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Labour Law

​​Indian Labour Laws And Its Impact On IT-ITES Industry

India's labor law system is centered on employment as well as other matters relating to labor and labor standards in India. Any type of employment-related disagreement between an employee's employer or another employee, as well as between employees themselves, is covered by the law's application. Let’s get deep!

Due to the Indian IT businesses’ exemption from the Industrial Employment Standing Orders Act, of 1946, Information Technology and related endeavors have been exempted from this basic legal framework of ​​indian labour laws And its impact. But it wasn’t until recently that the government made the decision to broaden the scope of the labor laws so as to include initiatives and businesses based on the Information Technology Act. It is subject to a wide range of operating conditions, obligations, duties, and other general standards of conduct due to the labor law regime’s regulation of it. 

It is typically assumed that they are exempt because of their prior exemption, although this is not the case. Nevertheless, there are several labor law statutes that do not apply (Industrial Disputes Act, 1947 and Factories Act, 1946). However, the proviso of exemption is negligible compared to the general rule of applicability. The laws that will be applicable to the IT industries and their personnel are summarized below:

  • The Trade Unions Act, 1926: The underlying theory of the Trade Union Act, 1 926 is to facilitate the representation of the workmen or employees via a platform or the coming together of all other employees in a Union. It originates by virtue of Article 19(1)(c) of the Constitution of India, which entitles all citizens to have a fundamental right to form associations. This has applicability to the IT Employees as well and is thus entitled to form unions and operate as an association.
  • The Payment of Gratuity Act, 1936: Payment of Gratuity Act, 1936 provides for the payment of gratuity to all employees, post-service. This statute is based on the equitable principle which is in favor of both the employer and the employee. Gratuity entitlement under this Act is also extended to IT employees if they fulfill the pre-conditions of continuous employment and other necessities.
  • The Minimum Wages Act, 1948: This Act applies to all workmen and ensures a basic minimum wage, fixed by the Central or State Government, as per the profile of the job. It essentially extends its scope and application to commercial establishments and the employees present therein. The periods of recession hits the IT industries to an extent that the employers drop current recruits, and cuts down salaries, and other incentives. The Central legislation as this one ensures that there is a basic minimum support to the employees in financially difficult times like these.
  •  The Sexual Harassment of Women (Prevention, Prohibition and Redressal) Act, 2013: Solidifying from the apex court’s judgments in the case of Vishakha State of Rajasthan, this legislation was passed to maintain work ethics in all industries pertaining to the treatment of women. It provides for the safeguard mechanisms which must be in place in order to ensure a safe working atmosphere for the women employees

A blanket exemption on IT industries from the labour regime in India allowed them to hire cheap labour, violate work ethics, and not maintain standard conditions of labour. However, a worker’s fundamental right cannot be infringed. After the application of labour laws and the removal of blanket exemption, the regime of IT Industries has become more stringent. The only exemption which can be applied to IT industries or other industries for that matter is done on a case-to-case basis.

The industrial or labour laws of the country are also applicable to the IT Industries, but not all the laws. The IT industries have been exempted from many labour laws which are applicable to other industries. The IT industries try their level best to avoid the obligations which are imposed on them by the law, but no one is above the law and the fundamental rights of a worker or an employee cannot be violated in any case by anyone.


The country’s labor and industrial regulations also apply to the IT industries, though not all of them. Many labor laws that apply to other businesses but are not to the IT industries have been exempted. The legal duties placed on the IT sectors are avoided to the best of their ability, but no one is above the law, and no one has the authority to abuse a worker’s or employee’s fundamental rights under any circumstances. If you need more clarification on Indian Labour law, feel free to connect with Vakilsearch, India’s number one leading legal service provider.

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