The Karnataka Shops and Commercial Establishments (Amendment) Bill, 2026 (LA Bill No. 23 of 2026), which was earlier introduced before the Karnataka Legislature in August 2026, has now completed the legislative process and has been enacted as the Karnataka Shops and Commercial Establishments (Amendment) Act, 2026 – Karnataka Act No. 38 of 2026.
The Bill document was published in August 2026 and bears the date 25 August 2026. It subsequently received the assent of the Governor of Karnataka on 3 September 2026. The final Act was published in the Karnataka Gazette Extraordinary on 4 September 2026 under Notification No. DPAL 32 SHASANA 2026.
The Act provides that it shall come into force at once, and therefore the amendments are effective from 4 September 2026.
The provisions that were earlier only proposals under the Bill have now become law and require compliance by covered establishments in Karnataka.
Registration Relief for Establishments Registered Under the OSHWC Code
A new clause has been inserted in Section 3 covering establishments employing ten or more workers that are already registered under the Occupational Safety, Health and Working Conditions Code, 2020.
The amendment also provides that no separate registration will be required for a godown or storage facility situated within 100 metres of the principal establishment.
The Statement of Objects and Reasons accompanying the earlier Bill indicated that the intention was to avoid duplication of registration for establishments already registered under the OSHWC Code.
Employers should, however, carefully examine the application of this provision while determining the extent of exemption available under the Karnataka Shops and Commercial Establishments Act.
Registration Process to Move to Electronic or Digital Mode
The Amendment Act introduces electronic or digital mode for various registration-related processes, including submission of prescribed forms, payment of fees and issuance of registration certificates.
This is an important step towards digital compliance and reduction of physical documentation.
The period available to the Inspector under Section 4(3A) for communicating a decision relating to registration has also been reduced from 30 days to 7 days.
It is important to note that this change relates to the period available to the Inspector for communicating the decision and should not be interpreted as reducing the employer’s original registration application period generally from 30 days to 7 days.
Registration to Remain Valid Until Closure
One of the most significant ease-of-doing-business amendments relates to the validity of registration.
Earlier, a registration certificate was generally valid for five years and required renewal.
Under the amended law, once registration is issued under Section 4, it will remain valid until the closure or cessation of business of the establishment.
This removes the requirement for periodic renewal of registration and considerably simplifies ongoing compliance.
Service Certificate to Be Issued Within Seven Days
A new Section 6-B has been inserted requiring every employer to issue a service certificate to an employee within seven days from the date of receipt of the employee’s application, in the prescribed form.
Employers should establish an internal process to record requests for service certificates and ensure that they are issued within the statutory timeline.
Retention of Original Employee Documents Prohibited
The new Section 6-C prohibits employers from retaining an employee’s:
original educational certificates;
original experience certificates; or
any other original documents.
The prohibition applies both at the time of appointment and during the course of employment.
Employers should therefore review their recruitment, onboarding and HR documentation practices. Original documents may be verified where required, but they should not be retained by the employer.
Alignment with the Labour Codes
The Amendment Act updates the Karnataka Shops and Commercial Establishments Act to align it with the new labour law framework.
References to the Payment of Wages Act, 1936 under Section 21 have been replaced with references to the Code on Wages, 2019.
Similarly, references to the Workmen’s Compensation Act, 1923 under Section 22 have been replaced with references to the Code on Social Security, 2020.
Changes in Conditions for Women Working During Night
The Amendment Act omits clauses (h) to (o) of Section 25(1).
These clauses earlier dealt with requirements such as driver antecedent verification, route planning, confidentiality of women employees’ personal contact details, deployment of security guards in certain transport situations, random checking of vehicles, control room or travel desk monitoring and emergency mobile applications.
However, other important safeguards relating to women working during night shifts continue, including written willingness, transport arrangements, security measures and prescribed welfare facilities.
Employers should therefore review their night-shift policies carefully instead of assuming that all safeguards have been removed.
Penalties Revised and Rationalised
Several penalties under the Act have been revised.
For specified contraventions, the earlier maximum fines of ₹1,000 and ₹2,000 have been increased to ₹3,000 and ₹5,000 respectively.
Certain fines earlier prescribed at ₹250 have been increased to ₹2,000.
Contravention of Sections 24 and 25 is now punishable with a fine of not less than ₹10,000.
The penalty for obstructing an Inspector or failing to comply with a lawful direction has also been increased from ₹500 to ₹10,000.
At the same time, certain imprisonment provisions have been replaced with monetary penalties, reflecting the Government’s stated objective of decriminalisation, rationalisation of offences and trust-based governance.
New Compounding Mechanism
Section 33-A has been substituted with a revised mechanism for compounding offences.
The jurisdictional Labour Officer may compound offences by collecting:
50% of the prescribed fine for the first offence, and
75% of the prescribed fine for the second or subsequent offence.
However, an offence of the same nature cannot be compounded if committed by the same person more than twice within a period of one year.
The law also provides that no penalty should be imposed without giving the concerned person a reasonable opportunity of being heard.
New Right of Appeal
A new Section 33-B introduces a statutory appeal mechanism against orders passed under the compounding provisions.
An aggrieved person may file an appeal within 30 days from the date of receipt of the order.
The appeal will not be entertained unless the amount of fine ordered has first been deposited.
The appeal is required to be disposed of within 60 days, and the appellate authority must be an officer not below the rank of Assistant Labour Commissioner.
Compliance Takeaway
The legal position has now moved from a proposed Bill in August 2026 to an enacted and enforceable law from 4 September 2026.
Employers and establishments in Karnataka should review their compliance framework immediately, particularly in relation to registration, digital processes, service certificates, employee documents, women’s night-shift arrangements, penalties, compounding and appeal procedures.
Key Dates
Bill: Karnataka Shops and Commercial Establishments (Amendment) Bill, 2026 – LA Bill No. 23 of 2026
Bill document: August 2026 / 25 August 2026
Governor’s Assent: 3 September 2026
Gazette Notification: 4 September 2026
Act: Karnataka Act No. 38 of 2026
Effective Date: 4 September 2026
Notification No.: DPAL 32 SHASANA 2026