Running Away from Standing Orders - The Indian IT Industry and Labour Laws

by Secki P. Jose

Recently, on October 21 2013, the Karnataka government announced that it would exempt the Information Technology (IT) industry from a Central labour law called the Industrial Employment (Standing Orders) Act (1). Now, central labour laws are applicable throughout the country to all industries without exception. However, this Act has a clause which gives State governments the power to exempt industries according to their discretion. Ordinarily, this law may not draw too much attention because it can be assumed that people who are not familiar with employment laws may not even be aware of the existence of such a law or what it implies. However, it is the repeated and concerted attempts by sections in the IT-ITeS-BPO (broadly the IT sector) industry and its lobbies that brings this law's criticality into the limelight.

Why would the IT sector bend over backwards to get itself exempted from an elementary labour law? The same industry that takes pride in its international-level best practices and offers some of the best working conditions in the country! It appears counter-intuitive for the flagship industry of the country, populated with some of the best minds and one that should ideally be setting the example for the rest of the industries - to behave in such an extra-legal way – bending laws, getting exemptions and undermining a long-standing and rich justice system. For people who have seen the employment side of IT operations, however, this comes as no surprise. But then the IT industry continuously slinks and dodges laws in other areas as well – which we shall subsequently touch upon.

Running Away from Standing Orders

This exemption is not an aberration. It may come as a surprise to many people that the IT industry has actually been avoiding all sorts of laws in the country for a fairly long time. The latest under-handed maneuver of escaping from the Standing Orders being just one of them. The term 'under-handed' is used here because the exemption from the law was seemingly struck outside the purview of the public. The declaration by the Chief Minister at an IT conference came completely out of the blue. The Chief Minister declared on October 21, 2013 that from November 1, 2013 – an exemption would be provided for 5 years. Even the Karnataka State's own labour department came to know about the decision only through the reporting media (2).

There was no public statement from the IT industry as to why it wants the exemption – or even whether it wants the exemption at all. There was also no statement as to why the IT industry was being given the exemption. There was also no suggestion of an alternative framework to which the industry would adhere. All that was said was that in 10 days time the IT industry will be exempted for 5 years! One may legitimately ask that when over 300 companies had already submitted their draft Standing Orders to the State Labour Department - while already following the same law in several other States, what was the need for this exemption. Even the industry body, NASSCOM, in its 2012-13 annual report had stated that it had already drafted a customised Standing Orders for the IT industry. In a blatant example exhibiting its lobbying power and influence in the economy however, the IT industry managed to again secure one of the many holidays that it enjoys in India. It would seem that if there was ever an example of wielding power irresponsibly for petty gains - to the detriment of the rest of society - this would be it.

No Rules, No Malpractice

How does this work to the detriment of the rest of society ?

First and foremost, it is in the nature of the law itself. The law was introduced for the first time amongst a series of people-centric legislations, in 1946. At the time, industrialists (Indian and British) used to change working conditions as per their personal whims and fancies. What the law did was to ask employers to publicly declare what are the standard working conditions in their organisation. This streamlined and provided the ground rules by which people would work there. This included conditions of hiring and firing, working times, workplace quality, attendance and leaves, types of employment contracts (permanent, temporary, probationer etc) and rules about misconduct by both employers and employees. What this law therefore did was to publicly declare what are the overall working conditions and ensure its adherence by both sides. Critically, it included several conditions of work that are either undefined or are not included in standard job contracts and the resulting contract law. This absurdly simple Law went a very long way in ensuring that employers follow the rules that they themselves set for their establishment.

Image Source: Wikimedia Commons

However, it seems that the 'best practice' for the IT industry is to have no rules at all. The implications of this exemption are tremendous for everyone working in the entire IT industry. As almost anyone who has worked in the IT industry will be aware, there are no fixed ground rules around hiring and firing, harassment (verbal, mental, physical) at the workplace, facilities at work, granting of leaves or even salaries. What one must understand is that this situation is primarily due to the exemption from the Standing Orders Act. Where there are no rules, no rules will be broken!

What is an equally serious concern is the fact that such exemptions are being demanded by other industries (biotechnology, mobile, internet etc) as well (3). Every industry is unique in its own way and demanding exemptions from the country's labour laws will only result in no industry being regulated. The IT industry in asking for such exemptions is setting a bad precedent for other industries. Similarly, while SEZs were originally envisioned to leverage economies of scale, good infrastructure and good networks – in India, they are being used to create zones to escape from laws. The disputes around SEZs have now expanded from land and now includes labour and environmental regulation. The exemption of industries from the rules and regulations of the rest of the country is a dangerous path. Because what it does is unravel all the knowledge that has been gained over the years dooming us to repeat our old mistakes again.

Exemption Loves Information Technology

The recent exemption from the Standing Orders Act is a clear example of the elementary rules and regulations that the IT industry is not following. But it must also be pointed out that this is just one of the many laws that the IT industry dodges. Notoriously, in an attempt to escape from the Industrial Disputes Act (1947) and its definitions of employees – the IT industry of India equates itself to shops, hotels, theatres and other places of public amusement or entertainment. Most IT firms register themselves under the 'Shops and Commercial Establishments (SCE) Act' to get this status and officially go to extreme lengths to say that they are NOT an industry! Within the SCE Act itself, the IT industry has brought about numerous changes so as to escape from what little regulation exists within that law - thereby affecting workers in other types of establishments as well where workplace standards may not be up to the mark.

Not only this, the IT industry despite having been around for over 30 years in India still goes ahead and shamelessly asks for tax exemptions and electricity concessions that are usually reserved for 'infant' industries (4). Tax holidays had already been going on for over 10 to 15 years and yet the IT industry asked for more tax breaks. In this respect, it is perhaps apt to call this evasion of taxes as pure 'corporate irresponsibility' towards society.

Conclusion

The seeking and securing of exemptions from the laws of the land is an immature and patently unjust behaviour towards the rest of society. In this regard, the IT industry behaves more like a bunch of spoilt children. Not only does it try to escape from labour and employment laws but it also tries to seek other concessions and avoid paying taxes. Avoiding taxes is directly detrimental wherein it deprives the Government of funds to carry out its welfare schemes for the needier sections of society. Avoiding employment and labour laws primarily causes harm to employees and their families - and results in an unstable and poor workplace environment. In this regard, it swallows wholesale and retail, recent Western economic theories about the role of the State when this model is already breaking down in the West.

It must be put on record that rather than becoming a shining example of corporate practices and showing direction to other industries, the IT industry of India continues in its path of avoiding the basic civic social responsibility of following the laws of the land and indulges in all sorts of extra-legal manipulations. This undermines the legitimacy of the success of an industry which has been built on the hard work of many people – by making it appear that the success is linked more to getting exemptions from laws and taxes. In the background of the continuing malpractices that are occurring in this sector and lagging behind of other sectors of the economy, it is perhaps an apt time for the IT industry to behave in a more responsible way and not be baby-fed ad nauseam.

In parallel with this understanding, the IT/ITeS Employees Centre (ITEC) has been opposing the exemption extended to the IT industry from the Industrial Employment (Standing Orders) Act and other important laws of the country.

References

The author is currently a Researcher with the Foundation for Agrarian Studies (FAS), Bengaluru and has worked in the IT industry for over 5 years.

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