Author: Pragya Choudhary
The Central Government has proposed a major labour law reform to consolidate and amend all the central and state legislation on labour law. The reform includes the Code on Wages; the Occupational Safety, Health and Working Conditions Bill, 2019; the Code on Social Security, 2019 and the Industrial Relations Bill, 2019. The Industrial Relations Bill, 2019 “to consolidate and amend the laws relating to Trade Unions, conditions of employment in industrial establishment or undertaking, investigation and settlement of industrial disputes.” The Bill seeks to consolidate and amend three labour laws: the Industrial Disputes Act, 1947; the Trade Unions Act, 1926; and the Industrial Employment (Standing Orders) Act, 1946. The Labour law reform has been welcomed with severe criticism on various accounts.
This blog post analyses the recent recommendations of Standing Committee on Labour (2019-2020) on trade union recognition laws under Industrial Relations Bill, 2019.[1] In the first section, the proposed law on trade union recognition is explained. The second section seeks to raise certain larger policy considerations which otherwise seems to be missing from general criticism of proposed trade union recognition under Industrial Relations Bill, 2019. The Conclusion follows as third section.
Proposed law under Industrial Relations Bill, 2019
The Industrial Relations Bill, 2019 mandates for Negotiation Council or Negotiation Union in an industrial establishment for negotiating with the employer of the industrial establishment on matters as may be prescribed.[2]
Negotiating Union is a recognized Trade Union in two cases: (a) where there is only one Registered Trade Union under the Code and is functioning in an industrial establishment;[3] and (b) in case of more than one registered Trade unions functioning in an industrial establishment, then the Trade Union which has at least 75% workers on the muster roll of that industrial establishment (verified in manner prescribed) supporting that Trade Union shall be recognized by the appropriate Government or any officer authorized by such Government in this behalf.[4] Negotiating Council is constituted when certain essentials are fulfilled: (a) there are more than one registered Trade Union of workers are functioning in an industrial establishment; (b) No one Trade Union has seventy-five per cent or more of workers on the muster roll of that industrial establishment (verified in such manner as may be prescribed) supporting that Trade union; and (c) Then, the appropriate Government or any officer authorized by such Government in this behalf shall constitute a negotiating council for negotiation on the matters to be notified under Rules.[5] The Negotiating Council would include representatives of registered Trade Unions which have the support of not less than ten per cent of the total workers on the muster roll of that industrial establishment so verified.[6] The representation would work according to one representative for each ten per cent of total workers on the muster roll of that industrial establishment so verified.[7] An agreement (on any matter to be prescribed under Rules) between an employer and a Negotiating Council is said to be reached if it is agreed by the majority of the representatives of the Trade Unions in such negotiating council.[8] Recognition granted to a Negotiating Council or Negotiating Union is valid for three years from the date of recognition or constitution.[9] Further, an enabling clause has been provided to prescribe through Rules matters on which negotiations will take place, manner of verification of membership and facilities which will be provided at establishment level to the Negotiating Union/Council by an establishment.
The Code also provides for recognition of Trade Unions at Central and State level.[10] A Trade Union or a federation of Trade Unions can be recognized as the Central or State Trade Unions by the Central or State Governments respectively, as and when required.[11] Further, manner in which the trade unions would be recognized, the purpose of such recognition and the authority to grant recognition would be prescribed by the appropriate Government.
Analysis of Standing Committee on Labour Report (2019-2020) on trade union recognition
- Registrar’s duty to register Trade Union
The Section 9 (1) of the Bill states “The Registrar shall, on being satisfied that the information furnished by the Trade Union which has made the application, in such form as may be prescribed, is complete in all respects, make an order, either granting or refusing to grant registration for that Trade Union..”. The Registrar is mandated to state reasons in writing in case of refusal to grant registration under proviso to section 19(1) of the Bill.
The provision thus, seems to suggest that even if all requirements for registration are complied by a Trade Union, the Registrar has power to refuse grant of registration [Standing Committee Report, Page 49, para-13.45]. Therefore, the provision lacks clarity.
Additionally, the provision is incompatible with the long-standing jurisprudence on this issue. The section 8 of the Trade Union Act, 1926 mandated for the Registrar to register the Trade Union upon being satisfied that the trade union has complied with all the registration requirements under the Trade Union Act, 1926. The importance of effective and time bound processing of application has been emphasized in A.C.C. Rajanka Limestone Quarries Mazdoor Union v. Registrar of Trade Union,[12] holding that a writ under Art. 226 can be issued directing the Registrar to deal with the registration application if the Registrar takes no action on a registration application for more than three months. Further, In re Inland Steam Navigation Workers Union,[13] it was held that the Registrar on being satisfied that the Trade Union has complied with all the requirements of the Act in regard to registration, must register the Trade Union and the Registrar hasno discretionin the matter.[14] The ILO Convention No. 87 which obligates the ILO members to recognize “Protection of Right to Organize”.[15]The international obligations are important interpretation tool in Indian jurisprudence because courts have repeatedly taken aid from international conventions to interpret laws and make policy recommendations.[16]
Therefore, in light of the long standing jurisprudence and need for more unambiguous laws, the Section 9(1) of the Bill should be modified to ensure that the registration is mandatory if all the requirements are complied with and Registrar’s powers are conform to the principles in the ILO Convention No. 87 as suggested by the Standing Committee Report (Page 49, para-13.45).
- Time Frame for Trade Union registration
The registration is one the prerequisites for a trade union to be recognized as a Negotiating Union or to be part of the Negotiating Council. This makes it necessary for the registration procedure to be streamlined and time bound. There is no time limit prescribed for registration of Trade Union under the Bill. A time bound approach would encourage transparency and certainty as correctly pointed out by the Standing Committee Report (Page 47, para-13.40).
A time limit of 45 days must be prescribed to process and finalize the registration application irrespective of the outcome of the scrutiny of the application [Standing Committee Report, Page 47, para-13.40]. As a consequence, the section 8(3) of the Bill should be amended to the effect that the Registrar should be entitled to call for further information from Trade Union registration purposes only within 45 days of the date of application [Report of the National Commission on Labour, Government of India (1969), page 28].
- Unrealistic and Burdensome threshold for recognition
The labour law reform has been criticized to be disproportionately inclined towards the employer. A trade union has to meet a minimum threshold of seventy five per cent workers on the muster roll of an industrial establishment to be recognized as Negotiating Union and the failure to meet this threshold leads to constitution of Negotiating Council as per section 14(3) of the Bill. This threshold is unrealistically high [Standing Committee Report, Page 50, para-13.48]. Any numerical threshold in law must be in conjunction with the existing industry/ market practice or socio-economic reality for its adequate enforcement. The threshold under the Bill would lead to cases wherein even if a Trade Union is widely supported (that is support of more than fifty or sixty per cent of workers on muster roll), but falls short of unrealistic threshold under the Bill, then it would be unable to lead the negotiations on behalf of the workmen. Trade Unions have also registered their protest stating that the 75% threshold can be satisfied by hardly a handful of trade unions in India or even Worldwide. Additionally, there are a number of interests, various pressure groups of workers and employers’ organizations co-exist within an industrial set up. [17] A burdensome threshold for recognition would prejudice the representation of workmen.
Therefore, the Bill is required to be amended to provide a threshold that is realistic and is in consonance with the practice and realities of industrial functioning as recommended by the Standing Committee (page 50, para-13.48).
- Least governmental interference in procedure
Section 14(3) provides for Trade Union to be recognized by the appropriate government or any officer authorized by such government. This has been severely criticized by the trade unions. When Government is accorded the role to constitute the “negotiation council”, it is an unnecessary government intervention. Such unnecessary intervention would dilute the powers of the workers to form their independent body. This concern becomes stronger considering the seemingly anti workers and pro “ease of doing business” campaign inclination of the proposed labour law reform in general. Additionally, the trade unions have raised demands that the previous practice under Code of discipline for employers to recognize the Trade Union should be continued and therefore, the section should reflect the same practice [Standing Committee, Page 45, para-13.24]. It would ensure more stability in the trade union regime across the country and lower the transition cost from old to new proposed law.
Therefore, the term “appropriate government” in Section 14(3) should be replaced with the word ’employer’ as suggested Standing Committee (Page 50, para-13.47).
- Period of validity
The period of validity of a trade union recognized as part of the Negotiation Council is proposed as three years Section 14(6) of the Bill. However, the most agreements between employer and the Trade Union are generally for four and five years. This concern has been raised in stakeholder consultation in the Standing Committee. Therefore, the Standing Committee (Page 51, para-13.51) has correctly pointed that the validity of the recognition of the tenure of the Negotiating Council be increased to a maximum period of five years.
- Multiplicity of trade unions
The Bill has faced a criticism that multiplicity of trade union can frustrate the negotiation and thus, hamper effective decision making. The Standing Committee (Page 50, para-13.49) also proposes to increase the criteria to at least twenty percent of the total workforce in order to reduce multiplicity of trade unions. There are some fundamental issues with the aforementioned proposal.
Firstly, there is an underlying presumption that multiplicity of trade union is problematic and thus, needs to be eliminated. It is true that a smaller number of people on a negotiating table can make decision making easier. However, the law is not only to make things easier, but also fair and certain.
Further, decision at Negotiating Council is to be guided by the majority. The small trade unions are better equipped to raise important issues and better serve a specific marginalized class of workers like women, lower caste, etc, considering that such social hierarchies have taken new forms and meanings within larger group of “workmen” in industrial setups. The Trade Unions with larger support on paper is unable to address some important concerns of the workers especially marginalized groups.[18] Therefore, the multiplicity of trade unions would ensure that the negotiating council has proper representation of the different viewpoints. This would also ensure that once an agreement is reached by the Negotiating Council by majority, then it would be more acceptable to workers on ground level which is crucial essence for industrial peace.
Additionally, the ‘Negotiating Council” is to be constituted only for presumably larger industrial establishment.[19] The larger the industrial establishment, more crucial is becomes for fair representation of each interest and demand for an effective decision making and compliance thereafter.
Secondly, threshold for registration of trade union is ten per cent or hundred workers under the Bill. Registration has been provided as a pre-requisite for recognition under the Bill. The Standing Committee on Labour (Page 50, para-13.49) has proposed to increase the criteria from ten to at least twenty percent of the total workforce in order to reduce multiplicity of trade unions at Negotiating Council. This would create disparity and put an additional burden (to garner support of additional ten cent of workers) on trade unions which are part of industrial establishments wherein there are a number of trade unions and no one trade union is able to meet the threshold of support of seventy five per cent of workmen on muster roll.
Thirdly, it is understandable that workmen unity is key for effectively raising demands and getting favorable decisions because in any case, the employer is more powerful in terms of finances and social capital. However, the need of unity should not undermine, rather should be sought to go hand in hand with the need to representation[20] of different interest through representatives of specific groups.
Therefore, the proposal aimed at removal multiplicity of trade unions, should be reconsidered.
- Support for trade union to be verified through secret ballot
The Bill has faced criticism for muster roll to determine support for each Trade Union. Muster roll is more permanent in nature and workers have an option to exercise their option for other trade unions as well. However, trade unions are not just restricted to being representatives, rather offer affirmative help in form of allowance, fund, etc. to its members. In most of the cases, the money is collected from member workers who deposit some amount of their hard-earned money in the Trade Union. Therefore, even though on paper, the workmen have right to change their membership, however in practical terms, it is very difficult and heavily burdensome for the workmen. On the other hand, the secret ballot method involves higher costs. However, it is required to be included within the regular working of an industrial establishment as a regular event scheduled after every few years. The facility for secret Ballot can also be included in the list of facilities for negotiating council which is yet to be prescribed by the Government under section 14(7) of the Bill. Therefore, it is advisable for long run that workers’ support for the Trade Union to be verified through Secret Ballot. This has been suggested by Standing Committee (para 13.50, Page 51). The support percentage for the Unions should be calculated on the basis of votes polled in the process of Secret Ballot [Standing Committee, para 13.50, Page 51] and accordingly the thresholds provided under Section 14 of the Bill for Negotiating Union and Negotiating Council can be ascertained.
- Need for clarity
The section 27 (1) and (2) which provides for recognition by Trade Union by Centre and State government respectively. However, the crucial aspects such as manner in which the trade unions would be recognized, the purpose of such recognition and the authority to grant recognition are left ambiguous to be provided by the appropriate government [Standing Committee, page 2]. Further clarity is also required for responsibilities and liabilities of the Trade Union [Standing Committee, 13.53, Page 51, 52]. Considering the importance of recognition of the trade union and major change in law, it is crucial that some further clarity is provided in timely manner [Standing Committee, para 13.53, Page 51, 52] It would trigger more informed public and stakeholder consultation which is required to foster good industrial relations.[21]
Conclusion
The proposed law for recognition of trade Union is facing widespread criticism. One of the major concerns is that the labour law reform is directed at “ease of doing” business campaign and therefore, is anti-workmen. Through this concern is legitimate in relation to criticisms as stated in the preceding section. The good aspects of the labour law reform include streamlining the multiple legislations (both state and central) and provide robust adjudicatory system. Such good aspects would not only benefit business employers but also addresses the long-drawn workmen concerns for effective representation, registration process, provision of adequate procedural laws, etc. However, certain aspects that require further consultation and thus, possibly modifications to the Bill include high unrealistic thresholds. government intervention for Negotiating Council; ambiguous powers of the Registrar for registration of Trade Union; no time frame for decision on registration of a trade union; etc.
Additionally, in light of the recent uncertain crisis of COVID 19 and emerging deplorable state of laborers across India, the proposed law has to consider empowering the workmen; changing long drawn business ethics and standards; effective representation of workmen; and higher and stricter liability for the employers. In order to ensure that there is least gap between law in books and law in action,[22] four things are crucial: consideration of the modifications to the Bill as suggested in the preceding section; wide public and stakeholder consultation; take account of the COVID 19 (has been discussed on a blog post here) and understanding that labour rights are not opposite of ‘development’.
[1] Special thanks to Ms. Simran Bhinder, Assistant Lecturer, O.P. Jindal Global University for her valuable comments on draft piece.
[2] Section 14(1) of the Industrial Relations Bill, 2019
[3]Section 14(2) of the Industrial Relations Bill, 2019
[4]Section 14(3) of the Industrial Relations Bill, 2019
[5]Section 14(4) read with Section 14(1) of the Industrial Relations Bill, 2019
[6]Section 14(4) of the Industrial Relations Code, 2019
[7]Section 14(4) of the Industrial Relations Code, 2019
[8]Section 14(5) of the Industrial Relations Code, 2019
[9]Section 14(6) of the Industrial Relations Code, 2019
[10]Section 27 of the Industrial Relations Code, 2019
[11]Section 27(1) provides for Recognition by Central Government and Section 27(2) provides for Recognition by State Government.
[12] AIR 1958 Pat. 470
[13]AIR 1936 Cal. 57
[14]In re Inland Steam Navigation Workers Union, AIR 1936 Cal. 57
[15] Article 11 (Part II), C087 – Freedom of Association and Protection of the Right to Organise Convention, 1948 (No. 87), International Labour Organisation, <https://www.ilo.org/dyn/normlex/en/f?p=NORMLEXPUB:12100:0::NO::P12100_INSTRUMENT_ID:312232>
[16]Xavier v. Canara Bank Limited (1969); J.G. Verghese v. Bank of Cochin (1980); People’s Union for Civil Liberties v. Union of India (1997); Vellore Citizens Welfare Forum v. Union of India and others (1996); Vishaka and others v State of Rajasthan and others (1997).
[17]BalmerLawrie Workers’ Union, Bombay and Anr.v. BalmerLawrie& Co. Ltd. And Ors. AIR 1985 SC 311; The ‘recognition’ question in trade union law, KR ShyamSundar, The Hindu Business line- Opinion, September 19, 2018 <https://www.thehindubusinessline.com/opinion/the-recognition-question-in-trade-union-law-ep/article24988006.ece>.
[18] Charting the rise of a women-only trade union in India, Ethical Trading Initiative, January 2018 https://www.ethicaltrade.org/blog/charting-rise-women-only-trade-union-india >; The Untouchables: Dalit Workers’ Struggles, Ritimo, June 2012,<https://www.ritimo.org/The-Untouchables-Dalit-Workers-Struggles>
[19]when (a) there are more than one registered Trade Union of workers are functioning in an industrial establishment; and (b) No one Trade Union has seventy-five per cent or more of workers on the muster roll of that industrial establishment (verified in such manner as may be prescribed) supporting that Trade union. Therefore, the Negotiating Council comes into picture.
[20] C087 – Freedom of Association and Protection of the Right to Organise Convention, 1948 (No. 87), International Labour Organisation, <https://www.ilo.org/dyn/normlex/en/f?p=NORMLEXPUB:12100:0::NO::P12100_INSTRUMENT_ID:312232> ; The ‘recognition’ question in trade union law, KR Shyam Sundar, Hindu BussinessLine (Opinion), <https://www.thehindubusinessline.com/opinion/the-recognition-question-in-trade-union-law-ep/article24988006.ece>; C144 – Tripartite Consultation (International Labour Standards) Convention, 1976 (No. 144), International Labour Organisation, Preamble, Article1-3, < https://www.ilo.org/dyn/normlex/en/f?p=NORMLEXPUB:12100:0::NO::P12100_INSTRUMENT_ID:312289 >
[21] The ‘recognition’ question in trade union law, KR Shyam Sundar, Hindu BussinessLine (Opinion), <https://www.thehindubusinessline.com/opinion/the-recognition-question-in-trade-union-law-ep/article24988006.ece>
[22] Rosco Pound, ‘Law in books and law in action’ [1910] 44 Am. L. Rev. 12.
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