Dr M C Agarwal
Associate Dean (Executive Education Programs)
& Professor HR and OB, NMIMS
Dr Sumi Jha
Assistant Professor in HR and OB at NITIE
(National Institute of Industrial Engineering)
CONTENTS
Page No.
Lesson 1
Lesson 2
Trade Unionism
21
Lesson 3
40
Lesson 4
Collective Bargaining
62
Lesson 5
74
Lesson 6
84
Lesson 7
114
Lesson 8
Dispute Settlement
130
Lesson 9
154
165
LIST OF FIGURES
Page No.
Figure 1.1
10
Figure 5.1
Management Thoughts
76
LIST OF TABLES
Table 5.1
75
Table 6.1
List of Registers to be maintained and returns filed under The Factories Act 1948
89
Table 6.2
Table 7.1
91
116
SYLLABUS
Introduction to IR
Trade Unionism
Role of State and Employers Association in IR
Collective Bargaining
Evolution of Labour Legislations
Labour Legislations Governing Employment of Personnel and IR
Labour Legislations Governing Employee Compensation
Industrial Dispute Settlement
Industrial Relations: Comparative Study
LESSON
1
INTRODUCTION TO INDUSTRIAL RELATIONS
CONTENTS
1.0 Aims and Objectives
1.1 Introduction
1.2 Concept of Industrial Relations
1.3 Industrial Relation System
1.4 Scope of Industrial Relations
1.5 Importance of Industrial Relations
1.6 Objectives of Industrial Relations
1.7 Dunlop's Contribution to Industrial Relations
1.8 Perspectives of Industrial Relations
1.8.1
Unitary Perspective
1.8.2
Pluralistic Perspective
1.8.3
Marxist Perspective
1.9 Challenges in IR
1.10 Evolution of Industrial Relations in India
1.11 Let us Sum up
1.12 Keywords
1.13 Self Assessment
1.14 Review Questions
1.15 Suggested Readings
1.1 INTRODUCTION
Industrial relations has become one of the most delicate and complex problems of
modern industrial society. Industrial progress is impossible without cooperation of
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Introduction to
Industrial Relations
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Industrial Relations
and Labour Laws
labors and harmonious relationships. Therefore, it is in the interest of all to create and
maintain good relations between employees (labor) and employers (management).
Any person who employs, whether directly or through another person or agency,
one or more employees in any scheduled employment in respect of which
minimum rates of wages have been fixed.
Employee
z
A person who works for a public or private employer and receives remuneration
in wages or salary by his employer while working on a commission basis, piecerates or time rate.
Employee, as per Employee State Insurance Act 1948, is any person employed for
wages in or in connection with work of a factory or establishment to which the act
applies.
In order to qualify to be an employee, under ESI Act, a person should belong to any of
the categories:
z
Those who are directly employed for wages by the principal employer within the
premises or outside in connection with work of the factory or establishment.
Employees whose services are temporarily lent or let on hire to the principal
employer by an immediate employer under a contract of service (employees of
security contractors, labor contractors, house keeping contractors etc. come under
this category).
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Industrial Relations
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Industrial Relations
and Labour Laws
High Morale: Good industrial relations improve the morale of the employees.
Employees work with great zeal with the feeling in mind that the interest of
employer and employees is one and the same, i.e. to increase production. Every
worker feels that he is a co-owner of the gains of industry. The employer in his
turn must realize that the gains of industry are not for him along but they should
be shared equally and generously with his workers. In other words, complete unity
of thought and action is the main achievement of industrial peace. It increases the
place of workers in the society and their ego is satisfied. It naturally affects
production because mighty co-operative efforts alone can produce great results.
Thus, it is evident that good industrial relation is the basis of higher production with
minimum cost and higher profits. It also results in increased efficiency of workers.
New and new projects may be introduced for the welfare of the workers and to
promote the morale of the people at work. An economy organized for planned
production and distribution, aiming at the realization of social justice and welfare of
the massage can function effectively only in an atmosphere of industrial peace. If the
twin objectives of rapid national development and increased social justice are to be
achieved, there must be harmonious relationship between management and labor.
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Industrial Relations
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Industrial Relations
and Labour Laws
To safeguard the interest of labor and management by securing the highest level
of mutual understanding and good-will among all those sections in the industry
which participate in the process of production.
To avoid industrial conflict or strife and develop harmonious relations, which are
an essential factor in the productivity of workers and the industrial progress of a
country.
Vesting of a proprietary interest of the workers in the industries in which they are
employed.
3. Rules that are derived from these interactions that govern the employment
relationship.
Dunlop emphasizes the core idea of systems by saying that the arrangements in the
field of industrial relations may be regarded as a system in the sense that each of them
more or less intimately affects each of the others so that they constitute a group of
arrangements for dealing with certain matters and are collectively responsible for
certain results.
In effect Industrial relations is the system which produces the rules of the workplace.
Such rules are the product of interaction between three key actors workers/unions,
employers and associated organizations and government.
The Dunlops model gives great significance to external or environmental forces. In
other words, management, labor, and the government possess a shared ideology that
defines their roles within the relationship and provides stability to the system.
Employees should feel that the skills and expertise of managers supports their
endeavors.
Staffing policies should try to unify effort, inspire and motivate employees.
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Industrial Relations
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Industrial Relations
and Labour Laws
The firm should have industrial relations and personnel specialists who advise
managers and provide specialist services in respect of staffing and matters relating
to union consultation and negotiation.
This perspective focuses on the fundamental division of interest between capital and
labor, and sees workplace relations against this background. It is concerned with the
structure and nature of society and assumes that the conflict in employment
relationship is reflective of the structure of the society. Conflict is therefore seen as
inevitable and trade unions are a natural response of workers to their exploitation by
capital.
1.9 CHALLENGES IN IR
Globalisation and economic reforms have had its own share of impact on Industrial
relations. The major challenges in IR are:
1. Competition on the basis of cheap labour: Globalization and increased
competition has lead to less strikes, lockouts and less man days lost due to strikes.
Also now in the era of knowledge industry employees are educated and thus do
not believe in violent activities.
2. Disinvestment: It affects IR in following ways: It changes ownership, which may
bring out changes not only in work organisation and employment but also in
Trade Union (TU) dynamics. It changes the work organization by necessitating
retraining and redeployment. It affects the right of workers and Trade unions,
including job/union security, income security, and social security.
Trade unions, management and government are responding to these challenges
through various types of new, innovative, or model arrangements to deal with
different aspects of disinvestment like:
(a) Making workers the owners through issue of shares or controlling interests
(latter is still not in India)
(b) Negotiating higher compensation for voluntary separations safeguarding
existing benefits
(c) Proposals for setting up new safety nets that not only include unemployment
insurance but also skills provisions for redundant workers.
3. New actors and the emerging dynamics: Earlier IR was mainly concerned with
Trade unions, but now consumers and the community are also a part of it. When
the right s of consumers and community are affected, the rights of workers and
unions and managers/employers take a back seat. Increasingly Trade unions are
getting isolated and see a future for them only by aligning themselves with the
interests of the wider society.
4. Pro-labour-pro-investor policies: This leads to decline in strength and power of
Trade unions if not in numbers. Unions have to make alliances with the society,
consumers and community and various civil society institutions otherwise they
will find themselves dwindling.
5. Declining trade union density: In government and public sectors workforce is
declining because of non-filling of vacancies and introduction of voluntary/early
separation schemes. New employment opportunities are shrinking in these sectors.
In the private sectors particularly in service and software sector, the new, young,
and female workers are generally less eager to join unions.
Not because of improved IR but because of the fear of job security, concern about
the futility of strikes, and concern to survive their organization for their income
survival.
Trade unions have become defensive evident from the fact that there is significant
shift from strikes to law suits. Instead of pressing for higher wages and improved
benefits, Trade unions are pressing for maintenance of existing benefits and
protection and claims over non-payment of agreed wages and benefits.
6. Collective bargaining: Level of collective bargaining is shrinking day by day.
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Introduction to
Industrial Relations
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Industrial Relations
and Labour Laws
The First World War is the first milestone enroute to industrial relations in India. It
created certain social, economic and political conditions, which raised new hopes
among workers in industries. It was for the first time, that workers realised their
importance that unless they produce goods required for wars (like steel, etc.), the wars
cannot be fought successfully. After war, prices of consumer goods also become
dearer. This led to intense labour unrest because workers earnings did not keep pace
with the rising prices and their rising aspirations.
Many other events happened which accelerated the pace of industrial relations during
the period:
z
The happenings at Carnatic and Birmingham Mills in which Mr. B.P. Wadia was
arrested in 1923
The Second World War gave a new spurt in the industrial relations field. The exigency
of the war made it essential for the Government to maintain uninterrupted flow of
goods and services for successful operation of war. Therefore, the Government of
India embarked upon a two-fold action for maintaining/countering industrial relations:
1. Statutory Regulation of industrial relations through the Defence of India
Rules Even though the Defence of India Rules lapsed after World War II,
Rule 81A which regulated industrial relations during the war was kept alive for
six months by an ordinance. Meanwhile, the tripartite deliberations during 194246 on the revision of Trade Disputes Act, 1929, helped the Union Government in
enacting the I.D. Act, 1947, which laid down a comprehensive dispute settlement
machinery to be applicable to all the States. The Act retained one of the principal
features of the Defence of India Rules, viz. compulsory adjudication of industrial
disputes.
2. Bringing all the interests together at a common forum for shaping labour policy,
tripartite consultative system was one of the important developments in the sphere
of industrial relations in our country. Tripartite consultation epitomises the faith of
India in the ILO's philosophy and objectives. The need for tripartite labour
machinery on the pattern of ILO was recommended by the Royal Commission on
Labour as early as in 1931. But the first step in this direction was taken only in the
year 1942, when the first tripartite labour conference was held at New Delhi under
the Chairmanship of Dr. B.R. Ambedkar. The conference consisted of two
organisations, namely, the Indian Labour Conference (ILC) and the Standing
Labour Committee (SLC).
The objectives, set before the two tripartite bodies at the time of their inception in
1942, were:
1. Promotion of uniformity in labour legislation;
2. Laying down of a procedure for the settlement of industrial disputes; and
3. Discussion of all matters of all-India importance as between employers and
employees. The function of ILC, as viewed by Dr. Ambedkar, was to advise the
Government of India on any matter referred to it for advice, taking into account
suggestions made by various State Governments and representatives of employers
and workers. These tripartite bodies were essentially deliberative,
recommendatory and advisory in nature and the area of their operation depended
on the discretion of the Central Government.
Tripartite deliberations helped to reach consensus, inter alia, on Statutory Minimum
Wage Fixation (1944), Constitution of Tripartite Industrial Committees (1944),
Introduction of a Health Insurance Scheme (1945) and a Provident Funds Scheme
(1950). Thus, it led to the passing of three important central labour laws, viz. the
Minimum Wages Act, 1948, the Employees' State Insurance Act, 1948, and the
Employees' Provident Funds Act, 1952.
Even though the defence of India Rules lapsed after, World War II, Rule 81 which
regulated Industrial-relations during the war was slept alive. Meanwhile in the
Iripanfite deliberations (1942-46) revised Trade Disputes Act, 1929 and helped
exactment of I.D. Act, 1947 a comprehensive legislation on dispute resolution.
Industrial Relations in Post-independence Era
Following forces were operating at the time of independence:
z
We inherited industrial relations legacies from our colonial masters with colonial
mindset, colonial habits and colonial culture.
Coincidentally, our freedom struggle coincided with the struggle by the working
class for better industrial relations. In course of these struggles, our top leaders
made promises and pledges to workers. Therefore, after independence, our leaders
had to fulfil those promises and the pledges made to the workers during
freedom struggle.
Our industrial relations were deeply influenced by all the above forces. These
philosophies got reflected in our constitution (1) Preamble of the Constitution
(2) Fundamental Rights (3) Directive Principles of State Policies. This "Trinity" of
Indian constitution is the fountainhead of all factors which shape and guide the spirit
of industrial relations. This was further put in practice when we launched our Five
Year Plans. Each of the successive Five Year Plans emphasised for the well-being of
the working class, co-operation between worker and employer, harmonious industrial
relations, workers right and workers participation, welfare state etc. social justice
and egalitarianism became the guiding spirit.
The aftermath of independence saw the mushroom growth of trade unions and a
plethora of labour legislations and this led to the furtherance of litigations and bitter
industrial relations not only between the employers and trade unions but between
multiple trade unions themselves Trade Union-rivalries.
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Industrial Relations
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Industrial Relations
and Labour Laws
This was the period when Industrial Policy Resolution, 1956, facilitated the growth of
the public undertakings both at the Centre and State level. Through these PSUs, Govt.
wanted to present a role-model of industrial relations as "Model-Employers".
In the year 1957 (15th ILC) the voluntary schemes for workers participation in
management and workers education schemes and in the year 1958 (16th ILC)
voluntary code of discipline and voluntary code of conducts were introduced to
counteract the unhealthy trends of litigations and delays.
In the year 1969 the first National Commission on Labour was formed under the
chairmanship of Justice Gajendragadkar which made significant recommendations but
most of them could not be implemented.
This is also the period when nationalisation of industry was at its peak. Many banks,
sick textile mills, sick steel plants and collieries, etc., were nationalised. In banks,
workers Directors were put on the Board of Directors as per the Bank Nationalisation
Act.
This is the period when militancy and violence crept in which gave rise to many
wasteful and restrictive practices in the working of industries, especially of Public
Undertakings. The result was that many of the industries especially the Public Sector
ones became weak, sick and many of them got closed.
Emergency of 1975 had its impact on industrial relations. Mrs. Indira Gandhi, the then
PM, wanted to salvage her image as a democrat. Therefore, she amended the
constitution (Article 43 A) to provide for workers participation and added Chapter 5B
in the Industrial Disputes Act, 1947. The Janta Government and each successive
government, thereafter, competed with others to provide measures for protection of
workers' interests and formation of workers' welfare.
In the post-independence period, especially the later portion of 70s and 80s, the Indian
judiciary has displayed unprecedented judicial activism by giving pro-labour
judgements, which had tremendous impact on industrial relations. This was the period
when amendments in IDA led to inclusion of Sections 2A, 9A, 11A, 17B & Chapter
V B (Sections MNo.) Contract Labour (R&A) Act, 1972, was passed and sec. 10 of
the Act was interpreted to absorb the workers, if they have worked for substantial
years on permanent and perennial nature of job, etc. This provided excessive
protection to labour.
The result was that we had a pampered labour class and a stagnant, regulated and
controlled industrial relations in the late 80s, quite oblivious of the fact that sweeping
changes were taking place and industries and businesses were quite susceptible to
them and threatened by them, if they failed to gear themselves upto meet the situation.
Industrial Relations in Post-globalization Period from 1991 till Date
The requirements and imperatives of global competitiveness are of international
standards in quantity, quality, cost-effectiveness and customers' concerns. This, in
turn, requires introduction of state-of-art of technology, followed by innovation,
creativity and strategic alignment of divergent resources to create performing climate.
Such a performing climate requires a dynamic and synergetic employee relationship.
The traditional IR was made to "fight the fire" or "douse the fire". It was reactive,
negative, passive, ad hoc and legalistic. It was selfish by confined to its own members,
without having any concern for business organisations or society at large. It was
inflexible, rigid and ideologies-bound which have lost their relevance.
The result is that the tradition of industrial relations is under tremendous pressure,
because it was made to cater to the requirements of controlled, protected and regulated
market and it is unable to address to the imperatives of competitive global market.
A tug of war is going on between "forces of Action" and "forces of Inertia". The
Market requires a flexible, resilient and aggressive employees relations and traditional
industrial relation wants to stick to status quo and no change.
Traditional institutions of IR are losing their importance and relevance. Trade unions
are marginalised and kept outside the mainstream of business. Strike is losing its
cutting edge. Collective bargaining is being replaced by individual bargaining.
Ideological decisions are being replaced by business pragmatism.
1.12 KEYWORDS
Industrial Relations: It explains the relationship between employees and management
which stem directly or indirectly from union-employer relationship.
Industry: It is a whole gamut of activities that are carried on by an employer with the
help of his employees and labors for production and distribution of goods to earn
profits.
Employee: He is any individual employed by an employer.
Employment: The state of being employed or having a job.
Labor market: The market in which workers compete for jobs and employers compete
for workers.
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Introduction to
Industrial Relations
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Industrial Relations
and Labour Laws
21
Trade Unionism
LESSON
2
TRADE UNIONISM
CONTENTS
2.0
2.1
Introduction
2.2
2.3
Militant Functions
2.3.2
Fraternal Functions
2.4
2.5
2.6
2.7
2.8
2.8.2
2.8.3
Union Goals
2.8.4
2.9
2.10
2.11
2.11.2
2.11.3
2.11.4
2.11.5
2.11.6
Formation of AITUC
2.11.7
2.11.8
Formation of NTUF
2.11.9
Let us sum up
2.13
Keywords
2.14
Self Assessment
2.15
Review Questions
2.16
Suggested Readings
22
Industrial Relations
and Labour Laws
2.1 INTRODUCTION
Trade unions are organisations. They have their own structure, policies, norms,
activities, communication system, and leadership. They interact with the environment
and strive to respond to its pressures/challenges not for mere survival, but to remain
effective organisationally. Thus, managing trade unions is a challenging task. Unlike
the business organisations, trade unions as organisations, cannot purchase the
compliance of the members through monetary rewards alone. They have to ensure that
both the economic and non-economic interests of the members are satisfied on a
continuous basis.
(a) Education and training: Most unions run training courses for their members
on employment rights, health and safety and other issues. Some unions also
help members who have left school with little education by offering courses
on basic skills and courses leading to professional qualifications.
(b) Legal assistance: As well as offering legal advice on employment issues,
some unions give help with personal matters, like housing, wills and debt.
(c) Financial discounts: People can get discounts on mortgages, insurance and
loans from unions.
(d) Welfare benefits: One of the earliest functions of trade unions was to look
after members who hit hard times. Some of the older unions offer financial
help to their members when they are sick or unemployed.
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Trade Unionism
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Industrial Relations
and Labour Laws
Trade unions are a part of society and as such, have to take into consideration the
national integration as well. Some important social responsibilities of trade unions
include:
z
25
Trade Unionism
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Industrial Relations
and Labour Laws
Trade unions are also seen as moral institutions, which will uplift the weak and
downtrodden and render them the place, the dignity and justice they deserve.
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Trade Unionism
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Industrial Relations
and Labour Laws
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Trade Unionism
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Industrial Relations
and Labour Laws
obsession is with enterprise level concerns with no forum to link them with national
federations that could secure for them a voice at national policy making levels.
Several studies also point to a shift in employment from the organised to the
unorganised sector through subcontracting and emergence of a typical employment
practice where those work for the organisation do not have employment relationship,
but a contractual relationship.
Unfortunately trade unionism in India suffers from a variety of problems such as
politicisation of the unions, multiplicity of unions, inter-union rivalry, uneconomic
size, financial debility and dependence on outside leadership.
trade union on permanent basis was done in 1906 in the Postal Offices at Bombay and
Calcutta. By the early years of the 20th century, strikes had become quite common in
all major industries. Even at this time. There were visible links between nationalist
politics and labour movement. In 1908, mill workers in Bombay went on strike for a
week to protest against the conviction of the nationalist leader Bal Gangadhar Tilak on
charges of sedition. There was also an outcry against the indenture system by which
labour was recruited for the plantations, leading to the abolition of the system in 1922.
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Industrial Relations
and Labour Laws
The moderates wanted affiliation with the BLO and the International Federation of
Trade Unions based in Amsterdam, The nationalists argued that affiliation with the
latter organisations would amount 10 the acceptance of perpetual dominion status for
the country under British hegemony. Similarly, the three groups saw the purpose of
the labour movement from entirely different points of view. The party ideology was
supreme to the communists, who saw the unions only as instruments for furthering
this ideology. For the nationalists, independence was the ultimate goal and they
expected the trade unions to make this their priority as well. The moderates, unlike the
first two, were trade unionists at heart. They wanted to pursue trade unionism in its
own right and not subjugate it completely to broader political aims and interests.
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Trade Unionism
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Industrial Relations
and Labour Laws
35
Trade Unionism
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Industrial Relations
and Labour Laws
2.
3.
4.
5.
6.
7.
8.
9.
ry to imagine the sophisticated Indian BPO worker protesting with a red flag in his/her hand.
Hard to imagine? This might just happen if the trade unions succeed in their efforts to
convince Indian BPO employees to form a union. Trade unions are making effort for quiet
some time to support BPO employees to form trade unions. While much has been written about the
high salaries and perks earned by BPO employs, the other side is that the high level of stress makes it
difficult for the employees to continue working for a long period of time. The industry experts believe
that stress forces one in seven workers to leave the industry every year.
In fact, the recent VV Giri National Institute of Labours report on call center equates the condition at
Indian call centers with 19th century prisons or Roman slave ship. The study said that respondents
reported symptoms such as nervousness, chronic fatigue, body ache, insomnia, nausea, anxiety,
restlessness, irritability and even depression due to the odd working hours and stress. Workers are
also subjected to `emotional labour as they are required to display certain kinds of expressions for
customer satisfaction. In some cases even facial expressions are monitored and any deviations from
the defined framework are considered defects. In this scenario, it would be easy for trade unions to
convince BPO employees to form a union. Right? You couldnt be farther from truth. In fact, CITU
recently announced that it has deployed its cadres in Bangalore, Chandigarh, Chennai and Hyderabad
to contact IT and BPO workers to establish Indias first nationwide union of IT workers by the end of
2006.
Forming a trade union is the fundamental right of any worker and BPOs are violating the basic
labour rules and regulations. For instance, every company has to form grievance committee for
women employees but many BPOs dont have it. Also, Maternity Act is being violated and women
employees are made to work late at night. Many times, the employees dont get Provident Fund and
ESI benefits as well. We want BPO employees to form a trade union so that they are able to fight for
their rights, KP Rao, member of Delhi State Committee of CITU said. This image of BPO workers
as cyber coolies is further reiterated, if one talks to Chetan Bhagat, the successful writer of `Five
Point Someone. Chetan researched his recently launched book, `One night@call center, for six
months. Many a times, he was forced to sneak into call centers at the peak night time since the
company managements wouldn't allow him to "rightfully" research for the book. He studied their
training materials and evaluation sheets and listened into live calls to gather dope for his book.
Bhagat also traveled with the employees in the pick-up car, ate with them at the canteen and
interviewed them. The call center employees, I interacted with during the research for my recently
launched book, `One night@call center, were intelligent and clever and certainly deserve better jobs
than the one where they just have to answer phone calls. BPOs are corroding a generation. I mean,
there is something seriously wrong if someone gets ticked for spending too much time in the
bathroom, says Bhagat. While that is one view, the BPO industry and the analysts present the other
view. The first and foremost argument which goes in favor of BPO community is that the huge
demand and supply ratio makes it apparent that the companies treat their employees well.
This is supported by Sujoy Chohan, Vice President and Research Director Offshore BPO. Unlike
factory workers, the trade unions are dealing with an educated set of people who have made the
choice of working at a call center. Moreover, they are working in an exceptionally good environment
with good salaries and frankly, I dont see any reason as to why they should form a trade union.
Another thing which goes against these trade unions is that they are seen as negative in the country.
The history shows that trade unions have never worked to the advantage of the employees in the
country.
Also, there is a huge demand and supply gap in the Indian BPOs, making it critical that the companies
look after their employees to reduce the attrition rate. According to NASSCOM figures, BPO sector
directly employs 3,50,000 people in the country and is expected to add 80,000 jobs this year.
The demand and supply gap ensures that BPO and call center employees are well looked after. The
companies are going out of their way to provide the best possible environment to work in for their
employees. Also, one has to understand that the demands of the outsourcing business are different.
You have to be there when the customer wants you and not when you want the customer, Ashok
Chadha, President, Global Vantedge Inc. said.
Source: www.rediff.com
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Industrial Relations
and Labour Laws
2.13 KEYWORDS
Trade Unions: It is an organization of workers who have come together to achieve
common goals.
Negotiation: It is a process by which the involved parties or group resolve matters of
dispute by holding discussions and coming to an agreement.
Militant Functions: A set of activities performed by trade unions leads to the
betterment of the position of their members in relation to their employment.
Fraternal Functions: A set of activities performed by trade unions aims at rendering
help to its members in times of need, and improving their efficiency.
AITUC: All India Trade Union Congress
NTUF: National Trade Union Federation
INTUC: Indian National Trade Union Congress
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Trade Unionism
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Industrial Relations
and Labour Laws
LESSON
3
ROLE OF EMPLOYERS ASSOCIATION AND STATE IN
INDUSTRIAL RELATIONS
CONTENTS
3.0
3.1
Introduction
3.2
Employers Association
3.3
3.2.1
Objectives
3.2.2
3.2.3
3.2.4
3.2.5
3.2.6
3.2.7
Future Challenges
3.2.8
Evaluation
3.3.2
3.3.3
Tripartite Consultations
3.3.4
3.3.5
3.3.6
3.4
Let us Sum up
3.5
Keywords
3.6
Self Assessment
3.7
Review Questions
3.8
Suggested Readings
3.1 INTRODUCTION
Employers' Organisations (EOs) are "formal groups of employers set up to defend,
represent or advise affiliated employers and to strengthen their position in society at
large with respect to labour matters as distinct from economic matters. They may
conclude collective agreements but this is not a formal rule and cannot be an element
of their definition. Unlike trade unions, which are composed of individual persons,
employers' organisations are composed of enterprises. Most legal definitions of a trade
union apply to them (Oechslin, 1990). The Trade Union Act, 1926 includes in its
purview, both associations of workers as well as employers.
In the initial years of Industrial Revolution, Government followed the policy of
Laissez faire (non-interference) in settling Employers' and Workers' problems. Parties
were left free to settle scores the way they liked. Towards the end of the 19th century,
the change was witnessed in the attitude of the Government.
In this lesson we will study the role of both employers association and state in
industrial relations.
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Role of Employers
Association and State in
Industrial Relations
42
Industrial Relations
and Labour Laws
period. Each phase reveals its own structural and functional characteristics. In each
phase, the organisations had to undergo changes because of contemporary economic,
social and political developments. The changes have been more rapid in some areas
than in others. The periods referred to also coincided with important developments in
the labour field and these have had a great impact on the pattern and development of
EOs and also on their functioning.
Pre-1933 Period: Merchants associations (chambers of commerce) and industrial
associations (jute, textiles, engineering, etc.) come into being or were primarily set up
to pursue the sectional interests of their constituents.
Until the First World War, the chambers of commerce and trade associations did not
consider it important to deal with labour problems, except in stray cases of
employee/union militancy. By and large the attitude of employers was one of
indifference and, occasionally, aggression. Individual units had autonomy to deal with
labour matters. But soon the jute and textiles employers began to regulate working
hours and introduce standard remuneration to workers because of conditions created
by the war and shortage of skilled labour. During this period, unions also started
gaining ground. Though the chambers of commerce took birth way back in 1830s,
when the East India Company withdrew from its trading activities, the British and
giant Indian (mainly Parsi) industrial and business interests teamed up in 1920 under
the umbrella of Associated Chambers of Commerce (ASSOCHAM). The big Indian
trading and industrial interests that had long been in conflict with British business
interests and supporting Swadeshi Movement as a part of the struggle for political
independence have played a major role in setting up the Federation of Indian Chamber
of Commerce and Industry (FICCI) in 1927. Certain other developments which
occurred rapidly during the 1920s had a bearing in providing the impetus for
recognising the nature of the employers' role in dealing with industrial relations
aspects. The first in the series of these developments was the formation of the
International Labour Organisation (ILO) in 1919. The emergence of the trade union
movement in the wake of the First World War led to the enactment in 1926 of The
Trade Union Act. The Royal Commission on Labour (Whitley Commission) was set
up in 1929 to enquire into the conditions of Labour. Following the recommendations
of the Whitley Commission, labour departments were set up to redress workers'
grievances and improve their conditions. The existing chambers of commerce could
not espouse effectively, the interests of industrial employers, especially in the area of
industrial relations and labour matters. As a result, the need for greater coordination of
employers' collective interest, resolving common policies for concerted action in
labour matters and labour legislations was felt, thus necessitating the formation of
separate EOs to deal with related problems in a more exclusive and specialised
manner.
Among all the reasons mentioned above, the formation of the ILO had provided an
explicit rationale for the formation of Federation of Employers' Association during the
years, immediately following the First World War. India, as one of the original
members of the ILO (set up by the Treaty of Versailles in 1919), had the responsibility
of sending a tripartite delegation to the International Labour Conference that is held
every year. According to the constitution of the ILO, the Government of each Member
State should nominate Employers' and Workers' Delegates and Advisors, in agreement
with the industrial organisations which are most representative of the interests
concerned.
This posed a problem to both these parties in as much as there was no single
organisation in existence at the time which was representative of either workers or
employers on an all-India basis which could be entrusted with the tasks of selection of
their respective delegates. Under the circumstances, when the Government of India
resorted to the expedient of nominating these delegates on their own, trade unions and
employers' organisations found the need to establish representative federations at the
national level. While the trade unions acted speedily and established the All-India
Trade Union Congress in 1920, it took some years for the employers' organisations to
iron out the differences among different chambers and associations. Efforts to set up
Employers' Federation of India at Mumbai, though began in 1920 under the auspices
of ASSOCHAM and a few other industry associations, could not materialise during
1920s. Since the formation of the Federation of Indian Chamber of Commerce and
Industry (FICCI) with headquarters at Delhi in 1927, the Indian Employers' delegate
began to be nominated on the recommendation of FICCI. It was in 1931 that the
Government of India informed FICCI that in terms of the Treaty of Versailles, the
Chambers of Commerce could not be treated as an organisation of industrial
employers which could be consulted by the member-governments in nominating
employers' delegates. To overcome the difficulty, FICCI announced the setting up of
the All India Organisation of Industrial Employers (subsequently, the term "industrial"
was dropped from the name) (AIOE) on December 12, 1931. ASSOCHAM and others
including Bombay Chamber and Bengal Chamber took the initiative to register
Employers' Federation of India (EFI) with headquarters at Mumbai in 1933, under the
Indian Companies Act.
1933-46: Thus, two EOs came into existence in 1933, with the AIOE representing
mainly Indian and the EFI mainly the British and Parsi business and industrial
interests in the large-scale, organised sector. The modest objective of these two
organisations in the beginning was to facilitate the selection of employers' delegates
for the meetings and conferences of the ILO.
Since the two bodies began to represent mainly the large-scale industrial employers,
the need for a third limb of EOs representing the medium and small size employers
was felt. Under the inspiring leadership of M. Vishwesvarayya, a renowned engineer,
the All India Manufacturers' Organisation (AIMO) was set up in Bombay in 1941 to
represent both the trade and labour interests of the member firms in the medium and
small sectors. The AIMO could secure recognition from the Government of India for
representation at the national level and in the 1980s for the International Labour
Conference, as any other EO.
1947-Present: In the wake of the independence of the country in 1947, a plethora of
labour laws were enacted. The industrial fabric of the country began to change with
the implementation of successive Five-Year Plans and the demographic profile and
aspirations of the employees also began to undergo major changes. All these provided
new opportunities and challenges for EOs. The growth of public sector consequent
upon Government's endeavour to raise it to the "commanding heights" of the economy
led, eventually to the claim by the public sector, to represent employer's interests. A
representative organisation for public sector, called Standing Conference on Public
Enterprises (SCOPE) was registered on September 29, 1970 as a society under the
Societies Act.
Structure
At present employers' organisations are organised at three levels:
(a) Local organisations: They serve the interests of local businessmen. The Bombay
Mill Owners' Association, for example, has been formed to protect the local
interests of manufacturing units operating within the city. Such bodies operate
through the local chambers of commerce.
(b) Regional organisations: The regional outfits such as Employers' Federation to
South India and Employers' Association, Kolkata are affiliated to Central
43
Role of Employers
Association and State in
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44
Industrial Relations
and Labour Laws
EFI: The main objectives of the EFI as embodied in its constitution are: (i) to regulate
the relations between employers and workers; (ii) to promote and protect the
legitimate interest of employers engaged in industries, trade and commerce; (iii) to
maintain harmonious relations between management and labour and to initiate and
support all properly considered schemes that would increase productivity and at the
same time vouchsafe to labour a fair share of the ncreased return; and, (iv) to collect
and disseminate information affecting employers and to advise members on their
employer-employee and other ancillary problems.
Although consideration of broad economic problems is not excluded from its purview,
the EFI usually likes to reserve commercial questions such as customs and taxation for
Chambers of Commerce.
SCOPE: The objectives of the SCOPE cover a wider ambit: "SCOPE looks upon its
tasks as both internal and external to the public sector. Internally, it would endeavour
to assist the public sector in such ways as would help improve its total performance.
Externally, it would help improve its total boundary role in conveying such
information and advice to the community and the Government as would generally
help the public sector in its role.
New Roles of EOs
1. Lobbying/awareness creation
2. Training consultancy services
3. Referral services/database service
4. Information dissemination/publication/experience sharing
5. Relations with social partners and other stakeholders
6. Legal advice/assistance
7. Collective bargaining
8. Social service
9. Other service, if any as per exigencies
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Association and State in
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Under the Constitution of the ILO, its member countries (India is a member of the
ILO since its inception in 1919) should accord recognition to the most representative
organisations of unions and employers. CIE is the organisation which represents the
Indian employers.
executive committee is responsible for implementing the policies and objectives of the
organisation and the secretariat with a permanent staff, is responsible for carrying out
the decisions of the governing body. There is greater continuity in the leadership of
the EFI than the AIOE. The EFI had only four presidents in over 50 years. The AIOE
which used to elect a new president every two years is now electing a new president
every year. The EFI constitution provides for setting up special technical committees
if need arises to provide special attention on any subject.
The SCOPE has two administrative organs, the Governing Council and the Executive
Board besides the Secretariat with permanent staff. The Governing council lays down
the policies and elects office-bearers, the Executive Board oversees implementation of
policies. The chief Executive of a member enterprise/organisation shall automatically
be a member of the Governing Council. Additionally, it has three government
representatives nominated by the Director-General, Department of Public Enterprises,
as ex-officio member of the Governing Council with full voting rights.
Finances: EOs are referred to as rich men's poor clubs. The EFI's balance sheet for
1985-86 shows an income of Rs. 20 lakh and that of AIOE Rs. 5 lakh, approximately.
Nearly half of the income of the EFI and one-fourth of the income of the AIOE are
from membership-subscriptions. Other incomes include interest on corpus/deposits,
conferences, publications, etc. Excessive dependence on income from subscription
makes EOs financially vulnerable. The surest way for them to raise funds is to
upgrade the quality, relevance and usefulness of services to their members and other
constituents, including the community.
Representation: EOs in India play two types of roles in representing the interests of
their members: One, they are called to nominate representatives of employers in
voluntary or statutory bodies set up not only to determine wages and conditions of
employment of workers in a particular industry/sector, but also for consultation and
cooperation on social and labour matters in national and global context. Secondly,
they seek to redress the grievances arising from legislative or other measures by
making submissions to the concerned authorities. It is difficult to recapitulate and
synthesise the role played by EOs in representing the interests of employers in the
ILO, various committees/institutions, bipartite and tripartite at the national level and
on various issues such as legislation, voluntary codes, social security, bonus, etc.
Services: The real worth of an EO and the best justification for its support is the range
of services that it provides to its members. Within the overall framework of the need
to develop enlightened human resource management practices, the kind and range of
services that an EO could provide rests mainly on the needs of the members and their
priorities as also the resources and competence within the leadership and secretariat of
the EO. Some of the basic services every EO may be expected to provide include the
following: (i) study and analysis of problems and dissemination of information
advice, advocacy and dispute settlement; (ii) guidance or conduct of collective
bargaining. In India, this role is voluntary and at the initiative and request of the
members; (iii) training and development of staff and members; (iv) safety and health
at workplace and working environment; and (v) public image and public relations.
The above list is indicative and not exhaustive. A survey of members of EOs in
India (Venkata Ratnam, 1989, pp. 112-113) noted that over 70 per cent of the
respondent-members of EOs believe that EOs: (a) are active in disseminating
information to members and making representations whenever an issue or problem
arises; henceforth, need to be proactive; (b) are not doing as well as they should be
doing in their advisory role and in providing a guidance on issues relating to collective
bargaining, etc.; (c) should pay more attention to (i) study the problems of concern to
the employers, (ii) improving their interaction with members, unions and government,
(iii) concentrating on training workers and members, (iv) strengthening advisory
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Association and State in
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48
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and Labour Laws
services, and (v) taking up projects for social and family welfare; and (d) need not
participate; as before, directly in enterprise level negotiations or settlement of
industrial disputes at firm level.
Relations: During the course of performing their functions, EOs interact with the three
principal actors; i.e., employers (who are their members), Government and unions.
Traditionally, employers are individualistic in nature and competitive considerations
affect their ability to confederate as a cohesive entity. Employers want individual
discretion than take a collective, unified stand for a good policy. This attitude
influenced their orientation towards relations with governments. Individual office
bearers would like to cultivate personalised relations with government functionaries
than institutionalise the interactions. The relations with unions are typically
adversarial and occasional interactions but not usually founded on the realisation of
the importance of a continuous dialogue and discussion to develop rapport, mutuality,
trust and confidence in each other.
EOs also interact with political parties, professional organisations and the community.
Relations with political parties assume significance even if EOs choose to remain
avowedly apolitical. The presence of professional organisations make it imperative to
see whether these organisations of managers are similar or dissimilar to those of
employers. In today's context of large, modern corporations, the employers'
dependence on professional manager had increased. Likewise the professionals and
professional bodies do draw their sustenance, to an extent, from employers. The EOs
also need to maintain relations with the community.
3.2.8 Evaluation
Employers' Associations (EAs) have remained disparate groups, passing resolutions
and airing grievances from various platforms. EAs relations with Government have
remained individualistic in nature. They were keen to have personalised relations with
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Role of Employers
Association and State in
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50
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and Labour Laws
Fraternity assuring the dignity of the individual and the unity and integrity of the
Nation"
The expression "socialist" was specifically introduced in the Preamble to the
Constitution by the Constitution (Forty-second Amendment) Act, 1976 to transform
the country from "a wholly feudal exploitative slave society to a vibrant, socialist
welfare society". The new economic policies announced in mid-1991, constitute a
marked shift towards market-oriented economy thus, raising doubts as to the
continued relevance of socialism, be it Gandhi an, Marxian or a blend of both.
Part II of the Constitution lays down fundamental rights of the citizen which include:
Right to equality: This right includes prohibition of discrimination on grounds of
religion, race, caste, sex or place of birth; Equality of opportunity in matters of public
employment and abolition of untouchability. The multi-rules, constitutional for
reservations for scheduled castes and scheduled tribes, etc., provided in the
Constitution are in the nature of affirmative action programmes for disadvantaged
groups.
Right to freedom: This includes protection of certain rights regarding freedom of
speech, etc., protection in respect of conviction for offences; protection of life and
personal liberty and, protection against arrest and detention in certain cases. Certain
acts like Official Secrets Act and Maintenance of Internal Security Act (MISA) seem
to restrict the right to some of the freedoms mentioned above.
Right against exploitation: Prohibition of forced labour and prohibition of
employment of children in factories, etc., are intended to minimise and eventually end
such exploitations. Subsequently, separate legislations have been promulgated to
guard against such exploitation. Legislations like the Bonded Labour (Abolition and
Regulation) Act and the Child Labour (Prohibition and Regulation) Act are illustrative
of legislative measures directed against prohibition and regulation of variety of
exploitations.
Part IV of the Constitution lists the Directive Principles of State Policy. The
provisions contained in this Part are not enforceable by any court, but the principles
laid down therein are, nevertheless, fundamental in the governance of the country and
it is the duty of the State to apply these principles in making laws.
The State is to secure a social order for the promotion of welfare of the people.
Towards this end, the State shall, in particular, direct its policy towards securing:
(a) that the citizens, men and women equally, have the right to an adequate means to
livelihood;
(b) that the ownership and control of the material resources of the community are so
distributed as best to sub-serve the common good;
(c) that the operation of the economic system does not result in concentration of
wealth and means of production to the common detriment;
(d) that there is equal pay for equal work for both men and women;
(e) that the health and strength of workers, men and women, and the tender age of
children are not abused and that citizens are not forced by economic necessity to
enter avocations unsuited to their age or strength;
(f) that children are given opportunities and facilities to develop in a healthy manner
and in conditions of freedom and dignity and that childhood and youth are
protected against exploitation and against moral and material abandonment.
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Association and State in
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and Labour Laws
Some of the Directive Principles of State Policy relevant for a discussion on the labour
policies of the State include the following:
The State shall secure:
Article 39A, Equal justice and free legal aid;
Article 41, Right to work (within the limits of its economic capacity and development)
and to public assistance in certain cases;
Article 42, Just and humane conditions of work and maternity relief;
Article 43, Living wage and conditions of work ensuring a decent standard of life and
full enjoyment of leisure and social and cultural opportunities, etc.;
Article 43A, Participation of workers in management of industries;
Article 44, Uniform civil code for the citizens;
Article 45, Provision for free and compulsory education for children until they
complete the age of fourteen years;
Article 46, Promotion of educational and economic interests of Scheduled Castes,
Scheduled Tribes and other weaker sections; and also protect them from social
injustice and all forms of exploitation;
Article 47, Raising the level of nutrition and the standard of living of its people and
the improvement of public health; and Article 48A, Protection and improvement of
environment and safeguarding of forests and wildlife.
International Labour Organisation (ILO) and its Influence on IR
The International Labour Organisation (ILO) sets international labour standards by
adopting International Labour conventions and Recommendations at its Conference,
held every year, after consultation with its member-States. When a member-State
ratifies a Convention, it becomes a legally binding International obligation.
Recommendations lay down general or technical guidelines and often supplement the
corresponding convention. A country that has ratified a Convention must report
regularly on its application in law and practice. The ILO uses moral persuasion as it
does not have machinery to legally enforce the conventions and recommendations. An
independent Committee of Experts on the Application of Conventions and
Recommendations considers complaints against violations of international labour
standards by member-States. The committee's findings are discussed each year at a
tripartite committee of the International Labour Conference and the erring
governments are persuaded to amend and report back.
The International Labour Conference has adopted 172 conventions on a variety of
subjects (mentioned later) till 1st June 1992. India, which is a member of the ILO
since its inception (1919) adopted 36 of the 172 conventions as of 1st June 1992.
Evolution of Labour Policy during the Five Year Plans
A major landmark event influencing post-independence era labour policies was the
report of the Labour Investigation Committee, 1946. The National Government in
1946 drew up a four-year phased programme to:
(a) revise the existing labour legislations to meet the changing needs of the time;
(b) eliminate completely and/or control contract labour;
(c) extend employment opportunities/exchanges to cover all classes of workers;
(d) evolve fair terms of service and deal for workers;
(e) fix wages in sweated industries, rationalise rate of dearness allowance to promote
fair wage agreement; and
(f) lay down nucleus for an industrial health insurance programme.
The First Plan recognised the importance of industrial labour in the fulfillment of plan
targets and in creating an economic organisation in the country which would best
sub-serve the needs of social justice.
The Industrial Disputes Act was amended, in 1950 itself, providing for a three-tier
system of Labour Court, Industrial Tribunals and National Tribunal.
The Second Plan recognised that "certainty of industrial democracy is a prerequisite
for the establishment of a socialist society."
The Third Plan emphasised the economic and social aspects of industrial peace and
elaborated the concept that workers and management were partners in a joint venture
to achieve common ends. Adherence to Codes, not going to courts, was emphasised to
regulate union-management relations. However, this was not of much avail.
The Fourth Plan stressed the need to improve legislation concerning safety and
welfare of workers, review of workers' participation and management of workers'
education programmes and arrangements for skills training, labour research, etc.
Several new legislations and improvements to existing legislations were made during
the period. The Payment of Bonus Act, 1965, Shops and Commercial Establishments
Act, and Labour Welfare Fund Act were among the important legislative initiatives
during the period. The National Safety Council was set up in 1966.
The Sixth and the Seventh Plans reiterated the earlier programmes, expressed concern
over the shortcomings in realising the important goals of improving the conditions of
working class, workers participation, productivity improvement, etc.
The Eighth Plan echoed the concerns raised in the earlier plans with particular
reference to workers participation in management, skills training, productivity,
equitable wage policy, informal sector, etc.
The major problem with our five year plans is that the intentions are pious and noble.
But there is little that the plans offer by way of providing guidance or clues as to how
these shall be achieved, measured and monitored. The goals being abstract, the
inspection and database being weak, the daunting tasks in each of the successive plans
left more to be achieved.
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Role of Employers
Association and State in
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(c) nomination of representatives of organised employer and labour being left to the
concerned organisations;
(d) representation of certain interests (unorganised employers and unorganised
workers), where necessary.
The Union Minister for Labour is the ex-officio Chairman of both the ILC and the
SLC. When the ILC was first constituted, the Government wanted to structure it on
the principles governing the ILO, viz., (a) equality representation among the
Government and non-Government representatives; (b) equality of representation
between employers and employees who were not otherwise represented. Thus, the
Chairman of the first ILC in 1942 proposed a strength of 44 members, including 22
from Government and 11representatives each, of employers and workers. The
representatives of employers and workers would be nominated by the Government and
who in turn would nominate two members on both sides to represent those sections of
employers and workers who were not represented by the central organisations. The
SLC was likewise proposed to comprise of 20 members, 10 from Government and
five representatives each from employers and workers, which was raised subsequently
to 24, with 12 from Government and six each from among the employers and workers.
In 1952 due to opposition from the central organisations of workers and employers,
the Government gave up the practice of inviting employers and workers not
representing any of the central federations. This in effect, reduced the size of
employers' and workers' delegations to nine each while the Government representation
remained at 22 members' in ILC and five each for employers' and workers'
organisations in the SLC as against 12 from the Government as before. The
reorganisation of States necessitated an increase in the size of government
representation in the SLC during the 1950s and 1960s. Similar need was not felt in the
case of ILC during this period so long as the number of states was less than 22.
However, by 1975, when the ILC met after a gap of 12 years for its 28th session, 46
Government representatives, 28 from States/Union Territories and 18 representing
Central Ministries took part as against 11 each representing employers' and workers'
organisations. During the 1970s, the emergence of SCOPE to represent public sector
employers' interests had affected the size of private sector representation. As for
nomination of workers' representatives, the problem became perennial, with the
Government being accused of adopting a partisan attitude ultimately leading in recent
times to the boycott of the conferences by a sizeable section of the central organisation
of trade unions, predominantly belonging to 'leftist ideology'. By 1992, the
government representation increased to 52 with 20 from Central Government and
Union Territories and 32 from State Governments. The representation for workers and
employers increased to 28. The formation of three more new states in 2000
necessitated further increase in representation for state governments. Apart from the
official nominees, the rules provide for the presence of advisers. Each delegate of a
central organisation of employers and workers and of state governments is entitled to
bring one adviser to the session, while each delegate of Central Government can bring
up to three advisers. Besides, experts and others interested in labour problems are also
allowed to attend the meetings as observers. Advisers and observers may participate in
discussion, with the permission of the Chairman, but have no right to vote. The
objectives of these tripartite institutions are laudable and their procedures flexible
enough to provide for exchange of views on a wider basis before policies and even
legal framework are decided upon. Both the ILC and SLC are non-statutory advisory
bodies. The tripartite deliberations are variously described as 'recommendations'
'decisions' 'conclusions' etc. time and again, the Union Labour Minister, who also
happens to be the ex-officio-Chairman of the ILC and SLC, has gone on record that
unanimous recommendations should be accepted by all the parties.
The 15th session of the ILC expressed confidence that the tripartite approach has been
accepted for policy making:
The legislative and administrative policies of the Central and State Government, and
the policies of employers' and workers' organisations should not run counter to the
broad lines of policy, that they be accepted by the Indian Labour Conference from
time to time after full tripartite discussions in the Conference. Proposals involving any
new major point of policy or principle should generally be undertaken after consulting
the Indian Labour Conference or Standing Labour Committee.
The role of the tripartite bodies in influencing labour policy in India was recognized in
the Third Five Year Plan thus:
Labour policy in India has been evolving in response to the specific needs of the
situations in relation to industry and the working class and has to suit the requirements
of a planned economy. A body of principles and practices has grown up as a product
of joint consultation in which representatives of Government, the working class, and
employers have been participating at various levels. The legislative and other
measures adopted by the Government in this field represent consensus among the
parties vitally concerned and thus, acquire the strength and character of a national
policy, operating on a voluntary basis. Joint committees have been set up to assist in
the formulation of policies as well as their implementation (India 1961).
However this was not to be so. The ILC recommended that minimum wages should be
need-based and defined the basis for calculation of Need-Based Minimum Wage
(NBMW), but towards the end of April 1958, a Secretary in the Union Finance
Ministry informed the Chairman of the Second Pay Commission that the Government
desired me (him) to make it clear that the recommendations of the Indian Labour
Conference should be regarded as what they are, namely, the recommendations of the
Indian Labour Conference which is tripartite in character. The Government at no time
committed itself to taking executive action to enforce the recommendation.
Six years later, in 1964, the then Union Minister for Labour, Mr. D. Sanjivayya, tried
to reverse the Government's stand: We have got to accept the unanimous
recommendations of all the tripartite bodies. However, the Union Home Minister told
the parliament in 1968 that accepting a principle or an ideal in the Indian Labour
Conference does not make any commitment as such. Truly enough in 1974, the
Deputy Labour Minister minced no words when he informed the Parliament that the
Government has no proposal to introduce need-based minimum wage.
Subsequently in 1960 and 1974, Union Ministers made the Government's policy clear
that the tripartite committee's recommendations are not binding on the government,
even if government was a party to the consensus reached at the tripartite forum. This
problem arose largely due to inadequate consultation within the concerned group
before discussion took place on the subject at the tripartite forum.
Since the time the National Commission on Labour submitted its report in 1969, there
were other problems that made consensus in tripartite forums elusive, with the result
that though there have been piece-meal changes in labour legislation, at least on three
occasion in the last quarter century, when comprehensive labour law reforms were
tabled for discussion, the government of the day fell, before the proposals could be
actually taken up for discussion.
The second objective, namely the formulation of a dispute settlement procedure, was
important too. The ILC and SLC were instituted at the time of the Second World War,
which made industrial peace paramount. The formulation of a comprehensive
procedure for industrial disputes in the industrial Disputes Act 1947, the inception of
the Labour Appellate Tribunal in 1950, and its abolition in 1956 were the outcomes of
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the deliberations at the ILC/SL. Though, third-party intervention came up for critics
on several occasions, majority of the union representatives and governments seem to
have had more than their due share in showing preference to adjudication during the
1950s.
The third objective of ILC/SLC concerns the discussion of matters of national
importance. While the sheer range and number of subjects discussed at these forums is
quite impressive, the outcomes have not been quite so, particularly since the 1970s.
The foregoing account is not complete, but only indicative. It is indeed difficult to
make an objective assessment of the successes and failures of India's tryst with
tripartism. While in the earlier years, deliberations at the ILC and SLC had make a
significant impact in evolving a progressive series of legislative enactments and
bipartite agreements, for the last two decades there has been a virtual stalemate.
However, on balance, the events during this period, point to the compounding
complexity of the industrial relations scene, with divisions and dissensions within the
respective interest groups - be it the Government (Centre-State relations), employers
(diverse interests among employers), or unions (fragmentation). Over the years, the
issue have become complex and controversial and there is rigid polarization in views,
both, between and within in the absence of purposive leadership. The result is that the
tendency among the parties has been to skirt the more stubborn questions rather than
come to grips with them.
Many issues that came up for discussion before the ILC and SLC were such that the
interests of both the parties were diametrically opposite to begin with and continue to
be so. On such issues, after repeated discussion and some give and take process,
despite the persistence of a wide gulf in the interests and approaches of employers' and
workers' representatives, the employers has agreed for compromise solutions
Apparently, this occurred because the spokesmen for the employers 'could not remain'
entirely untouched by the progressive trends on wages obtaining in the wider society'
but soon enough they realized the impracticality of the agreements so reached. Though
in the 15th session of ILC, the employers agreed to NBMW and the norms for
calculating the same, in the subsequent sessions they conceded their 'mistake' in
accepting the proposal without adequate assessment of their implications and
suggested a review. When the Government also seemed to side with the problem
before the Second Pay Commission in the year 1958, the representatives of AITUC
and HMS threatened to walk out. Government representatives, and more importantly
union labour ministers in those years often had a tough time in striking a delicate
balance between the interests of employers and workers with the Government itself
being the biggest employer.
The problems with regard to rationalization proved to be more ticklish for the
employers. As in case of NBMW, on rationalization too, there were prolonged
discussion held in the 11th to 16th sessions of ILC during 1951 to 1958 due to the
conflicting interests of employers and workers. The employers always supported
rationalization in the interest of productivity, while the workers resisted any proposal
that would deprive them of their livelihood. The workers' organisations unanimously
deplored the loss of jobs. They insisted on being consulted at the unit level before
plans were introduced and demanded one month's notice for retrenchment only to be
scotched by the AIOE. On one occasion, the employers' representatives generally
agreed to ensure that rationalization was effected without displacing labour.
Subsequently they admitted that some retrenchment was inevitable as a result of
rationalization. Finally, they approved, even if grudgingly, a resolution at the 16th ILC
in 1958 which provided, among other things that
z
should be maintained except for cases of natural separation and wastage. Workers
could, however, be provided with suitable alternative jobs in the same
establishment or under the same employers subject to agreement between
employer and the workers;
z
With the agreement on rationalization on the above lines, it was assumed that the
controversy on the subject was put to an end and that the Government could use the
ILC to narrow the differences between employers and unions. However in retrospect,
two decades after the pious resolution, the thorny problem still persists in a magnified
version.
On substantive economic issues requiring financial commitment on the part of
employers, consensus could not be reached. Even when it was reached, as described
above, it could not be endured. On a number of wage-related questions, the ILC had
been evasive, whether it concerned minimum wages, employers' capacity to pay,
NBMW, or wage boards (Mathur and Sheth 1969). Workers' demand for the
institution of labour welfare fund was similarly opposed and squashed by the
employers. The Government appreciated the employers stand, but it was obliged to
keep the issue alive due to its public policy of labour welfare. On regulation of
contract labour too, employers were vehement in their opposition on account of heavy
'financial burden' and the Government, being the largest employers of contract labour,
had to maintain a split personality till the Supreme Court ruled against the
indiscriminate use of contract labour.
There further evidence to substantiate that these bodies could not exert sufficient
influence on industrial relations and in fact lost much of their usefulness over the
years (EFI 1965, 1973). In 1950s, parties used to agree in principle. In 1960s when the
agreed principles were not implemented due to lack of commitment to the agreed
conclusions even on the part of the Government, difficulties were created in
understanding and solving problems. In 1970s the meetings became rare. Of the
37 sessions of the ILC between 1942 and 2001 (June) 23 were held till 1968, seven in
the following 25 years (1969-93), and another seven in the past seven years (19942001). They are supposed to be held annually. In 1980s, non INTUC unions with the
exception of HMS began to boycott the meetings even when they were held.
The ILC and SLC are both consultative and advisory bodies. The suggestion for
inclusion of subjects for discussion not only came from the Government, but also from
non-Government groups, largely central organisations of workers. The Government
has brought in not only proposals for reforms in the existing legislation and industrial
relations system, but also matters of concern for the society and national economy,
such as minimum wage, regulation of contract labour, etc. the workers' representatives
on the other hand, brought in subjects such as NBMW, dearness allowance, and
automation. Employers were mainly content with reacting to proposals.
Two Union Ministers for Labour, Mr. V.V. Giri and G.L. Nanda tried to exert their
influence on the tripartite institutions, Giri's approach was to champion the cause of
collective bargaining, but even the trade unions (notably INTUC and UTUC), which
opposed compulsory adjudication in the pre-independent era, changed their stand in
early the 1950s. The employing ministries in the Government also did not go along
with him. When employers too did not support him and welcomed adjudication if they
had the right to appeal, Mr. Giri resigned in frustration. The industrial Relation Bill of
1950 that he piloted lapsed due to the dissolution of Parliament, but the Labour
57
Role of Employers
Association and State in
Industrial Relations
58
Industrial Relations
and Labour Laws
Appellate Tribunal (LAT) that employers wanted and provided for in the Bill became
a reality in 1954. Six years later, however the LAT had to be abolished due to intense
pressure from workers who were unhappy with the decisions of the LAT. After Giri's
exit, the Union Minster who gave the most momentous thrust to voluntarism in the
deliberations of ILC and SLC, was GL Nanda during the period 1957-64. In the early
1950s as Minister for Planning, he initiated a process of joint consultation between
labour and management and put forth the idea of worker participation in management
and workers education. As Union Labour Minister and Chairman of ILC and SLC he
not only persuaded the three parties to agree to these voluntary overtures without
letting ideological differences stand in the way, but also played an instrumental role in
the resolutions on Code of Discipline (1958), Model Grievance procedure (1958),
Voluntary Arbitration (1959), code of efficiency and Welfare (1959), and Industrial
Truce Resolution (1962). No other Union Minister could hold sway over the parties
and persuade them to come together for a consensus on such lofty ideals. The ideas he
advocated had moral appeal which was astounding. It is a different thing that
gradually the morals waned and the mesmeric effect of Nanda was no longer felt by
them.
The parties seem to reach consensus easily on subjects which have a moral appeal and
are merely voluntary than statutory. Examples of this type include the Code of
Discipline and the Joint Management Councils (JMCs). The working of the Code is
discussed separately. Agreements on subjects such as the Code and JMCs entailed
little or no financial or administrative burden on the parties. They are not perceived to
be of much consequence to the parties; so they were hardly of any importance to the
structure of industrial relations. Such consensus, therefore, remained symbolic without
much substance in terms of practical applications.
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President, tender advice to form the basis for the President's decision. The usual
practice of the President's office is not to act, rather than to turn down the proposals
for changes per se. Some years ago, the Tamil Nadu government raised the limit of the
number of employees required in an establishment for application of certain Central
Legislations (like the Factories Act and the Industrial Disputes Act), as well as for
prior approval for lay-offs, lock-outs and closures. Similarly, it took many years for
Andhra Pradesh to get Presidential approval for its legislations concerning worker's
participation in management and insurance for workers affected by structural changes.
Finally, of course, Andhra Pradesh did not go ahead with its proposals.
Thus, in the absence of the Centre's Concurrence, State-Level initiatives on labour and
social matters can make a mockery of the fact that labour is a concurrent subject in our
Constitution. This in short is the snakes and ladders story of competitive labour
policies in the country's political set up. The potential for states to adopt competitive
labour policies to woo investors appears enormous, but this entails political and social
risks. Therefore, there is a need for caution and restraint. Also in the wake of the
pressure to link international trade with social clauses and the 1998 ILO Declaration
on Fundamental Principles, it might become necessary for maintaining uniformity and
consistency in aligning core labour standards freedom of association, right of
collective bargaining, non-discrimination and equal remuneration, child labour and
forced labour as envisaged in the relevant conventions of the ILO.
3.5 KEYWORDS
Employers Association: They are formal groups of employers set up to defend,
represent or advise affiliated employers and to strengthen their position in society at
large with respect to labour matters as distinct from economic matters
FICCI: Federation of Indian Chamber of Commerce and Industry
ASSOCHAM: Associated Chambers of Commerce
SCOPE: Standing Conference on Public Enterprises
Joint Consultative Board: It was set up as an official body to consider, advise, and
cooperate with the Government on matters relating to industrial relations in general
and specific issues such as retrenchment in particular
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Association and State in
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LESSON
4
COLLECTIVE BARGAINING
CONTENTS
4.0
4.1
Introduction
4.2
4.3
4.4
4.5
Industry Bargaining
4.5.2
Enterprise Bargaining
4.5.3
Concession Bargaining
4.5.4
Composite Bargaining
4.5.5
Conjunctive/Distributive Bargaining
4.5.6
Co-operative Bargaining
4.5.7
Productivity Bargaining
4.6
4.7
4.8
4.9
4.10
4.11
4.12
4.13
Let us Sum up
4.14
Keywords
4.15
Self Assessment
4.16
Review Questions
4.17
Suggested Readings
4.1 INTRODUCTION
Collective bargaining is process of joint decision making and basically represents a
democratic way of life in industry. It is the process of negotiation between firms and
workers representatives for the purpose of establishing mutually agreeable conditions
of employment. It is a technique adopted by two parties to reach an understanding
acceptable to both through the process of discussion and negotiation.
ILO has defined collective bargaining as, negotiation about working conditions and
terms of employment between an employer and a group of employees or one or more
employee, organization with a view to reaching an agreement wherein the terms serve
as a code of defining the rights and obligations of each party in their
employment/industrial relations with one another.
Collective bargaining involves discussions and negotiations between two groups as to
the terms and conditions of employment. It is called collective because both the
employer and the employee act as a group rather than as individuals. It is known as
bargaining because the method of reaching an agreement involves proposals and
counter proposals, offers and counter offers and other negotiations.
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It involves not only the negotiation of the contract, but also the administration or
application of the contract also.
It would be mistake as to assume that Collective Bargaining begins and ends with
the writing of the contract. Actually, that is only the beginning of the Collective
Bargaining.
It is a flexible and dynamic process: The parties have to adopt a flexible attitude
throughout the process of bargaining.
Employment
Recognition of union
Incentive schemes
Grievance proceedings
Working conditions
Employment benefits such as canteens, medical & health services and crches
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Industrial Relations
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It helps increase the economic strength of both the parties at the same time
protecting their interests.
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Industrial Relations
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Indian unions are bogged down by the problems of: multiplicity, inter and intraunion rivalry, weak financial position and non-recognition.
The Government has not been making any strong efforts for the development of
Collective Bargaining.
Imposition of many restrictions regarding strikes and lockouts has removed the
edge of the Collective Bargaining process.
Political interference:
z
Interference of political leaders in all aspects of union matters has increased over
the years.
Almost all unions are associating themselves with some political party or the
other.
Management attitude:
z
The above have all stood in the way of collective agreements contributing towards
industrial harmony.
A truly representative enlightened and strong trade union should come into
being and should function on strictly constitutional lines.
When there are several units of the company, there should be a delegation of
authority to the local management.
A fact-finding approach and a willingness to use new tools should be adopted for
the solution of industrial problems.
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gradually, withdraw the easy accessibility to adjudication and shift the emphasis
to collective bargaining.
Define the employees right to strike work and place it in overall scheme of
things
Thus, proper conditions have to be created for the success of collective bargaining.
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and Labour Laws
bargaining have been successfully used by both labour and management to respond
effectively to the changing demands of workplace functioning and market pressures.
The labour movement must devise organising and bargaining strategies that appeal to
expanding groups across segments. For workers, collective bargaining is an excellent
tool. Many workplaces benefit from unionization, which allows workers to speak
together as a body to assert their rights. Employers also benefit from collective
bargaining agreements, which set out clear expectations for both sides. The experience
of collective bargaining can also be a learning experience for both sides of the
discussion, as it encourages employers and employees alike to consider each other's
positions.
4.14 KEYWORDS
Collective Bargaining: It is a technique adopted by two parties to reach an
understanding acceptable to both through the process of discussion and negotiation.
Concession Bargaining: It was adopted as a temporary measure to save jobs in the
period of economic depression; it was undertaken by the employers to face increased
competition and cope up with higher productivity requirements.
Zero-sum Game: It is a situation where one partys gain is other partys loss and vice
versa.
Cooperative Bargaining: In this, both the parties try to get to a win-win situation.
Negotiation: It is a process of resolving conflicts between two or more parties wherein
both or all modify their demands to reach a workable compromise.
Quality of Work Life: It is related to the need for organised labour and management to
work co-operatively toward the goal of greater productivity.
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and Labour Laws
LESSON
5
EVOLUTION OF LABOUR LEGISLATIONS
CONTENTS
5.0
5.1
Introduction
5.2
5.3
5.4
5.4.2
Governing Body
5.4.3
5.4.4
5.5
5.6
5.7
Let us Sum up
5.8
Keywords
5.9
Self Assessment
5.10
Review Questions
5.11
Suggested Readings
Discuss the role of National Commission for Labor in development of labor laws
5.1 INTRODUCTION
The Indian Labour Legislations owe its existence to the British Raj. Most of the labour
legislations were enacted prior to Indias independence. The post independence
enactment of important legislations in the areas of employee security and welfare
derive their origin partly from the vision of independent Indias leaders and partly
from the provisions in the Indian Constitution and international conventions like the
International Labour Organization (ILO). The labour legislations were also enacted
keeping in mind the international standards on Human Rights and United Nations
Protocols.
Developments
Emphasis on People
Outcomes
1700
Exploitation of labour
Bonded labour
To
1900s
1900
To
Employer employee
relationship established.
Wages paid
Legal
recognition
of
workmen. End of slavery.
Trade
unions
organizing workers
were
Trade
unions
being
recognised by workers
and factory managers
Collective
bargaining.
Workers movements.
Beginning
of
labour
welfare administration and
personnel function
Productivity bargaining.
Workers participation in
management
Empowerment of workers
upliftment of workers
status and role.
Globalization, international
markets, new economy.
Developing people as a
key resource
People
management
need replaces HRD with
HRM. Hr is aligned to
business goals. HRM to
SHRM
1920s
1920s
To
1947
1947
To
1960s
1970s
To
1980s
1990s
To
2000
2001
Onwards
Rightsizing of organizations
to compete globally.
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and Labour Laws
LabourWelfare
Welfare
Labour
Personnel Mgt
Mgt
Personnel
HRD
HRD
HRM
HRM
SHRM
SHRM
HCM
HCM
Abbreviation used:
HRD Human Resources Development
HRM Human Resources Management
SHRM Strategic Human Resources Management
HCM Human Capital Management
z
HRD: Empower people by developing them for their current and future roles
From the above figure we see that today HCM encompasses Labour Welfare along
with its role of providing a strategic intent to Human Resources.
Under the Constitution of India, Labour is a subject in the concurrent list where both
the Central and State Governments are competent to enact legislations. This
categorization is listed as follows:
(a) Labour laws enacted by the Central Government, where the Central Government
has the sole responsibility for enforcement
1. The Employees State Insurance Act, 1948
2. The Employees Provident Fund and Miscellaneous Provisions Act, 1952
3. The Dock Workers (Safety, Health and Welfare) Act, 1986
4. The Mines Act, 1952
5. The Iron Ore Mines, Manganese Ore Mines and Chrome Ore Mines Labour
Welfare (Cess) Act, 1976
6. The Iron Ore Mines, Manganese Ore Mines and Chrome Ore Mines Labor
Welfare Fund Act, 1976
7. The Mica Mines Labour Welfare Fund Act, 1946
8. The Beedi Workers Welfare Cess Act, 1976
9. The Limestone and Dolomite Mines Labour Welfare Fund Act, 1972
10. The Cine Workers Welfare (Cess) Act, 1981
11. The Beedi Workers Welfare Fund Act, 1976
12. The Cine Workers Welfare Fund Act, 1981
(b) Labour laws enacted by Central Government and enforced both by Central and
State Governments
13. The Child Labour (Prohibition and Regulation) Act, 1986.
14. The Building and Other Constructions Workers (Regulation of Employment and
Conditions of Service) Act, 1996.
15. The Contract Labour (Regulation and Abolition) Act, 1970.
16. The Equal Remuneration Act, 1976.
17. The Industrial Disputes Act, 1947.
18 The Industrial Employment (Standing Orders) Act, 1946.
19. The Inter-State Migrant Workmen (Regulation of Employment and Conditions of
Service) Act, 1979.
20. The Labour Laws (Exemption from Furnishing Returns and Maintaining Registers
by Certain Establishments) Act, 1988
21. The Maternity Benefit Act, 1961
22. The Minimum Wages Act, 1948
23. The Payment of Bonus Act, 1965
24. The Payment of Gratuity Act, 1972
25. The Payment of Wages Act, 1936
26. The Cine Workers and Cinema Theatre Workers (Regulation of Employment)
Act, 1981
27. The Building and Other Construction Workers Cess Act, 1996
28. The Apprentices Act, 1961
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(c) Labour laws enacted by Central Government and enforced by the State
Governments
29. The Employers Liability Act, 1938
30. The Factories Act, 1948
31. The Motor Transport Workers Act, 1961
32. The Personal Injuries (Compensation Insurance) Act, 1963
33. The Personal Injuries (Emergency Provisions) Act, 1962
34. The Plantation Labour Act, 1951
35. The Sales Promotion Employees (Conditions of Service) Act, 1976
36. The Trade Unions Act, 1926
37. The Weekly Holidays Act, 1942
38. The Working Journalists and Other Newspapers Employees (Conditions of
Service) and Miscellaneous Provisions Act, 1955
39. The Workmens Compensation Act, 1923
40. The Employment Exchange (Compulsory Notification of Vacancies) Act, 1959
41. The Children (Pledging of Labour) Act 1938
42. The Bonded Labour System (Abolition) Act, 1976
43. The Beedi and Cigar Workers (Conditions of Employment) Act, 1966
(d) There are also Labour laws enacted and enforced by the various State
Governments which apply to respective States.
Governing Body: Executive Council of the ILO. Meets three times in a year in the
months of March, June and November.
The work of the Conference and the Governing Body is supplemented by Regional
Conferences, Regional Advisory Committees, Industrial and Analogous Committees,
Committee of Experts, Panels of Consultants, Special Conference and meetings, etc.
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Evolution of Labour Legislations
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and Labour Laws
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Industrial Relations
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happen because most of states govern the SSI sector and governments never took
especial initiatives for reducing the number of inspectors. The analysis is based on
feedback coming to Chamber Secretariat directly from its members, be it
manufacturing, food processing and SSIs. Even obtaining of licence is no longer
required to commence industrial operations in any sector other than those enlisted in
the sensitive list which include defence, strategic alliances and to some extent
telecom, civil aviation and insurance. This change has taken place as government
brought about various notifications and amendments in some sense to prototype laws.
The SSI sector which would go through inspections from excise, customs, banks,
insurance, PF, PPF and record inspectors, 16 years ago is now subjected to many other
inspections which include one separate inspector to monitor their register of
employees, accounts, balance sheet and on taxation fronts particularly the service tax
inspector. Likewise, many more areas were added in which the SSI sector is subjected
to tedious inspections.
Besides, the Factory Act 1948, Minimum Wages Act 1948, Payment of Bonus Act
1965, Employment Exchange Compulsory Notification of Vacancies Act 1959, Air
(Prevention & Control of Pollution) Act 1981 jointly provide empowerment to
government departments and various state governments to still regulate the SSI sector.
Source: ASSOCHAM
5.8 KEYWORDS
Personnel Management: It is the most effective use of people to achieve
organizational and individual goals
Human Resource Development: It aims at empowering people by developing them
for their current and future roles
Human Resource Management: It is leveraging the systems approach to the HR
function and integrating HR functions with other organizational functions
Strategic HRM: It aligns the HR goals to the organizational goals
ILO Conventions: They are international treaties and are instruments, which create
legally binding obligations on the countries that ratify them
ILO Recommendations: They are non-binding and set out guidelines orienting
national policies and actions.
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Evolution of Labour Legislations
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Industrial Relations
and Labour Laws
LESSON
6
LABOUR LEGISLATIONS: ACTS GOVERNING
EMPLOYMENT OF PERSONNEL AND IR
CONTENTS
6.0
6.1
Introduction
6.2
6.3
6.4
6.5
6.6
6.7
6.8
6.9
6.10
6.11
Let us Sum up
6.12
Keywords
6.13
Self Assessment
6.14
Review Questions
6.15
Suggested Readings
6.1 INTRODUCTION
In this lesson we are going to study the major acts concerning the employment of
personnel and industrial relations one by one in brief.
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Labour Legislations:
Acts Governing Employment
of Personnel and IR
86
Industrial Relations
and Labour Laws
Commencement
On and after the 31st day from the date of receipt of the certified SO. Any employee
can appeal to the respective authorities before this period. Where appeal has been
made the SO is applicable from the 8th day of the receipt of amended SO by the
employer/employee/TU.
Once the Standing Orders are certified, they supersede any term and condition of
employment, contained in the appointment letter. If there is inconsistency between
Standing Order and Appointment Letter, the provisions of Standing Order
prevail.
Model Standing Orders: The Act has prescribed Model Standing Orders. These are
automatically applicable till employer prepares his own Standing Orders and these
are approved by Certifying Officer. [section 12A].
Disciplinary Action: The most important use of Standing Orders is in case of
disciplinary action. A workman can be punished only if the act committed by him is
misconduct as defined under the Standing Orders. The Model Standing Orders
contain such acts like insubordination, disobedience, fraud, dishonesty, damage to
employers property, taking bribe, habitual absence or habitual late attendance, riotous
behaviour, habitual neglect of work, strike in contravention of rules etc. as
misconducts. The Certified Standing Orders may cover other acts as misconduct, if
approved by Certifying Officer.
Modifications
The Act prohibits modification of SO within a period of 6 months of the certification
or previous latest modification date (if applicable)
Important Provisions
1. The SO text should be pasted prominently by the employer on special boards to be
maintained for this purpose at the factory entrances and in all depts. where
workers work.
2. Where any worker is suspended by the employer over pending inquiry into
complaints or on charges of misconduct, the employer shall:
(a) Pay a subsistence allowance @ 50% of wages for the first 90 days
(b) 75% for next 90 days
(c) 100% for remaining days until the inquiry is completed
A Standard SO should have: (This is not an exhaustive list only indicative)
1. Classification of workmen i.e: permanent, temporary, on probation, apprentice,
etc.
2. Hours of work, rest hours, holidays, pay day and wage rates
3. Shift working timings
4. Attendance and late comings
5. Provisions for application and grant of leave
6. Requirement to enter premises by certain gates and gate searches
7. Termination, suspension and dismissal rules (specially on misconduct)
8. Redressal of grievances procedures and personnel/dept incharge/ess.
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Labour Legislations:
Acts Governing Employment
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Industrial Relations
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6. Annual leave with wages: 1 day for every 20 days of work done during the
previous year, provided that he has worked for atleast 240 days. In case of a child
it is relaxed for every 15 days of work. These leaves are exclusive of all other
holidays (general).
7. Work hours: not more than 48 hours in a week and not more than 9 hours in a
day. Overtime has to be paid at double rates, if applicable. If a worker works
beyond 9 hours a day or 48 hours a week, overtime wages are double the rate of
wages are payable. [section 59(1)]. A workman cannot work in two factories.
There is restriction on double employment. [section 60]. However, overtime
wages are not payable when the worker is on tour. Total working hours including
overtime should not exceed 60 in a week and total overtime hours in a quarter
should not exceed 50. Register of overtime should be maintained.
Labour Laws (Exemption from Furnishing Returns and Maintaining Registers by
Certain Establishments) Act, 1988
The Act has been passed to give relief to establishments employing small number of
persons from furnishing returns and maintaining registers under certain labour laws.
Small establishment means an establishment in which not less than ten and not more
than nineteen persons are employed or were employed during past 12 months. [section
2(e)]. Very Small establishment means an establishment in which not more than nine
persons are employed or were employed during past 12 months. [section 2(f)].
Such establishments are expected to submit only a core return in prescribed form as
on 31st December every year. The return should be filed on or before 15th February of
succeeding year. In addition, a small establishment is required to maintain registers
in prescribed form B, C and D. A very small establishment is required to maintain
only register in form E. [section 4(1)].
In addition, employer is required to issue wage slips to workmen. Returns relating to
accidents are required under Factories Act and Plantation Labour Act are required to
be submitted.
Once such annual return is filed and registers are maintained, no further return or
records are required under any of following laws Payment of Wages Act, Weekly
Holidays Act, Minimum Wages Act, Factories Act , Plantations Labour Act, Working
Journalists and Other Newspaper Employees Act, Contract Labour (Regulation and
Abolition) Act, Sales Promotion Employees (Conditions of Service) Act, Equal
Remuneration Act. [First Schedule to the Act]. [section 4(3)].
Table 6.1: List of Registers to be maintained and returns filed under
The Factories Act 1948
Returns/Registers
Form
No.
When to comply
Approval of Plans
Certificate of Stability
1-A
or
Contd
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Labour Legislations:
Acts Governing Employment
of Personnel and IR
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Industrial Relations
and Labour Laws
To be maintained always
10
To be maintained always
Report
of
examination
of
lifting
machinery/ropes/tackles
by
competent
person
12
13
Externally
Internally
Hydraulic Test
14
To be maintained always
16
17
To be maintained always
20
To be maintained always
Leave book
21
To be maintained always
24
24A
26
To be displayed always
Annual return
27
Muster roll
29
30
To be maintained always
Inspection book
31
To be maintained always
Sec.92 to 106
Penalties
On continuation of contravention
Obstructing inspectors
The Bombay Shop & Establishment Act, 1948. (For Establishments not covered
under The Factories Act, 1948)
1. Applicability: Every establishment which carries on any business, trade or
profession or any work in connection with, or incidental or ancillary to, any
business, trade or profession, but does not include any factory. Broadly speaking
the premises governed by the Act are shops, commercial establishments,
residential hotels, clubs, restaurants, eating houses, theatres and other places of
public amusement or entertainment.
2. According to Section 38-B of the Bombay Shops and Establishments Act the
provisions of the Industrial Employment (Standing Orders) Act, in its application
to the State of Maharashtra, are applicable to all establishments wherein fifty or
more employees are employed and to which the Bombay Shops and
Establishments Act applies.
3. Registration: Application for registration under the Act shall be submitted with in
31 days of its commencement.
4. Due Date for Renewal: the last date for renewal is 15th December of every year.
5. Restrictions on the working hours in shops and commercial establishments.
The main restrictive provisions of the Act about the working hours of employees
in shops and commercial establishments are as follows:
(a) The general rule about the opening hours of shops is that they are not allowed
to be opened earlier than 7 a.m. But shops selling goods like milk, vegetable,
fish etc., are allowed to be opened from 5 a.m. onward. {Section 10}
(b) This general rule about the closing hours of shops is that they must be closed
at the latest by 8.30 p.m. But shops selling goods like pan, bidi, etc., are
allowed to be kept open up to 11 p.m. {Section 11}
(c) Commercial establishment are not allowed to be opened earlier than 8.30 a.m.
and closed later than 8.30 p.m. in a day {Section 13}
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and Labour Laws
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Acts Governing Employment
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Labour Court: Labour Courts are constituted by State Governments u/s 7. It will
be presided over by Presiding Officer. The Labour Court has powers in respect
of:
(a) Interpretation of Standing Orders
(b) Violation of Standing Orders
(c) Discharge or dismissal of a workman
(d) Withdrawal of any customary concession or privilege
(e) Illegality or otherwise of a strike or lock-out
(f) Other matters which are not under Industrial Tribunal. [Second Schedule to
the Act]
Industrial Tribunal: Industrial Tribunal is constituted by State Government
u/s 7A. The tribunal will be presided over by Presiding Officer. The Industrial
Tribunal has powers in respect of:
(a) Wages, including period and mode of payment
(b) Compensatory and other allowances
(c) Hours of work and rest intervals
(d) Leave with wages and holidays
(e) Bonus, profit sharing, provident fund and gratuity
(f) Shift working changes
(g) Classification by grades
(h) Rules of discipline
(i) Ratinlanisation and retrenchment of workmen. [Third Schedule to Act].
National Tribunal: National Tribunal is formed by Central Government for
adjudication of industrial disputes of national importance or where industrial
establishments situated in more than one States are involved. [section 7B].
Reference of Dispute: Appropriate Government can refer any dispute to Board
of Conciliation, Court of Enquiry, Labour Court or Industrial Tribunal. [section
10(1)]. Appropriate Government means (1) Central Government in case of
railways, docks, IFCI, ESIC, LIC, ONGC, UTI, Airport Authority, industry
carried on by or under authority of Central Government (2) State Government in
case of other industrial disputes [section 2(a)].
Court/Tribunal can Reduce Punishment and Order Reinstatement: As per
section 11A, the Labour Court and Tribunal have wide powers. They can
reappraise evidence. They can also see whether the punishment is disproportionate
to the gravity of the misconduct proved. If the Court or Tribunal is of the view
that the punishment is disproportionate, it can impose lesser punishment or even
set aside the termination and order reinstatement. If Court orders reinstatement
and employer files appeal in Higher Court, the employer is required to pay full
wages to the employee during the period of pendency of proceedings with
High Court or Supreme Court. However, if the workman was gainfully employed
elsewhere, Court can order that payment of such wages is not to be made.
[section 17B].
Settlement: Settlement means a settlement arrived at in the course of
conciliation proceedings. It includes a written agreement between employer and
workmen arrived at otherwise than in course of conciliation proceedings
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(i.e. outside the conciliation proceedings). The difference is that settlement arrived
at in course of conciliation or an arbitration award or award of labour court or
Tribunal binds all parties to industrial dispute including present and future
workmen and all parties who were summoned to appear in the proceedings.
[section 18(3)]. If settlement is arrived at by mutual agreement, it binds only those
who were actually party to agreement. [section 18(1)]. The settlement is binding
during the period it is in force. Even after that period is over, it continues to be
binding, unless a 2 month notice of termination is given by one party to another.
[section 19(2)]. If no period has been specified, settlement is valid for 6 months
and an award is valid for one year.
3. The Act also provides for voluntary reference of the dispute to arbitration before
the dispute is referred to Labour courts, provided both parties agree voluntarily.
Important Provisions
1. The Act makes it obligatory for the employer to give a notice of change before
affecting any change in the conditions of service in respect of matters such as
wages, leave and holidays, introducing new rules of discipline, withdrawal of
concessions or privileges. A 21 days notice has to be given to all such workmen
who are likely to be affected by these changes.
2. The Act provides for providing full wages for workers during the pending order of
dispute in High Court or Supreme Court.
3. Every Award/Settlement arrived during the settlement machinery is binding on
all parties to the dispute, legal heirs and all present and future employees.
A dismissed workman is also covered under the Act.
4. Lay-off compensation @ 50% of Basic + DA and for retrenchment @ 15 days
wages for every completed year of service, with a minimum service of 1 year
lay off means failure, refusal or inability of employer on account of shortage of
coal, power or raw materials or accumulation of stock or break down of
machinery or natural calamity; to give employment to a workman on muster roll.
Lay off means not giving employment within two hours after reporting to work.
Lay off can be for half day also. In such case, worker can be asked to come in
second half of the shift. [section 2(kkk)].
A factory employing 50 or more but less than 100 employees on an average per
working day can lay off the workmen, who have completed one year of service,
by paying compensation equal to 50% of salary (basic plus DA) (section 25C of
IDA). Employer can offer him alternate employment, if the alternate employment
does not call for any special skill or previous experience, and lay off
compensation will not be payable if employee refuses to accept the alternate
employment (section 25E).
Above provisions of compensation for lay off do not apply to (a) Industrial
establishments employing less than 50 workmen (b) seasonal industry
(c) Establishments employing 100 or more workmen, as in their case, prior
approval of Appropriate Government is necessary u/s 25M(1).
Retrenchment means termination by the employer of service of a workman for
any reason, other than as a punishment inflicted by a disciplinary action.
However, retrenchment does not include voluntary retirement or retirement on
reaching age of superannuation or termination on account of non-renewal of
contract or termination on account of continued ill-health of a workman.
[section 2(oo)].
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In case of public utility, employees have to give at least 14 days notice for strike.
The notice is valid only if strike commences within 6 weeks. Otherwise, fresh
notice is required. Similarly, an employer cannot declare lock out without giving
14 days notice. [section 22]. If such notice is received, Government authority
should be informed within five days. As per section 2(n), Public Utility Service
includes railways, major port and docks, section of industry on the working of
which safety of establishment depends, postal/telegraph/telephone services,
industry supplying power/light/water; system of public conservancy or sanitation.
[section 2(n)]. In addition, Government can declare industry specified in Schedule
I as Public Utility Services. Such declaration can be made for 6 months at a time
[section 2(n) (vi)]. [Industries in first schedule include banking, transport, cement,
coal, defence establishments, security press, hospitals and dispensaries, oil fields,
mining of certain specified ores, foodstuff, cotton textiles, iron and steel etc].
Lock-out means temporary closing or a place of employment or the suspension
of work, or the refusal by an employer to continue to employ any number of
persons employed by him. [section 2(l)]. Workers go on strike, while lock-out is
to be declared by employer.
In every establishment, 1% of total workmen are recognised as Protected
workman u/s 33(3) (but minimum 5 and maximum 100). In case of such
workmen, order for his dismissal, discharge or punishment cannot be passed
without permission of authority before whom proceedings are pending, whether
the issue is related to dispute or not.
6. Unfair Labour Practices: Section 25T prohibits unfair labour practices by
employer or workman or a trade union. If any person commits unfair labour
practice, he is punishable with fine upto Rs 1,000 and imprisonment upto 6
months. [section 25U]. Fifth schedule to Act gives list of what are Unfair Labour
Practices. Then major are as follows:
(a) In Case of Employer: Interfering in Trade Union activities , Threatening
workmen to refrain them from trade union activities ,Establish employer
sponsored Trade Union, Discourage trade union activities by various means,
Discharge or dismiss by way of victimization or falsely implicating workman,
Abolish work of regular nature and to give that work to contractors, transfer
of workman under guise of management policy, Employ badli or casuals and
continue them for years, Recruitment workmen during strike which is not
illegal, Acts of force and violence, Not implementing settlement or agreement
or award, Refuse collective bargaining, Continue illegal lock-out
(b) In Case of Workmen and Trade Unions: Support or instigate illegal strike,
Coerce workmen to join or not to join a particular trade union, Threatening or
intimidating workmen who do not join strike, Refuse collective bargaining in
good faith, Coercive actions including go slow, gherao, squatting on work
premises after working hours etc. Willful damage to employers property,
Acts of force or violence or intimidation.
Latest Industrial Dispute in News
Jet Airways' strike enters second day. Saturday September 19, 2009, for the second
consecutive day, Jet Airways flights were disrupted following an ongoing agitation by
pilots, leading to cancellation of 160 flights across the country on Wednesday, an
airline official said. Many pilots continued to report sick on Wednesday despite a
Bombay High Court order on Tuesday evening restraining them from resorting to any
form of strike in the country's largest private airline. Many passengers, however, had
already cancelled their flights with Jet Airways. So there was relatively less chaos at
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Press Release:
Mumbai, May 13, 2009: The Nashik Industrial Court, by its order dated May 13,
2009, has declared the tool down strike by workmen at the Nashik Plant of Mahindra
& Mahindra Ltd.s Automotive Sector as illegal and unjustified.
The Industrial Court order states the following: It is declared that the respondents,
working in the complainant-company have resorted, commenced illegal and
unjustified strike in breach of Sec-24 (1) (a) & 24 (1) (b) of the MRTU and PULP Act,
1971 on and from 04-05-2009, which is continued thereafter till today, prima-facie
amounts to unfair labour practice under Item-1 of Sch-III of the MRTU and PULP
Act, 1971. The respondent-union workers are hereby directed to withdraw said strike
within 48 hours from said declaration. They are advised to report for their work in
their respective shifts at the earliest.
The workmen at the Nashik Plant of Mahindras Automotive Sector had resorted to an
illegal, tool down strike from 4th May, 2009. This was in response to a disciplinary
action initiated against an office bearer of the Employees Union for alleged acts of
indiscipline.
The Court has ruled that the workmen should resume their duties within 48 hours.
3. Justify lockouts, says HC
In a judgment upholding the security of a workforce during a lockout, the Bombay
High Court has held that an Industrial Court can investigate the justifiability of a
lockout, even if the company has declared it by legal means. Hence, a company will
now have to justify the reasons for declaring a lockout and explain denial of wages to
its workforce. It can no longer justify its stand by merely fulfilling the legal provisions
under the Maharashtra Recognition of Trade Unions and Prevention of Unfair Labour
Practices Act (MRTU & PULP) Act.
Justice F I Rebello of the Bombay High Court has ruled that workers are entitled to
wages during the lockout if they can prove the lockout itself was not called for. The
order was delivered on a petition filed by the Bharatiya Kamgar Karmachari
Mahasangh, which alleged unfair labour practices by Guest Keen Williams Limited.
The company had declared a lockout in February 1998 after issuing a notice in
January 1998.
Another group of 19 employees also moved the Industrial Court against the company
under the MRTU & PULP Act. The court, however, rejected the petition, maintaining
that the lockout was legal'' and the justifiability of the lockout could not examined in
a complaint of unfair labour practices. However, the workers appealed in the high
court, maintaining that the act permits the Industrial Court to probe the circumstances
under which the lockout was declared. They maintained that even though the company
may have followed the legal procedures, the lockout itself may not have been called
for or by subsequent passage of time, it may become totally unfair to the workers. The
company's counsel argued that unless there is a prior agreement with the workers, the
latter are not entitled to wages during the lockout period.
The counsel cited past rulings (Mazdoor Congress vs. S A Patil, Billion Plastics vs.
Dyes and Chemicals Workers Union, and Maharashtra General Kamgar Union vs.
Solid Containers Ltd), which underscore the Industrial Court's inability to go beyond
the scope of the lockout's legality. Upholding the workers' contention, Justice Rebello
observed that the company was not justified in this policy decision, after outlining the
circumstances before the lockout was declared. To begin with, the management
had suspended work from January 19, much before the lockout took effect from
February 5. Also, he observed, no agreements had been reached by the warring parties
despite the workers submission of two charters of demands since 1989.There were no
recent instances of violence in the company, he said, pointing out that in their reply to
the lockout notice the workers had in fact assured peace in the factory. This had been
reiterated in the courts too. Moreover, the company had reached an agreement with the
union with regard to a particular section of the workforce. Therefore, Justice Rebello
ruled, there was no justification for the lockout at this stage and certainly not for
denial of workers' monthly wages. The judge directed the company to pay wages until
the final disposal of the petitions.
Following the ruling, the company has filed an appeal in the high court, arguing that
the single judge has erred in interfering with the Industrial Court's well-reasoned
order. Moreover, the company claims, the judge has not appreciated the lockout
notice, which clearly mentions the looming threat of violence in the establishment.
No prudent employer could be expected to wait for actual bloodshed before imposing
the lockout, the appeal states.
Colin Gonsalves and J P Cama appeared for the petitioners while K K Singhvi and
C U Singh represented the management.
4. SC ruling on unfair labour practice
THE appeal under the Maharashtra Recognition of Trade Unions and Prevention of
Unfair Labour Practices Act, 1971 (MRTU & PULP Act) is dismissed on the ground
that the complaint was not maintainable.
It is open for the appellant-union or their members to raise dispute in this behalf
before an appropriate forum provided they are entitled to do so. If they get a
declaration to the effect that they are employees of the respondent-company, then it
may be open to file such a complaint. It is also clarified that if a dispute as to their
status is raised in an appropriate forum, then the same will be decided on merits
without taking into consideration any observations made or finding given by the
Industrial Court in the impugned order.
That was all that the workers' union could obtain from the Supreme Court by
approaching it by way of special leave petition in Vividh Kamghar Sabha vs. Kalyani
Steels Ltd (Civil Appeal No. 3375 of 1998 decided on January 9, 2000) by a Division
Bench comp rising Mr. Justice S. Rajendra Babu and Mr. Justice S.N. Variava. In this
case, Vividh Kamghar Sabha, a union representing the workmen of a canteen run by
the management of Kalyani Steel Ltd (company) claimed that they were employees
of the company, but the company was not treating them at par with the other
employees, and had notionally engaged the contractors to run the canteen. The
company did not accept this claim. The union filed a complaint under Section 28(1) of
the MRTU & PULP Act, alleging that the company had engaged in unfair labour
practices under specified items of Schedule II and Schedule IV of the MRTU & PULP
Act. T his complaint came to be dismissed by the Industrial Court. The union filed a
special leave petition directly in the Supreme Court against this order as the High
Court of Bombay, in the case of Krantikari Suraksha Rakshak Sangathana vs. S.V.
Naik (1993) 1 CLR 1002 had already held that the Industrial Court cannot, in a
complaint, under the MRTU & PULP Act, abolish contract labour, and treat
employees as direct employees of the company.
The Supreme Court referred to its ruling in the case of Central Labour Union (Red
Flag) Bombay vs. Ahmedabad Mfg & Calico Printing Co. Ltd (1995) 2 LLJ 765
holding that where the workmen had not been accepted by the company to be its
employees, then no complaint would lie under the MRTU & PULP Act. The judges
expressed their full agreement with that ruling.
The judges took this opportunity to reiterate the view that the provisions of the MRTU
& PULP Act can only be enforced by persons who admittedly are workmen. If there is
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a dispute as to whether the employees are employees of the company, then that dispute
must first be got resolved by raising a dispute before the appropriate forum. It is only
after the status as a workman is established in an appropriate forum that a complaint
could be made under the provisions of the MRTU & PULP Act. It was contended by
the appellant-union that the company had always recognised the members of the
appellant-union to be their own workmen. It was submitted that a formal denial was
taken only to defeat the claim.
The judges, however, saw no substance in this contention. Going by the written
statement of the company, the judges noted that the management had categorically
denied that the members of the appellant union were employees of the company. The
judges further took into account that the question was agitated before the Industrial
Court. The Industrial Court gave a finding, on facts, that the members of the
appellant-union were not employees of the respondent-company. This being a
disputed fact, till the appellants or their members, get the question decided in a proper
forum, the present complaint was not maintainable.
8. Penalties: Contravention of the provisions of the Act calls for imprisonment for
atleast 3 months which can be extended to one year or with a fine which shall not
be less that Rs. 10,000/- which may be extended to Rs.20,000/- or with both.
Second conviction calls for an imprisonment of 6 months extendable to 2 years.
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10. Apprentices working in factories are eligible for benefits relating to health, safety
and welfare as provided in the factories Act 1948.
11. In case of accidents apprentices are eligible for compensation under the
workmens compensation Act 1923.
12. It is mandatory for the employer to grant a certificate of training to the apprentice
on his successful completion of the training period and subsequent tests. On
completion of training, every trade apprentice has to appear for a test conducted
by National Council. If he passes, he gets a certificate of proficiency.
13. Any offence by employer under the Act is punishable with imprisonment upto 6
months.
14. The authorities under the act are the national council, the state council, regional
boards, central apprenticeship advisor and the state apprenticeship advisor.
15. Every employer is under obligation to take apprentices in prescribed ratio of the
skilled workers in his employment in different trades. [section 11]. In every trade,
there will be reserved places for scheduled castes and schedules tribes.
[section 3A]. Ratio of trade apprentices to workers shall be determined by Central
Government. Employer can engage more number of apprentices than prescribed
minimum. [section 8(1)]. The employer has to make arrangements for practical
training of apprentice [section 9(1)]. Employer will pay stipends to apprentices at
prescribed rates. If the employees are less than 250, 50% of cost is shared by
Government. If employer is employing more than 250 workers, he has to bear full
cost of training.
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8. The Act enjoins Joint and Several responsibilities on the Principal Employer and
the Contractor. The Principal Employer should ensure that the Contractor does the
following:
(a) Pays the wages as determined by the Government, if any, or;
(b) Pays the wages as may be fixed by the Commissioner of Labour.
(c) In their absence pays fair wages to contract labourer.
(d) Provides the following facilities:
(i)
Canteen (if employing 100 or more workmen in one place) and if the
work is likely to last for 6 months or more
(ii) Rest rooms where the workmen are required to halt at night and the work
is likely to last for 3 months or more
(iii) Requisite number of latrines and urinals separate for men and women
(iv) Drinking water
(v)
Washing
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apprentice. The main purpose of the Act is to provide practical training to technically
qualified persons in various trades. Under the Employment Exchanges (compulsory
notification of vacancies) Act it is compulsory for every employer to notify
employment exchanges all vacancies other than vacancies in the unskilled categories,
temporary vacancies and vacancies proposed to be filled through internal promotions.
The purpose of the Maternity Benefit Act is to regulate the employment of women in
certain establishments and for certain periods before and after child birth and to
provide for maternity benefits.
6.12 KEYWORDS
Standing Orders: To have a uniform service condition for the workmen employed in
all industrial establishments
Factory: It means any premises where 10 or more workers are working and a
manufacturing process is carried out with aid of power
Small establishment: It means an establishment in which not less than ten and not
more than nineteen persons are employed or were employed during past 12 months
Industry: It means any business, trade, undertaking, manufacture or calling of
employers and includes any calling, service, employment, handicraft or industrial
occupation or avocation of workmen
Strike: It means a cessation of work by a body of persons employed in an industry
acting in combination or a concerned refusal, or a refusal, under a common
understanding of any number of persons who are or have been so employed to
continue to work or to accept employment.
Retrenchment: It means termination by the employer of service of a workman for any
reason, other than as a punishment inflicted by a disciplinary action
Trade dispute: It means any dispute between workmen and employers or between
workmen and workmen, or between employers and employers
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LESSON
7
LABOUR LEGISLATIONS: ACTS GOVERNING
COMPENSATION OF EMPLOYEES
CONTENTS
7.0
7.1
Introduction
7.2
7.3
7.4
7.5
7.6
7.7
7.8
7.9
Let us Sum up
7.10
Keywords
7.11
Self Assessment
7.12
Review Questions
7.13
Suggested Readings
7.1 INTRODUCTION
In this lesson we are going to study the major acts concerning the compensation of
employees one by one in brief.
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Description of injury
% of Earning
capacity loss
Part I
Injuries Deemed to Result in Permanent Total Disablement
1.
100
2.
100
3.
100
4.
100
5.
100
6.
Absolute deafness
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Part II
Injuries Deemed to Result in Permanent Partial Disablement
1.
90
2.
80
3.
4.
60
Contd
5.
Loss of thumb
6.
40
7.
50
8.
30
9.
20
10.
20
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30
90
12.
80
13.
40
14.
30
15.
Loss of all toes of both feet distal to the proximal interphalangeal joint
20
16.
Amputation at hip
90
17.
Amputation below hip with stump not exceeding 5 from tip of greater
80
trochanter
18.
Amputation below hip with stump exceeding 5 but not beyond high
70
19.
60
20.
50
21.
40
22.
30
23.
30
24.
20
Other injuries
25.
40
26.
30
Whole
14
28.
Two phalanges
11
29.
One phalanx
30.
Middle finger
31.
Whole
12
32.
Two
33.
One phalanx
34.
Ring or little
35.
Whole
36.
Two
37.
One phalanx
38.
14
40.
41.
Contd...
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42.
43.
44.
45.
Three toes
46.
47.
48.
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apprentices. This is done as per the states. However different rates can be fixed for
different districts.
3. The minimum rate of wages is related to the cost of living Index.
4. In fixing minimum rates of wages in respect of any scheduled employment for the
first time or in revising minimum rates of wages, the appropriate government can
follow either of the two methods described below:
(a) Committee Method: The government may appoint as many committees and
sub-committees as it considers necessary to hold enquiries and advise it in
respect of such fixation or revision as the case may be. After considering the
advise of the committee/s, the appropriate government shall, by notifications
fix or revise the minimum rates of wages.
(b) Notification Method: When fixing minimum wages, the appropriate
government shall by notification, publish its proposal for the information of
persons likely to be affected by the rates of wages and specify a date not less
than 2 months from the date of notification, on which the proposals will be
taken into consideration. Thereafter fix or revise the minimum rate of wages
by notifications.
5. The Act provides that the central government shall appoint a central advisory
board for the purpose of advising the central government and the state government
in the matters of fixation and revision of the minimum rates of wages.
6. The minimum wages shall be paid in cash. Where the payment is to be made in
kind, the cash value of the wages in kind shall be estimated in the prescribed
manner. The government can also authorize for supply of essential commodities at
concessional rates.
7. Penalty: An employer who pays less than the minimum rates of wages shall be
punishable with imprisonment upto 6 months or fine upto Rs.500/- or both.
8. Apart from the payment of the minimum wages, the employer is required to
maintain registers and records giving such particulars of employees under his
employment as the work performed by them, Salary receipts, wage books, wage
slips as may be prescribed.
2. Employees drawing monthly salary (Basic + DA only) upto Rs.3500/- are covered
by the Act.
3. The Act provides for a minimum bonus of 8.33% and maximum of 20% of the
Salary.
4. Every employee shall be entitled to be paid by his employer in an accounting year
bonus, in accordance with the provisions of the Act, provided that he has worked
in the establishment for not less than 30 days in that year.
5. An employee shall be disqualified from receiving bonus under this Act, if he is
dismissed from service for:
(a) Fraud or
(b) Riotous or Violent behavior while on the premises of the establishment or
(c) Theft, misappropriation or sabotage of any property of the establishment.
6. Payment of minimum bonus 8.33% or Rs.100/-, whichever is higher, whether or
not the employer has any allocable surplus in the accounting year.
7. Where the monthly salary exceeds Rs.2500/- the bonus payable is calculated as if
the salary were Rs.2500/-.
8. New establishments get exemption from paying bonus for a period of 6 years or
upto the year they show profit, whichever is earlier.
9. Bonus is to be paid within a period of 8 months from the close of the accounting
year.
10. If an employee is found guilty of misconduct causing financial loss to the
employer, the amount of loss can be deducted from the bonus payable for the year
in which he was found guilty of misconduct.
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This Act is not applicable to employees drawing salary in excess of Rs.6,500/- p.m.
(Basic +DA). Every employee, other than excluded employee is entitled and required
to become member of the fund from the date of joining factory/establishment.
The Act covers three schemes i.e. PF (Provident Fund scheme), FPF (Family Pension
Fund scheme) and EDLI (Employees Deposit Linked Insurance scheme).
Provisions under the Act
1. Establishments are permitted to form their own schemes provided that terms of
such schemes are not less favorable than the scheme under the Act.
2. Contributions under the Act from the employer 10% or 12% of Basic + DA as
the case may be, and equal contribution from the employee.
As per section 2(c) contribution means a contribution payable in respect of a
member under a Scheme or the contribution payable in respect of an employee to
whom the Insurance Scheme applies.
As per section 6, contribution shall be paid by employer @ 10% of basic wages
plus dearness allowance plus retaining allowance. This amount is defined as pay
as per explanation to para 2(f) (ii) of EPF Scheme.
Equal contribution is payable by employee also. This contribution can be
increased to 12% by Central Government and in fact, has been increased to 12%
in most of the cases.
A person who is already a member continues to be a member even if his pay
exceeds Rs 6,500. However, the contribution is limited to Rs 6,500 only.
[para 26A(2) of EPF Scheme].
3. Amount lying to credit of provident fund account cannot be attached by any court
decree and in case of winding up of companies such amount gets priority.
4. If the employee is transferred or leaves the establishment, balance of his provident
fund account is transferred to new account in the new establishment.
5. There are provisions of Advances under the scheme.
6. Superannuation pension, retirement pension or permanent total disablement
pension to employees, widow or widowers pension or children pension is payable
under the Act. Provided that the employee has been contributing to PF for atleast
10 years.
7. Penalty: In case of default from the employers side, the Central Provident Fund
Commissioner may decide to recover the money from the employer as per the
following methods:
(a) By issuing of certificate to the recovery officer
(b) By recovering money from the debtors of the employer
(c) Employers money lying in any court can be adjusted for provident fund dues
subject to the permission of the court.
(d) By attaching and selling of movable/immovable property of the employer.
8. Every member shall be supplied with accounting statement after close of the
accounting year showing opening balance amount contributed, interest credited
and closing balance.
9. A non-refundable withdrawal can be made from provident fund account for house
building or for financing LIC policy or for certain illness of the member or his
family.
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3. The maximum limit on gratuity payable shall not exceed Rs.3,50,000/-. The
Gratuity Act provides only for minimum gratuity payable. If employee has right to
receive higher gratuity under a contract or under an award, the employee is
entitled to get higher gratuity. [section 4(5)].
4. The employer is bound to pay the gratuity within a period of 30 days from the date
of its becoming payable to the employee who is eligible, even if an employee fails
to make an application to that effect.
5. Gratuity can be forfeited only to the extent of damages/loss caused by the
employee, but in cases of riots/disorderly behavior of employee, it can be forfeited
fully.
6. Amount of gratuity is not liable to be attached in execution of any court decree or
order.
7. Employees to qualify for continuous service have to work for atleast 240 days in a
period of one year.
8. The Payment of Gratuity (Amendment) Act, 1987 has prescribed provisions for
compulsory insurance for employers liability for payment towards gratuity under
the Act from, The Life Insurance Corporation of India Ltd.
9. Each employee, who has completed one year of service, shall make nomination
for the purpose of payment of gratuity in the event of his death. If the employee
has a family at the time of making a nomination, the nomination shall be made in
favor of one or more members of his family. Any nomination made by such
employee in favor of a person who is not a member of his family shall be void.
10. Gratuity payable cannot be attached in execution of any decree or order of any
civil, revenue or criminal court, as per section 13 of the Act.
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(e) Funeral Benefit: A sum not exceeding Rs.1500/- is payable as funeral benefit
to the oldest surviving member of the family of the deceased insured person.
The time limit for claiming the benefit is 3 months for the death of the insured
person.
(f) Medical: OPD medical case at dispensaries and panel clinics, Supply of
medicines and drugs as prescribed and full hospitalization benefits like
surgery and diet for the insured person and members of his family.
8. The employer is prohibited from dismissing or discharging employees during the
period the employee is in receipt of any benefit under the Act and such dismissal
would be void.
9. Disputes/Claims arising out of this Act shall be referred to ESIS Court.
10. Penalty: If contributions are not paid in time, the principal employer will suffer
the following consequences:
(a) Employer will have to pay interest @15% p.a. for the delayed period
(b) Employer will have to pay damages as specified
(c) Employer is liable for prosecution.
7.10 KEYWORDS
Compensation: It is a systematic approach to providing monetary value to employees
in exchange for work performed
Occupational Disease: It is a disease that inflicts workers in that particular occupation
in which s/he was employed in and resulting from exposure to a hazardous working
atmosphere, particular to that employment
Wages: It is compensation, usually financial, received by workers in exchange for
their labor
Bonus: It refers to extra pay due to good performance
Provident Fund: It is the fund which is composed of the contributions made the
employee during the time he has worked along with an equal contribution by his
employer
Gratuity: It is payable to any employee only he serves for a minimum period of 5
years at a stretch with his employer
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LESSON
8
DISPUTE SETTLEMENT
CONTENTS
8.0
8.1
Introduction
8.2
Types of Disputes
8.3
8.4
8.5
8.6
8.4.1
Statutory Machinery
8.4.2
Voluntary Machinery
Lok Adalats
8.5.1
Concept
8.5.2
Limitations of Litigation
8.5.3
Advantages of Mediation
8.5.4
8.5.5
8.5.6
Case Laws
8.6.1
8.6.2
8.6.3
8.7
Let us Sum up
8.8
Keywords
8.9
Self Assessment
8.10
Review Questions
8.11
Suggested Readings
8.1 INTRODUCTION
Relations between labour and management do not proceed along the lines envisaged
above for a variety of reasons. Divergent views, opposite stands, contrasting demands
characterise labour-management relations. Employees want more jobs, management
wants to reduce staff, raise productivity and save on all fronts. Management wants to
computerise and introduce latest technology gradually in order to reduce the
dependence on manual force. Labour and unions cannot afford to let this happen by
keeping silence. Labour wants a fair share of productivity gains. Management wants
to demonstrate those gains as fruits of risky investments. The argument goes on and
on. However, the survival of both partners in the industrial activity is dependent on
how appreciatively they look at each others concerns and get along without rubbing
each other the wrong way.
Industrial disputes constitute militant and organised protests against existing industrial
conditions.
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Lock-outs
Lock-out is the counterpart of strike. It is the weapon available to the employer to
close down the factory till the workers agree to resume work on the conditions laid
down by the employer. The Industrial Disputes Act of 1947 defined it as the closing
of a place of an employment, or the suspension of work or the refusal of an employer
to continue to employ any number of persons employed by him. If it is impossible to
meet the demands of the workers, employers may decide to go for lock-out. An
employer may also pull down the shutters so as to bring psychological pressure on the
workers to agree to his conditions or face closure of the unit.
Gherao
Gherao means to surround. In this method, a group of workers initiate collective
action aimed at preventing members of the management from leaving the office. This
can happen outside the factory premises too. The persons who are gheraos are not
allowed to move for a long time, sometimes even without food or water. The National
Commission on Labour, while refusing to accept it as a form of industrial protest,
opined that gheraos tend to inflict physical duress (as against economic pressure) on
the persons affected and endanger not only industrial harmony but also create
problems of law and order.
Picketing and Boycott
When picketing, workers often carry/display signs, banners and placards (in
connection with the dispute), prevent others from entering the place of work and
persuade others to join the strike.
Boycott aims at disrupting the normal functioning of an enterprise. Through forceful
appeals and negative behavioural acts, striking workers prevent others from entering
the place of work and persuade them not to cooperate with the employer.
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Before sending the failure report he should ask the disputing parties whether they
would like the dispute to be sent for arbitration.
Board shall consist of an independent Chairman and two or four other members in
equal numbers to represent the parties to the dispute
Courts of Inquiry
Constituted by the appropriate Government as occasion arises for inquiring into any
matter appearing to be connected with or relevant to an industrial dispute
Labour Courts
Labour Courts are constituted by the appropriate Govt. for the adjudication of
industrial disputes relating to any matter specified in the Second Schedule and for
performing such other functions as may be assigned to them under this Act.
Matters within the Jurisdiction of Labour Courts (the II Schedule)
1. The propriety or legality of an order passed by an employer under the standing
orders;
2. The application and interpretation of standing order;
3. Discharge or dismissal of workmen including re-instatement of, or grant of relief
to, workmen wrongfully dismissed;
4. Withdrawal of any customary concession or privilege;
5. Illegality or otherwise of a strike or lock-out; and
6. All matters other than those specified in the Third Schedule.
Industrial Tribunals
Industrial Tribunals are constituted by the appropriate Govt. for the adjudication of
industrial disputes relating to any matter specified in the Second Schedule or the Third
Schedule and for performing such other functions as may be assigned to them under
this Act.
Matters within the Jurisdiction of Industrial Tribunals (the III schedule)
1. Wages, including the period and mode of payment;
2. Compensatory and other allowances;
3. Hours of work and rest intervals;
4. Leave with wages and holidays;
5. Bonus, profit sharing, provident fund and gratuity;
6. Shift working otherwise than in accordance with standing orders;
7. Classification by grades;
8. Rules of discipline;
9. Rationalisation;
10. Retrenchment of workmen and closure of establishment; and
11. Any other matter that may be prescribed.
National Tribunals
National Tribunals are constituted by the Central Government for the adjudication of
industrial disputes which, in the opinion of the Central Government, involve questions
of national importance or are of such a nature that industrial establishments situated in
more than one State are likely to be interested in, or affected by such disputes.
Adjudication
Adjudication is a judicial (decision making) process for settlement of industrial
disputes [sn.2(aa)].
The Act provides for Works Committee in factories employing 100 or more workers.
[section 3].
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It is also binding on all other parties summoned to appear in the proceedings to the
dispute.
When conciliation fails, before sending the failure report, the conciliation officer
asks the parties if they wish to send the dispute for arbitration.
If parties desire so, they must sign an arbitration agreement in form-c under rule 7
and send it to the government.
Arbitrators hear the pleadings of both parties and submit their orders to the
government who processes it like an adjudication award and it is implemented like
an adjudication award.
Settlement
z
Period of Validity
z
The settlement is binding during the period it is in force. Even after that period is
over, it continues to be binding, unless a 2 month notice of termination is given by
one party to another. [section 19(2)].
If no period has been specified, settlement is valid for 6 months and an award is
valid for one year.
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in 1958. Discipline in the relationship between workers and employers can better
be enforced if both the parties accept their responsibilities and show a willingness
to discharge them. In the absence of any statutory provision at the all-India level
for the recognition of trade union, the provision in this regard has been
incorporated in the Code of Discipline.
The main elements of the code are:
(a) The two parties agree to utilise the existing machinery for the settlement of
industrial disputes.
(b) The parties shall not resort to strikes and lock-outs without first exploring all
avenues of settlement.
(c) The parties accept that the disputes not settled mutually shall be referred to
voluntary arbitration.
(d) The code specifies the criteria for the recognition of trade union and creates an
obligation on employers to recognise the majority union in an establishment
or industry.
(e) The two parties shall not resort to the unfair labour practices detailed in the
code.
(f) Managements and trade unions agree to establish grievance procedures on a
mutually agreed basis.
Initially, by the end of March, 1962, the code was accepted voluntarily by about
900 independent employers and trade unions. The number increased to around
3000 by the end of 1967. Over the years, however, the willingness and enthusiasm
of the parties to observe the code has declined, and they have developed an
attitude of indifference to the code. It has proved to be difficult for them to abide
by self-imposed discipline in terms of obligations backed only by moral sanctions.
Industrial Truce Resolution, 1962. With the Chinese attack in October 1962, an
emergency was declared in the country, and it was realised that production should
not be jeopardised in any way. Employers' and workers' representatives, in a joint
meeting of their organisations held on November 3, 1962 at New Delhi, passed a
resolution, saying that:
"No effort shall be spared to achieve maximum production, and management and
workers will strive to collaborate in all possible ways to promote the defence
efforts of the country."
As a result of the acceptance of this Resolution, there was a sharp decline in the
number of disputes and in the number of man-days lost. Workers not only worked
for extra hours but also contributed to the National Defence Fund. Emergency
Production Committees were set-up, both at the Centre and in the States to
improve production and productivity. But the Resolution lost its importance when
prices rose sharply and disputes erupted once again.
Code of Conduct: The other code adopted in May 1958 was the code of conduct.
The representatives of the four central trade union organisations the INTUC,
AITUC, HMS and UTUC agreed to observe certain principles with a view to
maintain harmonious inter-union relations. Inter-union and intra-union rivalries
emerge out of certain weakness of Indian trade unions such as fragmentation and
multiplicity. The code was formulated to curb these evils. But it has remained
mainly on paper, for trade unions seem to have forgotten that it exists.
2. Tripartite Bodies:
(a) Indian Labour Conference,
(b) Standing Labour Committee,
(c) Industrial Committees, and
(d) Tripartite Committee on International Labour Organisation Conventions,
1954.
3. Formation of Joint Consultative Machinery (JCM) for Central Government
Employees: This is also a three-tier machinery.
4. Collective Bargaining to be encouraged.
5. Workers' Participation in Management Scheme to be introduced through
Formation of Shop Councils and Plant Council.
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limited to that of an umpire, ensuring that the evidence is presented in accordance with
certain ground rules. The adversary method of dispute resolution promotes game
theory of dispute resolution. Persons with good resources are likely to win the game.
Winning the game in an adversary system does not necessarily mean justice is done or
that a peaceful solution to the dispute is found. It only means that the dispute is
resolved. This is not a good way of resolving disputes in situations such as family
relations or industrial relations where human emotions are also involved. The
adversary system being a win-or-lose situation, the animosity between the disputing
parties gets worsened and usually ends up having an adverse impact on industrial
relations.
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Labour Courts/Tribunals, the parties require some encouragement to settle the dispute
outside the Tribunal.
A study conducted by the author on the working of labour courts in Bangalore reveals
how parties to a termination dispute can compromise when the dispute is pending
before the labour court. The study sample comprised 142 that were disposed of
termination cases during the period 1980-1990. These 142 cases were chosen at
random. Out of this, 36 cases, i.e., 25 per cent of the total cases, were settled outside
the Court and settlements were converted into compromise awards. The study reveals
that these compromises were reached at different stages of the proceedings in different
cases. In some cases compromise was reached on the first day of appearance by the
parties, while in other compromise was reached at the stage of arguments. It may be
noted here that the Presiding Officers did not play any role in promoting these
settlements. These 25 per cent settlements were reached entirely at the parties or their
lawyers' initiative. If the presiding officers of the labour court play a proactive role,
then the rate of out-of-court settlements is likely to be higher.
The I.D. Act, 1947 does not contain any provision specifically authorising an
industrial adjudicator to record a compromise settlement and pass an award. The Civil
Procedure Code Order 23, Rule 3 provides for converting out-of-court settlement into
compromise judgment decree. The same principle is used by the Labour Court and
Industrial Tribunals to convert an out-of-Tribunal settlement into an award. Section 11
of the I.D. Act gives much wider powers to the Labour Court and Industrial Tribunal
to follow such procedures as the authority deems fit. In Workmen of Government Silk
Weaving Factory, Mysore vs. Industrial Tribunal (1973) 2 LLJ 144 S.C., the Supreme
Court upheld the validity of the Industrial Tribunal by passing an award on the basis
of a compromise settlement. The validation of the same conclusion and converting it
into an award requires the presiding officer of the Tribunal to show that there has been
some application of mind in the process.
Lok Adalat Settlements are out-of-Tribunal Settlements. While promoting a
settlement, a Lok Adalat is required to follow the principles of justice, equity and fair
play. The conciliators in the Lok Adalats are serving or retired judges. Hence, if an
industrial dispute is settled in a Lok Adalat it can be straightaway converted into an
award. Section 33C of the I.D. Act is a very powerful mechanism for enforcement of
awards/settlements. Section 29 of the I.D. Act provides for punishment for breach of
any term of any settlement or award. The Schedule on Unfair Labour Practices to the
I.D. Act considers failure to implement an award, settlement or agreement as an unfair
labour practice, which is punishable under Section 25 U of the I.D. Act. Hence, an
appropriate blend of I.D. Act and Lok Adalats should help in resolving most of the
industrial disputes amicably.
Lok Adalats are now catching on. Though, it is attempted all over India, it is very
popular in Punjab and Haryana, where thousands of cases are settled through Lok
Adalats.
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by the Bank. The workmen joined duty on January 17, 1973. They should have
accepted the order gracefully and appreciated the attitude adopted by the
Management. The workmen, however, did not do so. They preferred to file appeal
which was dismissed by the Executive Committee.
Decision of Labour Court
The workmen, being aggrieved by the decision, raised an industrial dispute and the
matter was referred to Labour Court, Coimbatore by the Government under Section 10
of the Act. The Labour Court after extending opportunity of hearing to both the sides
and considering the evidence on record framed the following two issues;
1. Whether the punishment of stoppage of 1 to 4 increments with cumulative effect
on the 1 to 53 workers is justified?
2. Whether the 53 workmen are entitled to be paid wages for the period of
suspension? After considering the evidence in its entirety and relevant case law on
the point, the Court held that all the four charges levelled against the workmen
were proved. It also held the inquiry to be legal, valid and in consonance with the
principles of natural justice. The evidence established that threat was administered
by the employees.
The Labour Court concluded;" Unlike criminal cases it is not necessary that the
evidence should be beyond doubt. Nevertheless, the witnesses have given clear
evidence to prove charges. Therefore, we have to accept them and hold that charges
1 to 4 have been proved against all the 53 employees."
On the basis of the above finding, the Labour Court held that it could not be said that
the action of the Management could be described as illegal, unlawful or improper.
Accordingly, the demands of the workmen were rejected and reference was dismissed.
Approach of High Court
Being aggrieved by the award passed by the Labour Court, the Union approached the
High Court by filing a Writ Petition. The learned Single Judge did not disagree with
the findings recorded by the Labour Court and held that the workmen were not
entitled to wages for the period they had not worked. As to the second punishment,
however, the learned Single Judge held that stoppage of 1 to 4 annual increments with
cumulative effect was 'harsh'. The penalty of stoppage of annual increments with
cumulative effect had far-reaching consequences. It would adversely affect the
workmen throughout their service and in retrial benefits to be received by them. It
would further affect their families. Imposition of such punishment, according to the
learned Single Judge, was 'not valid in law' and liable to be set aside. The petition was,
accordingly, partly allowed confirming the withdrawal of wages for the period of
suspension, but by setting aside the order of punishment of stoppage of increments.
The Management was directed to pay the arrears in respect of stoppage of increments
to the workmen with 'interest at the rate of 12% per annum' within sixty days from the
date of receipt of the copy of the order.
The Management was aggrieved by the above order passed by the learned Single
Judge and preferred intra-court appeal before the Division Bench of the High Court.
The Division Bench rightly noted that it is settled law that the question of choice and
quantum of punishment is within the discretion of the Management. "But, the sentence
has to suit the offence and the offender". If it is unduly harsh or vindictive,
disproportionate or shocks the conscience of the Court, it can be interfered with by the
Court. Then referring to a leading decision of this Court in Ranjit Thakur v. Union of
India & Others., (1987) 4 SCC 611, the Division Bench held that the order passed by
the learned Single Judge required modification. The Division Bench opined that
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imposed by the Management was grossly disproportionate, the learned Single Judge
was also right in directing the Bank Management to pay salary with 12% interest. It is
no doubt true, stated the learned counsel, that the Division Bench partly set aside the
direction of the learned Single Judge by modifying the punishment permitting
stoppage of increment/increments of the workmen without cumulative effect and by
setting aside payment of salary with 12% interest, but as the said part of the order
passed by the Division Bench has not been appealed against by the Union, it would
remain. But no case has been made out by the Bank Management to interfere with the
order of the Division Bench and the appeal deserves to be dismissed.
Findings Recorded
We have given our most anxious and thoughtful consideration to the rival contentions
of the parties. From the facts referred to above and the proceedings in the inquiry and
final order of punishment, certain facts are no longer in dispute. A call for strike was
given by the Union which was illegal, unlawful and not in consonance with law.
Conciliation proceedings had been undertaken and there was amicable settlement of
dispute between the Management on the one hand and the Union on the other hand.
Pursuant to such settlement, 134 workmen resumed duty. 53 workmen, however, in
spite of the strike being illegal, refused to join duty. Their action was, therefore, ex
facie illegal. The workmen were, in the circumstances, placed under suspension and
disciplinary proceedings were initiated. In spite of several opportunities, they did not
co-operate with the inquiry and the Inquiry Officer was compelled to proceed ex parte
against them. Four allegations were leveled against the workmen;
(i) The employees did not come for work from April 17, 1972;
(ii) They took part in illegal strike from that date, i.e. April 17, 1972;
(iii) They prevented other employees who returned for work from joining duty by
administering threat to them; and
(iv) They prevented the employees who came to receive wages on April 17, 1972.
At the enquiry, all the charges levelled against the employees were established. In the
light of the said finding, the Management imposed punishment of
(i) stoppage of increment of 1 to 4 years with cumulative effect; and
(ii) non-payment of salary during period of suspension. In our considered opinion, the
action could not be said to be arbitrary, illegal, unreasonable or otherwise
objectionable. When the Union challenged the action and reference was made by
the 'appropriate Government' to the Labour Court, Coimbatore, the Labour Court
considered all questions in their proper perspective. After affording opportunity of
hearing to both the parties, the Labour Court negated the contention of the Union
that the proceedings were not in consonance with principles of natural justice and
the inquiry was, therefore, vitiated. It held that the inquiry was in accordance with
law. It also recorded a finding that the allegations levelled against the workmen
were proved and in view of the charges levelled and proved against the workmen,
the punishment imposed on them could not be said to be excessive, harsh or
disproportionate. It accordingly disposed of the reference against the workmen. In
our considered opinion, the award passed by the Labour Court was perfectly just,
legal and proper and required 'no interference'. The High Court, in exercise of
power of judicial review under Article 226/227 of the Constitution, therefore,
should not have interfered with the well-considered award passed by the Labour
Court.
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Labour Court did not record any finding about the non applicability of the ID Act. It
was noted that the workman was gainfully employed after the termination of his
services. Accordingly, direction was given for re-instatement with continuity of
service. This finding was recorded primarily on the ground that he had worked for
more than 240 days. No finding was recorded on the plea taken by the present
appellants that the claim was made after 9 years without explaining the belated
approach.
The High Court dismissed the writ petitions filed by the present appellants on the
ground that even if there was belated approach, the Court could not decline to grant
relief but it could mould the relief.
In support of the appeals, learned counsel for the appellants submitted that both the
trial court and the High Court did not notice the basic challenge of the appellants
about the non-applicability of the ID Act. Apparently, the Labour court had not
considered the plea about non applicability of the ID Act. This was specifically
pleaded. It is true that the Labour court could not have declined to answer the
reference. The jurisdiction of the Tribunal and the Labour court as the case may be in
dealing with an industrial dispute is limited. The point was mentioned in Section 10(4)
of the ID Act in National Engineering Industries Ltd. v. State of Rajasthan and Ors.
(2000 (1) SCC 371). It was held that the High Court has jurisdiction to entertain a writ
petition when there is an allegation that there is no industrial dispute which could be
the subject matter of reference for adjudication to the Tribunal under Section 10 of the
ID Act. Thus the existence of the industrial dispute is a jurisdictional factor. Absence
of jurisdictional fact results in invalidation of the reference. The Tribunal or the
Labour Court under Section 10 gets jurisdiction to decide an industrial dispute only
upon a reference by the appropriate government. The Tribunal or the Labour Court
cannot invalidate the reference on the ground of delay. If the employer makes a
grievance that the workman has made a stale claim then an employer can challenge
the reference by way of a writ petition and contend that since the claim is belated there
was no industrial dispute. The Tribunal or the Labour Court cannot strike down the
reference on this ground. As observed in Sapan Kumar Pandit v. U.P. State Electricity
Board and Ors. (2001 (6) SCC 222) there are cases in which lapse of time had caused
fading or even eclipse of the dispute. If nobody had kept the dispute alive during the
long interval, it is reasonably possible to conclude in a particular case that the dispute
ceased to exist after some time. But when the dispute remained alive though not
galvanized by the workmen or the Union on account of other justified reasons it does
not cause the dispute to wane into total eclipse. The long delay for making the
adjudication could be considered by the Adjudicating Authority while moulding the
reliefs. That is a different matter altogether.
In the instant case apart from the fact that the long delay aspect has not been
considered by the Management it also did not decide the jurisdictional fact about the
applicability of the ID Act. That being so, the order of the Labour court as affirmed by
the High Court cannot be sustained and stands quashed. The appeal is allowed without
any order as to costs.
In view of our conclusions in Civil Appeal No.7637/2004, Civil Appeal Nos. 6766 of
2004 and 2608 of 2004 are also allowed on the same terms with no order as to costs.
The matter is remitted to the Labour court to adjudicate on these aspects. Since the
matter is pending since long the Labour court would do well to dispose of the matter
within four months from the date of receipt of this order.
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High Court should have directed re-instatement of the respondent with full back
wages. Whereas at one point of time, such a relief used to be automatically granted,
but keeping in view several other factors and in particular the doctrine of public
employment and involvement of the public money, a change in the said trend is now
found in the recent decisions of this Court. This Court in a large number of decisions
in the matter of grant of relief of the kind distinguished between a daily wager who
does not hold a post and a permanent employee. It may be that the definition of
"workman" as contained in Section 2(s) of the Act is wide and takes within its
embrace all categories of workmen specified therein, but the same would not mean
that even for the purpose of grant of relief in an industrial dispute referred for
adjudication, application for constitutional scheme of equality adumbrated under
Articles 14 and 16 of the Constitution of India, in the light of a decision of a
Constitution Bench of this Court in Secretary, State of Karnataka and Others v
Umadevi (3) and Others [(2006) 4 SCC 1], and other relevant factors pointed out by
the Court in a catena of decisions shall not be taken into consideration.
The nature of appointment, whether there existed any sanctioned post or whether the
officer concerned had any authority to make appointment are relevant factors.
See M.P. Housing Board and Another v Manoj Shrivastava [(2006) 2 SCC 702],
State of M.P. and Others v Arjunlal Rajak [(2006) 2 SCC 711] and M.P. State
Agro Industries Development Corporation. Ltd and Another v S.C. Pandey [(2006)
2 SCC 716]
Our attention has been drawn to a recent decision of this Court in Jasbir Singh v.
Punjab & Sind Bank and Others reported in [(2007) 1 SCC 566] by the learned
counsel appearing on behalf of the respondent. We do not see as to how the said
decision is applicable to the fact of the present case.
In Jasbir Singh (supra), the Order of termination was passed on the ground of
misconduct. The said question was also the subject matter of a suit, wherein the Civil
Court had held that the appellant therein was not guilty of the misconduct. In that
context only, the question in regard to the relief granted by the Court was considered
in the light of the relief which may be granted by the Industrial Court under
Section 11A of the Industrial Disputes Act stating;
"It was, however, urged that no back wages should be directed to be paid. Reliance in
this behalf has been placed on U.P. State Brassware Corporation. Ltd. v. Uday Narain
Pandey. In that case, this Court was dealing with a power of the Industrial Courts
under Section 11-A of the Industrial Disputes Act. Therein, as the establishment was
closed, the question of reinstatement of the workman did not arise. Still then, 25%
back wages were directed to be paid as also the compensation payable in terms of
Section 6-N of the U.P. Industrial Disputes Act.
The judgments of both the civil court and the criminal court established that the
appellant was treated very unfairly and unreasonably. For all intent and purport, a
criminal case was foisted upon him. A confession, according to learned Chief Judicial
Magistrate, was extracted from him by the bank officers in a very cruel manner. It is,
therefore, not a case where back wages should be denied. The respondent Bank has
tried to proceed against the appellant in both in civil proceedings as well as in criminal
proceedings and at both the independent forums, it failed."
We may notice that recently in Muir Mills Unit of NTC (U.P.) Ltd. v. Swayam
Prakash Srivastava and Another [(2007) 1 SCC 491], a Bench of this Court opined :
"With regard to the contention of the respondents that in the present fact scenario
retrenchment is bad under law as conditions under Section 6-N, which talks about a
reasonable notice to be served on an employee before his/her retrenchment, is not
complied with; we are of the view that even under Section 6-N the proviso states
that "no such notice shall be necessary if the retrenchment is under an agreement
which specifies a date for the termination of service". In the present case on the
perusal of the appointment letter it is clear that no such notice needs to be issued to
Respondent No.1.
The respondents had referred to many cases with regard to back wages to be paid to
the retrenched workman. The learned counsel cited a string of decisions of this Court
in support of this contention. We are however not addressing this plea of the
respondents as we have already observed that Respondent 1 is not a workman under
the Industrial Disputes Act, 1947 and the U.P. ID Act, 1947 and also that the
retrenchment was not illegal and therefore the question of back wages does not arise.
We may also notice that in Uttranchal Forest Development Corporation v M.C. Joshi
[2007 (3) SCALE 545], this Court held; "Although according to the learned counsel
appearing on behalf of the appellant the Labour Court and the High Court committed
an error in arriving at a finding that in terminating the services of the respondent, the
provisions of Section 6N of the UP Industrial Disputes Act were contravened, we will
proceed on the basis that the said finding is correct. The question, however, would be
as to whether in a situation of this nature, relief of reinstatement in services should
have been granted. It is now well-settled by reason of a catena of decisions of this
Court that, the relief of reinstatement with full back wages would not be granted
automatically only because it would be lawful to do so. For the said purpose, several
factors are required to be taken into consideration, one of them being as to whether
such an appointment had been made in terms of the statutory rules. Delay in raising an
industrial dispute is also a relevant fact.
In Haryana State Electronics Development Corporation v Mamni [AIR 2006 SC
2427], this Court directed payment of compensation. Similar orders were passed in
North-Eastern Karnataka Rt. Corporation v. Ashappa [(2006) 5 SCC 137] and U.P.
State Road Transport Corporation v. Man Singh [(2006) 7 SCC 752]
In Man Singh (supra) it was held:
The respondent admittedly raised a dispute in 1986, i.e. after a period of about
12 years, it may be true that in an appropriate case, as has been done by the Labour
Court, delay in raising the dispute would have resulted in rejection of his claim for
back wages for the period during which the workman remains absent as has been held
by this Court in Gurmail Singh vs. Principal, Govt. College of Education. But the
discretionary relief, in our opinion, must be granted upon taking into consideration all
attending circumstances. The appellant is a statutory corporation, keeping in view the
fact that the respondent was appointed on a temporary basis, it was unlikely that he
remained unemployed for such a long time. In any event, it would be wholly unjust at
this distance of time. i.e. after a period of more than 30 years, to direct reinstatement
of the respondent in service. Unfortunately, the Labour Court or the High Court did
not consider these aspects of the matter.
Keeping in view the particular facts and circumstances of this case, we are of the
opinion that instead and in place of the direction for reinstatement of the respondent
together with back wages from 1986, interest of justice would be sub-served if the
appellant is directed to pay a sum of Rs. 50,000 to him. Similar orders, we may place
on record, have been passed by this Court in State of Rajasthan v. Ghyan Chand, State
of MP vs. Arjunlal Rajak, Nagar Mahapalika (now Municipal Corporation) v. State of
U.P., and Haryana State Electronics Development Corporation Ltd. v. Mamni."
It was further held
"The legal position has since undergone a change in the light of a Constitution Bench
decision of this Court in Secretary, State of Karnataka & Ors. vs. Uma Devi (3) &
Ors. [(2006) 4 SCC 1] wherein this Court held that 'State' within the meaning of
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and Labour Laws
8.8 KEYWORDS
Strike: A collective stoppage of work by a group of workers.
Lock-out: Closing down of an undertaking or the suspension of work or the refusal of
an employer to continue to employ any number of persons employed by him.
Arbitrator: A person who is appointed to play the role of an umpire while resolving
differences and disputes between two parties.
Conciliation: The practice by which the services of a neutral third party are used in a
dispute as a means of helping the disputing parties to reduce the extent of their
differences and to arrive at an amicable settlement or agreed solution.
Voluntary arbitration: The process in which the disputing parties show willingness to
go to an arbitrator (a third party) and submit to his decision voluntarily.
Adjudication: It is the process of settling disputes through the intervention of a third
party appointed by the Government.
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Industrial Relations
and Labour Laws
LESSON
9
COMPARATIVE GLOBAL INDUSTRIAL RELATIONS
PRACTICES
CONTENTS
9.0
9.1
Introduction
9.2
9.3
9.2.1
9.2.2
Global Experiences
9.2.3
9.2.4
Enhancing Productivity
9.3.2
9.4
9.5
9.6
Let us Sum up
9.7
Keywords
9.8
Self Assessment
9.9
Review Questions
9.10
Suggested Readings
9.1 INTRODUCTION
A comparative study of industrial relations shows that industrial relations phenomena
is a very faithful expression of the society in which it operates, of its characteristic
features and of the power relationships between different interest groups. Industrial
relations cannot be understood without an understanding of the way in which rules are
established and implemented and decisions are made in the society concerned.
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Comparative Global
Industrial Relations Practices
156
Industrial Relations
and Labour Laws
157
Comparative Global
Industrial Relations Practices
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Industrial Relations
and Labour Laws
The global experiences of Labourisation suggest that the different forms and paths
taken by financial participation depend largely on national systems of industrial
relations and the attitudes and bargaining powers of the social partners.
159
Comparative Global
Industrial Relations Practices
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Industrial Relations
and Labour Laws
Mitsui Bank
The company introduced an ESOP in August 1969. In 1985, 67.6 percent of all
employees were participating in the plan. The average stake of participants is JPY
2.36 million. In 1984 the bank paid the average employee JPY 0.915 million
(3.25 months' regular pay) as a summer bonus, and JPY 0.973 million (3.40 months'
regular pay) as a year-end bonus.
161
Comparative Global
Industrial Relations Practices
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Industrial Relations
and Labour Laws
collected and sold as scrap. At one time, the job was given to contractors who
employed slag pickers at miserable wages.
In 1979, the State Government formed a cooperative of slag-pickers, with the
sub-divisional officer as the chairman. The cooperative was given the monopoly to
pick slag. In the very first year the cooperative achieved a turnover of Rs.3 crore. This
staggering amount was beyond anybody's expectations. Wages have gone up
substantially. The cooperative has taken up lot of welfare work with its own funds. It
continues to run smoothly.
Cooperatives of Iron Ore Miners
The Open Cast Iron Ore mines of Dalli Rajhera in Madhya Pradesh also have
successful cooperatives. These mines supply iron ore to the Bhilai Steel Plant. About
7500 workers organised in seven cooperatives are engaged in this task. Most of the
workers have moved from the nearby Bailadilla mines, which have been running out
of ore. The government has encouraged the formation of cooperatives to rehabilitate
these displaced workers. The cooperatives have been running successfully in spite of
competition from contractors who also operate in this area. It has generated handsome
surpluses for distribution among members and funding welfare facilities. The best free
primary school in the town is run by this cooperative.
Although the cooperatives have shown that they can operate successfully, there is not
enough support for them from the trade unions. A trade union well known for its
militancy has organised the contract labourers in this area. The members of the
cooperative are also members of this union. Instead of encouraging the formation of
more cooperatives, the union has been demanding that the Bhilai Steel Plant should
take over all the mines in the area, including those managed by workers.
9.7 KEYWORDS
ESOP: This scheme gives the opportunity to employees to own shares in their own
company
Lifetime Employment: It means employment till the employee attains the age of
retirement
Employee Participation: Under this, employees of the organisations participate in the
procedures of management
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Comparative Global
Industrial Relations Practices
Labour
2.
Unitary
3.
Marxist
4.
5.
6.
State
7.
1947
LESSON 2
1.
Militant
2.
Fraternal
3.
4.
Upwards
5.
Madras
6.
7.
1.
Laissez Faire
2.
ASSOCHAM
3.
SCOPE
4.
Individualistic
5.
Constitution of India
6.
42
7.
Moral Persuasion
8.
ILC
LESSON 4
1.
United Kingdom
2.
Continuous
3.
Composite
4.
Negotiation
5.
Job Security
6.
7.
Productivity
LESSON 5
1.
Factory Act
2.
Human Assets
3.
Personnel
4.
Executive Council
5.
Recommendations
6.
1.
Workmen
2.
Misconduct
3.
Manufacturing Process
4.
Equal
5.
National
6.
Retrenchment
7.
14
8.
12
LESSON 7
1.
Workmen
2.
Monthly wages
3.
One month
4.
5.
8.33%, 20%
6.
Equal
7.
Gratuity
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Industrial Relations
and Labour Laws
LESSON 8
1.
Unofficial
2.
Gherao
3.
Adjudication
4.
Award
5.
6.
Mediation
7.
Litigation
LESSON 9
1.
Trust
2.
Tax Concession
3.
Privatization
4.
Japanese
5.
Pepper Report