The $100-billion Indian IT industry, which is already plagued by myriad economic concerns, will soon have to take on another challenge in Karnataka, the country?s software hub. The Industrial Establishment (Standing Order) Act, 1946, which the software industry fears will bring back some kind of ?inspector raj?, is slated to kick off from April 2013.
The decision to implement the Act was taken last week. According to a senior state labour department official, the government decided to bring back this Act following a number of complaints from IT-sector employees concerning harassment, non-payment of compensation and stressful working conditions.
The objective of the Act is to minimise industrial unrest and fix responsibilities and accountability of employees. This is something that the industry is not able to fathom. Similarly, the Act also defines service conditions such as punctuality, leave facilities, working hours and medical benefits among others. Industry captains speaking to FE on condition of anonymity said that these factors should be left to the discretion of the employers. The Act will apply to all establishments employing 50 or more people.
The IT firms are finding it amusing that the Act calls for details on shifts, late coming and classification of employees to be displayed at various points in the campus. A top official with an IT firm told FE that these are indicative of an earlier style of working and do not belong to today’s globalised work environment.
The IT industry was exempted from the Act for over a decade but it expired on August 26, 2011. The state, which contributes over 30% of the country’s total software exports, has been examining the possibility of reviving the Act for some time now. It is likely to be notified again within the next three weeks. However, the state government will provide six months’ time before implementing the law by April 2013. The labour department has made a very detailed presentation to the government on the merits of introducing the Act.
The department believes that it is a self-regulatory mechanism and would help in reducing industrial disputes. Referring to the industry’s fears of government officials harassing the software firms over the Act, the official said: ?If the government’s intention was to really harass the industry, we can do so in many other ways. That’s not the intention. We want IT companies to invest in Karnataka.?
According to the official, all that the IT companies will have to do is to establish written guidelines as per the model standing order of the Act before receiving the necessary certification from the department. ?This is just a certificate and self-observance procedure without any need to submit any kind of returns,? he said. There were also apprehensions that this might give rise to unionisation, but the Act allows the representation of any three employees for certification, if there is no registered union. Already, a dozen IT and biotechnology companies have come forward to receive the certification, the official said.
?Karnataka is the only state where the IT industry is exempted from this Act while it is applicable in other states like Andhra Pradesh, Tamil Nadu and Maharashtra,? the source added.
Nasscom, the apex trade body of the IT industry, has already written to the state government citing that Bangalore is home to a large number of R&D centres of MNC companies and such a move could discourage them from investing further in Karnataka. The state has around six lakh people employed in the IT industry with over 90% based in Bangalore, which is generally referred to as the IT capital of India.