Mahrshtra shop & establishment act, applicability under contract staffing

Great question, Dinesh!

Under the Maharashtra Shops and Establishments Act, the applicability of compliance and liabilities in a contract staffing (or outsourcing) scenario is nuanced:

1. Applicability of the Act:

• The Act applies separately to both:

  • The service provider/vendor (the third-party housekeeping agency), and

  • The principal employer/company (the company obtaining housekeeping services).

2. Who is liable for compliance regarding:

• Working hours, overtime, weekly offs, and leave entitlements?

Vendor’s responsibility:

• The contract staffing vendor is primarily responsible for:

  • Ensuring that their employees (the housekeeping staff) receive proper working hours,

  • Payment of overtime for work beyond 9 hours,

  • Grant of weekly offs (minimum 24 hours continuous rest),

  • Grant of paid leaves (casual, earned leave, etc.) as per the Maharashtra Shop & Establishment Act norms applicable to them.

Principal employer’s liability:

• However, the principal employer (the company using the contract staff) can also be held liable under the Act, because:

  • The law tends to hold the principal employer jointly liable for non-compliance regarding the conditions of work of contract labor.

  • This is to ensure better protection of workers and prevent principal employers from avoiding labor liabilities by outsourcing.

3. Legal and practical implications:

• Both the vendor and the principal employer must ensure compliance.

• The company obtaining the staff should:

  • Verify that the vendor is compliant with the Act,

  • Include appropriate clauses in the contract mandating adherence to labor laws,

  • Maintain proper records and supervision to avoid penalties.

Summary:

• Yes, Maharashtra Shop & Establishment Act is applicable to both the third-party vendor and the company obtaining the contract staff.

• Both can be held liable for non-compliance on issues like working hours, overtime, weekly offs, and leave entitlements.