Since 2014, the Karnataka state government has implemented an exemption for certain industries, including IT, animation, gaming, and telecom, from specific employment regulations in a bid to stimulate growth and increase job opportunities.
Under the Industrial Employment (Standing Orders) Act (IESO), employers are required to establish clear rules for their workers regarding various aspects of employment such as hiring procedures, working hours, wage rates, etc. These rules must be approved by the labor department and cannot be altered without their consent.
However, companies operating in Karnataka’s IT sector have been granted an exemption from these regulations, allowing them the flexibility to develop their own employment policies and make adjustments as necessary. Nevertheless, with a rise in complaints related to unfair labor practices and other issues, the state government is contemplating ending this exemption by May 2024.
If this exemption is indeed lifted, it could have significant implications for many IT firms, particularly those that have been following global policies which may not fully comply with Indian laws. In such a scenario, these companies would be required to review and revise their policies to ensure compliance with the IESO Act and obtain certification from the labor department.
While the government’s intention is to safeguard employee rights, the potential removal of this exemption could potentially impact the flexibility that IT companies currently enjoy in shaping their employment regulations and adapting to changing business needs. It remains to be seen how this proposed change will unfold and its broader implications for the IT sector in Karnataka.
