The State government has exempted the knowledge-based companies in Karnataka from the applicability of ‘Standing Orders’ for a further period of five years despite the industry not complying with earlier conditions.
While the previous exemption in 2019 had come up after deliberations and amidst protest by trade unions, the latest exemption is believed to have come without any extensive deliberations on the subject with stakeholders.
Labour Department sources said that there was tremendous pressure within the government to extend the exemption for a period of another five years, though Labour Minister Santosh Lad had last year indicated that the government may not provide the exemption.
One of the important pieces of labour welfare legislation in the country, the Industrial Employment (Standing Orders) Act, 1946, governs a host of service conditions, including appointment, termination and dismissal, among things. While the Standing Order is applicable to all industries, the Karnataka government has been providing exemption to the knowledge-based industries in the State from applicability of Standing Orders in the companies since 1999.
The notification exempting IT/ ITES/ start-ups/animation/gaming / computer graphics/ telecom/ BPO/ KPO/ other knowledge -based industries establishments from the applicability of Standing Orders came on Monday, a move that has drawn mixed reaction. The earlier exemption given in 2019 expired on May 24, 2024.
Monday’s notification reiterates that the establishments should constitute internal committee as per the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 besides constituting a grievance redressal committee consisting equal number of persons representing employer and employees, to address any complaint grievances of any employee.
While the Karnataka Employers’ Association that represents a host of companies welcomed the move, the All-India Trade Union Congress (AITUC) criticised the government for making a unilateral decision and the union is contemplating legal recourse.
Commenting on the exemption from Standing Orders, KEA president B..C Prabhakar said that it will help attract more software companies in the State, and this will be part of ease of doing business. This could remain till the Labour Code is implemented, he added.
“IT industry in the State is nearly four decades old and it is no longer at a nascent phase to be provided with incentives. The hand holding through the exemption of Standing Orders undermining the employee rights is not fair. All other manufacturing industries in the State comply with the Standing Orders Act. This is discriminatory between industries,” said M. Satyanand, general secretary of AITUC, Bengaluru.
Conditions violated
One of the important conditions imposed on the companies in the notification is intimating about the cases of disciplinary action like suspension, discharge, termination, demotion, dismissal and others of its employees to the jurisdictional Deputy Labour Commissioner and Commissioner of Labour. The companies should also furnish information about the service conditions of the employees as sought by the labour officials.
The trade unions cite that the conditions that were imposed while the Standing Exemption was given in 2019 have not been complied with by the companies.
The RTI responses obtained from Labour Department in April and May 2024 show that in matters of termination, demotion and dismissal, which has to be mandatorily filed by the companies before the jurisdictional Labour office, have not been filed. “There is no information on termination, demotion and dismissal from any company so far,” said the RTI reply from two jurisdictional Labour offices that cover the entire IT corridor, including the famed Electronic City and ITPL that house large IT companies.
In Bengaluru, an estimated 15 lakh people are employed across thousands of knowledge-based industries. Sources in the government acknowledged that it was aware that the companies had not complied with the conditions, and that some action could be expected about it in coming months.
“It is known that thousands of IT employees lost jobs during COVID-19. It is a fact that a large number of them have approached labour courts or the jurisdictional labour offices and yet the companies have chosen not to comply with the conditions. Despite this glaring violation with impunity by the companies, the State government has decided to exempt the companies. This is an anti-labour move,” said Mr. Satyanand.
“Principles of natural justice in any disciplinary proceedings against employees is mandated by the Standing Orders Act. The exemption allows the companies to flout the principles of natural justice.”