Article (June-2017)


IT Organizations and Employment Laws: The Tamil Nadu experience

Dr. Deepak Sharma

Designation : -   Associate Professor-HR

Organization : -  Narsee Monjee Institute of Management Studies, Bangalore


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New Democratic Labour Front's IT wing (NDLF) filed a petition seeking Tamil Nadu government's explanation on the controversial aspect of freedom to form trade unions in technology organizations. The Tamil Nadu government clarified that the State's labour laws applied equally to the information technology and allied sectors, and consequently allowed IT employees the freedom to form associations and trade unions. The government came with a clarification that IT companies were subject to inspection from the labour department like all other organizations. Where the provisions of the Industrial Disputes Act, 1947 were violated knowledge workers may approach the conciliation officer through their trade unions and even subject their erring employer to an industrial dispute. They were also free to form trade unions and could redress their grievances.

The IT wing of NDLF was established in 2015 amidst emerging issues around retrenchment of thousands of employees by TCS. It was at that time that NDLF came up with a petition at the High Court of Madras with a demand that retrenchment which TCS was doing was against the ID Act. The Court however restrained from entertaining the petition and directed the government to clarify its position on this issue. As there was delay in clarification from the government, NDLF took help of RTI to find out if action had been taken. When even RTI queries were left unanswered for almost 14 months NDLF then moved a contempt petition. It was then that the State Government published the notification clarifying its position.

However, the government's stand was not welcomed by professionals and employers across Tamil Nadu. They looked at it as 'bad news for Tamil Nadu' because in most states IT industry was exempted from all the regulations. It was felt that IT industry was catering to the global marketplace and what was needed was more certainty and predictability as they were involved with 24x7 critical service. IT experts felt that such demands from the employee may be troublesome for IT organizations. An industry with already a 15 to 20 percent turnover rate was not in that need of excessive protection they felt.

IT Policy of the Government of Karnataka
The Tamil Nadu's neighbouring state i.e. Karnataka, India's technology hub, prohibits formation of labour unions in IT firms under its jurisdiction. Karnataka has even exempted the IT sector from Industrial Employment (Standing Orders) Act 1946. Karnataka has also held that activities in IT organizations are to be treated at par with par with "essential services," to keep it going even in times of a strike or bandh call. Labour is on the Concurrent List of subjects, according to the Indian Constitution so both Centre and State may legislate on the subject. 
The Karnataka government in 2013 unveiled its i4 policy to further strengthen its thriving IT industry. The policy was directed to convert Bangalore from one of the top ten IT hubs to the largest IT destination globally by 2020. According to the i4 policy of Karnataka, in which 4 Is stand for IT/ITeS/Start-ups/ and knowledge based industries, the state government exempted from the applicability of Karnataka Industrial Employment (Standing Orders) Rules, 1946, for a period of five years with effect from January 25, 2014 with clause for protection of women employees and prevention of sexual harassment in work place.
In order to make Karnataka investor friendly destination, IT, ITeS, Innovation, Incentives policy, treated IT/ITeS/BPO/ KPO/Knowledge industries at par with public utilities to exempt them from disruptive effects of general strikes and bandhs.
Information technology (IT) and IT-enabled Services (ITeS) establishments in Karnataka were exempted from compliance under the Industrial Employment (Standing Orders) Act of 1946subject to the following conditions:
    According to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the rules framed there under Internal Complaints Committee (ICC) to be constituted by establishments.
    Grievance Redressal Committee to be set up by establishments to address complaints of employees in a time bound manner.
    Cases of disciplinary action, suspension, discharge, termination, demotion, dismissal, etc., of its employees to be intimated to the jurisdictional Deputy Labour Commissioner and the Commissioner of Labour, Karnataka by the establishments. 
    On requirement of any information by the jurisdictional Deputy Labour Commissioner or Commissioner of Labour, Karnataka regarding the service conditions of the employees employer to ensure prompt submission of any such information. 
IT as Public Utility Service
Further, many state governments have declared IT sector as a "public utility" under the ID Act. However, to understand the legal provisions correctly, IT as public utility service only means that before going for strike, workers are required to comply with requirements of section 22 of the  Industrial Disputes Act, 1947 which is much more elaborate than going for strike in other organizations. The freedom to strike of employees in the IT industry is not altogether barred.
Constitution of India and Statutory Provisions
It has to be understood that the right to form trade unions is a fundamental right and Constitution of India under Article 19(1)(c) guarantees freedom to form associations or unions as a fundamental right subject to "reasonable restrictions" imposed in the interest of sovereignty or integrity of India and public order and morality. Similarly, The Trade Unions Act, 1926 does not exclude any kind of workers from forming a trade union. According to section 4 of Trade Unions Act, "Any seven or more members of a trade union may, by subscribing their names to the rules of the trade union and by otherwise complying with the provisions of this Act with respect to registration, apply for registration of the trade union under this Act". 
The IT industry has considered itself as different from the manufacturing sector and even employees felt that they were much excluded category from workmen (refer to Industrial Disputes Act, 1947) and workers (refer to Factories Act, 1948). This was due to the attractive entry level salary packages, social status associated with it and the highly urbanized way of living which led IT industry employees differentiate from blue collar workers.

Employees in the IT sector have been understood to quit the job rather than think about formation of trade union option. Employees who start in IT industry from the middle layer supervisory and managerial function with a high salary package and perks do not feel the need for a trade union.

But IT sector of tomorrow may witness higher degree of "automation" whose effects may only be discovered and measured later. The jobs under the danger red-mark may be entry level, middle level or the threat may be equal for all ranks. The insecurity has been increasing among experienced software engineers in this ever changing sector, the speed and degree of automation have increased the insecurity and anxieties of the knowledge workers in these organizations. A day may come when trade union organizations in Karnataka may start asking for similar clarifications as freedom to form association is a constitutional right bestowed on each and every citizen of India.