Introduction.

To further the demand of the local population to employ Kannadigas in private establishments and to avoid accidents by minimizing the communication gap, the Government of Karnataka (“State Government”) has formulated and issued the Karnataka Industrial Employment (Standing Orders) (Amendment) Rules, 2019 on December 7, 2019 (the “Notification”)[1]. The Notification requires employers to give priority/ preference to Kannadigas for employment in certain categories of jobs in industrial establishments in Karnataka.

Background.

The Industrial Employment (Standing Orders) Act, 1946 (the “Act”)[2], as applicable in the State of Karnataka, applies to industrial establishments where 50 or more workmen are employed. The Act requires the employer of an industrial establishment to define and adopt certain conditions of employment (standing orders), which must have be certified by the appropriate authorities. Standing orders mean rules relating to matters such as classification of workers (whether temporary, permanent etc.), attendance, shift working, leave policy and holidays, termination/suspension of employment etc. These matters are detailed in the schedule to the Act.

The Act permits the Government of each State to make rules to carry out the purpose of the Act. The State Government has issued the Karnataka Industrial Employment (Standing Orders) Rules 1961 (“Rules”) which set out the model standing orders for certain categories of workmen/ employees. Pursuant to these Rules, the State Government has issued the Notification to enhance the safety of workers on the premise that the employment of locals with knowledge of the local language will improve communication and lead to better safety for the workmen.

The Notification provides data on accident rates of Kannadigas and non-Kannadigas, and highlights that the accident rate for non-Kannadigas is higher due to the language barrier.  This being the basis, the Notification mandates giving preference/ priority in hiring Kannadigas for certain categories of jobs in industrial establishments situated in Karnataka.

Notification.

1. The Notification amends the model standing orders for workmen and clerks. The law requires that standing orders of an industrial establishment must at least meet the requirements of the model standing orders.

 

2. Those who receive benefits: Industrial establishments that receive or obtain from the State Government any benefit or concession such as:

• benefit or concession on allotment or sale of land;
• concessional or differential pricing for water, electricity, infrastructure;
• tax or financial concession, tax rebate or deferment of tax;
• exemptions from the operation of any labour law or any other similar;
• or other benefit under any industrial or other policy of the State of Karnataka.

 

shall give priority in appointments to Kannadigas who are Indian citizens and are residing in Karnataka for not less than fifteen years (15) and are able to read, write and speak Kannada language subject to suitability, qualification, experience and other requirements.

3. Those who don’t receive benefits: Industrial establishments that do not receive any such benefit and/ or concession from the State Government shall give preference in appointment to Kannadigas who are Indian citizens and are residing in Karnataka for not less than fifteen years (15) and are able to read, write and speak Kannada language subject to suitability, qualification, experience and other requirements.

Exemption.

The State Government has the ability to exempt industrial establishments or any class of industrial establishments from all or any provisions of the Act. The State Government issued a notification on May 25, 2019 to exempt certain industries from the applicability of the Act for a period of 5 years. The 10 industries that are exempted from the applicability of the Act (and hence the Rules) are: Information Technology (IT); IT enabled services (ITeS); Start-ups; Animation; Gaming; Computer Graphics; Telecom; BPO; KPO; and other knowledge-based industries.

Therefore, this Notification only applies to non-exempt industrial establishments.

Analysis.

Who is a Kannadiga. A Kannadiga has been defined as an Indian citizen who has been living in Karnataka for at least 15 years and who can read, write and speak Kannada. Individuals who satisfy the domicile and language requirements, irrespective of whether or not their mother tongue is Kannada (i.e. they could hail from other States) or whether or not they have studied Kannada in school, would be included within this definition.

Priority vs Preference. The words ‘priority’ and ‘preference’ reflect the difference in treatment between establishments that receive benefits and those that don’t.  We would assume that ‘priority’ is a higher threshold to meet because establishments that receive state benefits must accord priority to Kannadigas. But the threshold itself is not clear. Both reservations, if we may call them that, are subject to “suitability, qualification, experience and other requirements”  which we would interpret to mean that if two candidates with the same qualifications, experience and other requirements were to apply to an establishment then the employer should engage the Kannadigas. It may be possible to interpret ‘preference’ to be in the nature of a directive rather than an obligation. This ambiguity will need to be cleared up by the State Government and industrial establishments would be well advised to approach the authorities for clarification.

100%. It is evident from the Notification that the policy makers support the idea of reservation for locals, and since there is no limit / number / percentage in the Notification, this appears to be a 100% reservation for Kannadigas subject to suitability, experience etc.

[1] https://www.labour.karnataka.gov.in/storage/pdf-files/Labour%20Department%20-%20Desk%20Officer-03/SO-ENg.pdf

[2]https://clc.gov.in/clc/sites/default/files/Industrial%20Employment%20%28Standing%20Orders%29%20Act%2C%201946_1.pdf