Status of an Employee in the I.T. Industry

Introduction

For an employee to be regarded as a ‘workman’ under the Industrial Disputes Act, 1946, there are two basic essentials. Firstly, the establishment has to be considered an “industrial establishment” according to the definition of “industrial establishment” and secondly, the employee has to be a “workman” within the definition of a ‘workman’ under sec 2 of the Industrial Disputes Act, 1946.

Are IT Companies Industrial Establishments?

According to sec 2 (k a) of the Industrial Disputes Act, an Industrial establishment or an undertaking “means an establishment or undertaking in which an industry is carried on …..” Further, industry “means any business, trade, undertaking, manufacture, or calling of employers includes any calling, service, employment, handicraft or industrial occupation or avocation of workmen”

All I.T. Establishments, either electronic data processing or computer software development companies fall under the definition of ‘industry’ under the ID Act.

In Seelan Raj and Others v. Presiding Officer, I Addl. Labour Court, Chennai and Others, (2001) 89 FLR 342, tried to determine whether IT companies fall within the definition of “industry” under the ID Act or a ‘factory’ under the Factories Act, 1948. It was held by the Supreme Court in this case that since no manufacturing processes or activities are conducted in electronic data processing or computer software development companies, they would be considered “industrial establishments” under the ID Act.

Definition of ‘workman’

‘Workmen’ under sec 2 of the Industrial Disputes Act, 1947 have been defined as persons employed in any industry (or even an apprentice) to do any manual, unskilled, skilled, technical, operational or supervisory work for hire or reward, whether the terms of employment are express or implied, and for the purposes of any proceeding under the ID Act in relation to an industrial dispute, includes persons who have been dismissed, discharged or retrenched in connection with, or as a consequence of, that dispute, or whose dismissal, discharge or retrenchment has led to that dispute, but does not include any person –

  1. Who is subject to the Air Force Act, 1950;
  2. Who is employed in the police service or as an officer or other employee of a prison;
  3. Who is employed mainly in a managerial or administrative capacity; or
  4. Who being employed in a supervisory capacity, draws wages exceeding Rs. 1600 per month, or who exercises functions of a managerial nature.

Employees under the definition of ‘workmen’

Courts in India, with regard to the ambit a ‘workman’ under the ID Act, have quite evidently followed the precedent laid down in HR Adyanthayavs v. Sandoz (India) (1995 ILCJ 303; AIR 1994, SC 2608), or for that matter in Raj Kumar v. Director of Education. In the above mentioned cases, it was held that merely being excluded of the 4 exceptions enlisted in the definition of ‘workman’ under sec 2 of the ID Act does not necessarily make an employee a workman. For being considered a workman, an employee must be doing a job that is be skilled, unskilled, manual, technical, operational or clerical in nature.

Classification of work

Employees holding Managerial or Executive positions have been disregarded as ‘workman’ under the ID Act. The kind of role that a manager or an executive actually performs has been variable though. To solve this issue, it has been unanimously held by Courts that the nature of work that an employee generally performs would stand as the test to ascertain whether he is a ‘workman’ or not. It was held in Delta Jute and Industries Ltd. V. State of West Bengal and others that if the nature of work is suggestive, the designation is immaterial. A judgement on similar lines was seen in the case of Ananda Bazar Patrika Ltd. v. Workmen (1969 (18) FLR 186 SC), where it was held by the court that if a person is primarily occupied in doing technical or clerical job and occasionally employed in supervisory work, he shall be considered a workman under the ID Act.

In other words, to ascertain if a particular person is to be considered a ‘workman’ owing to his managerial or executive designation, the emphasis should lie on the nature of work that such a person usually does.

Hierarchy in I.T. Industry

Following is a very common hierarchy chart of designations in any IT establishment:-

  1. Associate Software Engineer;
  2. Software Engineer Analyst;
  3. Senior Software Engineer;
  4. Team Leader;
  5. Associate Manager;
  6. Manager;
  7. Senior Manager; and
  8. Senior Executive.

Can IT Professionals be regarded as Workmen?

In a very recent case, K Ramesha, a software engineer working with HCL, a famous IT company, approached the Labour Court on allegedly being illegally terminated from his job. The Additional Labour Court Presiding Officer held that any person doing a skilled job is a workman. This rule was no different for all categories the employees of the IT Sector except for those specifically excluded by the Industrial Disputes Act, 1946.

It was further held that the job of a Software Engineer working for an I.T. Company is technical and skilled in nature. Hence he would be considered a ‘workman’.

In a recent statement, the Tamil Nadu Government has affirmed that employees of the I.T. Industry fall within the definition of a ‘workman’ under the Industrial Disputes Act, 1946.

Classification on the basis of Creativity and Monotonous Work

In the case of Sonipat Co-op Sugar Mills v. Ajit Singh, the question raised was whether a legal assistant falls under the definition of ‘workman’. The court in this regard held that any person doing a job which requires creativity, innovation and application of mind, cannot be categorized as a ‘workman’. The work of a legal assistant involved creativity, innovation and requires application of mind in case of drafting of pleadings etc. Hence it was not a stereotype job and the employee could not be categorized as a ‘workman’.

Lately employees of several I.T. Firms have put forward the demand to be treated as workmen under ID Act. This would allow them all the benefits promised to workmen with regards to termination, lay-off and retrenchment under the ID Act. The controversy here is that, since the I.T. boom in the years after 2005, employees have been engaged in work that is repetitive in nature. If that is anything to go by, they would be considered ‘workmen’ under the definition of ‘workman’ within the Industrial Disputes Act, 1946. On the other hand, employers try to escape the provisions of this Act by allocation managerial designation to employees no matter what kind of work they are engaged in.

Conclusion

It has been held in the case of Standard Chartered Bank v. Vandana Joshi and another that “in an organizational structure the employee, in the course of the decision making process, is subject to checks and balances is not a matter which would establish that she / he is a workman within the meaning of Section 2(s). Modern forms of business in corporate organizations put into place a carefully crafted process of checks and balances. Rarely, if ever, would an employee have authoritarian control over business decisions. Employees are made subject to check and balance both at the lateral and vertical level”.

Hence to decide whether an employee is a workman, it shall be of prime importance to ascertain the nature of work being done by the employee and not the designation or the position he occupies in the company.

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