Industry not in sync with K'taka IT union's demands to end labour exemption

Captains of the IT industry do not seem to agree with the Karnataka IT Union’s (KITU) demand for the state government to end the exemption given to the IT/ITeS sector from the Industrial Employment (Standing Orders) Act.

A section of IT employees in Bengaluru, under the banner of KITU, staged a protest in front of the labour commissioner’s office on March 16, which brought the issue to the limelight.

The IT/ITeS sector, which employs more than two million workers in Karnataka, has obtained an exemption from the applicability of the IE(SO) Act on more than four occasions. The last time the exemption was given was on May 25, 2019, and this exemption is about to lapse by May 25, 2024.

“KITU, the only registered union of IT/ITeS sector employees in Karnataka, which has a membership of more than ten thousand, demanded the government not renew the exemption anymore as the employers have not complied with the four conditions imposed on them while giving the exemption,” KITU said in a statement.

“The Industrial Employment (Standing Orders) Act is archaic, and modern businesses, IT or not, should not be governed by them. This Act was legislated a long time ago. Even the first line in the act considers the legislation itself ‘expedient’, which means, ‘convenient and practical although possibly improper or immoral’,” said Binod Singh, founder and CEO, of Cross Identity, a global player in identity and access management.

Singh explains that while the protest to reinstate the Act seems like a response to the mass layoffs in the industry, it is the nature of business. “If a company is failing and wants to retain some chance at success, sometimes mass layoffs are necessary. It is the nature of employment and the nature of modern business. Enforcing the protection of jobs via government laws helps nobody. The company will fail if it is forced to comply with such backward laws and red tape,” he said.

V. Balakrishnan, former board member at Infosys, concurs with the views that the IT industry is a sunrise sector and it should be provided with growth opportunities while protecting the rights of employees. “The IT industry needs flexible regulations if it has to compete globally. The startup industry too is at the growth stage and needs flexibility. Too much regulation will cripple the industry and will affect its competitiveness. The need of the hour is for the government to continue with the exemption and strictly enforce the conditions provided in the standing order act, which to a large extent, protects the interests of employees,” he said.

A former C-level executive of a Bengaluru-based IT company said that most companies in the IT sector follow global HR best practices and therefore can be exempted from archaic labour laws. “We are a global industry with business across geographies and employees all over the world, so we should be exempted from the labour department’s ambit,” he said on condition of anonymity.

Some companies have urged the Karnataka Labour Ministry to have broad stakeholder discussions with labour union leaders and the IT sector to determine the potential consequences of withdrawing the exemption.

“To minimise any negative effects on businesses while also protecting workers' rights, consider gradual implementation or transition periods. Furthermore, any negative effects on the business's competitiveness can be mitigated by sponsoring skill-development activities and cultivating an environment that promotes innovation and entrepreneurship,” said Vikas Sharma, founder and director, of Hi-Com Networks, an internet services provider.

Sharma suggests that if IT/ITeS companies were to be brought under the labour law, the government could consider developing procedures for equitable and open hiring, “offering sufficient protection from wrongful termination, setting up procedures for settling labour disputes and encouraging gender diversity and inclusion in the workplace. Provisions for emerging issues such as gig economy employment, remote work arrangements, and the use of future technology in the IT business may also be included. All things considered, the revisions should aim to strike a balance between protecting workers' rights and helping the IT sector to grow sustainably.”