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Sweeping technological advancements are creating a sea change in today’s regulatory environment. The pace of innovation and the scope of the transformations it induces is unprecedented, and at times regulatory frameworks are not agile enough to match the speed of change. This blog captures a recent development in Karnataka impacting the IT and ITeS ecosystem and the continuing debate around labour protections, exemptions and workplace rights.
Karma Global, a leading international solution provider in the field of regulatory compliance, has stood formidable with the integration of sophisticated AI into its tools and processes and its expansion into countries like the U.K., U.S., Canada, Middle East and South East Asia, specialising in areas like staffing, onboarding, payroll, facility management, curbing regulatory risk, auditing and abiding by all labour law related compliance on a PAN basis.
In a move with significant implications for the IT and IT-enabled services sector and start-ups in Karnataka, the state government has once again exempted certain categories of establishments from the applicability of the Industrial Employment (Standing Orders) Act, 1946. The notification dated June 10, 2024 marks a continuation of earlier exemptions that have been debated in the context of labour laws and employee rights.
The update comes at a time when the IT sector continues to play a pivotal role in Karnataka’s economy. The employment law discourse around the exemption focuses on the rationale behind the move, the conditions attached and the potential impact on workplace dynamics in technology-led establishments.
Even with the exemption, companies are still required to follow basic labour practices, including constituting an internal committee under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013, constituting a Grievance Redressal Committee, and intimating information about disciplinary actions such as suspension, discharge, termination, demotion and dismissal to the jurisdictional Deputy Labour Commissioner and Commissioner of Labour in Karnataka, among other requirements.
The AIITEU condemned the move and demanded stronger protections for employees, particularly within start-ups. It also highlighted the scale of the sector in Bengaluru and raised concerns that exemptions from existing laws can contribute to workplace exploitation if not balanced with enforceable protections.
AIITEU working committee member Suman Das Mahapatra stated that the IT industry value is pegged at around 254 billion dollars, that India has over 60 lakh IT employees, and that approximately 22 lakh tech employees work in Bengaluru. He also indicated that exemptions were initially introduced to encourage investments, and alleged that there is exploitation in the sector due to exemption from existing laws and inadequate legal protection for employees.
Developments of this nature reinforce a core principle for technology-driven workplaces: exemption from a specific statutory instrument does not eliminate broader compliance expectations. Employers benefit from building documented governance systems that cover workplace policies, committee constitution, grievance handling, disciplinary action reporting, and auditable process trails that demonstrate responsible workforce management.
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