The Karnataka government is considering a major amendment to the Shops and Commercial Establishments Act, 1961, aimed at extending daily work hours from nine to ten, increasing weekly limits to 48 hours, and enhancing overtime allowances. The proposal also seeks to exempt small establishments employing fewer than ten people from annual return filing. While the move is expected to benefit sectors like IT and ITES, it has provoked strong objections from trade unions. The draft, shared by the Labour Department, aligns with the Union government’s recommendation and similar reforms in other BJP-governed states, signaling a coordinated push for labor law modernization.
Government Proposal: Longer Shifts, More Flexibility
In a controversial yet calculated move, the Karnataka government has introduced a draft amendment to the Karnataka Shops and Commercial Establishment Act, 1961, recommending an increase in daily working hours to 10 from the current nine hours. The proposal, currently under stakeholder review, also caps total permissible work — including overtime — at 12 hours per day, up from the existing 10-hour limit.
If adopted, these changes would allow for 48 hours of work per week, a move that has drawn support from industry bodies seeking enhanced operational flexibility, especially in technology-driven sectors.
The Labour Department, tasked with circulating the proposal and collecting feedback, has convened a stakeholder meeting to finalize amendments to both the 1961 Act and the associated 1963 Rules.
Key Beneficiaries: IT and Commercial Services Sector
While the extended work hour proposal has raised concerns from labor groups, industries like IT, ITES, hospitality, and commercial services are expected to benefit most. These sectors often operate across global time zones and rely heavily on shift-based staffing to maintain 24/7 service capabilities.
Supporters of the reform argue that a 10-hour workday will enhance India’s competitiveness by aligning state regulations with global labor norms. For companies managing remote teams or international projects, the added flexibility could lead to higher productivity without necessarily increasing headcount.
Central Government’s Push and National Trend
The draft amendment is not isolated. Karnataka’s move follows the Union government’s directive to all states, encouraging them to consider legislative or regulatory changes to liberalize working hour restrictions.
The central government’s recommendation is part of a broader strategy to modernize India’s labor laws, aiming to boost employment, enhance ease of doing business, and attract investment. Similar reforms have already been implemented in Chhattisgarh, Gujarat, Maharashtra, Uttar Pradesh, and Uttarakhand — all BJP-ruled states — making Karnataka’s proposal part of a wider policy trend.
Overtime Limits Significantly Raised
Among the most notable changes in the proposed amendment is the dramatic increase in allowable overtime. Currently, the law permits up to 50 hours of overtime in a three-month period. The new draft raises this limit to 144 hours, a nearly threefold expansion that critics argue could lead to worker fatigue and exploitation.
While businesses may welcome this change for handling peak workloads or seasonal demand, labor rights advocates are demanding stronger safeguards to prevent abuse, including mandatory rest days and medical checkups for long-hour employees.
Regulatory Relief for Small Businesses
Another significant provision in the proposal is the exemption of establishments with fewer than ten employees from the Act’s compliance requirements, such as filing annual returns.
This move is expected to ease bureaucratic pressure on micro-entrepreneurs and reduce the regulatory burden on small shops and service outlets, especially those operating in rural or semi-urban areas. However, critics caution that such exemptions could encourage under-reporting of workforce size to avoid compliance.
Trade Union Opposition and Labor Concerns
Not surprisingly, the proposed amendment has been met with strong resistance from trade unions, which argue that increasing work hours without corresponding wage protections erodes workers' rights and undermines hard-won labor standards.
Union representatives have expressed concern that the reform prioritizes corporate convenience over worker welfare, especially given the rising cases of workplace stress, mental health challenges, and burnout in post-pandemic economies.
Many are also wary of the implications for blue-collar workers in hospitality and retail, where labor conditions are often less regulated and overtime pay enforcement is patchy.
Looking Ahead: Balancing Growth and Worker Protection
As Karnataka readies to finalize its proposed changes, the challenge lies in striking a balance between economic efficiency and employee well-being. While the state’s ambitions to streamline labor regulations and align with national trends are clear, the government must also navigate the ethical and practical implications of longer work hours, especially in sectors with vulnerable or underrepresented workers.
Transparent implementation mechanisms, worker consent clauses, and mandatory overtime compensation will be critical to ensure the reforms deliver inclusive, sustainable growth.
Conclusion
Karnataka’s draft amendment to its labor law framework reflects a decisive shift toward a more liberalized, employer-friendly labor regime. By extending work hours and easing compliance for small enterprises, the state positions itself as a forward-looking economic hub. However, the path forward must include robust social dialogue, strong enforcement mechanisms, and a firm commitment to preserving the dignity and rights of workers — without which, the promise of progress may come at too high a cost.
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