Research Brief - Standing Orders Act, IT Industry

PROPOSITION - The Karnataka IT industry wishes to extend its exemption from the Industrial Employment (Standing Orders) Act(1)

CONTEXT - The 2 year exemption that the Karnataka IT industry had received expired on
August 25, 2011. The exemption has been extended for 2 years 5 times - since 1999. Therefore, the
exemption has lasted 12 years.

DEFINITIONS-
What is this - The Industrial Employment (Standing Orders) ?
'Industrial Employment Standing Orders' is derived from the Industrial Employment (Standing
Orders) Act - a labour law was passed in 1946 (2). This law makes it mandatory for every
establishment that employs more than 100 people to -
1) Draft a 'Standing Orders'
2) Get it approved from the workers or their Union
3) Get it approved by the Office of the Labour Commissioner

Then , what are Standing Orders ?
Standing Orders are a list of conditions and procedures under which the workers will be employed.
This would be similar to the conditions listed out in a customary 'Job Offer Letter' except here it
would include all the workers in the company. A model 'Standing Order' should include -
1. Classification of workers, e.g. permanent, temporary, probationers etc
2. Manner of informing workers periods-hours of work, holidays, pay-days, wage rates.
3. Shift working.
4. Attendance and late coming.
5. Conditions, procedure and the authority which may grant leave and holidays.
6. Requirement to enter premises by certain gates, an liability to search.
7. Closing and reporting of sections of the industrial establishment, temporary stoppages of
work and the rights and liabilities of he employer and workers arising there from.
8. Termination of employment, and the notice to be given by employer and workmen.
9. Suspension or dismissal for misconduct, and acts or omissions which constitute
misconduct.
10. Means of redress for workmen against unfair treatment or wrongful exaction by the
employer or his agents or servants.

For most working employees, these would look like the guidelines in a standard 'Offer Letter.
Usually the SPOC for these issues is the HR Department.

WHICH STATES HAVE THIS EXEMPTION -
This is one of the many labour laws that the IT industry is exempt from. The success of the
Karnataka IT industry soon saw many states also making the IT/ITeS industry exempted from most
labour laws. The State Government has the power to exempt a particular industry from this Central
law.

The States of Maharashtra and Gujarat are already not under the purview of this law.
Apart from this, the IT related industries are completely exempted from this law in Haryana,

Karnataka, Tamil Nadu and to a degree in Andhra Pradesh. This includes most of the locations of
the IT industry.
Seeing this a lot of other states such as Orissa, Rajasthan, Madhya Pradesh among others also did
the same. (3)

Not only this, most SEZs do not have to comply with this law. With 133 functioning SEZs and
around 600 SEZs having been formally approved (4) - the concern arises whether the lax labour-law
attitude demanded by the IT companies is going to affect workers from other industries as well.

BENEFITS OF EXEMPTION
There is NO public statement from the IT industry or its bodies as to why exactly it seeks this
exemption. The question that arises is -
IF THE 'IT INDUSTRY' PROVIDES SUCH GREAT WORKING CONDITIONS, THEN WHY
DOES IT NOT COMPLY WITH THE LAWS ?

The Advantages of getting an exemption are several :
1. A company in this industry can have their own random firing procedures.
2. The company can hire workers for various types of contracts and position types.
3. The company does not need approval about the working conditions from workers or their Union.
4. The company can violate their own standard set of procedures at any time.
5. The company can modify their conditions of work any time Eg. transport, food-related, facilities
etc.

KEY CONCERNS
Giving a company the flexibility to manoeuvre its labour according to its fiscal condition does put the
conditions of workers at risk. While the IT sector has the some of the best working conditions, it is
always under the threat of job-loss due to the absence of such laws. The validity of this approach is
subject to heated debate.
With the classical economic theory - regarding the declining rate of profit - hitting the IT sector,
the question is whether the exemptions will remain. The conditions of work in the IT sector are
deteriorating especially with regard to smaller tech firms.
There is also a concern whether the tech manufacturing firms would try to piggy-back on the same
exemptions from labour laws that are used by the IT service-provider companies.

NOTES
1. http://www.thehindu.com/todays-paper/tp-national/article2532900.ece
2.Standing Orders Act - http://labour.nic.in/act/acts/IndustrialEmploymentAct.doc
3. Details available at respective State Government websites
4. SEZs in India - http://www.sezindia.nic.in/about-asi.asp

The author, Secki P Jose is a Masters student of Globalisation and Labour at the Tata Institute of Social Sciences, Mumbai and can be contacted at seckresearch@gmail.com

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