IT Employees- Entitled To Be “Workmen” Under The Industrial Dispute Act.

IT Employees Under ID Act

For a long period of time, the IT sector was under the impression that it is outside the ambit of the Industrial Dispute Act, 1947 and was misinformed as to the correct position of law, which has a great impact on the six-million-strong IT industry workforce in terms of labour rights. 

Despite all the grand boasts that it is pushing the boundaries of technology, India’s IT service sector is, regrettably, still caught in the ancient wage arbitrage system. Therefore, it becomes more important to reiterate the correct law and implement the rights given to the workers under the act.

Hence, the recent decision of the Division Bench of the Karnataka High Court in the case of Commissioner of Income Tax v. Texas Instruments India Pvt Ltd^[1] has come as a welcome and much-needed step in enforcing labour rights for the workers employed in the IT sector

Software Engineers: Per se “workmen” Under Industrial Disputes Act, 1947

The dispute in the above case aroused between an IT Company and the Income Tax Department, wherein the former was seeking concession on income tax to the extent of 30% of emoluments paid to newly employed workers, under section 80JJ-AA of Income Tax Act, 1961, provided that those workers fall under the definition of section 2(s)^[2] of the Industrial Disputes act, 1947.

 The absurd situation brought forward by this case was that on the one hand, IT corporations are happily and opportunistically claiming concessions from the Income Tax Department for having created new employment of “workmen,” while on the other hand, are actively denying labour rights to the very same “workmen” in their workplaces, arguing that they do not fall within the definition of “workman” under the Industrial Disputes Act.

 To restrict IT Companies from exploiting their employees by playing double standards, the Karnataka High Court unambiguously entitled the IT employees to be “workmen” 1 (2021) 435 ITR 1. 2 The Industrial Disputes Act, 1947, §2(s), No. 14, Acts of Parliament, 1946 (India). under the Industrial Disputes Act, 1947. The court while reiterating the definition of “workmen” under the Industrial Disputes Act stated that,

 “In terms of section 2(s) of the ID Act, the definition of a workman is very broad since the said definition would cover any person who has the technical knowledge, self skilled in an industry. Thus the software engineer would per se come within the purview and ambit of workman under Section 2(s) of the ID Act so long as such a person does not take a supervisory role.” 

The said decision is a welcome verdict for the millions of workers engaged in the IT Industry as the status of “workman” conferred upon them is accompanied by several rights such as the right to freedom of association and by an ability to utilize the dispute resolution machinery provided under the Industrial Disputes Act, 1947. Therefore, the High Court of Karnataka’s decision provides the workers in the IT sector with a great deal of relief and a light of optimism.

Rajeev Rambhatla, Head – Hyderabad and Prakarti Shrivastava, Intern.                 

^[1] (2021) 435 ITR 1.

^[2] The Industrial Disputes Act, 1947, §2(s), No. 14, Acts of Parliament, 1946 (India)