Is It True That Labor Laws Don't Apply to IT Companies? Seeking Expert Insights

Hello, I have recently joined an IT company as an HR professional, and here my employer only provides 5 national holidays a year. Now, he wants to remove the 2nd October leave by stating that it is no longer a Gazetted holiday. Although I have over 6 years of experience as an HR professional and am very aware of all the statutory compliance and labor laws, I still feel like sharing this and getting some insights from the experts.

Understanding labor laws for IT companies

Can somebody help me understand the labor laws for IT companies? Thanks! Awaiting a response.

Regards,
HR Professional

Labour Laws in India Applicable to IT Companies

The recent and ongoing economic downturn has resulted in a large number of IT jobs being cut and hiring restrictions being put in place, both of which, understandably, have not been well-received by the young IT professionals the country produces every year. There is a misconception that the labour laws of the country do not apply to the IT industry, but this is not true. Almost all the labour laws applicable to any other industry are also applicable to the IT industry.

This is true that the Factories Act, 1946, the Industrial Disputes Act, 1947, and certain state labour laws do not apply to IT industries. However, apart from that, all other labour laws are applicable to IT industries as well.

- The state governments have been given the power to exempt any particular industry from the laws made by the Central Government regarding labour or industrial laws under Section 14 of the Indian Employment Standard Orders Act, 1946.
- The state government, using this power, exempts IT industries from the Industrial Employment Standard Order Act, 1946.
- IT industries do not include their employees under the definition of "workman" stated in the Indian Industries Act, 1965, to get exempted from the liabilities that arise after that.
- The Trade Unions Act, 1926: Employers and employees strongly believe that employees of IT companies do not have the right to form a trade union. However, nothing is further from the truth. The fundamental right to form associations or unions is accorded to all citizens under Article 19(1)(c) of the Constitution of India. Therefore, like all citizens, even IT employees can form and/or join trade unions.

- Shops & Establishments Act: IT companies in a particular state are covered within the definition of 'commercial establishments' under the Shops & Establishments Act of the state. (Please refer to the state act to know leave applicability.)

- The Payment of Gratuity Act, 1972
- The Employees’ Provident Fund & Miscellaneous Provisions Act, 1952
- The Employees’ Compensation Act, 1923
- The Employees’ State Insurance Act, 1948: If an employee is covered under the ESI Act because their salary is under the Rs. 15,000/- cap, they are not eligible to receive benefits under The Employees Compensation Act, 1923. In a commercial establishment, therefore, employees who are below the Rs. 15,000/- cap shall be eligible for benefits under the ESI Act, and those above shall be covered by The Employees Compensation Act, 1923.

- The Contract Labour (Regulation & Abolition) Act, 1970: The Contract Labour Act is applicable if the commercial establishment employs its personnel through a service provider for carrying out various jobs such as security, cleaning, loading-unloading, etc. The registration of an establishment under this legislation is mandatory. If the service provider employs 20 or more workers, registration of the contractor is also mandatory.

- The Payment of Bonus Act, 1965
- The Equal Remuneration Act, 1976: As per notification number S.O. 144 (E), dated 02 March 1977, 'Data processing and tabulating services' are covered under the ambit of the Act, bringing IT and ITES industries under the sweep of the Act.
- The Employment Exchanges (Compulsory Notification of Vacancies) Act, 1959: A private sector establishment, before filling up any vacancy in any employment in that establishment, shall notify that vacancy to such employment exchanges as may be prescribed.
- The Minimum Wages Act, 1948
- The Maternity Benefit Act, 1961
- The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013

Please visit the below link: https://www.citehr.com/589941-sample...c-holiday.html

Regards,
Amit

Dear Sneha, this is in addition to what Amit has written. Since you are from IT, the Shops and Establishment Act of your state is predominantly applicable to you. Under the provisions of this act, it is important to give 10 closed holidays to an industrial establishment.

Few state governments, like the state of Karnataka, have passed acts like the National and Festival Holidays Act, 1963. For your state, the Delhi Shops and Establishments Act, 1954 is applicable. To know the provisions of this act, click the following link: https://blog.ipleaders.in/leave-poli...ents-act-1954/

More than the lack of statutory awareness, your employer is showing high-handedness. Things may go his way, but on one fine day, it could land him in trouble. Therefore, let him do his business within the precincts of the law. The cost of transgression is too high, and it nullifies savings made in the past years.

Thanks, Dinesh Divekar

Thank you, Mr. Dinesh and Mr. Amit. It's great to have feedback from the experts, and now I can speak with facts when discussing with my boss. Still, I know he won't change.

For this year, somehow, I have saved the employees' 2nd October holiday, as he is determined to remove it from next year's calendar, keeping only 4 holidays in a year. The company is a "Limited" Company, which influenced my decision to join.

National Holidays

Every state government is empowered to declare national, festival, and other mandatory holidays for industrial establishments under their respective Industrial Establishment Acts. For example, Delhi has adopted The Punjab Industrial Establishment (National and Festival Holidays and Casual and Sick Leave) Act, 1965, whereby every worker is entitled to the following mandatory holidays in each calendar year: (a) Three national holidays of one whole day each on the 26th January, 15th August, and 2nd October; and (b) four other festival holidays.

On a similar note, state governments, under their respective shops and establishment acts, may declare mandatory national and other holidays for non-factory workers. For instance, the Delhi Shops & Establishment Act, 1954 mandates three national holidays of one whole day each on the 26th January, 15th August, and 2nd October.

Hi Sneha, maybe your management is least bothered about employee rights. However, being in HR, it is your responsibility to recommend the right things to management and also make the workplace peaceful and enjoyable for both. Labor laws are a broad spectrum, and not all are applicable to IT companies. Upfront, your firm has to follow the Shops Act, and there are rules within as far as holidays are concerned.

I recommend visiting this statutory wiki for curated information: https://www.stacowiki.in/en/acts/st-delhi/

Also, in my opinion, in a knowledge company, forcing employees to sit and work on a holiday or more hours is not going to make a considerable improvement in work progress or quality. So eventually, the management will become the loser if they start acting out an owner-worker drama reminiscent of the 80s.