Punjab modernises its Labour Law: Shops & Establishments Act gets a pro-business makeover

The Punjab Cabinet has approved a long-awaited amendment to the Punjab Shops and Commercial Establishments Act, 1958, ushering a fresh wave of regulatory relaxations aimed at reducing compliance burdens, boosting operational flexibility, and encouraging entrepreneurial growth in the State.

The reforms announced earlier this month introduce a two-tier compliance framework based on the number of employees. Establishments employing fewer than 20 workers are now exempt from registration, and only need to furnish basic details to the Labour Department. On the other hand, larger establishments with 20 or more employees can now expect deemed registration approvals within 24 hours of applying, eliminating long administrative delays.

Perhaps the most consequential change is the significant expansion of permissible overtime from 50 hours to a generous 144 hours per quarter reflecting the realities of today’s dynamic work environments. Further, the daily spread-over period (inclusive of rest intervals) has been extended from 10 to 12 hours, giving businesses added flexibility to structure shifts, especially in sectors like retail, logistics, hospitality, and e-commerce.

The amendments also tackle penalties and compliance procedures. Penalties under Sections 21 and 26 have been revised, with the introduction of a three-month grace period between the first and second offences, and for all subsequent ones a move that balances enforcement with fairness. Most notably, the reforms introduce a decriminalisation provision, which eliminates the need for employers to appear in court for certain violations, thereby reducing the fear of criminal prosecution for minor procedural lapses. These reforms signal Punjab’s intent to modernise its regulatory regime, aligning with the broader national agenda of reducing bureaucratic friction and creating a more business-friendly climate.

By streamlining procedures, enhancing labour flexibility, and easing punitive provisions, Punjab has positioned itself as a more attractive destination for entrepreneurs and investors alike offering not just ease of entry, but also ease of operations.