“Navigate the complexities of Indian Labour Laws impacting the BPO-IT/ITES industry. Explore Industrial Relations Code, Trade Unions Act, Code on Wages, Social Security Code, Sexual Harassment Act, and more. Understand the implications on workers and employers. Stay compliant, informed, and ensure a fair workplace.”
The labour law system in India is focused on employment and other labour related issues, as well as labour standards. There have been several questions over whether certain labour laws under the country’s existing labour laws apply to IT/ITes enterprises. For instance, the issue as to whether the Industrial Employment (Standing Orders) Act applies to IT firms. Furthermore, recently numerous state governments have made a concerted effort to move IT/ITes outside the scope of certain laws in order to boost investment and ease of doing business in the Industrial Areas. Some prominent laws which when applied to the sector will provide great relief and support to the workers:
I. INDUSTRIAL RELATIONS CODE, 2019
i. INDUSTRIAL DISPUTES ACT, 1947
As discussed above, Industrial Disputes Act, 1947 is applicable to the organized sector industries. Under Section 2(j) of the Act, “Industry means any systematic activity carried on by co-operation between an employer and his workmen (whether such workmen are employed by such employer directly or by or through any agency, including a contractor) for the production, supply or distribution of goods or services with a view to satisfy human wants…”[1]
Bringing the BPO business under the Industrial Disputes Act of 1947 will provide its employees access to a variety of incentives, including enhanced work benefits and dispute settlement mechanisms. In places employing 100 or more people, the industries controlled by the Act are required to form a Works Committee.[2] Firstly, this committee tries to settle any dispute between the management and workers. If the dispute is not resolved, it is referred to a Conciliation Officer[3], and if the dispute remains unresolved, it is submitted to the Labour Tribunal/ Industrial Tribunal/ Labour Court[4]. Moreover, both the employer and the employee have the option of voluntarily referring the dispute to arbitration (mediation).
The Industrial Disputes Act of 1947, which governs all industrial disputes in India, specifies the circumstances in which a strike or lockout may be lawfully used, when they may be deemed illegal or unlawful, the requirements for laying off, retrenching, discharging or dismissing a worker, the conditions under which an industrial unit may be closed down, and numerous other issues pertaining to industrial employees and employers. Additionally, the Industrial Disputes Act of 1947 being applied to the BPO industry would make it essential for workers to create a recognised trade union.
ii. TRADE UNIONS ACT, 1926
To form an association in India is a fundamental as well as a statutory right. “Constitutional protection for labour and trade unions with the goal of collective bargaining” is guaranteed under Article 19(1)(c) of the Indian Constitution. In addition, the Trade Unions Act of 1926 was adopted to provide for trade union registration and to specify the legislation governing registered trade unions. In the case of every worker, the freedom to organise an association is regarded as a fundamental right. They obtain collective bargaining power for improving their living conditions by using this right.
Section 14 of Industrial Relations Code, 2019 explains recognition of a Trade Union as the negotiating union as well as creation of a negotiating council in case multiple registered unions exist. It states that if there is only one registered trade union of workers, the employer must recognise it as a negotiating union. If more than one registered trade union of employees operates at an industrial establishment, the trade union with 51 percent or more workers on the industrial establishment’s muster roll is recognised as the exclusive bargaining union. If more than one registered worker’s trade union fails to satisfy the 51 percent criterion, a negotiating council made up of representatives from unions that meet the mentioned criteria will be formed.
In the case of Gujarat Steel Tubes v. GST Mazdoor Sabha[5] this right was also acknowledged by the Apex Court, which stated that “the Directive Principles of State Policy enumerated under Part IV of the Constitution when read with Article 19(1)(c) sow the seeds of bargaining jurisprudence.[6] Workers’ rights are collectively defended through trade unionism. These trade unions are responsible for introducing the idea of collective bargaining to the workforce. This is a crucial method for resolving conflicts via negotiation rather than coercion.
The absence of trade unionism in the BPO sector and its effects were cruelly felt in 2005 when Pratibha Srikanth Murthy, a woman employed by a global BPO business in Bangalore, was raped and brutally killed by the driver of the company vehicle that was supposed to take her to work in the late hours. However, because there was no trade union in the industry, the employees’ complaint against the occurrence was futile, and the Supreme Court was simply asked to rule on who should be held legally responsible in this case—the company or the managing director?
Trade unionism may also prove to be a useful strategy in addressing the industry’s high attrition rate as a whole. The attrition rate in this industry, which is the highest of all other sectors in India and is approximately 7.8% point higher than other industries, demonstrates that the BPO companies’ work culture, which was already discussed in the previous section, indicates that the employees are having issues with exploitation. In order to reduce this high attrition rate over the long term, we contend that trade unionism is a viable option.
II. THE CODE ON WAGES, 2019
The Code on Wages is a labour code that incorporates laws concerning wage payment, bonuses, minimum wages, and fair remuneration. The Payment of Wages Act, 1936, the Minimum Wages Act, 1948, the Payment of Bonus Act, 1965, and the Equal Remuneration Act, 1976 were all included into the Code. These laws are applicable to the IT industry.
The definition of wages in Section-2(y) has a broad set of implications for salary structure, payroll operations, and statutory benefit computation. Section-17(2) of the Code on Wages requires wages payable to an employee to be paid within two days of removal, dismissal, resignation, or retrenchment. This will need completing exit formalities and HR processes as quickly as possible, as well as paying dues within the specified time frame. It is critical that businesses recognised this and make the necessary adjustments to their internal procedures. Also, e Employees earning a minimum wage must be paid double for hours worked beyond of normal working days, according to Section 14 of the Code on Wages. In other words, the overtime rate must be at least double the normal wage rate.
III. CODE ON SOCIAL SECURITY, 2020
The Code on Social Security is a labour code that incorporates essential Central labour regulations pertaining to provident funds, employees’ state insurance, and other statutory benefits.
The proviso to Section-53(2) requires that fixed-term workers be paid gratuity. In the case of fixed-term workers, it reduces the five-year continuous service requirement to one year. The law governing creche facilities is included in Section 67 of the Code, as well as Rules 38 and 39 of the proposed Central Rules. Every business with fifty or more female employees must provide/maintain a creche. The facility can be positioned either within the establishment or at a reasonable distance from it so that women employees, including those who work from home, can use it.
Social security is introduced for gig, platform, and unorganised employees, respectively, under Chapter-IX of the Code on Social Security. It is made clear in Rule-51 of the proposed Central Rules of the Code on Social Security how aggregators might contribute to their gig and platform workers. While most IT/ITes organisations may not be affected, this poses a serious problem for those that use independent contractors in consulting, development, design, etc.
IV. THE SEXUAL HARASSMENT OF WOMEN (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013
The Sexual Harassment of Women (Prevention, Prohibition, and Redressal) Act, 2013 was drafted after the Supreme Court, in the case of Vishakha v State of Rajasthan[7], the court in its decision instructed the Executive to enact legislation to address the problem of sexual harassment that women face while working in any institution.
V. OCCUPATIONAL SAFETY, HEALTH AND WORKING CONDITIONS CODE, 2020
The Occupational Safety, Health and Working Conditions Code is the labour code that replaces old Central legislation pertaining to factories, contract labour, buildings and other construction activity, as well as other elements like mines, docks, sales promotion staff, etc (OSWHC Code). Every establishment subject to Chapter-XI of the OSWHC Code that employs fifty or more contract workers. The Chapter offers two different types of licences to employ contract workers, the first of which is a work-specific licence that is electronically granted. A job-specific licence is only valid for the concerned work order in question, but a national licence is good for five years across different enterprises in the country. This act in BPO sector will enable greater access for the workers to benefits, including better work conditions, occupational safety and health benefits, these will be especially beneficial for women working in the sector.
[1]Bangalore Water Supply & Sewerage Board v Rajappa, (1978)2 SCC 213(SC 7-member bench 5 v 2 judgment), a very wide interpretation to the term ‘industry’ was given. It was held that profit motive or a desire to generate income is not necessary. Any systematic activity organized by cooperation between employer and employees for the production and/or distribution of goods and services calculated to satisfy human wants and wishes is industry.
[2] Section 3 of the Industrial Disputes Act, 1947. It further elaborates on the constitution of the Works Committee.
[3] Section 5; id.
[4] Section 12 (5); id.
[5] (1980)1 LL 137SC.
[6] Arts 42 and 43 show that the Constitution makers felt a deep concern for the welfare of the workers; further, Art 43A requires the state to take steps, by suitable legislation, or in any other way, to secure the participation of workers in the management of undertakings, establishments or other organizations engaged in any industry.
[7] (1997) AIR 3011 SC
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