‘Techies don’t have social security’: Telangana HC pulls up IT firms for service bonds, harassment
The observations were made while hearing a petition filed by Pothnuru Rajesh, a software engineer from Nallagandla, who alleged harassment by Algonox Technologies
By - Newsmeter Network
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Hyderabad: The Telangana High Court has come down heavily on software companies for allegedly forcing employees to sign minimum service bonds and threatening them with hefty compensation if they resign.
Observing that software professionals are being denied even basic social security, the court urged the State government to consider enacting exclusive legislation for the welfare and protection of IT employees.
Petition against software firm Algonox Technologies
The observations were made while hearing a petition filed by Pothnuru Rajesh, a software engineer from Nallagandla, who alleged harassment by Algonox Technologies.
According to the petitioner, the company made him sign three consecutive minimum service agreements and threatened to recover Rs 5 lakh as compensation if he resigned. A Division Bench comprising Justice Nagesh Bheemapaka took up the matter for hearing.
‘Illegal bargaining by management’
The court remarked that the company management appeared to be indulging in ‘illegal bargaining’ by using service bonds as leverage against employees.
It strongly criticised the functioning of the Labour Department, stating that the Labour Commissioner, Principal Secretary (Labour), and the Ranga Reddy district Joint Commissioner had failed miserably to resolve the grievance raised by the petitioner.
The Bench expressed serious displeasure over the authorities’ inability to address the harsh clause mandating payment of Rs 5 lakh as liquidated damages upon resignation.
No clear calculation, only harassment
The court noted that there was no rational calculation of how much compensation an employee should receive based on the length of service completed.
“Without even specifying how much is payable after how many days of service, the employee is being harassed,” the court observed.
It directed labour authorities to examine whether demanding liquidated damages in such a manner amounts to ‘illegal bargaining’ under labour laws and to take a reasoned decision.
‘Do labour laws not apply to IT employees?’
Raising a larger question, the Bench asked whether labour laws are applicable to software employees at all, and if not, why they should be left without statutory protection.
The court observed that while software professionals appear to enjoy modern workplaces, high salaries, foreign travel, food coupons and cab facilities, their actual working lives tell a different story, often marked by insecurity and coercive conditions.
Need for dedicated legislation
Emphasising the importance of the IT workforce to India’s economic progress, the High Court urged the State government to seriously consider framing appropriate legislation to ensure the welfare and social security of software employees, who currently fall into a grey area of labour protection.
The matter has been posted for further consideration, pending action and reports from labour authorities.
