Labour laws for the Indian IT industry

In this blog post, Pravesh Naveriya from RDVV, Jabalpur, talks about the various labour laws applicable to the Indian information technology industry.

Labour laws are the laws which deal with the employment and labour related issues. Labour laws deal with the disputes between the employer and employee, regarding wages, pension, insurance of employees etc. In India labour Laws are also known as Industrial Laws or Employment Laws due to the fact that it deals mostly with the employment, wages and termination issues of labours working in industries.

The Indian Information Technology companies for a very long time enjoyed an exemption from the basic rules and obligations which are imposed on the companies regarding employment of workers. The Indian IT industries were exempted from the Industrial Employment Standing Orders Act, 1946. But now after the government had refused to extend the exemption the IT Industries just like the other industries it will have to follow the obligations regarding the conditions prescribed by the government and will have to precisely describe the government regarding those conditions and will have to make sure that the workers and employees are not only informed about it but are also allotted those conditions.

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Do Labour Laws apply to IT Industries

There is a misconception among the people that the labour laws of the country do not apply to IT Industries but this is not true.

  • Almost all the labour laws which are applicable to any other industry are also applicable to IT Industry.
  • This is true that the Factories Act, 1946, the Industrial Disputes Act, 1947 and certain State labour laws do not apply to IT Industries but apart from that, all the other labour laws are applicable to IT Industries as well.
  • The state governments have been given the power that they can exempt any particular industry from the laws which are made by the Central Government regarding the labour or industrial laws under section 14 of the Indian Employment Standard Orders Act, 1946.
  • The state government using this power do exempts the IT Industries from the Industrial Employment Standard Order Act, 1946.
  • The IT industries do not include their employees under the definition of “workman” stated in the Indian Industries Act, 1965 in order to get exempted from the liabilities which arise after that.

Suggested Reading: Employer’s Liabilities under labour laws in India

The Indian Employment Standard Orders Act, 1946

The Indian Employment Standard Orders Act, 1946 was passed by the British Government to deal with the constant fights between the Indian workers or labourers and the British industrialists.

  • The Act states that there shall be equal opportunities and conditions available to each and every worker and there shall be no discrimination on the basis of the fact that whether the employment was done before or after the passing of the Act.
  • The Act is to be applied to all the types of industries be that private or government.
  • There is one exemption granted to the industries which can be granted by the state government if they feel necessary.
  • Section 14 of the Act, gives the power to the state government to exempt a type of industry from the Act.
  • The state government can exempt any type of industries and all the industries falling under that category will be exempted. Many state governments have exempted IT industries from the Act.
  • The IT industries have always tried to use their power, money and impact that they possess in the Indian economy to get rebates in different taxes.
  • The IT industry always tries to pressurize the government and try to twist the laws for their own personal needs.
  • The government is also forced to work as per their requirements because they employ a lot of people and their contribution to the economy is un-matchable. Also, these companies are often major political funders through individuals.
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The Trade Unions Act, 1926

  • The Trade Unions Act, 1926 was passed with the objective to make the establishing and functioning of the trade unions proper and systematic.
  • The formation of trade unions is also covered under the fundamental right prescribed in section 19(1)(c) of the Indian Constitution.
  • There is a misconception that the workers of an IT Industry cannot form a trade union, but this is something which is not true.
  • The right to form a union is a fundamental right which even the state cannot take away from the citizens.

The Payment of Wages Act, 1936

  • The payment of wages Act, 1936 applies to the IT Industries.
  • The Act states that there shall be no discrimination regarding the payment of wages on the basis of caste, colour, creed, sex etc.
  • Both men and women must be paid equally for equal work.
  • The Act deals with the illegal deduction and non-payment or late payment of wages.
  • The Act makes sure that there is no violation of labour rights regarding wages.

The Minimum Wages Act, 1948

  • The Minimum Wages Act, 1948 makes sure that a minimum amount of payment is given to the workers, who are working under the company.
  • The Act tries to minimize the risk of exploitation of the employees in the company.
  • The minimum wages which must be given to the employees are specified and changed by the central government from time to time.

The Payment of Gratuity Act, 1972

  • The Payment of Gratuity Act, 1972 is the law which governs the gratuity which is to be paid to every employee and worker who has worked for a period of not less than 5 years.
  • The gratuity is given to the employees after they have left the job by way of either resignation or retirement or superannuation or have died or become disabled, which renders them unable to continue.
  • In a case of death or disability, it is not necessary that the person should have worked for more than 5 years.

The Maternity Benefit Act, 1961

  • The Maternity Benefit Act, 1961 was passed by the legislature with the sole motive to make sure that the working women are not forced to continue their work even when they should not as they are pregnant or are expecting a baby.
  • The Act makes sure that the women are given appropriate holidays of 6 months as maternity leave and also sees that no industries is trying to discriminate on the basis of gender.

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

The Sexual Harassment of Women (Prevention, Prohibition and Redressal) Act, 2013 has been formulated after the Supreme Court in the case of Vishaka v State of Rajasthan gave directions to the Executive regarding the necessity to legislate an Act that could deal with the problem of sexual harassment which a woman face while working under any Institution.

Common Problems Faced by the IT Employees

There are a number of problems which an employee of an IT Industry has to face. The problems arise due to the fact that the IT industries are not following the general rules which have been formulated by the state and the central governments regarding the working hours and the other standards of employment. The IT Industries shall be governed by the labour laws of the country and it is not being executed in a proper sense.

The fields in which the labour laws of the country are being violated are:

  • The employees are working more than the prescribed working hours but are still not getting any overtime payment.
  • Many call centres and other ITES companies are forcing the employees to work frequently in night shifts without any extra payment or compensation which is an utter violation of the law which very clearly specifies that a person cannot be allowed to work in night shifts for more than a prescribed period of time.
  • If any employee tries to raise his or her voice against the working hours of the company then he is rusticated from his job, which is a violation of the fundamental right of the person.
  • Any attempt to form a union is penalized by removing the employee from his or her job, which is a violation of the Fundamental Right to form a Union under Article 19(1)(c) of the Indian Constitution.
  • The IT and ITES industries are openly violating the law regarding the conditions and environment which is to be created by the industries for its employees.
  • The IT and ITES industries try their best to exempt their employees from the definition of workers or labours which gives them their rights. In many cases the industries give employment to the workers informally, that is, no paper or document is presented to them which could prove that they were working for the company which gives them the freedom to terminate their employees as and when they like.
  • Many of the IT and ITES Industries do not give maternity benefits to women which have been provided by law to them.

If you face any difficult situation with your employer and want to report the same and take necessary legal actions, feel free to reach out to lawyers who can take up such matters for a nominal fee on


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.

What are your views on this? Feel free to comment below & share the article.

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  1. Hi can u please share the notification which says industrial dispute act is not applicable to IT/ITES/BPO companies. Because I have not found any such notification

  2. Thanks for sharing this information with us, I learn about labour-laws-indian-it-industry from your blog and that helped me to take services from comply4hr about labour law for more information you can visit them at

  3. Call centers used to work 8 hour shifts now they have made it 8.5 hrs and taking money from the clients.. 1000 x .5 is 500 man hours on a daily basis… divide that by 8 its gives u 62 days saving which is equal to 2 staffs salary in day (35 + 35) 70k x 30 days is 21 lacs profit.. Straight…

  4. Very informative article . Just to update we have formed an IT employees union – Forum for IT employees ( FITE Maharashtra P.N 4845 ) similarly its registered in other states . Feel free to reach the group ?

  5. You have mentioned factories act 1946, is it 1948?
    Can you please provide a reference as to how/why the IT industry is exempted from the factories act ?

  6. Gone through the rules and laws but in our country many companies don’t follow the same and a monopoly system being carried off as well.


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