Are Labour Laws Relevant to the IT Industry? Insights from a Recent Seminar

Dear Friends,

Please see the attachment for the clarification of doubts on whether the IT industry is applicable for Labour Laws. A Seminar was held at Andhra Pradesh FAPCCI, Hyderabad, and clarified the doubts. An extract Q&A is attached for all HR Professionals. May be useful for everyone.

Regards, PBS KUMAR

Hi,

The attachment is not opening. It says the file is corrupted. Could you please upload the document again?

Dear all,

Could any of you please share this file again as I could not open it.

Regards,
Ankeeta

Dear Mr. Kumar,

Your post on the subject is a very useful document for all HR professionals, and more particularly for those in the IT industry.

However, one observation I want to make to enlighten our colleagues in the profession is regarding the question 19 relating to obtaining certification of Standing Orders under the provisions of the Industrial Employment (Standing Orders) Act, 1946.

The said Act is applicable only to 'industrial establishments' as defined by Section 2(e) of the Act.

Section 2(e) defines:

(e) "industrial establishment" means
(i) an industrial establishment as defined in clause (ii) of Section 2 of the Payment of Wages Act, 1936, or
(ii) a factory as defined in clause (m) of Section 2 of the Factories Act, 1948, or
(iii) a railway as defined in clause (4) of Section 2 of the Indian Railway Act, 1890, or
(iv) the establishment of a person who, for the purpose of fulfilling a contract with the owner of any industrial establishment, employs workmen.

By this definition, the IT/ITES industry is not covered, and hence the said Act is not applicable if they are not engaged in any manufacturing activity.

Therefore, there is no need to approach the Certifying Officer for approval of employment rules for such companies.

Regards,
R. Sundararajan

Hey Rajan ji,

Please go through the S.O. Act at once. Do you mean that the word "Industry" only relates to industries? If you are facing a dispute in your IT firm between Employee and Employer or Employee and Employee, how do you solve it? On what basis do you have to handle the case? For this, you have to follow these orders. If the case goes to the Labour Court, on what basis do you have to attend? Please see the meaning as per the Industrial Disputes Act, 1947 (j) - "industry" means any systematic activity carried on by cooperation between an employer and his workmen (whether employed directly or through any agency, including a contractor) for the production, supply, or distribution of goods or services to satisfy human wants or wishes. It does not include activities such as agricultural operations, hospitals, educational institutions, etc.

So, in view of the above, the IT "industry" is also required to certify the standing orders to safeguard the organization in a congenial atmosphere.

Regards,
PBS KUMAR

Dear Mr. Kumar,

Your post on this subject is a very useful document for all HR professionals, especially those in the IT industry.

One observation I would like to make is regarding question 19 concerning the certification of Standing Orders under the provisions of the Industrial Employment (Standing Orders) Act 1946. This Act is applicable only to "industrial establishments" as defined by Section 2(e) of the Act. The definition excludes IT/ITES industries unless they are engaged in manufacturing activities.

Therefore, there is no need to seek approval from the Certifying Officer for the employment rules of such companies.

R. Sundararajan

Dear Sir,

Thank you very much for the valuable information. Could you please explain to me how Performance Appraisal (PA) is carried out in the IT industry? Do you have any materials on this topic? Please forward them to me.

Thank you, sir.

Dear Kumar,

I have carefully reviewed your reply, but I beg to differ on this.

The Act in question is the 'Industrial Establishment (Standing Orders) Act 1946'. It is applicable only to 'industrial establishments' as defined by the Act, which is what I had highlighted. The term 'industry' under the Industrial Disputes Act is different from the definition of 'industrial establishment' under the IE(SO) Act.

We need to have rules and regulations for employee conduct. Normally, these rules are circulated as part of the Employee Handbook or terms and conditions of appointment, and employee acceptance is obtained accordingly. These rules are binding on the employees, and their acceptance is sufficient for dealing with disputes in labor courts.

Not having rules and regulations is one thing, but not having certified rules and regulations under the Act is a different matter altogether.

All I am saying is that as per the current law, concerning IT/ITES companies, they can frame their rules and regulations for employees, and it is not mandatory for them to seek certification from the Certifying Officer under the Act.

R. Sundararajan

Hey Rajan ji, please go through the S.O Act at once. Do you mean that the word 'Industry' only relates to industries? If a dispute arises in your IT firm between employees or between an employee and the employer, how would you resolve it? On what basis would you handle the case? These orders need to be followed in such situations. If the case goes to the Labor Court, how should you proceed?

According to the Industrial Disputes Act, 1947, "industry" refers to any systematic activity carried out by cooperation between an employer and employees for the production, supply, or distribution of goods or services to satisfy human wants or wishes. This definition includes various activities but excludes certain operations like agricultural activities, hospitals, educational institutions, etc.

In view of the above, the IT 'industry' is also required to certify the standing orders to safeguard the organization in a congenial atmosphere.

Regards,
PBS Kumar

Respected Sh. PBS Kumar ji,

Sir, I apologize for differing with your views expressed in response to a query by Sh. R. Sundrarajan. I venture to point out that the definition of 'industry' under the Industrial Dispute Act, 1947, quoted by you in this column is still not in operation, although it is an amended definition under the Industrial Disputes (Amendment) Act, 1982 (Act 46 of 1982). The courts are still bound by the existing definition of 'industry' under the Industrial Disputes Act, 1947, according to which the word 'industry' means any business, trade, undertaking, manufacturing, or calling employers and includes any calling, service, employment, handicraft, or industrial occupation or avocation of workmen.

However, the provisions of the Industrial Employment (Standing Orders) Act, 1946 are not necessarily applicable to the 'industry' under the ID Act, 1947 but are applicable to the 'Industrial Establishments' defined under the Act, 1946. It is suggested that readers not be confused regarding the provisions of these two legislations and they may read them independently; meaning thereby that, for example, a factory employing 18 workmen may be covered under the ID Act 1947 but may not be covered under the SO Act, 1946.

Regards,

Jpratap

Dear Mr. Sundarajan,

Could you please tell us the guidelines for the definition of "Manufacturing Activity" (as per which Act) as referred to in your post.

Thank you so much, sir, for providing the details. Could you please give more information regarding the same for Madhya Pradesh state and the current regulations.

Hello friends, please tell me. I was asked in one interview, "Does the Minimum Wages Act apply to managers?" My answer was no. Can anybody help me.