Karnataka government has extended the exemption of startups from certain labour regulations for an additional five years. The exemption, which covers startups operating in new-age tech sectors such as animation, gaming, computer graphics, and knowledge-based industries, has been granted until the year 2029. This move comes as a relief for startups navigating through the challenges posed by the current economic landscape.
According to reports from the Economic Times, startups availing of this exemption are required to adhere to specific conditions. They must establish internal committees in compliance with the Sexual Harassment of Women at Workplace (Prevention, Prohibition, and Redressal) Act of 2013. Additionally, startups are mandated to set up an employee grievance redressal committee (GRC). Furthermore, these companies must furnish reports to local labour authorities detailing any disciplinary actions taken against employees, including suspension, discharge, termination, demotion, or dismissal.
The decision to extend the exemption follows thorough deliberations within the Karnataka government. Initially considering the inclusion of technology companies under the purview of labour regulations, the government opted to continue the exemption following opposition from various stakeholders. Concerns raised by the labour department regarding issues such as arbitrary termination, mass layoffs, and workplace sexual harassment prompted a reevaluation of the proposal.
The latest extension of the exemption aims to address these concerns by introducing specific conditions that outline the working and service conditions of employees. Startups are now required to comply with relevant procedures before terminating an employee’s service, thereby ensuring fair and transparent practices in the workplace.
This decision echoes a similar move made by the state authorities in January 2014 when certain technology companies were granted exemption until 2019. The objective behind these exemptions was to provide a conducive environment for startups to thrive and to recognize specific industries as sunrise sectors.
Reacting to the development, the president of Karnataka Employers Association BC hailed the decision, stating that the exemption “would go a long way in developing IT and ITES industries” in the state.
This decision comes at a critical juncture as Indian startups, particularly those based in Bengaluru, grapple with challenges arising from the funding crunch. The extension of the exemption provides startups in Karnataka’s burgeoning tech ecosystem with the necessary flexibility to navigate through the current economic uncertainties, thereby facilitating their growth trajectory amidst challenging times.
