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Follow UsThe dismissal of hundreds of employees by Tata Consultancy Services last year has come to haunt the entire Information Technology sector in Tamil Nadu, as the state has clarified that the IT companies will now be covered by the Industrial Disputes Act, 1947, which allows workers to form labor unions.
The clarification came after the IT Employees Wing supported by the NDLF, formed after the mass layoffs at TCS, had approached the Madras High Court seeking a direction to clarify whether the IT sector was covered by the Industrial Disputes Act. The front had also approached the state government regarding the issue but failed to elicit a response.
Kumar Jayant, the principal secretary for Labour and Employment of Tamil Nadu, which is among India's top three software exporting states, pronounced the clarification to the Puthiya Jananayaga Thozilalar Munnani (New Democratic Labour Front), which had raised its voice against the dismissal of employees at TCS last year.
"IT company employees are free to form trade unions and can redress their grievances through evoking the provisions of the Industrial Disputes Act," Jayant said in a note. Following the directive, several big IT enterprises in Tamil Nadu, such as TCS, Infosys, Wipro, HCL Technologies and Cognizant, will come under the ambit of Industrial Disputes Act. Infosys has over 17,000 employees in Chennai, Wipro has 25,000, and TCS, India's largest software exporter, has 60,000 employees in 13 centers in the state.
The decision can prove detrimental to these companies, as most of them are moving towards automation, and are cutting down on fresh hiring as a result. The move is being viewed as a significant departure from popular or active where labor unions are prohibited in companies. For instance, Karnataka, the country's largest technology hub, has exempted the sector from the industrial employment (Standing Orders) Act 1946 and has also declared that IT firms will be treated on par with "essential services" in the face of a strike or bandh.