely aimed at ease of doing business, ease of living, and harmonising the State regime with the four Central Labour Codes now in force.
The following is a section-wise reading of what the Bill proposes. As it stands, it is a Bill: the provisions take effect only once it is passed, receives the Governor’s assent, and is brought into force by notification.
1. Registration: from five-year cycle to lifelong validity
The most significant change is to the registration architecture under Section 4.
Registration valid until closure
The substituted Section 4(5) provides that a registration, once issued, remains valid until the closure or cessation of business of the establishment. The existing five-year validity is dropped and the renewal machinery in Section 4(6) is omitted — ending periodic renewals altogether for registered establishments.
Digital-first compliance
Filing of the registration statement, issue of the certificate and payment of fees are all to be made through electronic or digital mode (Section 4(1), (2) and (4)). Closure of an establishment must likewise be notified to the Inspector through electronic or digital mode (Section 6).
Faster decisions
Where the Inspector is not satisfied about the correctness of a statement, the window to communicate a refusal is compressed from thirty days to seven days (Section 4(3A)) — tightening the deemed-registration timeline in favor of the employer.
Overlap with the OSH&WC Code
A new Section 3(k) exempts an establishment employing ten or more workers that is already registered under the Occupational Safety, Health and Working Conditions Code, 2020 from separate registration under the S&E Act. A proviso further clarifies that no separate registration is required for godowns or storage facilities situated within 100 metres of the principal establishment — a practical relief for warehousing and logistics operations.
2. Two new employer obligations
The Bill inserts two new sections that formalise documentation practices:
Section 6-B — Service certificate: every employer must issue a service certificate to an employee within seven days of receiving an application, in the prescribed form.
Section 6-C — Prohibition on retaining documents: no employer may retain an employee’s original educational certificates, experience certificates or any other original documents, whether at the time of appointment or during employment. This directly addresses a long-standing grievance around the withholding of originals.
3. Alignment with the Labour Codes
The Bill updates the Act’s cross-references to reflect the repeal of the older central enactments by the new Codes:
Section | Existing reference | Proposed reference |
|---|---|---|
21 | Payment of Wages Act, 1936 | Code on Wages, 2019 (Central Act 29 of 2019) |
22 | Workmen’s Compensation Act, 1923 | Code on Social Security, 2020 (Central Act 36 of 2020) |
This is the operative bridge between the State S&E regime and the Central Codes — and reinforces the dual-compliance posture employers must now maintain.
4. Decriminalisation and enhanced fines
Consistent with the trust-based governance theme, imprisonment is largely removed and monetary penalties are raised. The key changes:
Provision | Existing penalty | Proposed penalty |
|---|---|---|
4(8) | Imprisonment not less than 6 months + fine up to ₹5,000 | Fine up to ₹50,000 (imprisonment removed) |
30(1) | Up to ₹1,000 (first) / ₹2,000 (subsequent) | Up to ₹3,000 (first) / ₹5,000 (subsequent) |
30(2) | Up to ₹250 | Up to ₹2,000 |
30(3) | Imprisonment 3–6 months or fine ₹10,000–₹20,000, or both | Fine only, not less than ₹10,000 (imprisonment removed) |
33 | Up to ₹500 | Up to ₹10,000 |
New compounding regime (Section 33A substituted)
The jurisdictional Labour Officer may compound offences by collecting 50% of the prescribed fine for a first offence and 75% for a second or subsequent offence. An offence of the same nature is not compoundable if committed by the same person more than twice within a year, and no penalty may be imposed without a reasonable opportunity of being heard.
New appeal mechanism (Section 33B inserted)
A person aggrieved by a compounding order may appeal to a notified appellate authority — who must be an officer not below the rank of Assistant Labour Commissioner. The appeal must be filed within 30 days, is entertained only on deposit of the ordered fine, and is to be disposed of within 60 days.
5. Women’s night-shift conditions trimmed (Section 25)
The Bill omits clauses (h) to (o) of Section 25(1). The core protections remain — written willingness, free transport with GPS and adequate security, employment on rotation, security guards on night shift, separate rest rooms and washing facilities with privacy, and employer-borne crèche cost.
The granular operational mandates are removed: driver bio-data and pre-employment screening, supervisory scheduling of pick-up and drop routes, non-disclosure of women employees’ contact details, the “not picked-up first / dropped last” rule, random vehicle checks, the control room/travel desk, and the emergency-signal mobile app. Employers relying on these prescriptive safeguards for their internal night-shift policy should note the shift from detailed statutory checklist to a leaner set of core conditions, with the residual power to prescribe further conditions retained.
What employers should do now
Map dual registration: establishments with 10+ workers registered under the OSH&WC Code, 2020 should assess reliance on the new Section 3(k) exemption — and revisit godown/storage registrations within the 100-metre rule.
Prepare for lifelong registration: factor out renewal timelines from your compliance calendar once notified, while retaining the deemed-registration and self-certification safeguards.
Update documentation SOPs: build a seven-day service-certificate workflow and audit HR practices to ensure no employee’s original documents are being retained (Section 6-C).
Revise policy references: replace Payment of Wages Act / Workmen’s Compensation Act citations in handbooks and letters with the Code on Wages, 2019 and the Code on Social Security, 2020.
Re-baseline night-shift SOPs against the trimmed Section 25, retaining robust internal safety controls as good practice even where no longer statutorily mandated.
Track enactment: the above are proposals; act on the notified commencement date, not the Bill.
Note on status: The Karnataka Shops and Commercial Establishments (Amendment) Bill, 2026 (LA Bill No. 23 of 2026) was published in the Karnataka Gazette, Part IVA, on 24 August 2026. As on the date of this article it is a Bill and has not been enacted or brought into force. Provisions are subject to change during passage and take effect only upon notification. This article is for general awareness and does not constitute legal advice; verify against the final enacted text before acting.