The debate regarding whether the Industrial Employment (Standing Orders) Act, 1946 [“IESO Act”] should be applied to the Information technology/ Information Technology Enabled Services [“IT/ITeS”] sector is of the utmost importance from the employee’s perspective. The companies in such sectors argue that the IESO should not be applied to them as they have their own policies and procedures which are considerably more advanced and robust than those enshrined under the IESO Act. On the other hand, employees demand the extension of the act for protection against the unfair practices of the employers. Such concerns have now gone off-the-air as recently the Karnataka government has issued a notification that has extended the exemption from the Industrial Employment (Standing Orders) Act, 1946 in IT/ITeS based industries. For extending the exemption certain conditions are laid down for compliance by the IT/ITeS industries i.e. the constitution of internal committees for the matters pertaining to sexual harassment of women at workplace; formation of the grievance redressal committee to address any complaint by the employee; intimation to the Labour Department on disciplinary actions like suspension, discharge, termination, demotion, and dismissal of employees; and sharing of the data related to workplace when asked by the government.
Currently, there are many people in this industry who work for Rs 8,000 and there is no minimum wage criteria in this sector which in the past has paid high salaries when compared from the other sectors. This decline in the salary shows the exploitation occurring on account of the inapplicability of the labor laws in the IT/ITeS sector. Further, there are ample amount of circumstances where the compulsory holidays of the employees are laid off and no paid leave options granted to the employees due to the lacuna in the law arising from the exemption for this sector. Through this article, the author will give a viewpoint from the employee’s perspective and will put forth some contentions to show the harmful effects of the notification exempting the IT/ITeS sector from the applicability of IESO Act, 1946.
Standing Orders Exemption: Boon or Bane?
The condition pertaining to the formation of internal complaints committee in the sexual harassment matters for availing exemption goes awry as less than 3% of 1,800 IT/ITeS companies
has complied with the condition of the notification in the past 5 years when such notification has previously protected the companies in the last 5 years. Thereby making 97% of the companies ineligible to claim the exemption from the IESO Act, 1946 but due to paucity in this arena, these companies are also availing the exemption as no ramification for non-compliance is laid. Further, in 2014, only 48 companies out of the 1800 companies have submitted a compliance report in pursuance of the second condition enshrined in the notification of exemption which lays down the stipulation to form a Grievance Redressal Committee with an equal number of employees and employers representatives to handle the grievances of employees. It is also to be observed that when the meeting was called by the Additional Chief Secretary of Labour to discuss the matter of the inapplicability of the IESO Act, 1946 on IT/ITeS sector, the National Association of Software and Services Companies [“NASSCOM”] opposed the participation of Karnataka State IT/ITeS Employees Union [“KITU”] representative. This meeting was held on 25th June 2019 after the passing of the notification and NASSCOM opposed the participation of the KITU by laying down the condition that meeting can only be possible when the representative of the KITU is not allowed to participate. These terms on the part of NASSCOM seriously challenge the second condition requirement of the formation of the Grievance Redressal Committee with an equal number of employees and employers representatives to handle the grievances of the employees.
Furthermore, the issues which are not mentioned in the conditions of the notifications have been effaced out from the consideration of prevailing labour law in IT/ITeS sectors. Considering the mandatory holidays on account of polling, most companies in the IT/ITeS sectors have not closed down the offices during the day of the voting of Karnataka state assembly elections. These issues are not defined in the rulebook of the companies which they use to flatter the premise of flexibility arising from exemption from the applicability of the IESO Act, 1946 on the IT/ITeS sectors.
It has become a general practice in the IT/ITeS Industry to make the newly recruited employees surrender and deposit the original certificates in the company. Also, they are forced to give a hefty amount of penalty for discontinuing their job. Thus, the person in these sectors continues their work under the different compulsions, pressures, forces, and coercion as they have no choice other than to do work, which cannot be considered as work through free will and consent. This will amount to forced labour and no such provisions for handling these situations are laid in the service rulebook.
Exemption From Standing Orders: Violation of Different Rights
The exemption given under Section 14 of the IESO Act, 1946 violates the right to equality of the IT/ITeS industries and its employees as the similar provision of non-applicability is mentioned under Section 13B of the IESO Act, 1946 which lays the fact that the Act is not applicable to Government establishments like Ordinance factories, Railways, etc., where the civil service rules have been laid. Considering the fact that no official service rules are there in the IT/ITeS sectors, the employees of the IT/ITeS and the IT/ITeS sector itself cannot be treated at par with the industries and its employees stipulated under Section 13B of the Act. Article 14 denotes equality of treatment in equal circumstances. As per this provision of the constitution, the similar treatment of persons who are not situated equally at par with the equals will cause the violation of Article 14 of the Constitution of India. And it is the duty of the state to ensure that every action taken by the state must be based on some reason and the decision uninformed by reason will be per se arbitrary. In the present notification, employees of the IT/ITeS sectors are treated at par with employees of Railways and Ordinance Factories where civil rules for services are there. But the IT/ITeS sector does not have any civil rules for the services and the treatment of the IT/ITeS sectors at par with the industries mentioned under Section 13B will cause grave injustice to the employees and violate their right of equality. This notification is thus per se arbitrary.
Further, not surrendering to the IESO Act, 1946 gives more boost to the employers to exploit employees. Moreover, by availing the exemption from the Standing Orders, it has become a widespread practice to neglect other laws such as the Industrial Disputes Act 1947, Contract Labour Abolition (Regulation) Act 1970, etc. Recently more than 100 employees were forcibly laid off by the companies and no company has shown any compliance with the rule of getting written permission from the government before laying off or retrenching hundred or more than a hundred workmen. Also, these industries have regularly indulged in the practice of employing contractual workmen without registering the names of the companies and getting the statutory licenses in the Contract Labour Abolition (Regulation) Act 1970.
The employees in this sector also cannot take any advantages of the amendments done to the IESO Act, 1946 due to the inapplicability of the Act. The recent amendment has granted fixed-term employment to the employees of all the sectors which was previously reserved only for the manufacturing sector. Through this amendment, the fixed-term employees can be hired for a specific project and they have a similar right as that of permanent workmen in terms of hours of work, wages, allowances, statutory benefits, and other benefits. This was a good chance for the government to mitigate the system of casual employees in this sector and replace it with fixed-term employment so that more organized structure can be formed but the government failed to do so by taking out the exemption notification.
The idea that IT/ITeS sector is the most pious and the workers in this sector are the most contented helps the IT companies to do away with the labour laws. Exemption from IESO Act 1946 firstly came out when the IT/ITeS industry was one of the emerging industries, but now the theory has changed as approximately this sector hires 3 million of the Indian population for work and this sector accounts for more than one-third of the Indian exports. From the abovementioned analysis and other indexes, it can be concluded that the working conditions of the people involved in IT sectors have become pathetic. The abovementioned premise can also be supported by the fact that only 10% of workmen are getting good salaries and at least 80% of the workmen are not getting minimum wages as notified by the KITU. Further, the IT sector in Karnataka only has one trade union which makes the task of collective bargaining more arduous but not impossible. The only bright side in this grey area is the KITU for the employees of the IT/ITeS sectors as it will play a vital role in keeping the checks on the lacunas not filled by the law and protecting the rights of the employees.