By Anuradha Gandhi and Isha Sharma
Introduction
In a significant development, the Department of Labour, Government of Karnataka has recently extended the exemption granted to IT and IT-enabled services (ITeS) industries from the applicability of the Industrial Employment (Standing Orders) Act, 1946 for another five years, until 2029 vide Notification No. LD 328 LET 2023 dated June 10, 2024.[1]
In a circular dated June 10, 2024, the State Government announced that the exemption applies to IT, ITeS, Startups, Animation, Gaming, Computer Graphics, Telecom, BPO, KPO and other Knowledge based industries. This move has been welcomed by industry representatives.
“The Karnatka Employers Association (KEA) welcomes the orders of the Government which would go a long way in further developing IT and ITES Industries in Karnataka and Bangaluru in particular,” said KEA President BC Prabhakar, in a statement.[2]
Earlier Exemptions to IT/ITeS Industries
These sectors have been exempt from the Industrial Employment (Standing Orders) Act, 1946 vide notification No. LD 53 LET 2013 dated January 25, 2014 for a period of five years. The same was last extended for an additional period of five years vide Notification No. LD 194 LET 2016 dated May 25, 2019.[3]
However, in December, the Karnataka labour department indicated that it was considering discontinuing the exemption, citing instances of unfair trade practices within the IT/ITeS sector. These practices included ID blocking, mass retrenchments, layoffs, extended work hours, and sexual harassment at workplaces.
According to Government estimates, nearly 1.8 million professionals are employed across 8,785 IT/BT firms in Karnataka. Following the covid-19 pandemic, the state labour department saw a surge in complaints from tech professionals alleging unfair trade practices, prompting authorities to consider revoking exemptions to strengthen job security and ensure a safer and more equitable work environment.
However, revoking the exemptions would also have posed challenges for businesses, including reduced ease of operation, constraints on policy and process implementation, and increased operational costs.
This balanced approach by the Karnataka government aims to support the growth of the IT and ITeS sectors while addressing employee concerns through regulatory conditions.
Conditions to avail Exemption
The Government held discussions with stakeholders, including the Karnataka Employers Association, before deciding to extend the exemption benefits by another five years till 2029.
However, these exemption granted to IT and ITeS industries comes with several conditions, including:
- The formation of an Internal Committee in accordance with the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and Rules framed thereunder;
- Establishing a Grievance Redressal Committee (GRC), consisting of equal number of persons representing employers and employees, to address any complaint/grievances of any of the employees. The GRC shall be empowered to handle all types of complaints/grievances of employee within a reasonable time frame;
- Intimating information about cases of disciplinary actions, such as suspension, discharge, termination, demotion or dismissal, etc. of its employees to the Jurisdictional Deputy Labour Commissioner and Commissioner of Labour in Karnataka
- Any information regarding employee service conditions sought by the Jurisdictional deputy Labour Commissioner and Commissioner of Labour in Karnataka, shall be promptly and fully submitted by the employer within the reasonable time frame fixed by the authority.
*In addition, the circular specifies that in case of The Industrial Relations Code, 2020 been implemented, the Code will be applicable to all.
Other Government Notifications for POSH Compliance
This trend of ensuring compliance with the Sexual Harassment of Women at Workplace Act, also known as POSH Act, is not unique to Karnataka. Other states have taken similar steps. For instance, in the year 2019, the District Magistrate of Noida mandated all companies in the district to form an Internal Committee and upload Annual Reports on an online redressal website. Following this, on December 13, 2022 the Additional Deputy Commissioner of Gurugram issued a comprehensive compliance checklist to all non-governmental organizations, urging them to form an Internal Committee. Similarly, the District of New Delhi issued an urgent notice dated January 13, 2023 requiring all companies to form Internal Committee and upload signed copies of their Annual Reports.
These measures highlight a broader commitment across India to enhance workplace safety and ensure compliance with the law, aiming to create a more secure and equitable working environment for all employees.
To know more about these notifications issued by state governments across India in detail, kindly refer to our article titled “Government Notifications for POSH Compliance-India.[4]
Conclusion
The continued exemption signifies an effort to maintain Karnataka’s competitive edge in the technology industry while acknowledging the importance of fair employment practices. The decision to extend the exemptions reflects a balancing act between fostering industry growth and addressing employee welfare concerns.
However, this move has been opposed by some trade unions, as unions state that this exemption has been extended without adequate deliberations on the lack of compliance met by the IT/ITeS sector previously.
Ahana Bag, Former Junior Associate at S.S. Rana & Co. has assisted in the research of this Article.
[1] No. LD 328 LET 2023 (chrome-extension://efaidnbmnnnibpcajpcglclefindmkaj/https://knowledge.legalitysimplified.com/attachment/ajax/uploads/circularAmendments/Karnataka%20exemption%20(1).pdf)
[4] https://ssrana.in/articles/government-notifications-posh-compliance-india/