Global Compliance Desk – Karnataka, India
India – Karnataka Extends Industrial Employment Act Exemption for IT and ITeS Sectors
The Karnataka State Government has renewed the exemption for IT and ITeS companies, along with other knowledge-based sectors from the Industrial Employment (Standing Orders) Act, 1946 (“the Act“). This renewal is detailed in notification No. LD 328 LET 2023, dated June 10, 2024, and extends the exemption until June 9, 2029. The conditions prescribed for the exemption remain consistent with those established since 2014.
Scope of the Exemption: The notification exempts the following industries and establishments operating in Karnataka from the provisions of the Act for five years:
- Information Technology (IT)
- Information Technology Enabled Services (ITeS)
- Startups
- Animation
- Gaming
- Computer Graphics
- Telecom
- Business Process Outsourcing (BPO)
- Knowledge Process Outsourcing (KPO)
- Other knowledge-based industries
Exempted Requirements Under the Act: The Act requires employers to draft and certify the standing orders that define the conditions of employment, including:
- Classification of workers
- Holidays and working hours
- Wage rates
- Termination of employment
- Suspension or dismissal procedures
- Grievance redressal mechanisms
These draft standing orders must be submitted for certification, involving consultation with trade unions or worker representatives and review by a Certifying Officer. Once finalized, the certified standing orders must be displayed prominently in the workplace.
However, according to the new rules, the exempted employees are not required to fulfill the conditions as stated in the Standing Orders Act.
Note: the notification states that once the Industrial Relations Code, 2020, becomes effective, the above-stated conditions will apply to all IT/ITeS companies in Karnataka.
Exempted employers must form an Internal Committee under the Sexual Harassment of Women at Workplace Act; establish a Grievance Redressal Committee with equal employer-employee representation; report disciplinary actions and any service conditions information to the Labor authorities.
Takeaway: Employers if they fall under the exempted category should review and revise their policies to align with the condition established under the notification.
