A Critique On The Exploitations Of Labor Law In It Sector In Karnataka Through Exemption By Way Of Delegated Legislations
Author: LawSphereX
Category: Labour & Employment
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A CRITIQUE ON THE EXPLOITATIONS OF LABOR LAW IN IT
SECTOR IN KARNATAKA THROUGH EXEMPTION BY WAY OF
DELEGATED LEGISLATIONS
Prajjal Kumar Dam & Amitava Mondal, The West Bengal National University of Juridical Sciences
(NUJS)
ABSTRACT
In this paper the authors try to examine the legal implications of the Karnataka governments’ decision to extend the exemptions to IT, ITeS, business process outsourcing, and knowledge process outsourcing firms from Industrial Employment (Standing Order) Act, 1946. The Karnataka government had provided this exemption on January 25, 2014 which was further extended for another five years on May 25, 2019. This exemption which was to expire in 2024 was further extended by the government by a circular on 10th of June for five years up till 2029. The exemptions provided has not been granted unanimously, there has been several conditions attached to it, including the formation of Sexual Harassment of Women at Workplace (Prevention, Prohibition, Redressal) Act, setting up of grievance redressal committee with equal representation of both employer and employees.
But the question arises that when the basis of labour law has been to safeguard the interests and demand of the labourers, how effective can these conditions be to protect the interest of the labourers when the IT industry itself is exempted from labour laws of the state by way of delegated legislations. The governments’ move to extend the exemption of labour laws to the IT sector undermines the integrity of the Indian labour laws. The authors propose that there should be a limit by way of delegated legislation to prevent the misuse of never-ending exemptions provided by the government. The exemption is a blow to the labour laws because even with the protections of certain conditions that the government has provided, they are ultimately ineffective in implementation.
This has become a serious issue considering that in India, workers are exploited to overwork even in the fields where labour laws are not exempted. This step by the Karnataka government is an implication that the labour laws in India are stuck to the period of slavery where capitalist mindset overlooks the conditions of workers. The key aspect of this paper is the use of delegated legislation by the legislature. The authors in this paper would answer that while delegated legislations in labour laws were intended to make laws flexible and adaptable, in this instance, the delegated legislations under labour law have facilitated the long-standing dilution of labour rights in the guise of promoting industry.
I.
Introduction. On June 10, 2024, the Karnataka Labour Department extended the exemption from Standing Orders under the Industrial Employment (Standing Orders) Act, 1946, for an additional five years. 1 This exemption, which derives its authority from Section 14-A of The Industrial Employment (Standing Order) Act, 1946, is a delegated legislation. The case of exemption of labour laws is not new and is not limited to Karnataka and IT Industries specifically. There are series of events where different states have provided exemptions to various relaxation or exemptions regarding labour laws. For example, Gujarat, Rajasthan, Haryana, Uttarakhand, Himachal Pradesh, Assam, Goa, Uttar Pradesh, and Madhya Pradesh have notified relaxations to labour laws through rules. 2 Although provision for exemption was provided in the laws so as to increase industrial investments in the state.
However, exemption is being used as a loophole to escape the labour laws. States are increasingly using exemptions from labour laws as a means to attract business and stimulate economic growth, under the rationale that such measures ease regulatory burdens and enhance job creation. This raises a critical question: Are exemptions truly justified for well-established industries, or are they undermining worker protections. Although labour laws aim to protect workers' rights, the increasing use of exemptions raises concerns about their effectiveness and whether they are undermining these protections, particularly for well-established industries.
II.
Objective. The main objective of this paper is to investigate the effects of the use of exemptions through delegated legislation and to interpret the exemptions through case laws, constitutionality and human rights considerations. Further the paper would provide the authors’ critique on the use of delegated legislation to provide exemptions to labour laws.
III.
Legal Framework.
In India, the Labour Law framework is very complex. 3 There are numerous state and central laws which govern the various aspects of labourers. The labour law in India falls under the concurrent list, therefore, the central as well as the state government can amend and implement laws as per their requirement. 4 If there is a clash between the centre and the state, the law of the centre shall prevail. The framework in question in this paper is the power to delegate legislation. In the majority of the labour law codes, it is found that there are powers of delegation provided to States and the executive. This framework of delegating powers to the executive or any other body was intended to cater to the various requirements of different states.
These delegation powers are used by the state government and the executive (who has been delegated the power) to exercise the rules and regulations under the code and also to exempt from certain or entirety of the provisions of the labour codes. IV.
Chronology of Exemptions. It is not only Karnataka but other states as well which have given exemptions or relaxation to labour laws. These states are chopping down harsh labour codes to attract business and industrial development. Going by the strategy utilised by the states it can be said that they are thinking labour laws as a strict regulatory compliance and exemption from these codes will attract companies. It was Uttar Pradesh which in 2020 gave a temporary exemption of 3 years from certain labour laws such as Industrial Disputes Act (IDA) & Factories Act, Minimum Wages Act, Equal Remuneration, Trade Union legislation etc.5 Madhya Pradesh had also exempted new factories from labour laws just after the Covid -19 so as to revive its industries.6 It also amended the Madhya Pradesh Industrial Employment (Standing Orders) act to increase the minimum number of
employees from 50 to 100 and thereby giving exemption to the industries with 50-100 employees to not follow the labour codes anymore. The Gujarat State Government has rather implemented a unique approach, which differs from Uttar Pradesh government, this was done by providing a 1200 day exemption for new industries from labour regulations. However, in the case of Gujarat there is a mandatory requirement for these industries to comply with basic welfare laws like the Minimum Wages Act, 1948, Industrial Safety Rules, and Employee Compensation Act, 1923. The Himachal Pradesh government has also granted registered factories exemption from Sections 51, 54, 55, and 56 of the Factories Act, 1948.7 These changes also include an increase in the working hours to 12 hours a day. There are other states such as Rajasthan, Haryana etc where many exemptions have been provided as well. V.
Government's Rationale and Author's perspective. The government’s rationale and conditions attached to these exemptions can be found in the Chapter 3, Volume 1, Economic Survey 2018-19. In this survey, the states have been made classified as flexible and inflexible. 8 The flexible states are those which are more lenient on their labour laws and vice versa. The report finds that the states that are flexible with their labour laws have higher jobs created, higher fixed capital in the state, higher number of workers per factory, higher average salary and higher fixed capital in the state. It is evident from this report that flexibility in labour laws have benefitted the overall development of the labourers and the state. But there remains another rationale that the government misses in this report.
This report does not take into account the other areas such as ability to attract foreign direct investment, reliable infrastructure, access to timely flows of capital, access to resources, technology and other government policies. The missing of these in the report also brings the rationale that in 2002, the National Commission on labour had pointed out that labour law regulations are not the only reason for inability to attract investments. 9 The question also arises is capital and increase in the number of workers the only objective of the government. Labour Laws objective is the welfare of the
labourer’s and that is not well represented in the Economic Survey report on the basis of which the government of the states believe that reducing labour law compliance could help them increase development and job creation. Therefore, the authors propose that there is no reason to exempt labour laws just to attract investment. The objective of the government is to find a balance between a conducive environment for economic development and ensuring that labourers are not exploited in the process. VI.
Legal Implications of Exemptions i. Violation of Constitutional and Human Rights Considerations Article 1410, which guarantees the right to equality, is being in a discriminatory in this context as this exemption denies the labour protections that their counterparts receive. The ‘reasonable classification’ is being hampered by this exemption as the differential treatment fails to meet this test set by the judiciary. 11 In this case, by giving exemptions to a particular sector of industries and particular industries in nascent phase, through the use of delegated legislation, it creates inequality among workers. The worker of an exempted sector is discriminated against the worker from a protected sector.
There is no justification in giving exemption to a few sectors and making the labour laws applicable for few other sectors, especially when they are equally vulnerable to overwork, arbitrary termination etc. It is not only equality of wages that comes but there is an equality of rights. This case of exclusive exemptions of industries is undermining the Constitution. Not only Article 14 but also Article 2112 which is one of the crucial parts of the constitution. Giving exemption hampers the safeguards related to working hours, job security etc. which makes the workers closer to a risk of greater exploitation. Without proper and adequate protection, the workers would have to overwork and might be in a precarious work condition violating their rights under article 21.
Furthermore, some of the articles mentioned in the DPSP such as Article 4213 and Article
4314 deal with the states responsibility to ensure just and humane conditions for the
workers. It is true that DPSP is not enforceable by law, however DPSP are the essential guidelines for good governance and social justice mentioned in the Constitution. Arbitrarily exempting these sectors from the law essentially contradicts the aspirations set by the constitution. The repetitive extension of this exemption really undermines the goal of promoting welfare in workers. Additionally, India is a signatory to some of the key international conventions such as Convention No. C08715 which states the “Freedom of Association and Protection of the Right to Organise, which affirms workers' rights to form and join trade unions. ” The continued exemption provided by the Government is jeopardising the adherence of these international labour standards. This type of practice can lead to exploitive practice where the workers may face unfair dismissal from the work etc.
Critics argue that this type of practice prioritises the profit motive of business rather than the rights of the workers. ii. Exemption from provisions regarding health, safety, and working conditions The Uttar Pradesh government had granted exemptions to provisions under Factories Act,
1948. The factories act protects various provisions related to health, working environment
and safety. Due to these kinds of exemptions being provided by the government basic facilities like washrooms, ventilation and dangerous operations are left to exploitations. Furthermore, factories are not subject to penalties for specific violations under the Act, such as, failing to address imminent danger from hazardous processes, failing to disclose information on dangers from hazardous processes, neglecting to hire qualified workers for hazardous substance handling, and not offering adequate facilities for protecting workers in hazardous work. This is also unconstitutional as per the case of Consumer Education and Research Centre vs Union of India (1995), the right to health and medical care is
considered a fundamental right of a worker under Article 21 of the Constitution to safeguard their health and vitality. 16 The Madhya Pradesh government had exempted the Industrial Disputes Act, 1947. The new factories under these exemptions are not subject to the same regulations regarding industrial dispute resolution, collective bargaining, strikes, lockouts, and trade unions. Additionally, Madhya Pradesh has granted permanent exemptions to establishments in specific sectors like textiles, iron and steel, sugar, and chemicals from the regulations of the Madhya Pradesh Industrial Relations Act, 1960. The Industrial Disputes Act of 1947 allows employers and workers to use collective bargaining to resolve their conflicts. The new factories in Madhya Pradesh did not have access to this mechanism because they are exempt from the Industrial Disputes Act, 1947.
The International Labour Organisation acknowledged collective bargaining as a fundamental right in its 1998 Declaration on Fundamental Principles and Rights at Work. 17 India is obligated to uphold this right, despite not ratifying the Right to Organise and Collective Bargaining Convention, 1949. In the similar manner, exemption of the entire labour laws in the case of IT Sector in Karnataka is also raising the question of working conditions of the IT employees. It is documented that the IT professionals are already working and further providing the exemption given to the Bangalore based IT Hub will lead to exploitation of the professionals. Exemptions of labour laws to the Silicon Valley of India presents a satirical commentary on the labour laws of India. iii. Exemption through Delegated Legislation is unreasonable and arbitrary
The action of the State governments to provide exemptions to industry under the labour laws is strictly violative of the notion of labour laws which comes from Article 42 and 43 of the Indian Constitution. There is a reasonable degree the labour laws can be exempted, blanked and continuous exemptions to labour laws is unreasonable and arbitrary in nature and violative of Article 14 of the Indian Constitution. It violates equality among workers across industries and therefore is violative of its parent statute and fundamental rights of the workers. VII.
Policy Recommendations i. Limiting the Scope of Exemption The central Government should bring a law which will set the measurable criteria for providing exemptions. There should be a transparent process to decide whether any particular industry needs such exemption, and there should be periodic reviews to ensure compliance and exemption clause is not being abused by giving exemptions for indefinite period. Industry like IT should not be exempted as it has a hefty amount of investment and the exemption should only be provided to those industries that need this as this would promote economic welfare and protect workers' rights. ii. Using sunset clause for time-bound exemption
iv. Adherence to International Conventions Being a signatory and to ensure the welfare of workers, Indians should adhere to the standards set by International Labour Organization conventions such as the right of collective bargaining, protection from exploitation etc.
VIII. Conclusion
It is so much visible how delegated legislation is being used to dilute the labour protection through giving continuous exemption to IT, BPO etc from the Industrial Employment (Standing Order) act, 1946. It is understandable that in a state like Karnataka with Silicon Valley, exemptions are being provided, however the end result is hampering the labour rights, taking it to the exploitation of workers specifically in those industries which are well-established such as IT. The arbitrary nature of this exemption is not only violating constitutional provision but also failing to adhere the conventions of ILO, which simultaneous compromising the rights of the worker. This lack of measures and proper supervision is guaranteeing the exploitation of the workers along with the labour laws in the well-established sector which are already known for over-work.
In order to balance all this, as proposed earlier there should be proper measures such as prescribing clear limitations and conditions to get an exemption. Time bound reviews and the most essential part that is protecting the fundamental rights of the workers. In order to ensure both economic and industrial growth and welfare of the workers, transparency and right based framework should be enacted.