Labour Department not consulted, earlier notification rejecting exemption not cancelled

Karnataka’s latest IT policy, unveiled here at the State’s ongoing IT trade conference, has drawn mixed reactions from stakeholders.

Of the many measures announced to woo investors are two controversial moves which reverse the government’s earlier positions on exempting the sunshine sector from key labour legislations: it has exempted the industry from the Industrial Employment Standing Orders Act, 1946, and declared that IT, BPOs and start-ups will be treated on par with “essential services” in the face of a strike or bandh.

This comes a year after the State government, on three separate occasions, rejected pressure from IT industry lobbies to extend exemptions for IT and biotechnology companies from general provisions of labour legislation that govern all workplaces employing more than 50 workers.

The Labour Department had also issued several notifications to IT companies to submit drafts of Standing Orders — orders that define and inform workers on the terms and conditions of their employment — and set March 31 as a last date. Around 350 companies, sources in the Labour Department say, had got standing orders certified.

The policy announcement has taken the Labour Department by surprise. Senior Labour Department officials, who say the notification was never withdrawn, said they learnt of the development through the media after the announcement was made.

“Both provisions come under the purview of the Labour Department, but the department was not even informed, let alone consulted. The government had earlier taken a decision after several rounds of talks with the industry that the exemption will not be extended as several issues were cropping up in the sector,” the official said. He explained that the IT sector was moving on baseless fears that the move would lead to unionisation. “But the Standing Orders have nothing to do with unions. It is only to safeguard and bring clarity to employees on their rights and obligations.”

The sector had enjoyed the exemption for 14 years, which ended in August 2011. Since then, the then BJP government had asked companies to fall in line and had also held consultations with industry bodies. Karnataka is the only State where the IT sector has been exempt from submitting Standing Orders, a practice followed across sectors.

The Labour Department’s rationale for denying extension of exemption was that it was receiving complaints ranging from harassment and arbitrary HR policies to job frauds perpetrated by fly-by-night operators. The move was also opposed by the Karnataka Women’s Commission, which held that because the sector had women working late hours such exemptions could lead to violations of employees’ rights and denying benefits such as transport.

In a petition to the IT/BT and Labour Ministry, the IT and ITeS Employees Centre (ITEC), a welfare group for workers in the tech sector, has challenged the policy announcement. The government has belied the interests of employees in the industry, the ITEC said in the petition. “The Labour department has said on record that there is an increase in the number of unfair practices, including sexual harassment, reported in this sector. In such a situation, why grant an exemption,” asked Ramkumar (name changed), an ITEC member, who spoke on condition of anonymity. He pointed out that most tech companies comply with much more stringent norms abroad.

Meanwhile, the announcements have been welcomed by industry bodies, NASSCOM and Bangalore Chamber of Industry and Commerce.

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