Laws that need work

India’s antiquated labour laws pose problems for employers and employees in the IT sector. Recent developments in Bangalore highlight the issues. By Swarnima and Aathira Menon

IT and information technology enabled services (ITES) companies located in Bangalore recently heaved a collective sigh of relief at their fortuitous escape from the “licence raj” regime that the state of Karnataka sought to impose on them. In October 2013, the Karnataka government announced a reprieve for all IT/ITES companies from the applicability of the provisions of the Industrial Employment (Standing Orders) Act, 1946 (SO Act), an archaic piece of legislation that is largely irrelevant in today’s context. In January this year, the exemption was finally extended for a period of five years through an official notification.

Employee associations, however, have been up in arms against the announcement, prompting a discussion on the need for an overhaul of labour legislation in India.

Over the past two decades, India has emerged as one of the leading growth markets for businesses across the world. The country’s services sector, in particular, has witnessed unprecedented growth and has proved to be a fertile ground for employment opportunities. While economic reforms have provided the stimulus for this growth, labour legislation has been a retarding factor.

Swarnima is a senior associate in the Bangalore office of Trilegal, where Aathira Menon is an associate. Both lawyers are part of the firm’s employment law practice.