Standing Orders is the primary document for regulation of employment which contains the terms and conditions of employment and prescribes the rules of conduct for workers employed in an industrial establishment. The object of Standing Orders is to require employers in industrial establishments to formally define conditions of employment under them.
The Current Scenario
Presently, the standing orders are governed under The Industrial Employment Standing Orders Act, 1946 (“IESO Act”). The Act applies to every industrial establishment wherein 100 or more workmen are employed or were employed on any day of the preceding 12 months. The Act also empowers the State Government to apply the provisions of this Act to any industrial establishment employing persons less than one hundred as may be specified in the notification. Some jurisdictions like Karnataka and Tamil Nadu have adopted standing orders for establishments employing less than 100 workers.
Further, the provisions of Standing Orders apply to all establishments and factories as defined under the IESO Act. However, some of the jurisdictions such as Karnataka and Haryana have issued notifications exempting the applicability of standing orders to IT/ITES establishments.
The Impact of The Industrial Relations Code, 2020
The Industrial Relations Code, 2020 (‘Code’) has brought out certain changes to the existing provisions of the Standing Orders. The Code has extended the applicability of the Standing Orders to all industrial establishments intending to create uniformity in employment conditions across industries. This move is commendable and will instill a sense of oneness amongst the workers across all industries.
The Code has made the provisions of Standing Orders applicable to the IT/ITES establishments as well, which was ambiguous earlier as the applicability differed from jurisdiction to jurisdiction. Further, the Code has legally recognized the concept of “Work From Home (WFH)” by formalizing it in the Model Standing Orders for the Service Sector, which is a well thought out move as a result of the COVID-19 pandemic.
On 31.12.2020, the Ministry of Labour and Employment vide notification has published The Draft Model Standing Orders separately for the Service Sector along with Model Standing Orders for Manufacturing and Mining sectors respectively. This has created a lot of apprehension and confusion amongst the HR and Compliance personnel in the IT industry. With the date of implementation of the Labour Codes nearing, the HR, Compliance and even Legal personnel are trying to understand the implications of adopting the Model Standing Orders for the Service Sector which will replace many of the company’s existing HR and employment policies. This may cause practical difficulties to IT companies and they will be faced with the following scenarios in respect of the provisions of the Standing Orders.
- What is the procedure the IT companies must follow to adopt the Model Standing Orders across all its units when presently, the company does not have any standing orders in place?
- What happens to the company’s existing standing orders when the IR Code is implemented?
- Is it better to continue with the existing standing orders or adopt the Model Standing Orders?
The Code prescribes that the companies having 300 or more workers will now be required to have Model Standing Orders in place for regulating the employment conditions. Generally, IT companies have company-specific rules and guiding policies for regulating the terms and conditions of employment. The majority of the IT companies have global policies or policies of the parent company for regulating employment which is headquartered outside India for example, disciplinary policy or their grievance handling system as commonly seen across the industry. These global policies may or may not be in line with the provisions of the Standing Orders as prescribed under the IR Code.
That being the case, companies will be tasked with the exercise of aligning their existing HR and employment policies and employee engagement models to the provisions of the Model Standing Orders. under the present system, any amendment to their HR and employment policies does not require the intervention of any Certifying Officer or Government authority as it is an internal exercise solely undertaken by the company through its HR-related personnel with minimal interface with employees.
However, the Code prescribes that once the company adopts the Model Standing Orders, the company will be required to intimate the Certifying Officer of such adoption along with particulars in the manner prescribed under the Code. This is in respect of those companies which do not have Certified Standing Orders in place. In certain cases, the Certifying Officer may require modification of certain provisions concerning the matters relevant to the employer’s industrial establishment in the Model Standing Orders of the company. Under such circumstances, the establishment will be required to amend the Standing Orders and submit the modifications to the Certifying Officer. Such modification will be approved by the Certifying Officer only after consultation with the interested parties. The modification exercise will take more time than usual as it requires consensus from all interested parties which was not the case earlier where the company ensured that any modifications or amendments to policies were done seamlessly and quickly without intervention from any external or regulating authority.
The Code prescribes that the adoption process in respect of Standing Orders should be effected within six months from the implementation of the Code. Until the implementation of the Code, the company will not be able to adopt the Standing Orders.
Further, if the company proposes to amend any service condition in the Standing Orders once it is adopted or certified, the same will be subject to consultation and certification of the Certifying Officer and the Union, if applicable. This will also make the whole process a time-consuming exercise and until such approval is obtained, the company will have no choice but to continue with its existing service conditions which may not be favourable to the company.
Conclusion
Given the above, it is safe to presume that although having Model Standing Orders creates a sense of unity amongst the working class, the applicability of the standing orders to IT companies will increase the compliance burden of IT companies. The companies will be required to examine the organizational structure and adopt the model standing orders in a consistent manner best suited for all their locations. Further, they must identify the policies and processes that may become redundant or that may change entirely on the adoption of the Model Standing Orders and take proactive measures to ease the entire adoption process for both its employers and employees.
The general notion is that IT companies have stringent employment policies and have a compliance conscious approach compared to other industries. Having said that, do you think IT companies should be exempted from adopting the Standing Orders or should they adopt a uniform approach and adopt standing orders across industries?
To learn more about the impact of the provisions of Standing Orders on your company, reach out to us at info@bcpassociates.com.
