Authors: Mr. Suyash Srivastava (Partner), Mr. Kumar Prem Anand (Associate Partner), and Ms. Shubhra Shastri (Senior Associate)
The Karnataka Shops and Commercial Establishments (Amendment) Act, 2026 (“Amendment Act”) introduces a series of changes to the Karnataka Shops and Commercial Establishments Act, 1961 (“Karnataka S&E Act”), aimed at simplifying registration requirements, digitising regulatory processes, introducing additional employee-related safeguards, and increasing monetary penalties for non-compliance. The Amendment Act received the assent of the Governor of Karnataka on 3 September 2026 and was published in the Karnataka Gazette on 4 September 2026. It expressly provides that it shall come into force at once.
The amendments are particularly relevant for establishments if already registered under the Occupational Safety, Health and Working Conditions Code, 2020 (“OSH Code”), as well as for employers undertaking registration, maintaining employee records and responding to inspections and enforcement proceedings under the Karnataka S&E Act. The key amendments and their implications have been summarised below:
- Exemption for OSH Code-registered establishments
Establishments employing 10 or more workers if already registered under the OSH Code are exempt from the application of the Karnataka S&E Act. Further, godowns or storage facilities located within hundred (100) metres of the principal establishment will not require separate registration.
2. Digital registration and continuing validity
Registration applications, certificates and prescribed fee payments are to be undertaken through electronic or digital mode. The period for communicating refusal of registration has been reduced from thirty (30) days to seven (7) days, failing which the establishment will be deemed to be registered. Registration will remain valid until closure or cessation of business, and the periodic renewal requirement has been omitted. The requirement under Section 6 of the Karnataka S&E Act to notify the Inspector in writing has also been replaced with a requirement to make such notification through electronic or digital mode. Section 6 requires an employer to notify the Inspector, within fifteen (15) days of closure of the establishment, of the date of such closure and return the registration certificate. The amendment therefore primarily changes the mode of such intimation from written communication to electronic or digital communication.
3. Employee-related requirements
New Sections 6B and 6C have been inserted which require employers to:
- Issue a service certificate within seven (7) days of receiving an employee’s application; and
- Not retain original educational certificates, experience certificates, or any other original employee documents at the time of appointment or during employment.
4. Other statutory updates
References to the erstwhile Payment of Wages Act, 1936 and the Workmen’s Compensation Act, 1923 have been updated to references to the Code on Wages, 2019 and the Code on Social Security, 2020, respectively.
Clauses (h) to (o) of Section 25(1), relating to certain conditions applicable to employment of women during night hours, have also been omitted. Employers should review their existing night-shift policies and safeguards accordingly.
5. Enhanced penalties, decriminalisation, compounding and appeals
The Amendment Act enhances various monetary penalties and, in certain cases, removes imprisonment as a consequence of contravention. Key changes include:
- Section 4(8): Imprisonment of not less than six (6) months has been done away with, and fine increased from up to Indian Rupees Five Thousand (INR 5,000) to up to Indian Rupees Fifty Thousand (INR 50,000);
- Contraventions of Sections 24 and 25: Imprisonment has been done away with and a minimum fine of Indian Rupees Ten Thousand (INR 10,000) has been prescribed;
- Section 30: Various fines have been enhanced, including Indian Rupees One Thousand (INR 1,000) / Indian Rupees Two Thousand (INR 2,000) to Indian Rupees Three Thousand (INR 3,000) / Indian Rupees Five Thousand (INR 5,000) respectively and Indian Rupees Two-Fifty (INR 250) to Indian Rupees Two Thousand (INR 2,000); and
- Section 33: Fine has been increased from Indian Rupees Five Hundred (INR 500) to Indian Rupees Ten Thousand (INR 10,000).
A revised compounding mechanism permits collection of fifty per cent (50%) of the prescribed fine for a first offence and seventy-five per cent (75%) for a second or subsequent offence, subject to specified conditions. A new Section 33B also provides for appeals against Section 33A orders within thirty (30) days, with disposal of the same within sixty (60) days. Such appeal is to be entertained only after the fine imposed under the impugned order is deposited.
DSK Comments: The amendments substantially simplify the registration framework under the Karnataka S&E Act by introducing digital processes, deemed registration within a shorter timeframe and continuing validity of registration. At the same time, employers should note the enhanced monetary consequences for non-compliance, including the replacement of imprisonment with monetary penalties in specified cases. Employers should accordingly review whether their establishments fall within the exemption and, where applicable, assess the resulting implications for their existing registration, Further, employers must also review the current night-shift processes in place, ensure appropriate processes are in place for the issuance of service certificates within the prescribed timeline, and align their employee documentation, compliance matrix and SOPs with the amended framework.
Disclaimer: This update is general in nature and is not intended to be a substitute for specific legal advice. Please contact the author(s) for specific legal advice in this regard