Introduction

  • The information technology industry has approached the central government ministries to flesh out changes to taxation and labour laws in line with the work-from-home model. While the coronavirus pandemic forced offices to migrate to WFH, many are expected to continue this even once a solution for the current health crisis emerges. At least 4.3 million IT workers or half the sector’s workforce would WFH permanently, according to estimates.

What changes is the IT industry expecting?

  • IT industry has moved nearly 85-90% of its workforce to deliver services from home. The government categorised the industry as essential services and permitted exemptions similar to those granted to units in SEZs and STPIs by the department of telecom.
  • India’s IT sector is seeking revisions in the country’s taxation and labour laws as over in the $191 billion industry could begin to deliver services remotely as part of the changes being wrought by the ongoing pandemic.
  • The industry has also requested the government to make permanent several recent concessions extended until July, including relaxation of telecom regulations that allow back-office companies to work from home and move equipment out from designated special economic zones to facilitate remote working.
  • Some of the labour laws may not cater to a work-from-home environment, so the industries need to start looking through a fresh lens
  • Officials are of the view that labour laws should be amended in a way to safeguard employees while also providing flexibility to employers.
  • India’s IT industry contributes 8% to the country’s gross domestic product and has a 46% share in the country’s services exports.
  • As working from home catches up, people could work for two or even three companies at the same time. So, the government will need to let employers and workers choose NPS (National Pension Scheme) instead of EPFO as a social security scheme, as in NPS a worker can be an employee today and a gig worker tomorrow.
  • Income tax provisions also need to be reviewed as expenses incurred by employers to enable work from home will need to be treated as business expenses and not as benefits in the hands of the worker, including broadband costs or office furniture.
  • Current labour laws will need to be revisited to provide industry the flexibility to enable working hours and shift timings. Moreover, the role of employer with respect to safety and health measures at the workplace will require a rethink as the home becomes the new workplace.

What have states done in this regard?

  • Several States have recently made significant changes in labour laws in order to deal with the economic challenges posed by COVID-19.
  • While most states have only increased working hours for factory workers, states such as Madhya Pradesh and Uttar Pradesh have undertaken wider changes aiming at attracting investment, easing compliance and speeding up the process of granting approvals and licences.
  • Since labour welfare falls within the concurrent list of the Constitution, both Central and State Governments can make laws on the subject. Any amendment to a Central statute by a State also requires the assent of the President, unless a change is made by a State exercising its existing powers within the statute itself.
  • Most states have followed the latter approach by introducing temporary relaxations under key labour statutes. Uttar Pradesh appears to have passed an ordinance providing a carte blanche exemption to all factories and commercial establishments from the application of almost all labour laws for a period of 3 years, barring provisions relating to the protection of women and children.
  • While the legality of some of these changes may ultimately be subject to judicial scrutiny.
  • The Government should look at bringing meaningful reforms to address the concerns of the industry while also safeguarding workers’ rights by simplifying laws, easing compliance, expediting approvals, and ensuring consistency across States in the interpretation and application of labour laws and procedure.

Issues faced by labourers and concerns related to labour laws:

  • If all labour laws are removed, most employment will effectively turn informal and bring down the wage rate sharply. And there is no way for any worker to even seek grievance redressal.
  • Laws to protect basic human rights covering migrant workers, minimum wages, maternity benefits, gratuity, etc. have been suspended.
  • Through the public health crisis created by the COVID-19 pandemic, workers are being abandoned by their employers and, above all, by the state.
  • The workers’ right to go home was curbed using the Disaster Management Act, 2005.
  • Adequate provisions were not made available for their food, shelter or medical relief.
  • Wage payments were not ensured, and the state’s cash and food relief did not cover most workers.
  • When the centre issued orders permitting their return to their home States, state governments responded by delaying travel facilities for the workers to ensure uninterrupted supply of labour for employers.
  • Employers now want labour laws to be relaxed.
  • The Uttar Pradesh government has issued an ordinance keeping in abeyance almost all labour statutes including laws on maternity benefits and gratuity; the Factories Act, 1948; the Minimum Wages Act, 1948; the Industrial Establishments (Standing Orders) Act, 1946; and the Trade Unions Act, 1926.
  • Several States have exempted industries from complying with various provisions of laws.
  • The Confederation of Indian Industry has suggested 12-hour work shifts and that governments issue directions to make workers join duty failing which the workers would face penal actions.
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