Author: Drishti Miglani

Banasthali Vidyapith

ISSN: 2582-3655


The Indian Labour Law owes its existence since British Raj. The condition of the workforce was pathetic in Imperial India. The exploitation of the working class was at a peak. Most of the legislation was formulated in the British Era. Most of the legislation derived its origin from independent India’s leaders and provisions from the Indian Constitution and International Conventions like the International Labour Organization (ILO). They were enacted keeping in mind the international standards on Human Rights and the United Nations Protocol.


Labour Laws refer to the laws which deal with the employment and labour related issues. It deals with the disputes related to wages, pension and incentives and insurance of employees between employer and employee. It most important deals with the employment, wages and termination issues of labours working in industries hence were also called Industrial or Employment Laws. It emerged when the employers tried to restrict the powers of workers union and keeping their costs low. With the advancement of time and technology workers demanded better working conditions and the right to organize to improvise their standard of living. The working costs increased due to the increasing demand of the worker for higher wages or better working conditions. This led to an intense situation where the intervention of the government was necessary. Many laws were enacted to tackle the disputes between the employer and the employees.

In India, the labour laws are so ambiguous, numerous and complex that they prefer litigation more than the resolution of problems relating to industrial relations. Various movements prevailed in the past which contributed a lot to the enactment of laws protecting labour rights in the 19th and 20th centuries. The history of labour legislation in India can be traced back to the history of British Expansionism. India has several labour laws tackling various issues such as the resolution of industrial disputes, working conditions, labour compensation, insurance, child labour, equal remuneration, etc. The applicability of it differs from sectors such as Baking, IT, Service, Manufacturing, etc.

Industry as provided in Section 2(j) of the Industrial Disputes Act, 1947 reads as under, “Industry” means any business, trade, undertaking, manufacture or calling of employers and includes any calling, service, employment, handicraft, or industrial occupation or avocation of workmen.”IT Industry refers to that part of the economy that includes individual and businesses that produces services rather than goods. It includes education, finance, communications, health care, utilities, wholesale and retail trade, and transportation.

The Indian Information Technology company enjoyed a lot of exemption from the basic rules and obligations which are imposed on the companies regarding the employment of workers. The IT Industries were exempted from the Industrial Employment Standing Orders Act, 1946. But since now the government has intervened in this, IT industries just like other industries will have to follow the obligations regarding the conditions prescribed by the government. These industries not only have to inform the workers and employees but also allot these conditions to them. The recent and on-going economic trend has led to various job-cut and changes in the hiring structure being put in place, both of which, have not gone well with the young IT professionals the country churns out every year. An incident showing a rapid change in the trend was quoted in 2013 where the fresh recruits of HCL were forming a Union and staging protests due to the multiple changes by the IT Company in their joining dates. This leads to a sudden rise in Unions like the All India IT Employee Association. Whether such makes a greater impact on the society or not, is remaining to be seen.


It’s not been a while since IT Laws have been enacted, the awareness of the act has not been much prevailing, thus employees are unaware of its applicability. Just like other industries labour law also applies to the IT industry as well.  Employers are still in this misconception that they cannot form the Trade Union. However, Article 19(1) (c) enables every citizen of the country to form associations or unions. An employee being a workman or not is a matter of concern for judicial scrutiny. Now the question arises that whether a software professional/ software engineer/ IT employee be termed as an employee or a workman. The answer to this depends on various factors such as the nature of work of the individual, his remuneration, his decision-making powers, use of mental facilities, extent of involvement with the business of his company, power of supervision, etc. In relation to this, it becomes necessary for us to understand the applicability of the labour laws to the IT sector.

  1. Labour Welfare Enactments:
  • The Trade Unions Act, 1926

“Trade Union” under the Act is defined as, “…. any combination, whether temporary or permanent, formed primarily for regulating the relations between workmen and employers or between workmen and workmen, or between employers and employers, or for imposing restrictive conditions on the conduct of any trade or business, and includes any federation of two or more Trade Unions.” By the right granted to all citizens under Article 19(1)(c) of the Constitution of India to form associations, even IT employees can form Trade Unions. Although this doesn’t make registration. To enjoy the benefits provided by the act, registration is necessary for the Union. The provisions of the Trade Unions Act, 1926, says “any 7 or more members of a trade union may apply in the prescribed manner to the Registrar of Trade Unions for registration of the union.” After registration of Trade Union, it becomes a body corporate, gets perceptual succession and a common seal can also acquire and hold both movable and immovable property, can enter into a contract and can even sue and be sued in its registered name.

The main aim of this act is to facilitate the establishment and functioning of the trade union proper also the representation of the workmen via platform or the joint stand of all other employees in a Union. The applicability of this act enables every employee to form a Union or Association and enjoy the benefits of the same.

  • Payment of Gratuity Act, 1972

This applies to any establishment which involves the employment of 10 or more than 10 workers or was employed on any day of the preceding 12 months.  It provides gratuity to all employees, post services. It is based on the equitable principle which is in favour of both the employer and employee. If the pre-conditions of continuous employment and other necessities are fulfilled, then its entitlement will be extended to the IT employees. This law governs the gratuity to be paid to every employee who has worked for a period of not less than 5 years. It is given to the employees after they left the job/retire or resign/superannuation or have died or become disabled and are unable to continue the services anymore. In case of death or disability, it is not necessary that the person should have worked for more than 5 years. To enjoy the benefit of the gratuity, in case of disability, it must be proved that the disability has been caused by any accident that occurred in due course of action. In case of death, the gratuity will be paid to the nominee of the deceased. Section 13 of this Act provides express protection. No gratuity payable to an employee or workmen shall be liable to attachment in execution of any decree or order passed by civil, revenue or criminal court. The aggrieved employer may approach the Labour Commissioner and file a complaint if payment delays.

  • The Employees’ Provident Fund and Miscellaneous Provisions Act, 1952

This act applies to any establishment employing 12 or more persons and it is the responsibility of the employer to ensure the biddability of the provisions under the Provident Fund Act. The applicability of this act depends on the salary ceiling of the employees which is currently Rs.6500/-. Hence, any employee earning less than 6500/- will enjoy the benefits of the same and for those earning above the ceiling, the amount can exempt themselves from makingProvident Fund contribution by applying in their respective companies. Since it is a good saving and security scheme hence all the software companies insist every fresh inexperienced recruit goes for this.

  • The Employee Compensation Act, 1923

Earlier known as Workmen Compensation as it covered Workmen but as of now, to cover employees, amended as Employees Compensation Act. Aims at compensating employees and workmen for various injuries, even death occurred during the due course of action.

  • The Employee State Insurance Act, 1948

This Act applies to industries and establishments within a geographical area which has been notified by the appropriate government, to be covered in the Act. This act covers employees whose compensation is up to Rs. 15,000/-, in the case where the commercial establishment has been brought under.

If an employee has been covered under this act on the basis that his salary being less than Rs. 15000/-, he/she will not be eligible to enjoy the benefits of The Employee Compensation Act, 1923. In the case of the Commercial Establishment, an employee earning under Rs.15000/- will be eligible to enjoy the benefit under this Act and those

earning above Rs.15000/- are covered under The Employee Compensation Act, 1923.

  • The Contract Labour Act, 1970

It applies to all those employments carried out by the Commercial Establishment for the purpose of loading/unloading, Security, Cleaning, etc. the registration is mandatory in this Act. In case of the Contractor, where the number of employees is 20 or more then also the registration becomes mandatory. The Principle Employer is solemnly responsible for the payment of wages and all statutory compliances. It even also applies to the Households hired by the Establishment for the upkeep and other mental duties.

  • Equal Renumeration Act, 1976

According to Section 1 of this Act, it is applicable to all the Establishments to whom, notification has been issued by the Appropriate Government. The IT and ITES industries are covered under the ambit of this Act by the notification issued on 02 March 1977, numbered S.O. 144 (E). It states that employers cannot discriminate against men and women in a matter of recruitment. It also ensures that the Employer must pay equal remuneration to men and women for the similar nature of work.

  • The Minimum Wages Act, 1948

As the employees of a Commercial Establishment falls within Entry 17 of the Schedule of the Act, hence it applies to Commercial Establishments. This Act also ensures a basic minimum wage, fixed by the Central or State Government, as per the profile of the job. It extends its scope and applicability to any person employed in a commercial establishment. Since, the salaries are very high, hence the compliance with the Act is usually not a problem. This Act was formulated in order to provide basic minimum support to the employees in financially difficult times like these.

  • Industrial Employment (Standing Orders) Act, 1946

This Act was passed by the British Government to tackle the disputes between Indian workers or labourers and the British Industrialists. This Act gives fair and equal opportunities and conditions to each and every worker employed before or after the passing of the Act. Applying to all the industries whether private or government, covers industrial establishments wherein 100 or more workers are employed on any working day. The Government can make some exceptions in the case of the industrial employment employing less than 100 workers, if necessary. The power to exempt is given to State Government under Section 14 of this Act.  “Industrial Establishment” under this Act covers all the Industrial Establishments defined under the Payment of Wages Act, 1936 and The Payment of Wages Act, 1948. It covers workman as defined under the Industrial Dispute Act, 1947. It is still a matter of observation, whether the Act will be covered by the IT & ITES industries.

  • The Employment Exchange (Compulsory Notification of Vacancies) Act, 1959

This Act applies to an establishment operating in the private Sector. It applies to those Commercial Establishments where 25 or more workers are employed to work for renumerations. The Act empowers appropriate government for issuinga notification or directing a private sector that before filling up of any vacancy of any employment, the notification of such vacancy must be transferred to Employment Exchange.

  • Labour Welfare Enactments for women in the IT & ITES Industry:
  • The Maternity Benefit Act, 1961

The act was passed by the legislature with the sole motive to provide incentives to women or to make sure that the working women are not forced to wok even when they are pregnant or expecting a baby or suffered a miscarriage. It is assumed that all the women are getting an appropriate or ample number of holidays for the care of themselves at the time of pregnancy. These holidays are termed as Maternity Leave and are granted for 6 months with wages. This Act applies to all the establishments employing at least 10 persons. The “person” here, does not only include women but any 10 persons, including at least one woman. This Act regulates the employment of the woman in establishments for a certain period before and after childbirth. They will be entitled to the same under this provision. This Act safeguards the pregnant women to be employed in the hazardous nature of the work. This Act does not allow to dismiss or discharge the woman during the period of absence.

  • The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013

This Act was formulated by the Supreme Court in the case of Vishaka v. State of Rajasthan where the directions were given to the Executive regarding the necessary for an Act to be formed to deal with the problem or harassments faced by the women during their employment in the respective Institution. This law wassolidified to maintain work ethics in all industries pertaining to treatment of women. It provides safeguard to working women and ensure a safe working environment. Provisions are made for the formation of the Internal Complaint Committee (ICC) at each office or branch, of an organization employing at least 10 employees. It comprises senior-level working women employed in the company, two members from employees, one member from NGO or person familiar with issues relating to sexual harassment. The Act also instructs the State Government to set up a “Local Complaints Committee” (LCC) at the district level to investigate complaints regarding sexual harassment at the workplace where the ICC has not been constituted. The procedure has been defined by the Act for dealing with the complaints and the inquiries, protection of victims and punishment for committing such offences and also punishes false complaints of harassment. The term Sexual Harassment includes sexual colored remarks, demand or request for sexual favours, showing pornography, unwelcome physical, verbal, non-verbal sexual conduct, and uninvited physical contact and advances. Commission of any such type of offence may charge Rs.50,000/- and the cancellation of license to carry any business activity.

Problems Faced by IT Employees

There are numerous problems faced by IT employees. Since this Sector enjoys many benefits or exemptions from the State Government, hence misusing the power. This sector has always used their power, money, and impact that they possess in the Indian Economy to get a rebate from different Taxes. The IT industry always tries to pressurize and manipulate the government for their own personal needs. Since they employ a lot of people and contribute to the economy to an unmatchable extent that they sometimes even force the government to work as per their requirements.  Also, these industries are majorly politically funded by the individuals thus making them the most powerful sector of the economy. Various labour laws are applicable to the IT industry, but its execution is not mannerized properly.

Labour laws are violated in various fields, some of which has been stated below:

  • The employees are forced to work for more than the prescribed working hours affecting their physical, mental well-being without even getting paid for overtime.
  • Some industries ignore the Maternity Benefits provided to men and women.  
  • Many Call Centres, Customer Care Companies or ITES companies are forcing their employees to work frequently in night shifts without any extra payments or compensation which is violative of the law. According to the law, a person cannot be allowed to work in night shifts for more than a specified period of time.
  • The employees are exempted from the definition of workers or labours which give them their rights. Most organizations provide the employment informally, or no legal documentation is done at the time of employment which gives them the freedom to deploy/terminate their employees as when they like.
  • If any voice is being raised for excessive working hours, then he is removed out from his job which is a violative of Fundamental Rights.
  • If any employee attempts to form a Union, he is then penalized by removing from his job which is against the Fundamental Right to form any Union under Article 19(1)(c) of the Indian Constitution.

Conclusion and Suggestions

The IT sector being the highest contributing sector of the economy enjoys a blanket that prevents them from certain obligations. It is governed by various industrial or labour laws but has been exempted from many labour laws that are applicable to other industries. They try their level best to safeguard themselves from the obligations imposed on them by law. This blanket enables the industries to hire cheap labour, violate work ethics and not maintain standard conditions of labour. It is an offence to violative the fundamental rights of the worker. The removal of this blanket is necessary for the protection of the workers and to provide them fair and just working conditions. It depends on every case for providing exemption to every industry. The workers employed in IT sector holds the right for security scheme and welfare benefits granted to labour working in other fields. Men and women both are exploited in some or the other way. Dealing with the Labour Law we must also consider the fact that application of asset of legal or regulatory conventions governs labour as a society in particular. The whole concept of the term labour, who all are included, or which sector is the targeted must also be studied. Indian Labour Law is meeting the standards of the developed industrial societies. It has numerous legislations providing the minimum standard of wages, social security, occupational health and safety and so on. Labour law focuses on legalizing Trade Unions and regulate their activities and provide a framework within which they perform. The Ground Reality of this law is that the applicability is least. The percentage of the workforce covered by this law is very less as compared to the total workforce of the nation. It is a non-functioning law that just appears to be in papers while behind the stage the reality is harsh.


  2. Study of Labour Law in India
  12. Research Paper on Labour Legislations (H.R.M)

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