Editorial: No more Exemption to IT Industry from Employment (SO) Act

On October 21 2013, at the IT trade conference ITe.biz held in Bangalore, the Karnataka government unveiled its new IT policy. This new policy contains two important provisions that have serious implications for people employed in IT/ITES sector.

First is the announcement that it would extend the exemption for the IT industry from Industrial Employment (Standing Orders) Act. This Central Government Act requires the employers in industrial establishments to define the conditions of employment with ‘sufficient precision’ and to make these conditions known to employees. The exemption provided by Government allows the IT companies operating in Karnataka to run their business without complying to this act.

The second is the Government statement that IT, BPOs and start-ups would be considered as an “essential services”. The Essential Services Maintenance Act, 1968, is an act laid out to provide for "the maintenance of certain essential services and the normal life of the community". It is impossible to classify the normal services provided by Indian IT industry as “essential” by any stretch of imagination.

These two policy provisions, taken together, spares the IT companies from the burden of defining terms such as conditions of employment, working hours, wages, attendance, grounds of termination etc. If media reports are to be believed, even the labor department was not consulted regarding these exemptions and many senior officials became aware of these decisions only after they heard the announcements in the media. Looks like the Government was in a hurry. It is not difficult to see the 'under-handed' maneuvering of the lobbyist representing Indian IT industry behind this haste.

Why an Industry that considers human capital as its most important asset is extremely hesitant to comply with the laws of the land regarding working conditions of its workers? As pointed out in the detailed study of the standing orders published in this issue, “why would the IT sector bend over backwards to get itself exempted from a fairly elementary labour law? The same industry that prides in its international-level best practices and offers some of the best working conditions in the country!”

This indeed is a very critical question.

The industry leaders have multiple claims for not falling in line with Standing Orders. One of them is that the industry itself has an internal eco system in which employer – employee relations can be maintained in mutually beneficial manner. Another claim is that the Industrial Establishment Law was formulated much before the advent of Indian IT industry in 1946 and it is very archaic for the needs of a new generation industry.

However, as any Industry insider can see from their own experiences, employer-employee relationship in IT/ITeS industry is not even-handed as they claim. Often the power is completely tilted towards the employer and the employee does not have any negotiation power in matters like working conditions. Even though policies are in place in many of the firms, the management seldom consults with employees either during formulation or modifications of these policies. Hence, in effect it remains unilateral.

It is very important here to note that the labour department itself has disagreements with the exemptions IT industry is enjoying because they have been hearing many complaints from employees on unilateral HR policies, harassment and job frauds. The move to exempt from Standing Orders was opposed by Karnataka Women’s Commission also citing concerns of safety and security of women employees who are working in the late hours in these firms.

Regarding the claim that Standing Orders act is too archaic for IT industry, one needs to understand that this act mandates only minimal things needed to guarantee basic rights of employees. It only asks the companies to publish their various policies and to get these policies certified by the labour department. Rather than refusing to follow the Standing Order Act, it would have been better if IT companies have proposed constructive suggestions to improve it based on specific nature of IT/ITeS industry.

It is not at all surprising that these latest IT labour exemptions creates a furore. As an organization working for the welfare of employees in IT/ITeS sector, ITEC realizes the importance of sustained campaigns against these new policies. It is a welcome sign that various civil society organizations and trade unions have offered support to ITEC in these campaigns.

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