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Source: This post is created based on the article “Implications of Implementing Labour laws in IT/ITeS Sector”, published in the Business Standard on 19th April 2024.
UPSC Syllabus: GS Paper 3 – Indian Economy – Changes to industrial policies
News: A new workers’ union called Karnataka State IT/ITeS Employees Union (KITU) has demanded the removal of the exemption given to IT/ITeS establishments from the Industrial Employment (Standing Orders) Act, 1946.
The union alleges that the exemption has allowed employers to flout labor regulations. They are enforcing long working hours, and engaging in unfair practices without proper grievance redressal mechanisms.
Karnataka has nearly 2 million workers engaged in the IT/ITeS sector.
How effective is the standing order?
The law in question does not provide new labor protections but aims to enhance transparency and workers’ awareness of their existing rights.
In Karnataka, businesses with 50 or more employees are required to create and display ‘Standing Orders’ detailing service conditions, which must be certified by the government. This legislation allows worker representatives to advocate for conditions that exceed legal obligations, solidifying these conditions through formal agreements.
Employers must consult with worker representatives before implementing these Standing Orders, and in cases of disagreement, a tripartite discussion involving the employer, worker representatives, and the government is mandatory.
Employers face significant pressure from worker representatives to adopt conditions of employment that are not mandated under any law.
What are the issues in implementing regulations?
It requires consultation with worker representatives and government involvement in determining conditions of service. Which would hinder the present fluid and flexible approach, where managers and workers find middle roads.
Certain demands from worker representatives, such as the “right to disconnect” after office hours, may not be feasible for IT/ITeS establishments serving clients across different time zones, potentially affecting their global competitiveness.
Well-educated workers in the IT/ITeS sector have a degree of agency and market mobility. It reduces the potential need for state coercion or union intermediation in determining employment conditions.
Moreover, Standing Orders cannot be amended for six months without the consent of worker representatives.
Excessive regulation or unionization could hamper the growth and flexibility of the IT/ITeS industry.
What should be done?
The IT/ITeS sector in Karnataka is the backbone of the state’s economy. Furthermore, Services exports were a full $325 billion in 2022-23 and can reasonably double every decade. Therefore, striking a balance between worker rights, economic dynamism, and global competitiveness is essential.
State government should improve monitoring and public disclosure of compliance with existing labor laws like PoSH and the Industrial Disputes Act. It will allow workers to make informed decisions when choosing employers.
