IMPACT OF SUSPENSION OF LABOUR LAWS IN UP IN IT INDUSTRY: CRITICAL OVERVIEW

Aayush Akar & Koustav Bhattacharya

INTRODUCTION

Labour laws are the laws which deal with the relationship that governs the workplace, in an environment influenced by both the employer and the employee. Labour laws deal with the disputes between the employer and employee, regarding various matters during the course of the job and also after the specific term of the job is over. These Labour Laws had been enacted in India to codify the Fundamental Rights of the workers regarding minimum wages and proper working conditions. Further, they provide a degree of certainty to the industries and bring them under a proper regulatory framework. Lastly, they help the State to fulfil its obligations enshrined in the Directive Principles of State Policy(s). So, they are expected to serve tripartite interests- of the employee, employers and the Government.

The Indian Information Technology companies were exempted from the basic obligations of the Labour Laws till 2012, after which the Labour Department refused to renew their exemption order. They had enjoyed this exemption for 11 years straight as they didn’t fit into the definition of ‘knowledge-based industry’, against which the ITEC (an IT Professional support group) and ITFI (an IT women support group) had campaigned.  

The then Labour Commissioner S.R. Umashankar made it very clear that applicability would be the general rule and exemption may be given only on a case-to-case basis. With this, various labour laws were made mandatory to be applied, along with the requisite update and compliance to be given to the Government about the same. Further, with an executive order dated 2018, startups were also made to follow Labour Laws.

LOOPHOLES IN THE EXISTING SCENARIO

It has to be kept in mind that the labour laws prevailing in the IT industry have many loopholes which are often exploited by the Employer to deprive the employee of their just due. On top of that, the Government has often been alleged to be hand in gloves with these industries as they significantly influence the Government with their resources.

A few of the most prominent loopholes of the Labour Laws concerning the IT industries can be cited as:

1. Under Section 14 of the Indian Employment Standard Orders Act, 1946 the state government may exempt any industry from the Central made Labour Laws. Most of the time, such exemptions are being granted by the State to the IT industries only. Instances can be cited from cases in Karnataka, Uttar Pradesh, and Gujarat.
2. The Factories Act, 1946, the Industrial Disputes Act, 1947 and certain State labour laws do not apply to IT Industries and further, if the IT employees are not included under the definition of “workman” stated in the Indian Industries Act, 1991, they are exempted from it too.

THE UTTAR PRADESH TEMPORARY EXEMPTION FROM CERTAIN LABOUR LAWS ORDINANCE, 2020 AND ITS EFFECT ON THE IT INDUSTRY EMPLOYEES

In the very recent case of Labour Laws suspension in Uttar Pradesh, the IT industry can be termed as the worst-hit industry. On May 6^th, 2020, Uttar Pradesh promulgated an ordinance as the Uttar Pradesh Temporary Exemption from Certain Labour Laws Ordinance, 2020, which suspended around 35 major labour laws in the state for a period of 3 years. The authors would like to state that it is the employees of the IT industries who are being treated the most unjustly. The reasons for the same can be stated as below.

1. IT industry is immune from the effect of COVID-19 – Since the advent of the COVID-19 pandemic, the IT industry was the pioneering form of industry to shift to a ‘work from home’ scenario. Thus, the industry, unlike the manufacturing and production industries, has suffered a minimal state of loss. So, allowing them to reap the benefits which are to be envisioned for the other form of industries is a blatant misuse of the law. This will provide for a legal fiction that would justify the owners of such industries to evade from their responsibilities, and would adversely affect the employees. The legitimate claims of the employees, which is that they have been working relentlessly in the lockdown period, are being denied by the employer by taking the help of this ordinance.
2. Enough cash reserves and Contingency funds for the IT industries- In the Indian context and scenario, most of the IT industries have well paid up Cash Reserves and Contingency Funds to deal with such situation. Even though the revenue growth for the IT industries has been lowest in a decade, their reserves are still sufficient enough to make them bear such obligations towards their employees. Certain UNICORN startups (with capital less than 6 crores) would have justified such an exemption, but a blanket ban can never be justified. The Government failed to establish such a selection criterion and rather imposed a blanket ban.
3. Unjustified time period-The ordinance has set up a time period of 3 years of exemption. This is extremely unjustified given the Scale of Operations of such industries and the losses that they suffered, which can be well recovered within 3 years. This just gives the IT industries a legitimate excuse to exploit their employees.
4. Existing problems amplified multiple times– There are already multiple problems which are faced by the IT industries, such as long working hours, no proper post-retirement benefits, which are multiplied by giving no adherence to the labour laws.

     The ordinance may prove beneficial to certain manufacturing and production units, but the same cannot be said for the IT industries. By providing a blanket ban, the employees engaged in ‘work from home’ are being denied their legitimate claims. There is no cap on the availability of this benefit as certain MNCs and such organizations with ample monetary resources would be unjustly enriched. Further, 3 years is quite an unreasonable time period given the Scale of Operations of such companies.

CONCLUSION

In a developing third world country, like India, IT Industries do contribute a lot to the economic development by providing employment opportunities and developing infrastructure. But, we must realize that though they may mandate certain incentives for more participation, this cannot be done at the expense of the employees. The Central government did extend the Labour Laws to the IT industries for this reason itself. But, more often than not we have seen State Governments violating them by claiming the exception under Section 14. This is a dichotomy that we must address to ensure proper coordination between the State Government and the Central Government, so that we may be in a situation to protect the interests of the stakeholders. “Labour” is a subject in the “Concurrent List” under the Constitution of India where both the Central and State Governments are competent to enact legislations subject, however, to reservation of certain matters for the Central Government. Thus, we must ensure and envision proper coordination between both the Governments in this matter. This will not eliminate all the malpractices and derogatory practices prevalent but they would also eliminate the possibility of any future conflict or issues that may arise with regards to various matters such as child labour, cyber frauds or cyber vigilance. This Labour Law suspension and its effect on IT industries is a classic example of unjust enrichment of the employers at the expense of the legitimate claims of the employees.

Aayush Akar, third year B.A.L.LB (Hons.) student at National Law University Odisha; AND Koustav Bhattacharya, third year B.A.L.L.B (Hons.) Student at National Law Institute University, Bhopal

Picture Credits: https://www.peoplematters.in/article/talent-management/the-year-that-was-2018-in-the-it-sector-20259?media_type=article&subcat=skilling&title=the-year-that-was-2018-in-the-it-sector&id=20259