priyankgowda Started The Discussion:
Does software companies come under the defn of industries
Posted 23rd October 2008 From India, Bangalore
Dear Priyanka,

Software companies are covered under Shops and Establishments Act. This act slightly varies from state to state.
For Example, A software company in Bangalore will be covered under Shops and Establishments Act, Karnataka. Another software co. in UP will be covered under Shops and Establishments Act, Uttar Pradesh.

Posted 23rd October 2008 From India, Hyderabad
Dear Priyank

Software industry doesnt come under Industries Act,but under Shops and establishment Act, if you read the definition of Industry under Industrial Act you will understand why Software company are not covered under industrial Act

Posted 24th October 2008 From India, Mumbai
no, ID Act is not applicable here. But, you need to go through shops and establishments act in detail in case u r thinking to just discard id act.

Also, if you let me know the context in particular, i will try to help.
Posted 29th October 2008 From India, Hyderabad
Please correct me if I am wrong, what is Industrial Act? When was the Act enacted? For me two basic Acts are Factories Act, 1948 (Central Act) and Shops and Establishments Act (of respective state govt.) although there are Mines Act, Plantations Labour Acts etc particularly for the concerned industry.
Industry has a wider meaning to cover all activities which are not otherwise covered by Shops and Establishments Act. Under Industrial Disputes Act, 1947, industry means any systematic activity resulting in the production or distribution of goods and services. Even the capital investment and profit motive are irrelevant in deciding whether an activity shall be considered as industry or not.

IT/Software companies are also engaged in an activity of production and distribution of goods/ services. As such there is no ground to say that IT companies do not come under Industrial Disputes Act.

In fact, if a thorough interpretation of term 'factory' in the Factories Act is done, IT companies shall also come under the Factories Act. But since the definition is narrow and many provisions made in the Act are relevant only to manufacturing units, IT companies came under 'other establishments'.

Like Factories Act, Shops and Establishments Act also does not provide any thing for settlement of disputes. All these Acts, such as Factories Act, Shops and Establishments Act, Plantations Labour Act or Mines Act, are meant for providing for health, welfare and security of employees employed therein. These Acts speak about hours of work, overtime, weekly off, welfare steps to be taken by the employer, measures to ensure safety and security of employees etc. In case of disputes, whether in any manufacturing or factory unit or shop or establishment, the same is redressed by authorities under the Industrial Disputes Act. Since in IT companies also employee - employer relationship is present there is no meaning in saying that the IT sector is free from coverage of ID Act. If it is so where should the employees seek justice?

I think the amendment to the Factories Act permitting women employees to work during night shift was made with a view to benefiting the IT sector. Similarly a verdict in the closure issue of Cholamandalam Software Company which did not intimate the appropriate government of its intention to close down the company was in favour of the employees. Right now I don't have supporting details but I shall post it soon.

The above views substantiate that IT company will also come under the coverage of Industrial Disputes Act.


Posted 30th October 2008 From India, Kannur
dear madhu is absolutely right .we should not mix shop and est act and industrial dispute act. industrial dispute act will apply here. tks j s malik
Posted 30th October 2008 From India, Delhi
Even i was thinking in the same way as madhu but got confused with the comments of software companies come under the defn of industries........ash would u like to comment on this
Posted 30th October 2008 From India, Bangalore
Dear all, A valuable topic for discussion. Correct me If I am wrong, please :- "Will the employees in a Software industry fall under the definition 'Labour' ?"
Posted 4th November 2008 From India, Madras
In labour law, the term labour is not confined to un skilled employees or those working in factories. It can be extended to office staff as well. At the same time many Acts give separate treatments to supervisory staff. That means a worker who is not supervised for his work shall not come under the defenition of labour. Similarly, many Acts restricts the applicability to 'workmen' with ceiling on wages/ salary. Now the Payment of Wages is applicable to persons drawing Rs 10000. With such enhancements, I feel that one who does work for another and for a return by whatever name called, viz, wages, salary, or honorarium, shall come under the definition of 'labour". As such, employees who work in IT companies and who are subject to supervision by others shall also come under labour.


Posted 7th November 2008 From India, Kannur
Cholamandalam Software Company case has gone through labour court, single judge and division bench of Chennai high court and also Supreme court, where it was reffered to larger bench. Can you give us the final verdict of the case?
In another case of Tata Consultancy Services v. State of Andhra Pradesh, software is considered as 'goods'.
Considering these verdicts can a software industry of not less than 100 employees be exempted from section V B of Industrial Disputes Act?

Section VB says that prior permission is required from appropriate government for retrenchment of employees and also three months notice period or equivalent salary plus compensation at the rate of 15 days/ year of service, if the no of employees is not less than 100. Is this applicable in software companies?

Posted 26th February 2009 From India, Bangalore
Software is certainly a 'good' with all characteristics of an item of trade. Though I do not have last verdict on the issue, there is no reason to exclude software companies employing 100 or more employees from the ambit of Chapter V B of the ID Act.


Posted 27th February 2009 From India, Kannur
dear mr madhu really great,the answers given on this topic is absolutely logical tks j s malik
Posted 27th February 2009 From India, Delhi
Dear Ms Priyanka,

i also agree with Mr. Madhu, as per factory Act def there is a process of "alteration". but for registration propose as per the Act it comes under Shops & Estb only and even the ID act is applcable, bcoz there is a employe - employer relationship for the purpose of Bussiness.

So dont get confused.


Posted 2nd January 2010 From India, Bangalore
Hi Priyanka

As Mr. Madhu said I.T defiantly an industry, as there is employer and employee relation, for any disputes you can take the shelter of the I.D. Act. I.T, It is an establishment , as there is no manufacturing process involved and hence does't fall under factories Act, hence it is covered under Shops and Establishment Act of your respective state where the business is done.

Mohan Rao
Manager HR
Posted 2nd January 2010 From India, Visakhapatnam
our company is in engineering consultancy no manufacturing only we deal in ppg designing&detail engg. it falls under which act either industry or factory?
Posted 1st March 2014 From India, Pune
Dear All
Please see Chapter V B of the Industrial Disputes Act and the sections contained therein.
According to section 25K, Chapter V B of the Industrial Disputes Act is applicable to industrial establishments,excepting seasonal establishments and establishments in which work is performed intermittently, in which not less than 100 workmen were employed. The term "industrial establishments" is defined section 25 L of the Industrial Disputes Act which is contained in Chapter V B itself. Section 25 l(a) says that the term "industrial establishment" means (i) a factory as defined under the Factories Act, (ii)a mine as defined under the Mines Act, and (iii) a plantation as defined under the Plantation Labour Act. The question is whether Chapter V B of the Industrial Disputes Act is applicable to software industries. Soft ware industries are neither mines nor plantations. In several States, and especially in Tamilnadu software industries are not regarded as factories as defined under the Factories Act and are regarded as Establishments as defined under the respective Shops and Establishments. Therefore as software industries are neither factories nor mines, not plantation, chapter V B of the Industrial Disputes Act is not applicable to them.
With regards
Posted 2nd March 2014 From India, Madras
Good debate and shall be elaborated more. Hon'ble judges also get confused while concluding judgment on IT industry and software engineer and shifted ball towards appropriate government to decide.

In this connection definition of "Industry" Section 2 (j)
and "Workman" 2 (s) need to be evaluated and interpreted well. As far as contents of the definition is concern; IT would be an industry and software engineer shall also come under the preview of "workman" subject to the nature of job he/she is performing. Matter could be pleaded well before conciliation and labour court by following legalities of the statute.


Gajendra Harishanker
Posted 24th February 2015 From India


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