Exemption From Industrial Employment Act: Karnataka Govt’s Move Against IT/ITeS Workers?

The Karnataka government’s move to exempt IT/ITeS sector from the implementation of the Industrial Employment (Standing Orders) Act, 1946, for further five years has invited strong protests and criticisms from the trade unions and workers. The Industrial Employment (Standing Orders) Act gives protection to the employees from arbitrary suspension, termination, demotion and dismissal.

In Karnataka, along with the Information Technology(IT)/Information Technology enabled services (ITeS), animation, gaming, computer graphics, Telecom/BPO and other knowledge-based industries have also been enjoying this special treatment with certain conditions for the past 20 years. The exemption period which was being renewed every five years had ended on January 25 this year.

On January 3, 2019, three weeks prior to the lapse of the existing exemption tenure, Karnataka State IT/IteS Employees Union (KITU) submitted a memorandum to Amlan Aditya Biswas, the Additional Chief Secretary of Labour, Government of Karnataka, requesting the formation of a committee to enquire whether the industries have fulfilled the specified conditions in the exemption.

The conditions for exemption from the implementation of the Industrial Employment (Standing Orders) Act are- ‘each workplace constitute internal committee as per the Sexual Harassment of Women at Workplace Act, 2013; each establishment constitute a Grievance Redressal Committee consisting of equal number of persons representing employer and employees; each establishment intimate information about all the cases of disciplinary action like suspension, discharge, termination, demotion, dismissal etc., of its employees to the Jurisdictional Deputy Labour Commissioner and Commissioner of Labour in Karnataka and any information regarding service condition of the employees is sought by the Jurisdictional Deputy Labour Commissioner and Commissioner of Labour shall be promptly and fully submitted by every employer within the reasonable time frame’.

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“If they have not been following the conditions, they should not be granted any further exemption,” said VJK Nair, President of KITU. “We also urged him to see similar service conditions which are framed by the government of Karnataka and make them applicable. Since the additional chief secretary of labour was not inclined to given an extension, we requested him to call a tripartite meeting,” he further added.

Again on January 25, 2019, a joint meeting was convened with the officials from National Association of Software and Services Companies (NASSCOM) (a trade association of Indian Information Technology and Business Process Outsourcing industry), KITU and the state government.

Meanwhile, NASSCOM opposed the participation of KITU representative in a meeting called by the Additional Chief Secretary of Labour saying that the industry representatives will participate only if KITU representative is absent, which is an open challenge to the second condition of the Act which mandates equal employer and employee representation.

“During the meeting, we asked why should the companies be given a further exemption. They said, they wanted it because the digital India project cannot be completed with this standing order,” VJK added.

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Again in the meeting, it was decided that the possibility of implementation of the 1946 Act should explored by visiting every establishment. After exploring all the possibilities, it was decided to convene another meeting. In the mean time, the additional chief secretary of labour was transferred from his post.

“After transferring the officer, the state government had waited for the election agenda to be over and on May 25, they issued the order extending the exemption for further five years,” he said.

The extension was given under Section 14 of the Industrial Employment Standing Orders Act, which is virtually the use of a similar provision inserted in 1957 in Section 13-B making the Act not applicable to Government establishments like Ordnance factories, Railways etc., where the civil service rules are applicable instead of standing orders which are otherwise applicable in every industrial establishment, reads the press statement of KITU.

The exemption was introduced, for the first time, when IT was an emerging sector. But, the scenario has changed and the state government itself has published that an estimated 3 million employments will be made in the IT/ITeS sector by the year 2020. Also, IT services account for over a third of India’s exports pie and more than 76% in Karnataka’s case.

“The working conditions of the employees related to IT services are pathetic. Only 10% of workmen get paid well, at least 80% workmen in this sector are paid less than the notified minimum wage,” the KITU statement further reads.

Unlike other sectors, IT has only very few trade unions. The unions observe that a collective work force, which will help gain a bargaining power for their rights are the way out from these issues.

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When asked about how the exemption would affect the workers, VJK narrated that in the name of this exemption, they won’t frame any service regulation, working hours will be open with conditions of employment like entry exit starting of a particular department closure. The companies also claim exemption from all the labour laws, including Industrial Dispute Act which mandates prior permission from the government for lay-offs or closure of a company with more than 100 workforce. They also don’t pay respect to other labour laws like Provident Fund Act.

So, he said, “We are challenging the provision for this exemption in High Court because it is a violation of fundamental rights guaranteed under article 19.”