The said Act requires employers in industrial establishments to define conditions of employment in the form of Standing Orders and make them known to the workmen. It provides for the certification of draft Standing Orders as submitted by employers. Such Standing Orders have to cover the aspects specified in the Schedule to the Act which include classification of workmen, manner of intimation of working hours, holidays, paydays, wage rates, employment termination, shift working, etc.

An exemption of this nature was first granted in the year 1999 and it has been renewed multiple times since then. This was done recognising the IT and IT-enabled sector’s pivotal role and to encourage innovation, enhance ease of doing business, and attract foreign investment. The last extension, accorded vide Notification no. LD 194 LET 2016, dated May 25, 2019, ended last month.

As per the present Notification, the exemption is subject to the following conditions:

• Internal Committee under POSH Act

The establishments have to constitute an Internal Committee as per the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013, and the rules framed thereunder.

• Setting up of Grievance Redressal Committee

A Grievance Redressal Committee has to be set up, consisting of an equal number of persons representing employer and employees, to address any complaint or grievances of the employees. This Committee should handle all types of complaints and grievances within a reasonable period.

• Intimation regarding Disciplinary Actions

Information regarding cases of disciplinary action such as suspension, discharge, termination, demotion, dismissal, etc. of employees has to be intimated to the Jurisdictional Deputy Labour Commissioner and Commissioner of Labour in Karnataka.

• Furnishing Information sought on Service Conditions

Employers are required to promptly submit any information concerning service conditions of employees as sought by the Jurisdictional Deputy Labour Commissioner and Commissioner of Labour in Karnataka.

Position after Labour Code Comes into Effect

When it comes to the new labour codes, which are expected to be implemented shortly, the Industrial Relations Code, 2020, (’Code’) contains provisions pertaining to Standing Orders and is set to replace the Industrial Employment (Standing Orders) Act, 1946 (i.e., apart from the Trade Unions Act, 1926, and the Industrial Disputes Act, 1947). It is clarified, under the present Notification, that once this Code is implemented, the Code will apply to all.

Remarks

This Notification is intended to provide a stable regulatory environment that can help IT firms focus on growth and technological advancement. It seems like the decision aims to encourage growth and maintain the state’s preeminence as a global IT hub. Due to the exemption, IT companies and startups can continue having flexible working hours considering remote working and non-standard schedules which are common in this sector.  This sector can also resolve labour disputes internally instead of having to adhere to conventional dispute mechanisms.

The extension is widely seen as a boon by many tech firms considering that their growth trajectory remains undisturbed. However, its implication for labour rights cannot be ignored and critics may argue that the exemption undermines workers’ rights. One of the questions that may arise is – do the benefits justify the renewal of the same four conditions for over a decade without prescribing any additional requirements. In fact, concerns have been raised regarding compliance with the specified conditions particularly the one requiring filing information on disciplinary actions taken against employees.

Evidently, the decision to extend the exemption has been taken despite protests held by the Karnataka State IT/ITES Employees Union (KITU) earlier this year. Reportedly, the KITU has also filed a writ petition before the Karnataka High Court contesting the exemption.

In light of the above, the challenge moving forward would be that of creating a balance between the economic growth of the state without leaving the employees vulnerable.

Hope that the state government stands true to its motive of not only boosting these sectors but also safeguarding employees’ interests and creating more jobs thereby enabling the economy to bloom.