IT sector presses for major labour reforms


India’s information technology (IT) sector is seeking revisions in the country’s labour law policy to absorb the effects of the COVID-19 disaster on its business. These reforms primarily pertain to - (i) terminations and layoffs; (ii) working conditions for women; (iii) policy change; and (iv) relaxation from compulsorily engaging apprentices. The National Association of Software and Service Companies (NASSCOM) wrote to various state governments seeking changes in labour laws to help IT firms cut expenditure during the COVID 19 crisis and also after it. Hence, they suggested that the aforementioned steps be taken in the same direction.

The proposed changes

The first and foremost change the IT sector is looking for is to allow for furloughs, temporary lay-offs and permission to allow terminating the services of surplus employees. Generally, as per the Industrial Disputes Act, 1947 (“ID Act”) employees who are laid off from their employment have to be paid a minimum of fifty percent (50%) of their salary. Further, in certain cases, IT companies face problems in temporarily laying off surplus employees wherein salary cuts calls generally leads to disputes.

Many states in India have allowed night shift for women. However, certain onerous responsibilities are place on the employers wherein apart from safety and security, they spend a large sum on organizing transportation for them. Certain states under their respective shops and establishments also require the IT employers to take permission to run night shifts. Hence, the proposed change calls for a self declaration by women employees working in night shift thereby placing the onus on the employee itself.

T companies also feel burdened by the provision of the ID Act, which requires them to provide a notice of twenty one (21) days to workmen in case they are changing their working conditions. Not only does this delay the implication of the change, it also forces It employers to sometimes suffer because the changes in policy till the time they become effective causes damage – e.g. change in working hours which in no way effects employees significantly in the IT sector. Hence, the IT employers have asked for the same to be done away with.

The IT sector has also asked for relaxation under the Apprentice Act, 1961 (“Apprentices Act”) which requires them to train certain apprentices in craft and skills so that they are ready to be a part of the workforce. The IT sector feels that such training of the workforce has increases their cost without having desired effect on their revenues.

The way forward

While labour law reforms in the IT sector are important, the same has to be obtained via a balance approach. Hence, benefits of reforms should not be entirely in favour of either IT employers or the employees. Firstly, the Government may consider having certain specific provisions regarding IT sector employees in the ID Act. As the debate still rages whether IT sector employees are covered under the ID Act, taking the beneficial view, IT companies usually follow the principles of the ID Act. Keeping the same in mind the Government may consider allowing furlough or temporarily laying off employees during a lean period. As an innovative mechanism, IT employers may consider such employees working at an alternate place on their own volition (i.e. without the company providing them alternate employment in a different place) and their employment still being counted as employment with their actual employer.

As with regard to night shift for women and self declarations, it may be a very prudent decision to only have this if absolutely necessary. Women should be allowed to clock in their night shifts as a policy of ‘work from home’ in as far as possible and their presence in office should only be sought if very necessary.

As a part of the labour reforms, it is firmly believed that the requirement of twenty (21) days of notice of change under the ID Act should be done away with not only in the IT sector but all other sectors. The labour authorities should be intimated about the same and only in case of any change that has adverse effect due to such change should any entity be called for by the labour authorities for an inquiry.

However, the IT sector cannot and should not look at only short term goals. Apprentices and training requirements are some of the major reasons that many IT companies are given various relaxations viz. IT Zones, relaxation from applicability of certain laws like Industrial Employment (Standing Orders) Act, 1946 etc. To encourage the same, the Government should probably have only those apprentices under the Apprentices Act be allowed in IT companies whom they want to absorb as part of their workforce. Further, employment bonds for these employees for a reasonable period may boost the confidence of the IT employers. This would help It employers see the exercise of hiring IT employees as positive one and not a cost burden.

This update is by Rohitaashv Sinha, Advocate & Associate Partner at Agarwal Jetley & Co., Advocates & Solicitors. Contact: Email: or Mob: (+91) - 9999565393