EXEMPTIONS TO IT/ITES ESTABLISHMENTS; A STEP FORWARD FOR EASE OF DOING BUISNESS

EMPLOYMENT LAW UPDATE

17th June, 2024

Issue No. 08/24-25

EXEMPTIONS TO IT/ITES ESTABLISHMENTS: A STEP FORWARD FOR EASE OF DOING BUISNESS

LEGISLATIVE BACKGROUND

The Industrial Employment (Standing Orders) IESO Act, 1946 (“IESO“) requires employers in industrial establishments formally to define conditions of employment for employees under them.

The objective of the IESO has been to ensure employers have uniform Standing Orders providing for matters such as periods and hours of work, holidays, pay-days, termination of employment, suspension or dismissal for misconduct, acts or omissions which constitute misconduct etc.

CURRENT SCENARIO IN KARNATAKA

The State of Karnataka has renewed its exemption given to IT, ITES, other knowledge-based enterprises and startup companies from the applicability of the IESO for a period of 5 years. The exemption was given on the basis that the following conditions be met:

  1. that each workplace would constitute an internal committee in accordance with the Sexual Harassment of Women at Workplace Act, 2013 (POSH) and the rules framed thereunder;
  2. that each establishment would constitute a Grievance Redressal Committee consisting of equal number of persons representing employer and employees to address any grievance or complaint of employees;
  3. that each establishment intimate information about all the cases of disciplinary action like suspension, discharge, termination, demotion, dismissal etc., of its employees to the Jurisdictional Deputy Labour Commissioner and Commissioner of Labour in Karnataka;
  4. that in the event any information regarding service condition of the employees is sought by the Jurisdictional Deputy Labour Commissioner and Commissioner of Labour shall be promptly and fully submitted by every employer within the reasonable time frame.

The erstwhile exemption provided in 2019 ended in May 2024 and was met with severe backlash from the Karnataka State IT/ITES Employees Union (KITU) stating that the above-mentioned conditions are not taken seriously by the industrial establishments or the Government and is proved by total negligence by NASSCOM & IT/ITES sector managements.

The exemption has nonetheless been renewed whilst continuing the same conditions mentioned above that must be met with to abide by the essence of the circular.

OTHER STATES

It is observed that along with the State of Karnataka, other states too have followed suit to encourage ease of doing business by providing the fast-growing IT sector and others with similar exemptions to working conditions.

The State of Telangana has renewed its exemption for all IT/ITES from certain provisions of the Telangana Shops and Establishments Act, 1988 for a further period of 4 years after the prior exemption given in the year 2019 lapsed in May 2024.

These sections are:

  1. Section 15 (Opening and closing hours)
  1. Section 16 (Daily and weekly hours of work) 
  1. Section 21 (Special provision for young persons)
  1. Section 23 (Special provision for women) and 
  1. Section 31 (Other holidays)

CONCLUSION

Where the move is seen to be welcomed by employers and investors wanting relief for ease of doing business, it is to be seen how the KITU and employees working in IT/ITES will react to such exemptions.

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