Applicability of Factories Act and Shops & Establishments Act for NGOs in Karnataka

Dear Client,

Non-profit organizations (NPOs) may still be subject to the Shops and Establishment Act if they provide services or engage in activities covered by the Act, despite not being commercial entities. Although the Act doesn't explicitly mention NPOs, it broadly encompasses establishments where individuals are employed for various functions. For instance, NPOs employing staff for administrative, accounting, or project management roles would fall under this Act's definition of an "establishment." According to the Karnataka Shops and Establishment Act, a commercial establishment includes various types of businesses such as offices, hotels, restaurants, theaters, and more. To obtain updated information and clarification on how this applies to NPOs, it's advisable to contact the Inspector appointed under the Karnataka Shops and Establishment Act.

Dear Client,
Non-profit organizations/NGOs, even though they may not engage in commercial activities, may still fall within the purview of the Shops and Establishment Act if they provide services or undertake any activities that fall under its ambit. While the Act does not specifically mention non-profit organizations, it broadly covers establishments where individuals are employed to carry out various functions. Consequently, NPOs employing workers for administration, accounting, project management, etc., would be considered an "establishment" under this Act. The Karnataka Shops and Establishment Act defines a commercial establishment as a commercial or trading or banking or insurance establishment, an establishment or administrative service in which persons employed are mainly engaged in office work, a hotel, restaurant, boarding or eating house, a cafe or any other refreshment house, a theatre or any other place of public amusement or entertainment and includes such establishments as the State Government may by notification declared to be a commercial establishment for the purposes of this Act;” Reach out to the office of the Inspector appointed under Karnataka Shops and Establishment Act for updated information and clarification