Information technology (IT) and IT-enabled services (ITES) establishments in the state of Karnataka have been exempted from complying with the Industrial Employment (Standing Orders) Act, 1946 (Standing Orders Act). The exemption has been granted for five years as per a notification issued by the Karnataka state government on 25 January and is subject to certain conditions.
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The Standing Orders Act requires employers (to which it applies) to define and publish uniform conditions of employment in the form of standing orders. An employer is required to draft standing orders (in accordance with the format prescribed under the statute), have them approved by the employee representatives and eventually apply to the labour department for certification. The standing orders must contain terms of employment including hours of work, wage rates, shift arrangements, and provisions relating to attendance and late arrivals, leave and holidays, termination of employment and suspension/dismissal of employees for misconduct, etc. Once certified, the standing orders override any contrary provisions of the employment contract, unless such provisions are more favourable to the employee.
In 1999, the Karnataka state government exempted the IT and ITES sectors from the Standing Orders Act for two years. The exemption was subsequently extended every two years until August 2011. In September 2012, the government exempted IT and ITES establishments from the Standing Orders Act until 31 March 2013, subject to the condition that such establishments submit their draft standing orders for certification to the state’s labour commissioner by 31 December 2012.
The notification states that IT and ITES companies and other knowledge-based industries (such as startups, animation, gaming, computer graphics, telecom, business process outsourcing and knowledge process outsourcing) in Karnataka are exempt from the Standing Orders Act for five years. The publication of the notification in the Gazette of India is still awaited.
The exemption is subject to the following conditions:
- The company is required to constitute an internal complaints committee in accordance with the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.
- The company must set up a grievance redressal committee consisting of an equal number of persons representing both the employer and the employees to address complaints of employees in a timely manner.
- The company must inform the jurisdictional deputy labour commissioner and the state’s labour commissioner about cases of disciplinary action, suspension, discharge, termination, demotion, dismissal, etc., of its employees.
- The company must ensure prompt submission of any information regarding the service conditions of employees sought by the jurisdictional deputy labour commissioner or the state’s labour commissioner. (For more on this issue, see Laws that need work.)
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The business law digest is compiled by Nishith Desai Associates (NDA). NDA is a research-based international law firm with offices in Mumbai, New Delhi, Bangalore, Singapore, Silicon Valley and Munich. It specializes in strategic legal, regulatory and tax advice coupled with industry expertise in an integrated manner.
