In a major move to boost Ease of Doing Business (EoDB) and support MSMEs, the Government of Telangana has issued a notification exempting all shops and establishments employing up to 10 employees from the applicability of most provisions under the Telangana Shops and Establishments Act, 1988 (Act No. 20 of 1988).
This decision is part of a broader compliance reduction and deregulation effort being promoted by the Government of India to create a business-friendly environment, especially for micro and small enterprises.
🏛️ What the G.O. Says
As per G.O.Rt.No.383, dated September 23, 2025, issued by the Labour, Employment, Training & Factories Department, the exemption is granted under Section 73(4) of the Act. The order specifically targets shops and establishments with up to 10 employees, allowing them to function without having to comply with most of the Act’s regulatory requirements.
✅ Provisions Still Applicable
While the exemption reduces the regulatory load, certain key worker rights and protections will continue to apply. The following provisions of the Telangana Shops and Establishments Act will still be enforceable:
📋 Operational Requirements:
- Section 3–6: Registration, renewal, revocation, suspension, and appeals
- Section 9, 11, 12: Working hours, spread-over, and shop closing rules
🧑⚕️ Employee Welfare:
- Sections 16–19: Daily/weekly work hours, rest intervals, and holidays
- Section 24: Maternity Leave
- Sections 30–31: Leave and additional holidays
💰 Wage and Compensation Protections:
- Sections 37–38: Overtime pay and wage payment timelines
- Sections 47–49: Conditions for termination, compensation, and related appeals
- Sections 50–56: Claims related to wages, deductions, appeals, and authority powers
This approach ensures that while administrative compliance is eased, core labour protections remain intact.
🔎 Why This Matters
According to Periodic Labour Force Survey (PLFS) data, only 4.4% of non-agricultural establishments in India employ between 10–19 people. Hence, raising the threshold for mandatory compliance is expected to significantly:
- Reduce per-worker compliance costs
- Encourage formalization of small enterprises
- Promote job creation by removing regulatory hurdles
- Increase the number of registered businesses
⚙️ Policy Context
This move aligns with the Government of India’s EoDB reforms, particularly the deregulation of small businesses, which often struggle with compliance burdens despite limited workforce and capital.
The Special Chief Secretary (Industries & Commerce Dept.) had earlier recommended this reform (vide D.O.No.15/2024/637363/EoDB-2024), which was supported by the Commissioner of Labour, Telangana.
📢 Next Steps
The notification will come into effect from the date of its publication in the Telangana Gazette (24.09.2025). All stakeholders, especially small business owners, HR professionals, and chartered accountants, are advised to take note and adjust their compliance frameworks accordingly.
🧾 Conclusion
The Telangana Government’s step to simplify labour compliance for shops with up to 10 employees is a welcome reform that balances the interests of small businesses with the rights of workers. By keeping key employee-centric provisions intact, the state ensures that business growth does not come at the cost of labour welfare.