Tata Consultancy Services (TCS), India?s largest software services exporter, on Tuesday said a US court has allowed two ex-employees to proceed with a class action suit against the company for alleged wage disputes. The suit has alleged that TCS and its holding company Tata Sons had breached contracts by wrongfully withholding wages and violating California?s labour laws.
A class action case is a type of lawsuit in which one or several persons sue on behalf of a larger group of people who have common questions of law and fact.
The two former employees accused the company in 2006 of forcing all non-US workers to sign over their US tax refund cheques to the company and also that TCS deducted Indian salaries from their compensation. The employees have claimed that the firm had promised to pay them a gross salary in dollars and a separate Indian salary during their stay in the country.
The California Federal Court judge has allowed non-US citizens who worked with the company between 2002 and 2005 to sue for contract violations and also for separate class of employees to bring claims under California labour laws.
A company spokesperson in an email statement said, ?TCS continues to believe that when this matter concludes, the court will find that the plaintiff’s claims are without any merit. This is an order only on one procedural matter and does not address the merits of this case.?
Analysts FE spoke to have ruled out any business impact on TCS from the class action suit even as its shares closed 1.04% down at Rs 1178.95 on the Bombay Stock Exchange on Tuesday.
The US is a very significant market for TCS, accounting for 53% of its total revenues. It has 18,000 employees in the US out of a total employee base of 226,751. The $100-billion Indian IT industry, which the counts US as its largest outsourcing market, has been of late receiving a lot of flak for alleged violations regarding use of visas and other labour regulations.
Infosys, the second largest IT services exporter from India, is facing a lawsuit from one of its US citizen employees, Jack Palmer, who has alleged that the company had indulged in visa fraud. It alleged that Infosys abused a temporary business visa programme to get employees into the country for longer-term assignments. Infosys has denied any wrongdoing and said that it is cooperating with the grand jury’s investigation and that the company is also subject to an enquiry by a US senate subcommittee on immigration.
The HR head of a leading IT firm told FE on condition of anonymity that Indian firms will have to not only understand the law of the land but also respect it in spirit. ?Indian IT companies are no more the little wonders that they used to be. They are now multi-billion-dollar firms and have to be more cognisant of the letter and spirit of foreign laws.?