A Introduction
The Department of Labour, Government of Karnataka ("Labour Department") issued a notification on June 10th , 2024 ("Exemption Notification") exempting the Information Technology ("IT") and the IT enabled Services ("ITeS") sector from complying with the provisions of the Industrial Employment (Standing Orders) Act, 1946 ("Standing Orders Act") for a further period of 5 (five) years from June 10, 2024 in the State of Karnataka. Apart from the IT/ITeS sector, startups, animation/gaming/computer graphics/telecom/BPO/KPO and other knowledge-based companies ("Exempted Companies") can avail this exemption. This is in line with the previous exemption notification that was issued on May 25, 2019, and which lapsed on May 25, 2024.
B. The Standing Orders Act: What does it stipulate?
The Standing Orders Act requires industrial establishments in Karnataka which have employed 50 (fifty) or more workmen in the preceding 12 (twelve) months, to propose and draft standing orders ("Draft Standing Orders") for its workmen in consultation with the trade unions and the representatives of the workmen. Post which, the Draft Standing Orders are required to be submitted to the Labour Commissioner who will be the certifying authority ("Certifying Authority") approving the Draft Standing Orders. The Draft Standing Orders include the classification of workmen, service conditions for workmen such as appointment, working hours, working shifts, layoffs, retrenchment and other matters that are prescribed by the respective State governments.
Once the Certifying Authority approves the Draft Standing Orders ("Certified Standing Orders"), they shall not be subject to modification until six (6) months have elapsed from the date they came into operation or from the date of their last modification. Any modification within this period requires an agreement between the employer and the workmen, or a trade union or other representative body of the workmen.
C. Conditions to be followed for availing Exemption:
The Exemption Notification prescribes that the Exempted Companies in order to avail the exemptions from complying with the provisions of the Standing Orders Act are to necessarily ensure that:
(i) An Internal Committee as per the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 is constituted.
(ii) A Grievance Redressal Committee consisting of an equal number of persons representing the employer and the employees is constituted in order to address any grievance/complaint of the employee/s.
(iii) Information pertaining to any disciplinary action taken against an employee such as demotion, discharge, dismissal, suspension and termination is intimated to the Jurisdictional Deputy Labour Commissioner and Commissioner of Labour in Karnataka ("Labour Authority").
(iv) Information pertaining to the service conditions of an employee that is sought by the Labour Authority is fully submitted within the prescribed timeframe fixed by the Labour Authority.
Concluding Note:
While the Exemption Notification provides an impetus to the IT/ITeS sector in Karnataka, the move to extend the exemption has been opposed by some trade unions, as unions state that this exemption has been extended without adequate deliberations on the lack of compliance met by the IT/ITeS sector previously. Interestingly, this Exemption Notification provides that if the Industrial Relations Code, 2020 comes into force, the code would apply to all establishments, including the Exempted Companies.
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