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This course pack on managing industrial relations is basically

meant for students. It is concerned with the several factors and
issues that go to make up an industrial relations system. The
objective is to provide a broader outlook of the industrial
relation function. The focus has been on the developmental
aspects rather than on the more traditional control aspects of
the function. It also provides the reader with a framework for
analysis of industrial relations problems. This would enable the
reader to get a broad overview and a good feel of the several
related factors that should be considered for an understanding
of the industrial relations situation.

The students on completion of the course shall have a good

understanding of various aspects of:

1. Industrial Relations (IR) and Trade Unionism.

2. Collective Bargaining Process.
3. Grievance Redress Mechanism.
4. Industrial Conflict.
5. Workers Participation.





Sub. Code: MBA- HR- 304 Credits-03

Total Marks: 100 Minimum Pass Marks: 40%

Internal Assessment: 40 Marks University Examination: 60 Marks


Unit 1: Industrial Relations Strategy

Evolution of Industrial Relation; Industrial Relations; Relations Strategy; Future of
Industrial Relations in India.

Unit 2: Types of Unions

Historical Evolution and Aspects of Trade U696 nion in India; Approaches to Trade
Union, Types of Union, Functions of Trade unions.

Unit 3: Industrial Dispute Act

Functions of Trade Unions; National Level Federations; The Industrial,
Dispute(Central)Rules, Central ID Rules, 1957


Unit 4: Trade Unions Act 1926

The Industrial, Dispute (Central) Rules; Central ID Rules, 1957; The Trade Union Act

Unit 5: Wage Fixation Method

Concept of Collective Bargaining; Stages and prerequisites for collective Fixation;
Collective Bargaining as a Wage Fixation Method.

Unit 6: Collective Bargaining

Collective Bargaining as Wage Fixation Method; Types of Collective Bargaining and
Studies in Collective Bargaining; Approaches and Nature of Grievances; Causes,
Procedure and Grievance; Redress Mechanism; Case Study.

Unit 7: Disciplinary Proceedings

Judicial Approaches to Discipline; Disciplinary Proceedings; Domestic Enquiry and
Award of punishment, Nature of Conflict and its Manifestations, Labor Administration

Unit 8: Industrial Disputes Act 1947

Inter Industry Propensity for Strikes, Strike Patterns, Environmental Influence:
Arbitration, Conciliation, Adjudication, Unfair Labor Practices, Environmental Influence:
Arbitration, Conciliation, Adjudication, Unfair Labor Practices, Case Study, Industrial
Disputes Act 1947 Evolution and Nature of Participation, Prerequisites for Successful

Unit 9: Limitation of Participation

Degree of Influence and Involvement, forms of participation, and impact of participation,
Degree of influence and Involvement, forms of participation, and impact of participation,
Limitation of participation, Current trends in participation in Indian industries Case Study


1. Dynamics of Industrial Relations in India by Mammoria C. B. Himalaya

Publishing House;
2. Personal Management by Mammoria C. B. Himalaya Publishing House;
3. Industrial Relations & Labor Laws by Srivastava S. C. Vikas Publishing House;
4. Personal Management & Industrial Relation : R. S Davar, Vikas Publishing
5. Hand Book of Industrial Laws by Kapoor N. D. Publishing House Sultan Chand
& Sons;
6. Personal Management & Industrial Relation : Mittal Kumar- Anmol Publication;
7. Contemporary Industrial Relations by Ian J Beardwell; Oxford University Press


Unit No. Lesson No. Topic Page No.

1 Lesson 1 Evolution of Industrial Relations 1

Lesson 2 Approches to Industrial Relations 7
Lesson 3 Industrial Relations Strategy 9
Lesson 4 Future of Industrial Relations in India 22

2 Lesson 5 Historical Evolution and Aspects of Trade Union in India 27

Lesson 6 Approches to Trade Union 37
Lesson 7 Types of Unions 41
Lesson 8 Growth of Union 45

3 Lesson 9 Functions of Trade Unions 51

Lesson 10 National Level Federations 53
Lesson 11 The Indiustrial Dispute (Central)Rules, Central ID Rules, 1957 56
Lesson 12 The Indiustrial Dispute (Central)Rules, Central ID Rules, 1957 61

4 Lesson 13 The Indiustrial Dispute (Central)Rules, Central ID Rules, 1957 65

Lesson 14 The Trade Unions Act 1926 71
Lesson 15 The Trade Unions Act 1926 74
5 Lesson 16 Concept of Collective Bargaining 78
Lesson 17 Stages and Prerequisites For collective Bargaining 80
Lesson 18 Collective Bargaining as a Wage Fixation Method 84
Lesson 19 Collective Bargaining as a Wage Fixation Method 93

6 Lesson 20 Collective Bargaining as a Wage Fixation Method 107

Lesson 21 Types of Collective Bargaining and Studies In Collective
Bargaining 117
Lesson 22 Approaches and nature of grievances, causes, procedure
and grievance redress mechanism 120
Lesson 23 Case Study 126
7 Lesson 24 Case Study 127

Lesson 25 Judicial Approaches to Discipline 128


Unit No. Lesson No. Topic Page No.
Lesson 26 Disciplinary Proceedings 133
Lesson 27 Domestic enquires, Charge Sheets, Conduct of enquiry and
award of punishment 136
Lesson 28 Nature of conflict and its manifestations 139
Lesson 29 labour administration machinery 143

8 Lesson 30 lnter industry propensity for strikes, strike patterns 144

Lesson 31 Envionmental influnces: arbitration, conciliation,
adjudication,unfair labour practices 148
Lesson 32 Envionmental influnces: arbitration, conciliation,
adjudication,unfair labour practices 152
Lesson 33 Case Study 157
Lesson 34 Industrial Disputes Act 1947 160
Lesson 35 Evolution and nature of participation, Prerequisites
for successful participation 162

9 Lesson 36 Degree of influnce and involvent, forms

of participation, and impact of participation 165
Lesson 37 Degree of influnce and involvent,
forms of participation, and impact of participation 167
Lesson 38 Limitation of participation 170
Lesson 39 Current trends in participation in Indian industries 172
Lesson 40 Case Study 173


Learning Objectives 1 Primitive Stage


After going through this lesson you will be able to comprehend The families at this stage were self-sufficient as their needs were
the following limited. Hence, there was no problem of exchange of goods.
• What are Industrial Relations. Division of labour was restricted only to the family level. This
was mainly because men devoted their time to activities like
• How did the Industrial Relations evolve going through a
hunting, fishing and making of weapons, and women engaged
series of stages.
themselves in cooking, bringing up the children, agriculture and
• The changes brought about by Industrial Revolution and domestication of animals and doing other household chores.
its effects. In short, all the activities of the family were carried on either to
• How did we reach the machine age and modern factory produce or to procure products for family consumption. In this
system. manner a family was able to satisfy its needs, and the question
What are Industrial Relations? of exchange of goods did not arise.
In order to understand the emergence of Industrial Relations, In the course of time, some families started keeping the
it is necessary for us to study the process of evolution of animals rather than killing them. This led to domestication of
industry. animals. Animals were treated as a form of wealth, which could
be exchanged for other products required by the family. This
Evolution of Industrial Relations
gave birth to the barter economy.
The evolution of industry has been quite gradual. There was a
time in the history of human civilisation when there used to be The barter economy…Yeah! The term sounds familiar
no industrial activity. During hunting stage, man lived all by Is it something to do with exchange? or
himself. He used to go out for hunting and eat whatever he Some form of business?
could find, even flesh, fish, fruits and roots of trees. He used
tree bark, leaves and animal skins to cover his body. But he had To answer the questions barter economy may be defined as the
no fixed residence. After this, man entered into pastoral stage direct exchange of one commodity for another commodity.
under which he started domesticating animals to have an “The barter economy developed because of the increase in the
assured supply of milk, meat and skin. He lived near the banks number of human wants and inability of a family to produce
of lakes and rivers because of the availability of grass and water all the things required, by it. The exchange was direct and
for the animals. Gradually, man discovered a new use to which without the use of any common medium of exchange. Every
land could be put. He entered the agricultural stage. He began person used to exchange his surplus goods with the other
cultivating the land to grow food grains. Some people, who did persons for the goods required. For instance, a farmer, who had
not have any work, offered to work in the fields of others. Such plenty of foodgrains but no cloth exchanged a part of his
workers were paid in kind. The exchange of services for goods foodgrains with the weaver who had surplus cloth and needed
made the background for the evolution of industry. foodgrains. The main difficulty of the barter system was the
lack of double coincidence of wants and a common measure of
All this is fine but the next question, which comes to our mind value. Therefore, the exchange was restricted only to the goods
is- how did the Industry finally evolve? in which some families were surplus and other families were
Well we can classify the various stages in the evolution of deficient.
industry as follows:
2 Agrarian Economy Stage
1. Primitive stage Well by this time things changed a little. Many tribes settled
2. Agrarian economy stage down permanently at some place and began to sow seeds and
3. andicrafts stage. rear cattle on the land, which they shared in common. Agricul-
ture became the primary source of maintenance during this
4. Guild system.
stage. These tribes were self-sufficient as they produced
5. Putting out (or Domestic) system. everything they required. The division of labour confined to the
6. Industrial revolution. division of work between men and women of the tribe.
As you might know The Machine age started after industrial Eventually with the rise of private ownership of property
‘revolution in England which took place between 1760 A.D. inland and cattle, the tribe split up into families. Gradually,
and 1820 A.D. The first three stages represent Pre-machine age. human wants also became varied. These families were no more
Let us look at these stages briefly: self-sufficient. Moreover, some families concentrated on
occupations other than agriculture. This led to exchange of
goods for goods to satisfy needs of various families and the

establishment of village economy. The village became a unit of development of industry and commerce. It changed radically

economic self-sufficiency. Some families also started using hired the techniques of production and had an important impact on
labour. Later on, traders came into existence that purchased the the life of mankind.
surplus products of different families and sold them to those Industrial revolution was the result of the inventions of many
requiring these products. The difference in purchase and sale English scientists during 1760 to 1820. The need for inventions
price was their profit. Emergence of traders led to specialisation arose because of the increase in the demand of products due to
in different fields by different families. It was no longer widening of markets followed by the geographical discoveries
necessary to produce everything a family needed for self- of the late 15th and 16th centuries. It was beyond the capacity
consumption: of the industry using labour intensive techniques to meet the
3 Handicrafts Stage increasing demand. The inventors in England had set for
This is the next stage which we are going to discuss about themselves the task of finding ways and means to remove the
under this stage, artisans living in villages produced the hindrances in production faced by the producers and manufac-
products for the local population and got in exchange various turers. James Hargreaves made ‘spinning genny’ in 1764, and
things from customers. There was hardly any machinery. The Richard Arkwright introduced ‘water-frame’ in 1779. Thereafter,
craftsman used simple hand tools arid manual skills for many mechanical inventions came in quick succession such as
producing the goods. There was no division of labour at this ‘mule spinner’ by Crompton, and ‘power-loom’ by Cartwright.
stage. Thus, the organisation of industry was quite simple. The The invention of steam engine enabled man to drive the
craftsman was responsible for assembling various raw materials, machines by power.
and selling the goods produced by him. We see that the concept Industrial Relations largely emerged
4 Guild Stage during the Industrial Revolution.
The ‘guild stage’ is the next stage what we are going to talk Let us briefly deliberate on some aspects of Industrial Revolu-
about. Under this stage two types of guilds were initiated, tion which will help in our understand of the evolution of
namely, Merchant Guild, and Craft Guild. A merchant guild was Industrial Relations
an association of merchants engaged in trade in a particular We can sum up as:
locality. The purpose of a merchant guild was to enforce equality
1. There were a series of mechanical inventions by the English
of opportunity for the members of the guild, to protect their
interest, to avoid competition among the members and also to
regulate the conduct of its members by prohibiting unfair 2. Production in factories started with the help of machines
practices. A craft guild, on the other hand, was an association of run by mechanical power such as steam, oil and electricity:
the skilled artisans engaged in the same occupation. Thus, there Thus, setting up a factory required huge amount of capital.
were several guilds in a town. The craft guild regulated entry to This gave birth to two classes in industry, namely, capitalist
the craft, prescribed standards of workmanship and regulated and labour.
the conduct of the members. The guild system began to decline 3. Introduction of machinery led to mass scale production of
by the end of 15th century due to the narrow attitude of the standardized goods. .
guilds and the increasing rivalry among their members. 4. The modern factory system provided both direct and
5 Putting out System. indirect employment to a large number of people. The
At this stage, the intermediary between the producers and factories generated direct employment and trading in raw
consumers of goods came to play an important role. The materials and factors products gave indirect employment to
entrepreneur gave outwork to the artisans who worked in their traders and mercantile agents.
homes. The artisans still owned the means of production. The 5. Large scale employment in factories gave birth to labour
entrepreneur came at regular intervals, collected the goods and problems, which necessitated some steps by employers to
paid for them to the artisans. The artisans faced difficulty when create good human relations in factories.
the scale of production increased and there was a need for new Changes brought about by Industrial Revolution.
tools of production. The entrepreneur started providing raw The significant changes brought about by industrial revolution
materials and, tools to the artisans who produced goods and are listed below:
received wages on piece wage basis. That is why; this stage was
called the putting out system. During the beginning of 18th a. Development of engineering. Engineers were required to
century, the entrepreneur followed the practice of employing the design machinery for textiles, coal mining, etc. for making
artisans and getting work from them at their own premises. and repairing steam engines, and making tools and
The entrepreneur procured raw-materials and equipment, locomotives.
assigned work to the artisans, inspected the quality of products, b. Revolution in iron making. The engineers, who took charge
and found a market for his products. In other words, he was of important task connected with the industrial change,
the owner and manager of the production system. could succeed in their work only if iron was cast in large
quantities and was of fairly good quality.
6 Industrial Revolution
Industrial revolution during the later part of the 18th century c. Use of power driven machines. Power driven machines were
and earlier part of the 19th century had a vital influence on the used in industry. It began with cotton spinning and
weaving and, later on, spread to wool, silk etc.

d. Rise of chemical industry. The application of power driven vi. Standard of Living. Industrial revolution had a positive


machines in textile mills made it necessary to develop impact on the standard of living of the people. Factories
bleaching, dyeing, finishing and printing processes to keep produced goods of better quality and at cheaper rates for
pace with the output of textile mills. the consumption of the people. This improved their
e. Development of coal mining. Coal was needed to refine pig standard of living.
iron and cast it into the form in which it was needed by the Social and Politica1 Effects of Industrial Revolution
engineers. It was also needed for generation of steam Industrial revolution not only affected the economy but also
power. created certain social and political implications, which in turn
f. Development of means of transport. For regular supply of created the need for organization of workers and later paved the
raw materials, etc., to industry and for the distribution of way for trade unionism. Here let us discuss a few social and
goods produced by the factories, effective transport was a political effects of industrial revolution :
must. The development of the means of transport like i. Urbanization. Industrial revolution led to the
railways and steamships constitutes the most important concentration of population in towns because factories and
impact of the industrial revolution. other establishments were located in the towns. This gave
Above you have seen the changes brought about by the birth to the housing problem. Even now, lakhs of workers
industrial revolution so now going on a little further on the continue to live in slum areas in the industrial towns.
same topic let us discuss the effects industrial revolution had on ii. Rise of Individualism. People from the villages came to
the economic front. the towns to find employment. Their close ties with the
Economic Effects of Industrial Revolution village, land and family were broken. The industrial
Industrial revolution brought about the following economic revolution created conditions under which workers aimed at
changes: material progress by working in the factories. This led to the
disintegration of joint family life.
i. Large Scale Production. The industrial revolution made
mass production of goods possible by the use of power iii. Awareness of Rights. The industrial revolution gave birth
driven machinery in place of hand tools. to two classes, namely capitalists and workers. There was
economic inequality between the rich and the poor. Slowly
ii. Change of form of Ownership. Large-scale production
and slowly class-consciousness came in the minds of
increased the size of industrial enterprises sole
workers and they organized themselves in the form of
proprietorship concerns expanded into partnership firms
unions to fight for their economic, social and political
and further developed into joint-stock companies. The
evolution of joint stock companies was an important
outcome of the industrial revolution. iv. Poor Working Conditions. The workers were paid lower
wages and they had to work under poor working
iii. Specialization. Industrialization led to a craze for
conditions. There was no one to convince the factory
specialization in every field because of development in the
owners about the need of good working conditions so
means of transport and communication. Different parts of
long as trade unions did not protest. This was an
the country (and even different parts of the world)
obstruction in increasing the productivity of the workers.
specialized in producing or manufacturing different
commodities or parts. Specialization helped in reducing the
cost of production. v. Political Awareness. Industrial revolution increased the
incomes and standard of living of the people. The earning
iv. Rise of Capitalism. Cottage system of production was
people started spending more and more on the education
greatly replaced by the factory system. Under the factory
of their children. Press also progressed a lot to air the
system capital is the crucial factor. Large-scale production
grievances of the working class. These factors created
further increased the need and significance of capital. This
political consciousness among the people. The workers
gave birth to capitalistic economy under which there are two
demanded the right to form unions and to participate in
classes of people, namely, capitalists and workers. The-
the management of the industrial undertakings.
workers are purely wage earners dependent for their -living
on the capitalist employers. The capitalist system also After seeing the changes brought about by the industrial
increased the importance of money as a medium of revolution let us now try to examine how did we reach the
exchange, measure of value and store of value. Machine Age And Modern Factory System
v. Trade Cycles. Large-scale production accompanied by The industrial revolution took place in England and later on
capitalism gave birth to trade cycles having successive spread to other countries of the world. Since the industrial
periods of inflation arid depression. During the period of revolution, many changes have taken place in the industrial
prosperity, there is high level-of employment and sustained system. The present age is an era of large-scale production.
rise is prices. But during depression, there is large-scale Many big factories have come into existence and they employ a
unemployment decrease in demand and so on. Many weak large number of workers. They cater to the needs of the people
firms are eliminated during the depression period. not only in one country but also in many countries of the
world. Thus, machine age has facilitated expansion of interna-
tional trade and growth of multi-national corporations.

During the last 40 years or so, tremendous and rapid develop- earnings for innovating new products and ideas. Research

ment of science and technology has taken place. That is why, the and development activities have the effect of decreasing cost,
present era is known as ‘atomic age’, ‘space age’ and ‘electronic increasing quality and consumer satisfaction and raising the
age’. Some people also call this era as the phase of second standard of living of the people.
industrial revolution. In the present machine age, different
countries of the world are closely inter-related by very fast
x. Competition. There is cutthroat competition among the
means of transport and communication.
producers of goods in all capitalist economies. Economic
Features of Machine Age relations between different persons are based on contract
The main features of the present age, popularly known as rather than on custom and tradition.
machine age, are as follows: Now we can conclude that industrial revolution gave plants and
i. Large Scale Production. Modem factories carryon large scale machinery, which brought about factory system. Entrepreneurs
production to meet the demands of large number of established factories and employed a large number of workers
people. Production is carried on in anticipation of demand. to work in their factories. This gave rise to two classes, namely,
ii. Mechanization. The developments in the fields of science capitalist and workers and the term ‘industrial relations’ was
and technology have increased the degree of mechanization coined to create and maintain cordial relations between these
in the modern factory system. The efficiency of the factories two classes for the growth of industry. This was the real
has increased many times because of new innovations. beginning of industrialization.
iii. Automation. In many advanced countries like the U.S.A. As a result of industrial revolution, capital became a critical
and the U.K., automation has been introduced in the factor of production. With the technological advancements, the
production system. By automation we mean installation of use of out-workers (people working at their homes with their
one set of machines to run another set of machines. For own tools and machines) declined and employment in factories
instance, there is automation in oil refineries, chemical rose up tremendously. The owner of the factory provided raw
industrial units and food processing units. A small number materials, tools and machines and other means of production
of operators sitting in the control room control the entire in the factory premises and the workers offered their labour in
operation. return of wages. This led to the emergence of two distinct
iv. Management Information System. Introduction of classes on the industrial scene, namely, the capitalist class and the
management information system with the help of electronic working class. The capitalist class became more powerful as it
computers is another highlight of modem machine age. provided the most important input of production i.e., capital
The computers have vast memories. They can store huge in the initial stages of industrialization the workers were largely
amount of information and make available the required untrained, uneducated and unorganized ; hence didn’t receive a
information within seconds. They help in taking managerial fair deal at the hands of employers.
decisions at the proper time. In the early stages of industrialization, the trends, which
v. Specialization. There is greater specialization and division of dominated the scene, were:
labour. Many industrial units specialize in the manufacture i. Loss of freedom. Unlike working in their homes, where
of a small number of components or parts of different the workers had freedom in carrying out work the way they
products. Division of labour has facilitated the workers to liked it, in factories they were forced to work under strict
concentrate on limited operations. discipline. They had little say in matters of working
vi. Standardization. Standardization brings about uniformity conditions, rest interval, holidays, wages etc. They also lost
of quality and size, and facilitates large-scale production. their freedom of movement during working hours.
Nowadays, many organizations... whether production or ii. Unhygienic working conditions. The work environment
services based, are trying to get themselves standardized as in the factories was extremely unhygienic and unhealthy.
per International Standards called ISO certifications. Thus, Also it was largely in sanitary badly lit and ill ventilated; little
overall quality consciousness has increased in industry. attention was paid to the health and safety of workers.
vii.Growth of Industrial Areas. Concentration of industries in
certain regions of the country has given rise to the growth iii. Employment of children. Partly due to economic necessity
of industrial areas which offer special advantages in regard and partly due to pressure of employers, the workers were
to raw materials, power, access to market, financing, forced to put their children to employment. There was no
transporting, etc. difference in the hours of work and other working
conditions’ of both the child and the adult workers. The
viii.Expansion of International Trade. Mass production,
incidents of the shameless exploitation of child workers by
standardization of products, and improved means of
the employers were not uncommon.
transport and communication have increased the volume of
international trade among different countries. Since the workers were unorganized and had no bargaining
ix. Research and Development. Big industrial enterprises have power, the Governments in many countries intervened through
established separate departments for research and various1aws to check the exploitation of workers and to
development and they spend a considerable portion of their safeguard their health and welfare. Predominance of mass
illiteracy among the workers also stood in way of rise of trade

unionism. But gradually, with the initiative of social and timing work. His vision was that of improving efficiency


political workers, trade unions were formed to protect the through the application of scientific techniques .
economic, social and psychological interest of the, workers. The Daniel C. McCallim. Daniel C. McCallum tried to find
factors, which necessitated the growth of trade unions areas, solutions to managerial inefficiencies, which were plaguing the
follow: railroads at that time. His approach to run the railroad, was one
i. Commanding position of the capitalist or employer; of system, commonsense, reports and control. He insisted job
ii. Employment of large number of workers in factories; descriptions, made promotions on the basis of merit and
insisted that those in charge of specific operations were both
iii. Introduction of division of labour;
responsible and accountable for their successes and failures.
iv. Growth of a new class of technical and, professional
employees; Growth of’Trade Unionism
During the early period of industrialization, workers faced
v. Migration of labour from rural areas to urban areas;
several problems in the factories. They got lower wages and
vi. Rise of materialism; worked under poor working conditions. So they organized
vii.Monotony and boredom in jobs increase in accidents, etc.; themselves into trade unions to secure better wages and better
viii.Employment of children in factories; conditions of work. The basic philosophy underlying trade
unionism was through strength and collective support, the
ix. Payment of lower wages;
employers could be forced to listen to the workers and redress
x. Unhygienic working conditions in factories; their grievances. The weapons used included strikes, slowdowns,
xi. Lack of welfare measures for workers etc walkouts, picketing, boycotts and sabotage. Sometimes, even
Now the things were becoming complicated and complex. To physical force was used. Trade unionism influenced the
meet the above challenges, several management thinkers and personnel management in such fields of activity as the adoption
practitioners contributed to the thought on human relations in of employee grievance handling systems, the acceptance of
industry. The contribution of Robert Owen, Charles Babbage arbitration as means of resolving conflict of rights , disciplinary
and Daniel C. McCallum is worth mentioning here. Thus, we practices, the expansion of employee benefit programmes, the
are now going to talk about the role of management thinkers in liberalization of holiday and vacation time clear definition of
regard to the human relations in industry. job duties, job rights through seniority and the installation of
rational and defensible wage structures.
Role Of Management Thinkers
Robert Owen. Robert Owen was an outstanding pioneer of Because of influence of trade unions, several employers in the
management thought. He started a factory at Manchester of U.S.A. appointed Welfare Secretaries and also launched schemes
textile machinery and in 1800; he became the managing director for workers’ participation. They adopted paternalistic attitude
of Chorlton Twist Company. He carried out experiments in the towards the workers and invested on welfare activities for the
group of textile mills he managed during the period 1800 and betterment of workers. In several companies, personnel
1828 and introduced many social reforms. He also began departments were set up around 1910 to look after functions
cooperative movement in 1828 in Rochdale, England. like recruitment, training, motion study, record-keeping, welfare,
Robert Owen has been referred to as the father of personnel
management. Throughout his life, he worked for building up of Trade unionism in India developed quite slowly as compared to
a spirit of co-operation between the workers and the manage- the western nations. The main reason for the delayed start of
ment. He believed and practiced the idea that workers should be the labour movement is the difference in her economic set up
treated as human beings. He, made provision for reduced from those of the United Kingdom and the U.S.A. Though the
working hours, housing facilities, education of workers and foreign trading companies helped in the spread of trade and
their children, and a system of discipline combined with justice commerce in the country during the eighteenth and the first
in the factories being managed by him. He also took active part half of the nineteenth centuries, they were also instrumental in
in the introduction of British Factory Act; 1819.He was greatly destroying indigenous industries. They were more interested in
admired for giving human treatment to the workers. He selling goods obtained from their own country and not in
preached that personnel management pays dividends to the setting up production centres. It was only during the 19th
employers and is an essential part of every manager’s job. century, and especially during its second half, that a number of
Charles Babbage. Charles Babbage was a leading British factories were set up in Calcutta and Bombay-jute mills in
mathematician at Cambridge University from 1828-1839. He Calcutta and cotton textile mills in Bombay.
invented a mechanical calculator in 1822. He advocated work Industrial capitalism was well established in Europe during the
measurement, cost determination, and wage incentives in 18th and 19th centuries, but in India modern types of indus-
factories. He is best remembered as the inventor of the tries could be set up only during the middle of the 19th century.
‘analytical engine’, which was the for-runner of the modern Indigo plantations were the first to be started in 1831 followed
computer. In 1832,’Babbage published his famous book “On by a cotton mill in Bombay in 1853, the manufacture of jute in
the Economy of Machinery and Manufacturers.” He stressed Calcutta in 1855, and the coalfields were connected by rail to the
the importance of division of physical and mental labours, port city of Calcutta. These developments paved the way for
suggested the ides of profit sharing, and began observing and development of industries in India.

The first indication of industrial unrest and earliest work mill workers in Ahmedabad in 1918 whose leadership was

stoppage came to the fore in 1877 on the initiative of weavers taken over by Mahatma Gandhi who turned it into a Satyagrah.
of Empress Mills, Nagpur. Though no trade union existed, the From this was born (in 1920) the famous Textile Labour
relations between employers and workers cannot be said to be Association of Ahmedabad.
peaceful. Evidence of short-lived strikes and their frequent Enactment of the Trade Unions Act in 1926 and formation of
occurrence is found at various centres such as Bombay and the International Labour Organisation (I.L.O.) gave a fillip to
Surat. “They ended in suppression of operatives... power on the trade union movement in India. The immediate result of
one side and ignorance and mildness on the other are the basis the formation of International Labour Organization was the
on which the present relations, and the relations are quiet, rest.” birth of the All-India Trade Union Congress in 1920. With the
Lock-outs were completely non-existent. This reveals the formation of I.L.O., immediate necessity was felt for a forum
unequal strength of the bargainers at that time. The powerless for election of the workers’ representatives to that organization
workers in mild disputes were intimidated, dismissed and or, at least, of an agency that could tender suitable advice to
victimized by the employers. In 1895, probably for the first Government regarding selection of the workers’ representatives.
time, the workers struck work at the Budge Jute Mill, as a result This necessity led to the formation of the All-India Trade
of which the mills suffered a loss of Rs. 18,000. Union Congress.
The passing of the Factories Act in 1881 awakened the working The Trade Unions Act gave legal status to registered trade
class towards a concerted approach. In 1884 about 5,000 unions and conferred on them and their members a measure of
workers presented a memorandum to the Bombay Factory immunity from civil suits and criminal prosecution. The Act
Labour Commission under Shri N.M. Lokhande. In 1890, the gave legal status to unions and enhanced their position in the
first labour association, viz., Bombay Millhands’ Association minds of employers and the general public. This Act was an
was established. However, till 1895, workers had very little class important landmark in the history of trade union movement in
consciousness and, therefore, they lacked the power of united India. The failure of the Bombay Textile Strike of 1929 and the
action. In 189':’ was formed the Amalgamated Society of economic depression of that period brought a lull in trade
Railway Servants c: India-consisting of Anglo-Indians and union activity. But industries faced the problem of effective
domiciled Europeans employed on railways and acted more as a handling of labour-management relations. The managements
friendly society than a combination for securing concessions. In declared lock-outs to resist pressure by workers while workers
1905, another organization was formed in Calcutta under the resorted to strikes to pressurize managements for higher wage
name of the Printers’ Union. The Postal Union was formed in and better facilities. The Government also intervened in many
Bombay in 1905. These organizations formed on the lines of cases to resolve the disputes between the management and
trade unions and may be considered as the pioneer organized workers. This is how the industrial relations system consisting
labour associations in India. Thus, it may be noted that there of three actors, i.e., management, workers and government,
were no strong organizations for concerted action. evolved.
Whatever trade unions emerged, they were of a purely local
character at the level of individual mills. The conditions of
labour were severely affected by the World War I and the unions
could not do much to improve the lot of workers. -
Though quite a number of workers’ organizations did spring
up during the early years of the twentieth century, legal recogni-
tion to the movement was not forthcoming readily. The first
organization-The Amalgamated Society of Railway Servants in
India and Burma-formed in 1897 was registered under the
Companies Act. Specific legislation for registration of trade
unions was enacted only in 1926. As a matter of fact, the
pressure exerted by the trade unions movement in the United
Kingdom facilitated this legislation. However, Mr. B.P. Wadia
initiated the process through introduction of an element of
militancy in the movement in India. The Textile Workers
Unions set up by him in Madras in 1918 as an immediate
success and through a number of strikes, he was able to get a
lot of benefits for the workers. But the employers retaliated by
filing a suit for damages against Mr. Wadi a and other leaders
and obtained court injunction restraining the union leaders
from interfering with their business. This led to focusing
attention to the need for legislation for protecting trade union
On the other side of the country, a new experiment on the
labour front was carried out. A strike was launched by the textile


Learning Objectives Wage labour is, alienated because of exploitation by the

After going through this lesson you will be able to comprehend capitalists. Alienation of a worker arises from the fact that he
the following. does not own the too1s with which he produces. Whatever is
• Theories and models of conflict for better understanding produced from the contribution of his labour is not exclusive
of the entire relationship of labour and management. creation (because of division of labour), it arises from the
appropriation of the surplus; finally, it arises from himself
• Differentiate between approaches of Industrial Relations
because his labour is no longer a form of self-expression or an
After having discussed at length the ‘evolution of industrial end itself, but a mere means to an end-the end being the wage
relations’ let us now enhance our knowledge and know more which is necessary in order to survive.
about the IR primarily starting with the ‘approaches to indus-
trial relations.’ 2 Human Relations or Neo-Classical Approach
This approach has its origin in the Hawthorne experiments
Approaches To Industrial Relations conducted by Elton Mayo, Roethilsberger, Whitehead, Whyte
Theories/Models of Industrial Conflict. and Homans, etc. According to this theory, conflict is an
The bases for conflict in industry are no diffident from those in aberration and not the natural state of human society. This
any other area of human endeavor. Most of social and psycho- aberration occurs when tendency of the industrial society is to
logical, economic and political factors underly every conflict treat worker as an isolated individual, and deprive him of all
situation. Thus, a broader framework of industrial conflict is control over his environment. This loss of mooring and
the complex of influences of socio-economic and political control is a major source of conflict.
factors. Means of conflict management or resolution must The core of human relations theory consists in the importance-
incorporate considerations of these dynamics. Some of the attributed to the small informal social groups as a source of
theories/models of conflict are presented below for a better human satisfaction. This satisfaction results from better human
understanding of the entire relationship of labour and relations through the encouragement in creating informal social
management. groups and better communic’1ition by providing not only
1 Classical Approach (Marxist Model) downward communication but upward communication also.
Karl Marx considered industrial conflict as a part of the broader The key to sound industrial relations lies in achieving better
social conflict between classes and used it to explain the human relations in the organisation. The major criticism of this
fundamental historical process of change and-development theory is that it treats the factory as if it were a self-contained
inhuman society. He was concerned with certain macro eco- and isolated social system. The sources of conflict lie as much
nomic processes and deep-rooted inequalities in society as a- outside the factory as within it, and the argument that all these
whole, and not with specific industries or firms. Marx divided strains can bee handled by the management through better
the society into two classes: (i) capitalists, who own the means of human relations within the factory is not convincing. .
production, and (ii) proletariat, who own nothing but their own Neo human religionists like Maslow, Herzberg and McGregor
labour power. These classes are antagonistic groups. Antago- felt that workers look for satisfaction of their needs from their
nism and conflict are o f the very essence of Marx’s conception employment. The motivators include both economic and non-
of class. The reasons for this fundamental antagonism lie in the economic rewards like appreciation of performance, knowledge
capitalist mode of production. of results, competition, etc:
The main drawback of the capitalist mode of production is the 3 Pluralistic Approach
exploitation inherent in the system of wage labour. Wage The pluralistic theory is based on the premise that the enterprise
labour implies that labour is-a commodity which is bought and contains people with a variety of interests, aims and aspirations;
sold like any other. Labour is bought at the cheapest price therefore, it is a coalition of different interests. Arthur Ross
possible and put to work on means of production owned by argued that we should view an organization as a “plural society
the capitalist. The work_r is paid a wage which is barely containing many related but separate interests and objectives
sufficient for his subsistence. This gap is the surplus value which must be maintained in some kind of equilibrium.”
which the capitalist appropriates. This appropriation of the
Given such views, conflict is not abnormal but quite natural.
surplus by the capitalist employer is not lessened rather
The capitalist is no longer a ruthless exploiter. He is willing to
increases, for the actual distribution of additional increments of
sit down and discuss terms with those who protest. Thus,
revenue is determined by the power situation. Workers with no
protest has become institutionalized and has lost its bite. Given
power may get nothing. There is no automatic distribution
the nature and distribution of power in industry and society,
based on a sense of equity. And, thus, the exploitation of the
both labour and management restrain each other to exercise the
worker by the capitalist increases.
exclusives of power. Rather, together they construct and

maintain rules and institutions for the regulation of conflict. . Since the problem of industrial relations is multifaceted as

Conflict cannot be wished away in this system. Arbitration, shown in the Figure above, the first step will be to diagnose a
mediation and adjudication emerge as the major regulators of situation in terms of the prevailing circumstance in the organi-
conflict, and strike becomes a weapon of last resort. zation and then to adopt a strategy of effecting changes at
Pluralism does not imply the inevitability of compromise and crucial points. Conflict in industry cannot be completely wiped
consensus in all situations. Fox argues that the aim of plural- out, it can only be contained with reasonable limits.
ism is to combine social stability with adaptability and 6 Gandhian Trusteeship Approach
freedom-this involves the assumption that on most occasions, Gandhiji’s views on industrial relations are based on his
conflict will be resolved by collective bargaining-the major fundamental principles of truth and non-violence and non-
institutional apparatus of the pluralist. possession. Out of these principles evolved the concept of
trusteeship on which his philosophy of industrial relations
4 Social Action Approach
The social action model has its origins in Weberian sociology. rests. This philosophy presumes the peaceful co-existence of
capital and labour, which calls for the resolution of conflict by
Under this model, the actors own definitions of the situations
non-violent, non-co-operation (i.e., Satyagraha), which actually
in which they are engaged and these are taken as an initial basis
amounts to peaceful strikes in ordinary parlance. Gandhiji
for the explanation of their social behaviour and relationships.
accepted the workers’ right to strike, but cautioned that this
This model points but the reciprocal nature of the relationship right is to be exercised in a just cause, and in a peaceful and non-
between social structure and behaviour. Social structure limits violent manner; and it should be resorted to only after
social action. Thus, a worker’s ability to take strike action or an employers fail to respond to their moral appeals.
entrepreneur’s ability to invest may be limited by his personal
and by more general economic conditions, and this will help to The principle of trusteeship propagates that the capitalist order
can be transformed into an egalitarian one. It does not recog-
determine the environment for similar decisions in future.
nize the right to property except to the extent permitted by
One of the most important features of the social action models society for its own welfare; the individual does not have any
is the attitude it adopts towards social theory. The social action right to hold or use wealth in disregard of the interests of
approach suggests that general explanations of social action are society; and the character of production is to be determined by
not possible simply because of the nature of the subject of social necessity rather than by personal whims or greed. The
social sciences-men do not react to the stimuli in the same way capitalist is expected to hold industry in trust for the commu-
as matter in the natural sciences. The social action approach has nity; and the workers should be treated as co-trustees with the
been contrasted with the systems approach while the systems capitalist employer.
approach regards behaviour as a reflection of the characteristics
The trusteeship theory implies that there is no room for conflict
of a social system containing a series of impersonal processes
which are external to actors and constrain them, the social action of interests between the capitalist and the workers. Though
wealth legally belongs to its owners, virtually it belongs to the
approach stresses the way in which man influences the social
society. If capitalists fail to pay minimum living wages to
structure and makes society.
workers, workers should appeal to their conscience. If this does
5 Systems Approach not work, they should resort to non-violent non-co-operation.
The systems approach views the industrial relations system as a As a pre-condition to this, two things are expected from
sub-system of the society or the total social system. The society workers: One is an awakening and other is the unity among
is seen as providing certain external influences and constraints them. By awakening among workers, Gandhiji meant develop-
but not as completely dominating industrial relations. An ing and nurturing faith in their moral strength and their
industrial relations system at any particular time is regarded as awareness of its existence which means that the workers should
comprising of certain actors, certain context and ideology which realize the fact that without their co-operation, capitalists cannot
bind the industrial relations system together through a body of work and when the workers resort to non-co-operation, their
rules created to govern the actors at the place of work and work exploitation by capital would stop.
community. The creation of rules is the central aim of the For putting the Gandhian concept of trusteeship into practice,
industrial relations system and the following guidelines should be followed:
Dunlop isolates three groups of actors-Workers, Management
a. The workers should seek redressal of reasonable demands
and the Government-who take part in the rule-making process. only through collective action.
b. The workers should avoid strikes as far as possible in
R= f(a,i,b)
industries of essential services.
Where R = Industrial relations system c. The strikes should be resorted to only as a last resort after
a = actors all other legitimate measures have failed.
i = ideology d. As far as possible, workers should take recourse to
b = body of rules voluntary arbitration where efforts at direct settlement have
FIG. 1 not succeeded.
(Chhabra T.N Pg.54 ) e. If they have to organize a strike, trade unions should seek
authority from workers to do so, remain peaceful and use
non violent methods.


Learning Objectives Second World War. Rule 81 A gave powers to the appropriate
After going through this lesson you will be able to comprehend Governments to intervene in industrial disputes, appoint
the following. industrial tribunals, and enforce the award of the tribunals on
• Different strategies related to industrial relations both sides. The BID Act was amended during the war years to
provide for compulsory adjudication in unresolved disputes.
• Disputes and how to settle it.
The BID Act was replaced by a more comprehensive legislation,
Industrial Relations Strategy viz., the Bombay Industrial Relations Act, 1946 (BIR Act), but
State intervention in the settlement of industrial disputes with the basic structure of the BID Act unchanged. At about
started with the Trade Disputes Act, 1929. The Act vested the same time, the Government of India placed on the statute
Government with powers which could be used whenever it book the Industrial Employment (Standing Orders) Act, 1946,
considered fit to intervene in industrial disputes. It provided which provided for the framing and certification of Standing
for only ad hoc conciliation boards and courts of enquiry. The Orders covering various aspects of service conditions including
amending Act of 1938' authorized the Central and Provincial the classification of employees, procedures for disciplinary
Governments to appoint conciliation officers for mediating in actions and the like. In a way, this piece of legislation filled a
or promoting the settlement of disputes. The Act, however, void that existed in the Central industrial relations legislation.
was not used extensively, as the Government policy at that time
continued to be one of laissez faire and selective intervention at The Industrial Disputes Act, 1947
the most. Where Government intervened, the procedure The emergency war legislation (Rule 81A of the Defence of
consisted of appointing an authority which would investigate India Rules) was kept in operation pending the enactment of
into the dispute and make suggestions to the parties for the Industrial Disputes Act, 1947 (the ID Act), which replaced
settlement or allow the public to react on its merits on the basis the Trade Disputes Act, 1929, from April 1, 1947, With
of an independent assessment. subsequent amendments, the I.D. Act still continues to be the
main instrument for Government’s intervention in labour
Provincial Legislation disputes.
While this was the position in the country as a whole, a more
purposeful intervention in industrial disputes was attempted in The I.D. Act provides for settlement of industrial disputes
one of the industrially advanced Provinces—the Bombay through conciliation and adjudication. The Act empowers the
Presidency. The Bombay Trade Disputes (Conciliation) Act, appropriate Government to appoint conciliation officers and/or
19342, introduced for the first time a standing machinery to constitute Boards of Conciliation to mediate in, and promote
enable the State to promote industrial peace. A permanent cadre settlement of, industrial disputes. It also empowers the
of conciliators was envisaged for settling matters which fell appropriate Government to refer disputes for adjudication by
within their jurisdiction. The scope of the Act was limited to an industrial tribunal. The Act makes a distinction between
selected industries. The experience of the working of the Act, disputes arising in public utility services and those in other
though in a limited sphere, led to the enactment of the industries and provides for compulsory conciliation and
Bombay Industrial Disputes Act, 1938 (BID Act). The impor- adjudication to resolve the former. Besides, the appropriate
tant features of this new Act were the provisions for (a) Government could constitute a Court of Enquiry to enquire
compulsory recognition of unions by the employer, (b) giving into matters pertaining to an industrial dispute. Restrictions are
the right to workers to get their case represented either through placed on strike/lock-out in public utility services, and
a representative union, or where no representative union in the during the pendency of conciliation and adjudication proceed-
industry/centre or in the unit existed through elected represen- ings. The procedures and machinery provided under the I.D.
tatives of workers or through the Government Labour Officer, Act have been modified from time to time in the light of the
(c) certification of standing orders which would define with actual working of these provisions, the decisions of the
sufficient precision the conditions of employment and make judiciary and the influence of the bipartite and tripartite
them known to workmen, (d) the setting up of an Industrial agreements.
Court, with original as well as appellate jurisdiction, to which The period 1947-50 witnessed some important developments
parties could go for arbitration in case their attempts to settle having a hearing on industrial relations, apart from a basic
matters between themselves or through conciliation did not change in the attitudes of employers and workers. The Central
bear fruit, and (e) prohibition of strike/lock-out under certain Government was made the appropriate Government for
conditions. This law was made applicable only to some disputes in Banking and Insurance, as these industries extended
industries in the Province. over more than one State/Province. The Trade Unions Act,
Shortly thereafter, the Government of India promulgated the 1926 was amended to provide for compulsory recognition of
Defence of India Rules to meet the exigencies created by the unions.1 The Labour Appellate Tribunal was set up. The work

of the tripartite bodies associated with the Labour Ministry The Third Plan did not suggest any major change in policy. It

started expanding. Comprehensive legislation was drawn up in emphasized the economic and social aspects of industrial peace
the form of a bill for putting industrial relations on a sounder and elaborated the concept that workers and management were
footing. partners in a joint endeavour to achieve common ends. The
voluntary arrangements agreed to in the Second Plan were
Plan Policies
strengthened by the Industrial Truce Resolution, 1962, adopted
The First Plan stressed the need for industrial peace for
in the wake of the Chinese aggression. The I.D. Act was
economic progress. While it wanted the State to arm itself with
amended in 1965 with a view to giving an individual worker the
powers for intervention in labour disputes, the endeavour had
right to raise a dispute connected with his discharge, dismissal,
to be to encourage mutual settlement, collective bargaining and
retrenchment or termination of service, even if the cause of the
voluntary arbitration to the utmost extent, and thereby to
individual workman was not espoused by any union or group
reduce to the minimum, occasions for its intervention in
of workmen.
industrial disputes and exercise of the special powers2. The
Indian Labour Conference which met as these recommenda- To sum up, the existing arrangements for the prevention and
tions were formulated, favoured the retention of powers by settlement of industrial disputes consist of (a) statutory
Government to refer matters to industrial tribunals rather than procedures and (b) voluntary arrangements. The former are
sole reliance on collective bargaining. The I.D Act was amended covered by the Industrial Disputes Act, 1947 and certain similar
in 1953 to provide for compensation in case of lay-off and State enactments. In essential details, the machinery provided
retrenchment. The working of the Labour Appellate Tribunal for under the various enactments consists of works/joint
(LAT) came up for criticism in tripartite meetings and a decision committee, conciliation, voluntary arbitration, and adjudication
was taken in pursuance of the strong feelings expressed in these by tribunals or industrial courts. Voluntary arrangements
meetings, particularly by the labour representatives, that the provide inter alia for recognition of unions, where no statutory
LAT should be abolished. provisions for it exist, the framing of a grievance procedure,
reference of disputes to voluntary arbitration, setting
The Second Plan envisaged a marked shift in the industrial
relations policy consequent on the acceptance of the socialist up of joint management councils, implementation of agree-
pattern of society as the goal of planning. It emphasized ments, settlements and awards and the setting up of
mutual negotiations as the effective mode of settling disputes. industry-wise wage boards.
Among the other recommendations in the Plan were demarca- Industrial Relations Machinery
tion of functions between works committees and unions, and As has been mentioned, the present machinery for the settle-
increased association of labour with management. The I.D. Act ment of industrial disputes comprises: (i) conciliation, (ii)
was amended in 1956. The LAT was abolished through this arbitration and (iii) adjudication machinery—tribunals, indus-
amendment and a three-tier system of original tribunals—viz., trial courts, etc. We propose to discuss in what follows the
labour courts, industrial tribunals and national tribunals—was salient features of some of these existing arrangements for the
brought in force. While the labour court would deal with certain settlement of industrial disputes and assess their working
matters regarding the propriety and legality of an order passed during the last twenty years with a view to evolving recommen-
by the employer under the standing orders, and discharge and dations for the future. The topics we have chosen for discussion
dismissal of workmen including reinstatement, the industrial are (i) collective agreements; (ii) conciliation; (iii) voluntary
tribunal adjudicates on matters like wages, allowances, hours of arbitration; and (iv) adjudication. The relative merits and
work, leave and holidays and other conditions of service. The demerits of adjudication and collective bargaining as also issues
national tribunal, to which matters similar to those adjudicated connected with the right, to strike/lockout form part of the
upon by a tribunal are referred, is appointed by the Central discussion.
Government to decide disputes which involve questions of
national importance and those which affect industrial establish- Collective Agreement
ments situated in more than one State. Except for the industrial relations legislation in some States
where arrangements for recognition of unions exist, there is no
The 15th Session of the Indian Labour Conference took note statutory recognition of unions for the country as a whole.
of these developments and the Second Plan recommendations Neither are there provisions which require employers and
and sought to evolve steps for their implementation. The Code workers to bargain in ‘good faith’. It is, therefore, no surprise
of Discipline3 was drawn up and arrangements were made to that collective agreements have not made much headway in the
educate workers through a scheme accepted by the tripartite. country so far. Nonetheless, there have been more of such
Complaints about non-implementation of agreements, agreements than is popularly believed.
settlements and awards were in the meanwhile disturbing the
industrial scene. On the administrative side, provision was Some historical factors have also come in the way of collective
made to examine such complaints and place the conclusions agreements having a greater share in maintaining industrial
thereof before a tripartite Evaluation and Implementation harmony. The Whitley Commission found that the only
Committee. The foundations were thus laid for a policy of attempt made to set up machinery for regulating the relations
giving to the parties themselves a greater share in ensuring between a group of employers and their work-people was at
better enforcement of agreements, settlements and awards. Ahmedabad. Though the assessment of the Whitley Commis-
sion was made soon after the Trade Unions Act, 1926 was

enforced, the situation did not change significantly in the period non-public utilities also. With a view to expediting conciliation


1931 to 1947. Since Independence, however, trade unions have proceedings, time-limits have been prescribed—14 days in the
been growing and agreements with employers have become case of conciliation officers and two months in the case of a
more common. The changing attitude of employers and the board of conciliation. A settlement arrived at in the course of
emergence of a new generation of employers and workers have conciliation is binding for such period as may be agreed upon
also helped. Legal measures, in spite of their limitations, have between the parties or for a period of six months and will
lent as much support to collective agreements as joint consulta- continue to be binding until revoked by either party. The Act
tions in bipartite and tripartite meetings at the national and prohibits a strike/lockout during the pendency of conciliation
industry levels. Even so, a sample study made by the Employ- proceedings before a Board and for seven days after the
ers’ Federation of India for the years 1956-1960 reveals that the conclusion of such proceedings. While the conciliation officer is
number of disputes settled by collective agreements during the given the powers of a civil court under the Code of Civil
period in question varied between 32 per cent and 49 per cent in Procedure, 1908 only for the purposes of compelling the
the units studied. production of documents, a Conciliation Board, like a Labour
Broadly, the agreements have been of three types: (i) agreements Court or an Industrial Tribunal, is in addition given the powers
which have been drawn up after direct negotiations between the of a civil court to enforce attendance of persons, examine them
parties and are purely voluntary in character for purpose of their on oath and call witnesses.
implementation; (ii) agreements which combine the elements The performance of the conciliation machinery as indicated by
of voluntariness and compulsion i.e., those negotiated by the statistics does not appear to be unsatisfactory. During the years
parties but registered before a conciliator as settlements; and (iii) 1959—66, out of the total disputes handled by the Central
agreements which acquire legal status because of successful Industrial Relations Machinery each year, the percentage of
discussion between the parties when the matters in dispute settlements has varied between 57 and 83. The remaining
were under reference to industrial tribunals/courts and could be disputes, it is reported, were settled mutually, referred to
considered sub judice, the agreements reached being recorded by voluntary arbitration or arbitration under the I.D. Act or to
the tribunals/courts as consent awards. adjudication, or were not pursued by the parties. While such has
Most of the collective agreements have been at the plant level, been the performance of the Central Industrial Relations
though in important textile centres like Bombay and Machinery, the success achieved in the States seems to be varied.
Ahmedabad, industry level agreements have been common. In some it is impressive; in others disappointing. During the
These have a legal sanction under the State 322 Acts and have to period 1965—67, the percentage of settlements reached in Bihar
be distinguished from others where no statutory sanction ranged from 51.0 to 86.0; in Orissa from 27.5 to 35.8 and in
prevails. Such agreements are also to be found in the plantation Assam from 65.5 to 92.3. In U.P., Punjab and Delhi, in the year
industry in the South and in Assam, and in the coal industry. 1966, the percentage of disputes settled during conciliation was
Apart from these, in new industries like chemicals, petroleum, 60, whereas in Rajasthan it was 40. In the southern region,
oil refining and distribution, aluminium, manufacture of conciliation is reported to be more successful in Kerala, where
electrical and other equipment, and automobile repairing, the percentage of disputes settled ranged around 80.1 Though
arrangements for settlement of disputes through voluntary statistics are not available for Maharashtra and Gujarat, the
agreements have become common in recent years. In ports and opinion evidence in these States shows that the machinery on
docks, collective agreements have been the rule at individual the whole has given a fair measure of satisfaction. It suggests
centres. On certain matters affecting all ports, all-India agree- that in many cases the success attributed to conciliation is due
ments have been reached. In the banking industry, after a series merely to the legal requirement to register the agreement. Also, a
of awards, the employers and unions are in recent years coming section of employers’ and workers’ organisations feels that
closer to reach collective agreements. In the Life Insurance many settlements reached in conciliation are over minor issues.
Corporation of India, except for the employers’ decision to As against this mixed reaction to the working of the concilia-
introduce automation which has upset industrial harmony in tion machinery, both employers and workers have expressed
some centres, there has been a fair measure of discussion across dissatisfaction over certain specific aspects of its functioning,
the table by the parties for settling differences. On the whole, such as the delays involved, the casual attitude of one or the
the record of reaching collective agreements has not been other party to the procedure and lack of adequate background in
unsatisfactory, though its extension to a wider area is certainly the officer himself for understanding major issues.
desirable. Delays in conciliation are attributed partly to excessive work load
Conciliation on officers and partly to procedural defects. The evidence shows
that delays occur in conciliation often for reasons which are
The aim of conciliation under the I.D. Act and under similar
beyond the control of the officer. Initially the parties supply
State Acts is to bring about a settlement in disputes through
scanty information and adjournments are sought to collect
third party intervention. The conciliation machinery can take
additional information. On occasions, proceedings are ad-
note of a dispute or apprehended dispute either on its own or
journed at the instance of one or the other party or even both,
when approached by either party. Under the I.D. Act, concilia-
to enable them to settle the matter. Since conciliation involves a
tion is compulsory in all disputes in public utility services and
good deal of persuasion and is a process of give and take
optional in other industrial establishments. Over the years, the
helped by a third party, such adjournments become inevitable
optional provisions appear to be acquiring compulsory status in

and have to be allowed. There are several cases, however, where also, in due course, improve the attitude of the parties towards

a party seeks adjournment and the other acquiesces in it the working of the conciliation machinery. We expect the parties
informally. And this causes some difficulty in sticking to the will be more willing to extend their co-operation to the
time-limit set for conciliation. While on the basis of the conciliation machinery as now proposed and working indepen-
statistical information we have, it is difficult to establish the dently of the :nor-mal labour administration. Apart from this
extent of such delays, it would be unfair to criticize the machin- basic change in the set-up of the conciliation machinery, there is
ery on this account. need for certain other measures to enable the officers of the
We feel, however, that the attitude of the panics to conciliation machinery to function effectively. Among these are (i) proper
is extremely important for the success or failure of the officers’ selection of personnel, (ii) adequate pre-job training and (iii)
efforts. Conciliation is looked upon very often by the parties as periodic in-service training through refresher courses, seminars
merely a hurdle to be crossed for reaching the next stage. There and conferences and for most of these, there is a good measure
is, therefore, a casualness about it in the parties and a habitual of support in the evidence.
display of such casualness conditions the conciliator also into Voluntary Arbitration
that attitude. The representatives sent by the parties to appear Voluntary arbitration as a method of resolving industrial
before him are generally officers who do not have the power to conflicts came into prominence with the advocacy by Mahatma
take decisions or make commitments; they merely carry the Gandhi of its application to the settlement of disputes in the
suggestions to the concerned authorities on either side. This textile industry in Ahmedabad. The BID Act and the BIR Act
dampens the spirit of a conciliator. We have been told by recognised voluntary arbitration along with the machinery set
employers’ and workers’ organizations alike that the conciliation up by the State for composing differences between employers
machinery is weakened because of its falling into this type of and workers. The policies recommended in the Plans specifically
disuse in recent years. Such disuse has hindered the officers in mention voluntary arbitration. The I.D. Act was amended to
acquiring a breadth of interest and depth of understanding in make a provision (Section 10-A) for joint reference of industrial
the disputes before them. disputes to voluntary arbitration. But apart from the statutory
Reverting to the other aspect of delays in conciliation, it is arrangement for recourse to voluntary arbitration, considerable
difficult to devise a yardstick for measuring the work-load of an emphasis is placed on this mode of setting disputes in official
officer and to prescribe work norms for him. Work norms pronouncements.
suggested to the Commission, such as 25 disputes of a general In spite of all these Governmental efforts, resistance to the idea
nature and 50 individual disputes to be completed in a month continues. The Code of Discipline (1958) reiterated the faith of
as proposed by one Stale, and 300 to 400 disputes per annum parties in voluntary arbitration and enjoined on employers and
as suggested by one of our Working Groups, if applied to the workers to resort to it on failure of other methods of resolving
number of cases dealt with at present in conciliation, would in differences. In view of the continued reluctance of the parties,
fact mean increasing the strength of the personnel manifold; more particularly of the employers, the matter came up for
and this may not be a practicable proposition. discussion at various tripartite forums; but barring stray efforts,
Among the other suggestions for improving the effectiveness the situation of indifference to the idea continued throughout
of conciliation officers are: (i) prescribing proper qualifications the period 1951—61. The Indian Labour Conference in August,
for a conciliation officer and improving his quality by proper 1962 reiterated the need for a wider acceptance of voluntary
selection and training; (ii) enhancing his status appropriately for arbitration. But, as” against the emphasis in the Third Plan
dealing with persons who appear before him; (iii) giving which considered that voluntary arbitration should be the
additional powers to the conciliator; and (iv) keeping him above normal practice in preference to recourse to adjudication, the
political interference. While (i) is a general point which runs Conference felt “whenever conciliation fails arbitration will be
throughout the administration, (ii) is a matter for a body like the next normal step except in cases where the employer feels
the Pay Commission the appointment of which we have that for some reasons1 he would prefer adjudication”. A
recommended for Central Government employees.1 No direct proviso, similar to the one which nullified in effect the opera-
evidence of the effect of (iii) and (iv) on the officers’ efficiency is tion of the need-based minimum2, was added to this
available and yet it would be prudent to recognize opinion resolution of the Conference also in the following words:
evidence in this regard and give satisfaction to parties on these The reasons for refusal to agree to arbitration must be fully
points. explained by the parties concerned in each case and the matter
We are in favour of a more basic rearrangement of conciliation brought up for consideration by the implementation machinery
work which will bring about a qualitative change in the set-up. concerned.”
We recommend that the conciliation machinery, in order to be the Industrial Truce Resolution, November 1962, while re-
free from other influences—and we reiterate that such influences emphasizing voluntary arbitration, specified certain items which
have not been proved before us—should be part of the were amenable to this way of settling disputes. These were
Industrial Relations Commission which we are recommending. complaints pertaining to dismissal, discharge, victimization and
This will introduce important structural, functional and retrenchment of individual workmen not settled mutually.
procedural changes in the working of the machinery as it exists
To make voluntary arbitration more acceptable to the parties
today. The independent character of the ‘Commission will
and to coordinate efforts for its promotion Government has
inspire greater confidence in the conciliation officers. This will
recently set up a National Arbitration Promotion Board

(NAPB) with a tripartite composition. The Board will review certain respects, a labour court/industrial tribunal has the power


the position, examine the factors inhibiting wider acceptance of of a civil court under the Code of Civil Procedure, 1908.
this procedure and suggest measures to make it more popular. Any matter listed in the Second or Third Schedule of the I.D.
The NAPB is also to evolve principles, norms and procedure Act can be referred to an industrial tribunal/national tribunal,
for the guidance of arbitrators and the parties. It would look the authority for constituting the latter being the Central
into the causes of delay and expedite arbitration proceedings, Government. The Industrial Court under State legislation has,
wherever necessary, and also specify from time to time the type apart from adjudication functions, the power to entertain
of disputes which would normally be settled by arbitration in appeals against the decisions of the Registrar/ Labour Com-
the light of tripartite decisions. While we wish that the NAPB missioner/Labour Court/Wage Board constituted under the
will achieve its objectives, we are constrained to observe that respective Acts.
voluntary arbitration has not taken root in spite of the influen-
It cannot be denied that during the last twenty years the
tial advocacy for it in different policy making forums. Factors
adjudication machinery has exercised considerable influence on
which have contributed to the slow progress of arbitration, as
several aspects of conditions of work and labour-management
mentioned in the evidence before us, inter alia, are: (i) easy
relations. Adjudication has been one of the instruments for
availability of adjudication in case of failure of negotiations; (ii)
improvement of wages and working conditions and for
dearth of suitable arbitrators who command the confidence of
securing allowances for maintaining real wages, for standardiza-
both parties; (iii) absence of recognized unions which could
tion of wages, bonus and introducing uniformity in benefits
bind the workers to common agreements; (iv) legal obstacles;
and amenities. It has also helped to avert many work stoppages
(v) the fact that in law no appeal was competent against an
by providing an acceptable alternative to direct action and to
arbitrator’s award; (vi) absence of a simplified procedure to be
protect and promote the interests of the weaker sections of the
followed in voluntary arbitration; and (vii) cost to the parties,
working class, who were not well organized or were unable to
particularly workers.
bargain on an equal footing with the employer. As against these
With little progress made in collective bargaining, which pre- advantages, certain procedural detects and indeed fundamental
supposes the existence of a recognized union representing all criticism have been brought to our notice. On the procedural
the employees and a responsive employer, who together build plane we were told that adjudication is dilatory, expensive, and
up over a period an attitude of mutual trust and an acceptance even discriminatory as the power of reference vests with the
of bona fides on the two sides, it is perhaps not a matter for appropriate Government. Most of the analysis which has been
surprise that voluntary arbitration has so far had little success in made in detail with reference to conciliation applies to adjudica-
India. We feel that with the growth of collective bargaining and tion as well. On fundamentals, the objections are that the
the general acceptance of recognition of representative unions system of adjudication has failed to achieve industrial peace,
and improved management attitudes, the ground will be that it has inhibited the growth of unions and has prevented
cleared, at least to some extent, for wider acceptance of volun- voluntary settlement of industrial disputes and growth of
tary arbitration. The National Arbitration Promotion Board collective bargaining. We are of the view that while there are
may then have a better chance of success in the task of promot- certain procedural deficiencies in the present system which need
ing the idea. The NAPB should pay special attention to to be remedied, there is some substance also in each of the
preparing and building up suitable panels of arbitrators. fundamental objections mentioned above against the system.
Adjudication At the same time. we cannot help feeling that the disadvantages
The ultimate legal remedy for the settlement of an unresolved are overstated. Adjudication was not conceived to prevent all
dispute is its reference to adjudication by the appropriate work stoppages; the fact that Government may not refer a
Government. The Industrial Disputes Act, 1947, currently dispute to adjudication means that it should be settled, it need
empowers the appropriate Government to constitute a labour be, by direct action. Trade unions have certainly been growing
court, industrial tribunal or national tribunal to adjudicate in a during the period the adjudication system has been in vogue,
dispute. Association of assessors with a tribunal is permissible and where conditions were favourable, voluntary settlement of
for expert advice. disputes and collective agreements have been adopted in the last
twenty years.
Matters to be referred to a labour court under the I.D. Act are
broadly: the propriety and legality of an order of the employer, The moot point is whether adjudication inhibits collective
application and interpretation of the Standing Orders, the bargaining and is antithetical to it. It certainly represents the
legality or otherwise of a strike or a lock-out, and discharge/ availability of a third party to settle disputes. But the system, as
dismissal including reinstatement, as listed in the Second it has been applicable in our country, did not exclude bipartite
Schedule to the Act. Labour courts set up under State legislation agreements. The parties have not been eligible to have such
also deal with similar issues. Legal practitioners are permitted to third party intervention directly and hence it could not inculcate
appear before the labour courts or tribunals with the consent of in all cases a tendency to avoid mutual agreements. The
the other party and with the permission of the court/tribunal. infrequency of mutual negotiations cannot therefore be all
In the latter case, according to experience so far, the consent has accounted for by the system of adjudication as it has developed.
become a mere formality. Unlike the BIR Act, the I.D. Act does In fact, a major handicap has been the absence of a recognized
not provide for appeal against an order of the labour court. In bargaining agent. But these issues cannot be decided on the
basis of empiricism, as we have no means of ascertaining what

would have happened in the absence of adjudication. We have, same lime to remove the obvious defects in the system through

therefore, to analyze its efficacy on a broader plane and in terms suitable improvements/modifications to make it more
of its alternative viz., collective bargaining. acceptable. Four specific points made in this connection are: (i)
The place of collective bargaining as a method of settlement of the circumstances which necessitated the provision of compul-
industrial disputes has been debated in India since long, almost sory adjudication when the industrial disputes law was enacted
since the days of the Whitley Commission. The best justifica- in 1947, still continue; (ii) the parties, particularly unions, are
tion for collective bargaining is that it is a system based on still unprepared and incapable, because of organizational and
bipartite agreements, and as such, superior to any arrangement other weaknesses, to shoulder full responsibilities of collective
involving third party intervention in matters which essentially bargaining; (iii) immediate withdrawal of State intervention
concern employers and workers. This is recognized even in our through adjudication will lead to chaos in the industrial field,
system in principle, but in practice, there seems to be a prefer- which the country can ill afford; and (iv) there is always the third
ence for adjudication. party to the dispute, viz., the community; and the State, as
representing the community, must have the right to intervene
The evidence appears to favour the increasing adoption of
and compel the parties to submit to the decision of an
collective bargaining to settle disputes, and a gradual replace-
adjudicator. For reasons stated in an earlier paragraph, empirical
ment of adjudication. The desire for a shift to collective
data can be no guide to settle this controversy.
bargaining has, however, been tempered by a concern in some
quarters for avoidance of work-stoppages and of unwarranted The arguments in favour of either system cannot be settled on
disturbances in industrial peace; and in others, by the organiza- a theoretical plane nor on the basis of foreign experience. With
tional weakness of labour which cannot yet meet the reference to the latter, it could be said that the system adopted
requirements of effective collective bargaining. There is thus a in any country will depend on a complex of circumstances
general preference for collective bargaining with a built-in which cannot be easily classified. The figures (Table below) of
provision for arbitration in the event of failure of collective man days lost due to work stoppages per 1,000 persons
bargaining. The idea of leaving a certain area of disputes i.e., employed in mining, manufacturing, construction and trans-
public utility services and cases where national interests are port industries for two five-year periods, in three countries
involved—where adjudication should be permitted enjoys a which have a political democracy functioning and also a similar
large measure of support. The majority view appears to favour system for settlement of industrial disputes, seem to point to
the introduction of collective bargaining subject to the above the same fact.
safeguards, in the organized sector, while retaining third party TABLE: Man days lost due to Work-stoppages per 1,000
intervention in sectors mentioned earlier and where workers are Persons Employed
not organized and conditions of work and wages have yet to The variations are, indeed, striking. For Australia, comparable
reach a satisfactory level. figures for the two periods are 406 and 350 respectively. One
The advocates of collective bargaining argue that the present cannot on this basis accept collective bargaining, because the
system, although giving lip sympathy to collective bargaining, Swedish data are more favourable than the Australian; nor can
has only perpetuated adjudication; that adjudication, which was one accept adjudication, because Australia makes ;a better
expected to be a temporary measure till such time as labour showing than the U.S.A.
came of age and could bargain with employers on an equal Country 1955—59 1960—64(1) (2) (3)Sweden 21 6United
footing has failed to fulfill the expectations; and that it has, by Kingdom 346 242 U.S.A. 1366 722
the very logic of its functioning, inhibited the growth of trade
In finding a way out, we recognize that adjudication as it has
unions and made them litigious. The only way, it is argued, is a
developed in India has tended to prolong disputes; allegations
wholesale rejection of reliance on a third party for settlement of
of political pressures, though often without foundation, have
disputes and acceptance of collective bargaining with all its
been there. Discretion, though used by the appropriate
implications, including the right to strike/lockout. In suggest-
Government in a fair manner, may appear to the workers/
ing this, it is conceded that collective bargaining in the initial
employers affected to have been unfairly used. On the other
stages may give rise to industrial strife and work-stoppages on a
hand, collective bargaining as it has developed in the West may
somewhat larger scale than at present, but there is confidence
not be quite suitable for India; it cannot appropriately co-exist
that this is bound to be a temporary phase and the situation
with the concept of a planned economy where certain specified
will stabilize after an initial period of uncertainty.
production targets have to be fulfilled. Though we are not
Equally strong arguments have been urged in favour of convinced that collective bargaining is antithetical to consumer
continuing adjudication. It is staled that while adjudication has interests even in a sheltered market, we envisage that in a
its defects, it has by and large succeeded in bringing about some democratic system pressure on Government to intervene or not
measure of industrial peace in the country; that industrial to intervene in a dispute may be powerful. It may hardly be able
relations would have been worse, and work-stoppages longer to resist such pressures and the best way to meet them will be
and indeed, what is more important, conditions of work to evolve a regulatory procedure in which the State can be seen
would have been less attractive than what they are today, if in the public eye to absolve itself of possible charges of political
things had been left to be settled by collective bargaining. Those intervention. The requirements of national policy make it
who argue on these lines feel that the best course in the present imperative that State regulation will have to coexist with
situation is to carry on with the existing procedures, trying at the collective bargaining. At the same time, there are dangers in

maintaining status quo. There is a case for shift in emphasis and strikes. A suggestion has been made to us to circumscribe all


this shift will have to be in the direction of an increasingly such forms of agitation by suitably widening the definition of
greater scope for, and reliance on, collective bargaining. But, any strikes. We do not consider that legal restrictions alone will be
sudden change replacing adjudication by a system of collective of any help in reducing strikes or containing the new forms of
bargaining would neither be called for nor practicable. The labour protest. Unless the Government is prepared to take
process has to be gradual. A beginning has to be made in the effective action against illegal strikes, and Government may not
move towards collective bargaining by declaring that it will find it expedient to do so in several cases, a mere classification
acquire primacy in the procedure for settling industrial disputes. of concerted action on the part of workers/employers as illegal
It follows that conditions have to be created for the success of will only bring the law into disrepute. If, on the other hand,
this proposed change-over. An important pre-requisite of it is Government is to enforce penalties for an illegal strike/lock-out,
the grant of union recognition. We have to evolve satisfactory it is necessary to make the definition as simple as possible. New
arrangements for- union recognition by statute as also to create forms of labour protests should be treated as misconduct
conditions in which such arrangements have a chance to succeed. punishable under the service rules or under the standing orders.
Apart from this, we have to indicate the place which strike/lock- We would like to refer here to a form of industrial unrest,
out will have in the scheme we propose. Collective bargaining namely, ‘gherao’ which came to be increasingly resorted to in
cannot exist without the right to strike/lock-out. We discuss one part of the country in recent years. Our Study Group on
these two aspects but in the reverse order. Industrial Relations (Eastern Region) which examined this
problem came to a majority conclusion, one member dissent-
ing, that ‘gheraos’, apart from their adverse effects on industry
Conceptually, the right to strike/lockout is recognized in all
and economy of the country, strike at the very root of trade
democratic societies; reasonable restraint on the use of this right
unionism. We endorse this view and deprecate resort to gheraos
is also recognized. The degree of freedom granted for its
which invariably tend to inflict physical duress on the person(s)
exercise varies according to the social, economic and political
affected and endanger not only industrial harmony but also
variants in the system. For safeguarding public interest, the
create problems of law and order. If such means are to be
resort to strike/lockout and, in some cases, the duration of
adopted by labour for realization of its claims, trade unions
either are subject to rules and regulations either voluntarily
may come into disrepute. It is the duty of all union leaders
agreed to by the par-tics or statutorily imposed. This has been
therefore to condemn this form of labour protest as harmful to
the criterion underlying the earlier legislation for regulating
the interests of the working class itself. Gheraos cannot be
industrial relations in the country. In our current context, the
treated as a form of industrial protest since they involve physical
connected issues have to be viewed against the requirements of
coercion rather than economic pressure. In the long run, they
a planned economy.
may affect national interest.
Under the Industrial Disputes Act, 1947, a distinction is made
The general view regarding strike/ lock-out as revealed in the
between a strike/ lock-out in public utilities and in other
evidence before us is that the right to direct action should be
employments. Industries such as Railways, Posts and Tele-
allowed following the failure of all the procedures available for
graphs, those which supply power, light or water and any
settlement of disputes, except in the case of specified indus-
system of public conservancy or sanitation are defined as public
tries/services wherein a stoppage of work may endanger public
utility services under the Act, and in respect of certain others
interest or affect the nation’s economy or threaten the security
enumerated in the First Schedule to the I.D. Act, the appropri-
of the State. Even those who are opposed to any State interfer-
ate Government is given the discretion to declare them as public
ence in industrial disputes concede this point.
utility services. The Industrial Disputes Act, 1947, makes a
strike (or lock-out) in the public utility service illegal if it takes The democratic ideals of the State prevent it from abridging
place (i) without giving to the employer a notice of strike within individual freedom, hut its socialist objectives justify the
six weeks before striking; (ii) within fourteen days of giving Government’s regulation of such freedom to harmonize it in a
such notice; (iii) before the expiry of the date of strike specified reasonable measure with the interests of the society. What
in any strike notice, and (iv) during pendency of conciliation seems called for, therefore, is a reconciliation of these two
proceedings—and seven days after the conclusion of such points of view, While we are not in favour of a ban on the right
proceedings. In industries in general, a strike or lock-out is to strike/lock-out, we are also not in favour of an unrestricted
prohibited during the pendency of conciliation, arbitration or right to direct action. In our view the right to strike is a
adjudication proceedings. Besides, the appropriate Government democratic right which cannot be taken away from the working
is empowered to issue an order prohibiting the continuance of class in a constitutional set-up like ours. Even from the practical
any strike or lockout in respect of any dispute when a reference point of view, we will not favour such a step. Taking away the
is made to a Court/Board/Tribunal. right of the workers to strike, may only force the discontent to
go underground and lead to other forms of protest which may
These provisions by themselves do not seem to have succeeded
be equally injurious to good labour-management relations. At
in curtailing work-stoppages;’ indeed they were not meant to
the same time, there are certain essential industries/services
prevent all stoppages. Annexure I gives data on work-stoppages
wherein a cessation of work may cause harm to the community,
due to industrial disputes since 1946. Labour has also devised
the economy or the security of the nation itself and as such,
new forms of agitation such as go-slow work-to-rule etc which
even this right may justifiably be abridged or restricted, pro-
fall beyond the purview of statutory provisions relating to

vided, of course, a specific procedure is laid down for remedies in each category enjoy certain privileges, as indeed they have

and redressal of grievances. Therefore, in such industries, the obligations. The Act further stipulates that in case no union has
right to strike may be curtailed but with the simultaneous the recognised status, workers can either elect their own
provision of an effective alternative like arbitration or adjudica- representatives or allow the Government Labour Officer to
tion to settle disputes. We do not wish to enumerate the speak on their behalf to the employer. Legislation in Madhya
industries/services that should be classified as ‘essential’; the Pradesh and Rajasthan has corresponding provisions for
listing of ‘essential’ industries should be left to the Parliament recognition. In Bihar, a tripartite committee decides how
to decide. recognition should be granted to a union.
It has been brought to our notice that there are instances The need for a provision for recognition of unions was stressed
wherein the leadership of a union has called for a strike without in the Second Plan.1 Because of the desire to go slow on
consulting the membership and sometimes even when legislation, recognition was provided for on a voluntary basis in
members were known to be against the strike. No statistical the Code of Discipline. According to the criteria in the Code, a
evidence is available to show how widespread this situation is. union claiming recognition should have been functioning at
It can be remedied only by providing for a compulsory strike least for a period of one year as a registered union and should
ballot before a call for direct action is given. One cannot also be have the specified membership. In case more than one union is
certain that once a dispute has gone on to the stage of a strike functioning in an establishment, the membership of all eligible
notice, the leadership will not be in a position to influence the unions is verified by the Chief Labour Commissioner (Central)
bulk of their members to vote in favour of it. We are inclined if the establishment falls under the Central sphere, or the State
to think that our situation in regard to the effects that flow Implementation Officer/the State Labour Commissioner in
from cessation of work and consequent losses, direct and other cases, in accordance with the procedure evolved at the
indirect, warrants the imposition of certain restrictions on tripartite Standing Labour Committee. Once a union is
recognized unions before launching a strike. We, therefore, recognized under the Code, it is entitled to enjoy this status for
suggest that every strike should be preceded by a strike ballot, at least two years from the date of recognition. A union which
open to all members of the union concerned and that the strike does not observe the Code can be de-recognized.
decision must be supported by 2/3rd of members present and We have thus, over the last ten years, the experience of securing
voting. The notice of strike should contain a clause to show recognition for a union both on a statutory and on a voluntary
that such ballot has been taken and the requirement, about the basis. It shows that the former has distinct advantages. On this
needed majority has been satisfied. point there is a fair measure of support in the evidence before
In this connection, we would attach importance to the issue of us. It would be desirable to make union recognition compul-
a prior notice of strike/lock-out. At present, the law provides sory under a Central law, in all undertakings employing 100 or
for such a notice in case of public utility services only. We would more workers, or where the capital invested is above a stipulated
recommend its extension to all industries/services. size. A trade union seeking recognition as a bargaining agent
The present provisions in the I.D. Act about other restrictions from an individual employer should have a membership of at
on strike/lock-out and their regulation seem to meet the least 30 per cent of the workers in the establishment. If it is for
situation subject to some modifications that may be called for an industry in a local area, the minimum membership should
in the light of our other recommendations. be 25 per cent. Where more unions than one contend for
recognition, the union having a larger following should be
Recognition of Unions recognized.
We attach considerable importance to the matter of recognition
Serious differences exist, however, on the manner in which the
of unions. Industrial democracy implies that the majority
following of a union is to be determined: whether it should be
union should have the right to sole representation i.e., the right
by (a) verification of the fee-paying membership of the unions,
to speak and act for all workers and to enter into agreements
or (b) election by secret ballot. The issue has long been debated
with the employer. That the need for a provision for union
in Central and State Legislatures, tripartite forums and public
recognition has been realized is evident from the provision in
platforms, but without reaching unanimity. In the evidence
the BID Act and its successor the BIR Act and certain other
before us, we find support in every interest—Governments,
State Acts (Madhya Pradesh and Rajasthan), the amendment
employers, workers and independent observers— to one or the
incorporated (but not enforced) in the Trade Unions Act, and
other procedure evenly balanced. Advocates of one method or
the Code of Discipline.
the other did not seem to recognize the ‘whip’ of their central
Since we will have occasion to refer to the scheme of recognition organizations. That is also the reason why the issue has acquired
outlined in the BIR Act later, we propose to mention it in some more importance.
detail. The BIR Act, 1916 provides for the classification of
Those in favour of verification of membership base their
registered trade unions as (i) Representative Unions (having a
preference on the premise that (i) it is the support of fee paying,
membership of not less than 15 per cent employees in any
stable membership of a registered trade union that alone
industry in a local area); (ii) Qualified Unions (5 per cent
should entitle it to the representative status, and (ii) a regular
membership in any industry in a local area); and (iii) Primary
check by a competent authority can satisfactorily determine
Unions (15 per cent of employees in an undertaking). Among
whether or not the membership claims are genuine. Regular
the unions in a ‘local area’, the order in which the unions will
paying membership ensures financial viability of a union and
get representation will be the same as indicated above. Unions

enables it to discharge effectively its other responsibilities. They But whether it is verification or secret ballot, the trend of the


concede that membership could be open to inflation and even evidence is unmistakably in favour of an independent authority
manipulation, but contend that the remedy should be to to deal with various matters relating to recognition. Such an
introduce a greater measure of vigilance in verification arrange- authority alone would be able to inspire confidence among the
ments, if necessary by entrusting them to an independent unions/parties and eliminate suspicions of favoritisms in this
authority They oppose secret ballot on the ground that it would vital area. Although State Governments, public sector employ-
introduce topical political issues about which a union may not ers and some others have suggested the continuation of the
be directly concerned as a union and create an election atmo- present arrangement, viz., verification through government
sphere, with some leaders making promises which they will machinery, they do not seem to object to the setting up of an
never fulfill. Workers in our country, according to this view, are independent agency for this purpose. Several study groups
not yet used to making a rational choice of what is good and including the Study Group on Labor Legislation and the
creative when confronted with demagogic slogans and rousing Industrial Relations Study Groups and a number of employers
of emotional sentiments which can be whipped up over any and trade union organizations have expressed a strong prefer-
industrial or non-industrial issue. Moreover, regular payment ence for the setting up of an independent authority to deal with
of union dues, on which verification relies, is itself an open these matters. As regards the basis for recognition, however, the
vote of workers in favour of a union which submits to Eastern and Western Region (Industrial Relations) Study
verification. Supporters of this line of thought question the Groups have favored secret ballot by all workers while the
appropriate-ness of the analogy of political choice through Southern Region Group has favored verification of member-
adult franchise, because there can be no ‘Government and ship. The Northern Region Study Group and the Study Group
opposition’ in the running of industry. Also secret ballot, in on Labor Legislation did not express themselves in favor of
this view, will give a severe blow to the trade union movement cither, but left the choice of method to the authority concerned.
itself. In the absence of any qualification prescribed for eligible Several Industry Study Groups have shown preference for secret
voters, there can be no incentive for workers to join a union. ballot.
The supporters of secret ballot, on the other hand, base their Much of the opposition to membership verification today is
case primarily on the ground that it is the most democratic way the outcome of fears of manipulation and interference by the
of expressing a choice. Membership verification as a basis for administrative authority fears which are not always unfounded.
selection of the representative union is considered unsatisfac- It is reasonable to expect that verification will become more
tory as it is at best an indirect method. When membership acceptable, if entrusted to an independent quasi-judicial
records and accounts of subscriptions received are often in an authority Similarly, election by secret ballot may find favour with
unsatisfactory state, and there are admittedly many questionable those who now oppose it, when an independent authority
ways of boosting membership claims, the task of verification, conducts it, strictly according to accepted regulations. The best
according to this view, becomes complex. There is the added course, therefore, seems to be to leave the choice of method, in
disadvantage of delay built into the procedure itself. Sampling any particular case, to the discretion of an independent author-
method. however, effective in other aspects of human activity, ity. We suggest that this task should be entrusted to the
should not be used in the sensitive area of union recognition. Industrial Relations Commission(s) proposed by us. The
Processes similar to those used in choosing the Government of Commission will have the power to decide the representative
a country are well recognized by workers; the basis of represen- character of unions either by examination of membership
tation in industrial democracy need be no different from that of records, or if it considers necessary, by holding an election
any other institution. In this view, the Indian worker is now through secret: ballot open to all employees.1 We are confident
grown up to know what is good for him and to make a rational that this proposal would be welcomed by all parties. the
choice. If he can be discerning in the choice of political leaders, it Commission would deal with the recognition work in its
would not be right to deny him the responsibility of choosing various aspects: (i) determining the level of recognition—-
representatives who will give him economic satisfaction. The whether plant industry, center-cum-industry—-to decide the
fear of wild promises and rousing of passions swaying the majority union, (ii) certifying the majority union as the recog-
worker can be exaggerated. Such false promises cannot be nized union for collective bargaining, (iii) generally dealing with
expected to win ballots all the time. other related matters. The union thus recognized will retain its
The Council of Indian Employers has suggested an alternative status for a period of two years and also thereafter till its status
which provides for verification as also election by secret ballot in is effectively challenged.
certain circumstances. According to this proposal, the member- Rights of Recognized and Other Unions
ship of the contending unions has to be verified by the A union recognized as the representative union under any
concerned authority and the majority union which should have procedure, should be statutorily given, besides the right of sole
at least 30 per cent membership is to be given recognition. In representation of the workers in any collective bargaining,
case, however, two or more unions have 30 per cent or more certain exclusive rights and facilities to enable it to effectively
membership, and the difference between the membership of discharge its functions. Among these are the rights:
any two of them is less than 10 per cent, a secret ballot of all
i. To raise issues and enter into collective agreements with
workers in the establishment should be arranged to determine
employers on general questions concerning the terms of
the most representative union.
employment and conditions of service of workers in an

establishment or, in the case of a representative union, in an members. It was argued by some that. the grant of this right

industry in a local area; might to a certain extent, reduce the strength of the majority
ii. To collect membership fees/subscriptions payable by union. When the majority union is recognized as the sole
members to the union within the premises of the bargaining agent on behalf of all the employees in the under-
undertaking; or demand check-off facility; taking, the question of some employees being represented by a
minority union should not arise in so far as general demands/
iii. To put up or cause to be put up a notice board on the
issues are concerned. However, in regard to certain matters of
premises of the undertaking in which its members are
individual rights and grievances and their representation, the
employed, and affix or cause to be affixed thereon, notices
opinion has been in favour of giving some rights, though of a
relating to meeting’s, statements of accounts of its income
very limited nature, to the minority unions. We recommend
and expenditure and other announcements which are not
that the minority unions should be allowed only the right to
abusive, indecent, inflammatory or subversive of discipline;
represent the cases of dismissal and discharge of their members
iv. To hold discussions with the representatives of employees before the labour court .
who are the members of the union at a suitable place or
places within the premises of office/factory/ establishment Our Approach
as mutually agreed upon; While we discuss the arrangements for the settlement of
industrial disputes when they arise, we must emphasize that
v. To meet and discuss with an employer or any person
real industrial harmony is possible only when conditions are
appointed by him for the purpose, the grievances of its
created for avoidance/prevention of disputes. While no
members employed in the undertaking;
procedure, however carefully worked out, can entirely eliminate
vi. To inspect, by prior arrangement, in an undertaking, any industrial disputes and conflict, frequent discussions between
place where any member of the union is employed; the employer and the representatives of workers will be of
vii.To” nominate its representatives on the grievance committee considerable assistance in reducing the areas of conflict. The
constituted under the grievance procedure in an system of industrial relations as it has developed since Indepen-
establishment; dence has kept avoidance of conflict/disputes as one of its two
viii.To nominate its representatives on statutory or non- basic objectives, the other being expeditious settlement of
statutory bipartite committees, e.g.. works committees, disputes when they do arise. The role of Government in
production committees, welfare committees, canteen pursuit of the former objective cannot be gainsaid. Emphasis
committees, and house allotment committees. On most of has been laid on the creation of the necessary atmosphere for
these points there is a fair measure of unanimity in the the development of labour management cooperation through
evidence before us. the adoption of a suitable institutional frame-work for joint
consultation, redress of grievances and the like. It is perhaps
We consider that industries, in which workers are organized on
true that these procedures which will be discussed in the next
an industry/area basis and in which collective bargaining has
chapter in detail were not as effective as expected and this
developed at the industry/area level, should maintain and
objective could only be partly realized. This is due as much to
encourage this practice of recognizing unions at the industry/
the absence of certain important factors, such as the existence of
area level. Such recognition may give rise to certain problems in
a united trade union movement and the provision for recogni-
regard to the circumstances in which it should be granted and in
tion of unions as to the emphasis laid on compulsory
regard to the rights and functions of plant-wise unions vis-avis
adjudication for the settlement of disputes. Whatever be the
the industry/area unions, particularly when the majority union
nature or causes of disputes, most of them can be amicably
at the plant level has no affiliation with the recognized industry
settled, given the goodwill and desire to come to a settlement
/area union. It has been brought to our notice that employers
on the part of the employers and the employees. It is in this
of units in which the industry level recognized union has no
context that we emphasize the adoption of procedures which
following, find themselves in a difficult situation when
will promote effective bipartite consultations and collective
confronted by the demands of the plant union, which they
bargaining between the parties.
cannot ignore. This situation can only be set right by a proper
demarcation of the rights and functions of the industry/area Industrial Relations Commission
recognized unions and plant-wise unions, and by ensuring that We have referred earlier to certain weaknesses in the working of
recognition at the industry/area level is conferred subject to the existing industrial relations machinery viz., the delays
certain well defined conditions. We consider that industry-wise involved, the expenditure, the largely ad hoc nature of the
recognition is desirable, wherever possible. We are, therefore, machinery, and the discretion vested in the Government in the
not in favour of recognition being granted to plant unions in matter of reference of disputes. There have also been allega-
an area/industry wherein a union has been recognized for an tions of political pressures and interference While many of the
industry/area as a whole. allegations may not be true, we cannot be oblivious to the fact
We now come to the related question of the rights to be given that in some cases the decisions of Government. though fair,
to the minority (unrecognized) unions. The view taken by the have not appeared to be so to the aggrieved parties. And this
Indian Labour Conference in 1964 was that minority unions aspect cannot be entirely ignored in training our recommenda-
should enjoy the light to represent individual grievances relating tions. The evidence before us is strongly in support of
to discharge, dismissal and other conditions of service of their reforming the industrial relations machinery, so as to make it

more effective and more acceptable. What is called for, therefore, vi. Judicial Members of the National Indus ~ trial Relations


is a formal arrangement which is independent in character, Commission, including its President, should be appointed
expeditious in its functioning and which is equipped to build from among persons who are eligible for appointment as
up the necessary expertise. We consider that it would not be Judges of a High Court;
enough to secure some of these improvements through vii.The terms and conditions of service and the age of
suitable modifications in the existing machinery . A more basic superannuation of the judicial members of the National/
change is called lor, and this can be ensured only through the State IRC should be similar to those of the judges of the
replacement of the present ad hoc machinery, by permanent High Courts.
machinery, which will be entirely independent of the adminis-
viii.The President of the National Industrial Relations
tration. We. therefore, recommend the setting up of an
Commission will be appointed by the Union Government
Industrial Relations Commission (IRC) at the national and
in consultation with a committee consisting of the Chief
State levels, for settling interest disputes, broadly covering
Justice of India, the Chairman of the Union Public Service
matters listed in the Third Schedule to the I.D. Act.1
Commission (UPSC) and the senior most Chief Justice in
The IRC would combine in itself both the conciliation and the High Court
adjudication functions. We believe that there is a definite
ix. The other members of the National Industrial Relations
advantage in having the conciliation machinery working within
Commission will be appointed by the Union Government
the IRC, since both will be concerned with ‘interest’ disputes
in consultation with the Chief Justice of India, the
though at different stages. An interchange of knowledge,
Chairman of the U.P.S.C and the President of the National
information and expertise can thus be ensured. We have also
Industrial Relations Commission;
recommended in an earlier section that all matters concerning
recognition of a union as a representative union for purposes x. In regard to the State Industrial Relations Commission, the
of collective bargaining should be entrusted to an independent President of a State IRC will be appointed by the State
authority. We consider that it would he advantageous to entrust Government in consultation with the Chief Justice of
this function also to the proposed IRC. It would obviate the India, the Chief Justice of the State and the Chairman of
need for creating another independent body. In addition to the the State Public Service Commission;
IRC, we also suggest the setting up of Labour Courts which xi. The other members (of a State Industrial Relations
would be entrusted with the judicial functions of interpretation Commission will he appointed by the State Government in
and enforcement of all labour laws, awards and agreements. consultation with the Chief Justice of the State High Court,
The set up of the proposed machinery will broadly be on the the Chairman of the State Public Service Commission and
following lines: the President of the State Industrial Relations
A The Industrial Relations Commission (IRC):
xii. The Conciliation Wing of the Commission will consist of
i. There should be a National Industrial Relations conciliation officers with the prescribed qualifications and
Commission appointed by the Central Government for status. In the cadre of conciliators, there will be persons
industries for which that Government is the appropriate with or without judicial qualifications. Those who have
authority. The National IRG would deal with such disputes judicial qualification would be eligible for appointment as
which involve questions of national importance or which judicial members of the Commission after they acquire the
are likely to affect or interest establishments situated in necessary experience and expertise. Others could aspire for
more than one State, i.e., disputes which are at present dealt membership in the nonjudicial wing;
with by National Tribunals.
xiii. The Commission may provide arbitrators from amongst,
ii. There should be an Industrial Relations Commission in its members/officers, in case parties agree to avail of such
each State for settlement of disputes for which the State services;
Government is the appropriate authority;
xiv. The Commission may permit its members to serve as
iii. The National/State IRC will have three main functions: (a) Chairmen of the Central/ Stale Wage Boards/Committees
adjudication in industrial disputes, (b) conciliation and (c) if chosen by the Government. for such appointment
certification of unions as representative unions.
xv. The functions relating to certification of unions as
iv. The strength of the National/State Commission should be representative unions will vest with a separate wing of the
decided taking into account the possible load on it and the National State IRC. The National IRC may, where it
need for expeditious disposal of cases; its membership considers necessary, get the following of the contending
should not exceed seven. unions determined by the State IRCs.
v. The Commission should be constituted with a person The procedure for the settlement of disputes would be as
having prescribed judicial qualifications and experience as its follows:
President and equal number of judicial and non-judicial
i. After negotiations have failed and before notice of strike /
members; the non-judicial members need not have
lock-out is served, the parties may agree to voluntary
qualifications to hold judicial posts, but should be
arbitration and the Commission will help the parties in
otherwise eminent in the field of industry, labour or
choosing an arbitrator mutually acceptable to them.

ii. After negotiations have failed and notice of strike/lock-out hearing the parties concerned transmit the case to the

has been served, cither party may approach the Commission National IRC which with thereupon try the said dispute.
for naming a conciliator within the Coin-mission to help viii. Where a dispute is brought before the National IRC, and
them in arriving at a settlement during the period covered the Commission after hearing the parties comes to the
by the said notice. conclusion that it may be desirable or expedient that the
iii. In essential industries/services, when collective bargaining said dispute should be dealt with by the appropriate State
fails and when the parties to the dispute do not agree to IRC it may remit the case to the said State IRC for disposal
arbitration, either party shall notify the IRC, with a copy to and on receiving the record of the said dispute, the State
the appropriate Government, of the failure of such IRC shall proceed to deal with it.
negotiations, whereupon the IRC shall adjudicate upon the ix. If the Commission substantially grants the demands in
dispute and its award shall be final and binding upon the support of which the strike was called and comes to the
parties. conclusion that the said strike was justified because of the
iv. 1 In the case of “Others” (non-essential industries/ refusal of the employer to grant the said demands, the
’services), following the failure of negotiations and refusal Commission while making its award may direct the
by the parties to avail of voluntary arbitration, the IRC, after employer to pay the employees their wages during the strike
the receipt of notice of direct action (but during the notice period.
period), may offer to the parties its good offices for x. In case a strike becomes necessary as a result of the changes
settlement. After the expiry of the notice period, if no sought to be introduced by the employer in the terms and
settlement is reached, the parties with be free to resort to conditions of employment of his employees and the
direct action. If direct action continues for 50 days. It will be Commission comes to the conclusion that the change(s)
incumbent on the IRC to intervene and arrange for was/ were not justified and the strike was justified, the
settlement of the dispute.’ employees with be entitled to wages for the period of
v. 1 When a strike or lock-out commences, the appropriate strike.
Government may move the Commission to call for the xi. If the demands in support of which the strike was called
termination of the strike/lock-out on tile ground that its are not granted by the Commission and it holds that the
continuance may affect the security of the State, national strike was unjustified, wages for the period of the strike
economy or public order, and if after hearing the with not be granted.
Government and the parties concerned the Commission is
xii. If the Commission holds that demands which led to the
so satisfied, it may for reasons to be recorded call on the
lock-out were justified and the lock-out was not justified,
parties to terminate the strike/lock-out and file their
the Commission in granting the demands may order that
statements before it. Thereupon the Commission shall
the employees should be paid their wages during the period
adjudi-cate on the dispute.
of the lock-out.
vi. (a) If a State IRC. is seized of any dispute and it appears to
xiii. If the Commission holds that the demands were not
the Central Government that the decision on the said
justified and the lockout was justified the employees will
dispute is likely to have an impact on similar industrial
not he entitled to claim wages for the period of the lock-
undertakings in other States, it will be open to the Central
Government to move the National IRC; to take the said
dispute on its file. When such an application is made the xiv. If during the pendency of the strike or thereafter, the
National IRC shall hear the parties concerned, and if it employer dismisses or discharges an employee because he
comes to the conclusion that it is necessary to take the case has taken part in such strike, it would amount to unfair
on its file. it shall call for the papers in relation to the said labour practice’ and on proof of such practice, the employee
dispute from the State TRC and shall proceed to deal with will be entitled to reinstatement with back wages.
and decide the dispute. xv. All collective agreements should he registered with the IRC.
b. Similarly if a State IRC is seized of any dispute and it xvi. An award made by the IRC in respect of a dispute raised by
appears to the National IRC that the decision on the the recognised union should be binding on all workers in
dispute is likely to have an impact on similar industrial the establishments) and the employer(s).
undertakings in other States, and if after hearing the parties B Labour Courts
the National IRC comes to the conclusion that it is In addition to the Industrial Relations Commission, we also
necessary to take the case on its file, it will be open to the suggest the setting up of standing Labour Courts which would
National IRC to call for the papers in relation to the said be entrusted with judicial functions of interpretation and
dispute from the State IRC and decide the dispute on enforcement of all labour laws, awards and agreements These
merits. courts with deal broadly with disputes relating to matters
vii. When a State IRC is possessed of any dispute, and during mentioned in the Second Schedule of the ID. Act, in respect of
the hearing it comes to the conclusion that the decision on the industrial relations issues brought to them.
the said dispute will have an impact on similar industrial
undertakings in other States and that it is desirable that the
dispute should be tried by the National IRC, it may, after

i. There will be a labour court in each State constituted of influenced our decision in making these recommendations is


judicial members only. The strength and location of such that the setting up of the Industrial Relations Commission
courts will be decided by the appropriate Government; with two wings will, in the long run, make negotiations
ii. Members of the labour court will be appointed by between the parties more earnest and serious and thus intro-
Government on the recommendations of the High Court. duce a new era of successful collective bargaining: We recognise
Generally, the Government should be able to choose from a that in the initial stages of the working of this scheme, mutual
panel given by the High Court in the order in which the negotiations may not always succeed; but we hope that where
names are recommended; this happens, sustained effort by the Commission’s conciliation
wing will materially assist the parties in reaching satisfactory
iii. Labour courts will deal with disputes relating to rights and
solutions to their problems amicably. If this process continues
obligations, interpretation and implementation of awards
for some time, the number of industrial disputes which will go
of either the National or State IRC and claims arising out
before the Comission for its adjudication will gradually decrease
of rights and obligations under the relevant provisions of
and that is the end which we have in mind. We have made these
laws or agreements, as well as disputes in regard to unfair
several recommendations in I the confident hope that the end
labour practices and the like.
would be achieved if the scheme which we have recommended
iv. Labour courts will thus be the courts where all disputes is accepted by the Government. These recommendations
specified in clause (iii) will be tried and their decisions constitute one integral scheme and, for their success, must be
implemented. Proceedings instituted by parties asking for given effect to as a whole.
the enforcement of rights falling under the aforesaid
categories will be entertained by labour courts which will act Notes -
in their execution jurisdiction in that behalf. Appropriate
powers enabling them to execute such claims should be
conferred on them
v. Appeals over the decisions of the labour court in certain
clearly defined matters, may lie with the High Court within
whose area/jurisdiction the court is located;
Unfair Labour Practices
Provision of legal protection to unions is a corollary to the
promotion of healthy industrial relations and recognition of
unions as the sole representatives of workers. It is, therefore,
important to write into the law provisions to prohibit and
penalise unfair labour practices, on the part of both the
employer and the recognised union. An attempt was made to
define these practices both in the Trade Unions (Amendment)
Act, 1947 (not enforced) and in the industrial Relations Bill,
1950. The Code of Discipline (1958) contained a reference to
unfair labour practices to be avoided by unions and manage-
ments. In February, 1968, the Government of Maharashtra set
up a Committee on Unfair Labour Practices’ to define activities
which should be treated as unfair labour practices on the part of
employers and workers and their organisations and to suggest
action to be taken. In its unanimous report presented to the
Maharashtra Government in July, 1969, the Committee listed
various arts of omission and commission which constitute
unfair labour practices. The lists are at Annexure II. These could
form a suitable basis for the enumeration of unfair labour
We recommend that the law should enumerate various unfair
labour practices on the part of employers and on the part of
workers’ unions; and provide for suitable penalties for commit-
ting such practices. Complaints relating to unfair labour practices
will be dealt with by the labour courts. They shall have the
power to impose suitable punishments/penalties which may
extend to de-recognition in case of unions and heavy fine in
case of an employer found guilty of such practices.
Having made these recommendations, we think it is necessary
to emphasise the fact that the main consideration which has



Learning Objectives have to depend on the objectives, values, structures available

After going through this chapter you will be able to compre- and the environment in which they have to operate.
hend the following:
We sum up with a Quotation:
• The current industrial scenario in India Its strategic importance extends beyond the limited frontiers of
• How the industrial scenario and the industrial worker are union-manage-ment relationship and overlaps with the future
going to influence the economy in the days to come. prospects for Indian democracy on one hand, and the basic
We link industrial relations with industrial development and concepts and assumptions of economic develop-ment on the
complexity of the work organisation. The earliest and simplest other. The set of strategic choices must be made in the midst
organisations had little industrial relations in the sense that we of economic and political difficulties that the country is
understand it today. But as organisations grew in complexity, undergoing.
size and number, industrial relations emerged. In this relation In relation to the future of industrial relations in India let us
let us now look into the ‘future of industrial relations in India.’ first get to know our Indian industrial worker.
Future of Industrial Relations in India The Indian Industrial Worker
The future of industrial relations in India can be reviewed from There can be no study of industrial relations without an
reports of the commissions constituted by the government for analysis of indus-trial workers, who are the prime-movers of
this purpose. From these, certain issues are emerging which are commerce and industry. Most recent studies point to the new
posing challenges to the three ‘actors’ in the system. industrial worker being more ‘adjusted’ to his work environ-
I. The first is the issue of strengthening collective bargaining ment than his predecessors. However, the simmering
by trying to determine a sole bargaining agent for dis-content among labour which now and again manifests itself
negotiations. The State of Maharashtra has already passed a in strikes and other forms of labour unrests, proves that the
law for the creation of a sole bargaining agency in every unit new industrial worker is still in a state of flux. He is not fully
and industry. Collective bargaining is advocated where the aware of his problems, his aspirations are his vague, and he is
parties involved have a fuller understanding. This will help unsure of his identity. The aim of this lesson will be to
to arrive at a speedier settlement of disputes, between characterise, from available data, the new industrial worker-the
themselves. varying influences on his life and, in turn, his own commitment
2. The second issue relates to the gaps that are occurring as a to industry.
result of the variations that occur in Central and State Owing to the increasing mechanisation of industry today, the
legislation as far as labour matters are concerned. In India, recruits to in-dustry have to possess the appropriate skill and
labour falls under the Concurrent List though NCL has qualification necessary for the job, unlike their counterparts in
made a recommendation for forming a common labour the past.
code which is yet to be adopted. Adoption of this In spite of the government’s commitment to rural develop-
recommendation will go a long way in solving some of the ment, the lot of the average farmer is still decidedly poor. As a
problems that India’s legislation process is facing. result, many of them have migrated to urban centres in search
3. Another issue is that of workers’ participation in of work. These constitute the ‘surplus’ work force “who are
management. India has already experienced the working of permanent and semi-permanent urban settlers with no
many forms of worker-participation schemes but none of nostalgic attachment to the romantic surroundings of the
them seems to have made any headway. The reasons for the Indian village. “ Studies of census reports indicate that between
failure of these schemes need to be probed into. 1961 and 1971, on an average, more than 2 million farmers were
The three ‘actors’ in the system need to take into account the moving out of their villages every year.
effect of their actions on the consumers and society in general, To say that the new industrial worker has a ‘traditional bias’
owing to the growing inter-linkages between industry and its which is responsible for his maladjustment, if any, is not true
environment. They have to evaluate and decide on the appropri- because of the fact that the majority of the work force, in any
ate alternatives in terms of the ‘strategy’ they are going to adopt case, have an urban background, while the ‘surplus’ work force
in managing the personnel and industrial relations func-tions. constituting the migrants from rural areas are not inclined to
The environment is fast changing and the pressures from leave their present jobs in the factories-nor is the ‘full hierarchy’
various groups involved are starting to get more vocal and of the traditional caste structure evident in the factory. In fact,
intense. The strategy chosen for the attainment of the goals will Slotkin concluded that the rural workers migrated because of
the inadequacy of their ‘traditional culture’. Systematic studies
of the Indian labour force have shown that factories attract

labour from all levels of traditional society (Morris, 1960; management. Sickness and social or religious reasons are the


Lambert and Vaid, 1968; Sheth, 1968; and Sharma, 1974). usual excuses given for being absent. A study by Pais of the
The new industrial worker’s educational background and cotton textile industry in Bombay on absenteeism shows that
aspirations are much higher than those of his predecessors. A there are a large number of badli force in these industries, and
study of industrial workers by Vaid revealed that 78% of them this factor contributes to the high rate of absenteeism in the
wished to increase their incomes. As has been already pointed industry. Bhatia and Valecha in their study on absentee-ism in a
out, a rural background does not inhibit them from entering large manufacturing plant conclude that chronic absentees have
industry. In fact, once they do, they prefer to stay on and greater indebtedness and are found more among those in the
improve their prospects. But is this an indication of the higher age bracket having longer length of service, and in the
worker’s commit-ment to his work or is it, as some researchers unskilIed and semiskilled work force. Managements are
indicate, actually an interest in matters such as wages, housing, generally quite helpless, especially with the increasing militancy
security and advancement in work rather than the fulfilment of of trade unions who use minor issues to prove their bargaining
their needs, e.g. ‘ego satisfaction’ or ‘self-actualisa-tion’? Sheth power. The new industrial workers are more “articulate,
feels that by imparting theories of ego satisfaction and self-- confident and capable” and aware of their rights. The factory
actualisation and putting forward schemes to hum anise system initiates changes in the attitudes and values of its work
working conditions, one may only be substituting “devices for force making them more “cosmopolitan, anticasteist, secular
the satisfaction of the actual needs”. and radical in their outIook”. The worker is also aware of his
high level of productivity and his tremendous power to cripple
True, the worker may not be aware of self-actualisation, and
ego-satisfac-tion may not be of primary importance to him, but
a study by Holmstrom indicates he is definitely moving As discussed earlier, workers today have greater aspirations than
towards the “concept of equality and free-dom of choice in his those in the past. Earlier, the mobility among workers was poor
work behaviour.” A recent study by Sharma’ states that for the and their aspirations undoubtedly low. The present trend of
workers in the organized sector, the nature of work forms one competitiveness could be because of greater skills and education
of the determinants of job-satisfaction. It is natural that a among workers. In an Indian enterprise workers are motivated
worker would prefer human working conditions. As it is, “the by the expectation of higher wages once they acquire more skills.
sheer alienation and drudgery of the worker’s machine- Vaid et al. found that superior technology contributes to better
dominated work at the factory is what makes his life dull, work adjustment. Lambert also found that the level of,
unrewarding and poor in a sense in which a school teacher’s is aspiration of workers varied from factory to factory but it was
not. Within the confines of an individual work situation over the highest in the most technically advanced factory. This new
which he has no control the worker will always be disoriented. class of labour with higher aspirations and greater awareness of
After all, in the present social structure, workers are in the final job security and wages is to be found in the most modern and
analysis ‘wage slaves’. Yet he is willing to work hard and accept technically advanced industries that demand greater skills.
the monotony of routine if it enables him to earn more and However, even earlier studies indicate that wages always played
make his life outside the factory better. Herein lies the problem. an impor-tant part in a worker’s choice of job. Vaid reports in
Industrial skilI alone is not of the greatest impor-tance-a his study that the workers’ current jobs gave them a better
committed labour force demands adjustment in both the income than any of the previous jobs and 45% of the total job
working and social environment. changes are due to the search for ‘higher wages’. Lambert and
Desai’s studies also indicate similar findings.
The idea of the industrial man in terms of committed labour
force has to be reconceptualised in the context of the uneven The rise of this new working class (though it does not domi-
development of the whole process of our industrialisation. nate yet it greatly influences the industrial labour force) has also
Mere wilIingness to work cannot boost the morale of a worker, necessitated changes in the method of operation of trade
unless he has the kind of socially accepted position required for unions, some of which are not even affiliated to national union
the industrial way of life. The Indian worker is deprived of federations, and yet are most ‘active and militant’. Ketkar feels
such a position (Sengupta) particularly in the areas of small in- that “the reason for the disproportionately high influence
dustrial activities. within which it works are the critical industries in the manufac-
turing sector as a whole. ... The new working class is not only
The number of mandays lost due to industrial disputes in
the wage leader in the sense that it sets the trends for higher
India during 1980 and 1981 is as follows: 1980-21,925,026; and
wages but also influences other workers in industry and even
1981-25,503,6541. What are the reasons for the high rates of
white-collar workers in their methods of struggle, styles of
absenteeism and the increasing number of mandays lost? If the
trade unionism, social habits, language, etc. In a definite sense it
worker is committed to his job, why does he stay away? Why is
constitutes the opinion maker within the working class as a
the labour force like a nuclear dump waiting for a match to set it
whole.” The workers’ awakening to trade unions is a fairly
recent phenomenon since older studies reported the workers’
Absenteeism has always been a major problem in the Indian general disinterest in trade union activities. Ashraf, in his study
industry. An official of Bharat Cooking Coal Ltd’s planning of workers at Kanpur, found socio-political consciousness and
department points out that often as much as 40% of the trade union affiliation to be interdependent. With the emer-
labour force stays away from work. Myers is of the view that gence of the new worker who is confident and aware, trade
absenteeism is encouraged owing to the lenient policies of the unions have come to play an important role. The trade union is

considered a protector in general terms. Thankappan feels that resort to settle his grievances and he usually supports it in a

“some of the most important events in trade unionism during crisis, sometimes in spite of his personal misgivings.
the last 5-8 years whether they are strikes or solidarity struggles
Profile of the New Worker
in support of other workers’ struggles, are directly related to the
The picture of today’s industrial workers emerging from most
initiatives taken by the new working class”. But are these strikes
accounts is in contrast to the one depicting the workers of the
warranted? With such strict government regulations, is the
1940s and 50s. This change is basically because of the growth of
worker truly underpaid? In spite of the fact that workers’ wages
industry, demanding more technological and industrial skilIs.
have increased, there has been an ‘erosion’ of wages owing to
This in turn means, the workers inducted into this kind of
the sharp increase in the consumer price index. The working
establishment would have a higher level of education as
class is aware of this and attributes “the stagnation or erosion
compared to those in the more traditional industries, say
of its standard of living directly to its increased exploitation at
textiles. These ‘new workers’ tend to be second or even third-
the hands of the employers. That is one of the reasons for the
generation workers, unlike the half-peasants who found it
militancy of even the better paid workers”, opines Thankappan.
difficult to overcome their parochial attitudes and chauvinism.
Is the trade union movement in India efficient enough to They realise their indispensability and bargaining power and are
handle the problems of workers? Most of the larger trade ready to move on and improve their educational qualifications
unions have definite political affiliations, and act or react to better themselves. Most often these new workers have jobs
according to political trends, the workers being mere pawns in in the critical industries and hence will not allow themselves to
the game. But the new worker seems determined not to be be exploited. Even though the trade union movement has not
used as a crutch by political activists. This is not always the case. proved wholly effective, without clear programmes or organiza-
With their new found power, trade union leaders often seek to tion, workers today are no longer docile, inarticulate and
put pressure on managements with no legalistic base to their diffident. They are definitely a class to contend with, who will
demands, aided as they are, often, by political clout. To add to intensify their efforts in the future and whose attitudes and
the already complex scene, there is the pressure of inter-union aspirations are of utmost importance to industrial peace.
rivalry with each union claiming sole bargaining rights. Some-
The new workers are definitely committed to the industrial way
times, to divide the workers and thus weaken them, rival
of life even if some are prone to look back with nostalgia and
unions are patronised by the management. The credibility of
reminisce about the clean environment of the villages. There
the trade union move-ment in Kanpur rated rather low, in the
seems an imminent need for the government, through
eyes of the working population, during the strike at Swadeshi
legislation and for managements, through discussions, to
Cotton Mills where “the trade union leader-ship proved to be
seriously consider issues that concern workers and work out an
ineffective in organizing the workers’ struggle for securing the
amenable solution. Most accounts of their daily life indicate the
very basic demand of the workers, for their very wage”.
poor quality of their living conditions, which seem to have a
Legitimate claims become mixed up with demonstrations,
greater impact indirectly on them as individuals than the
arson and looting and in this melee the workers’ demands are
drudgery of their jobs. There is definitely the need to improve
often forgotten, making the whole thing seem badly conceived
workers’ living conditions and provide basic amenities in order
and illegal. Mehta, himself a trade union leader, puts it suc-
to make their lives more meaningful. Mere revision of wages
cinctly when he says, “even with so much inter-union rivalry
and bonuses will not help to raise his standard of living or
there are hardly any ideological differences. It is more a scramble
improve his commit-ment, but rather drive him to the bottle or
for power.” If effective leadership is not forthcoming among
the gambling den in an attempt to escape his immediate social
trade unions in the future, the already prominent trend of
independent plant-based unions, which generally involve a large
number of workers, is sure to dominate the indus-trial The new worker is not an individual to be taken for granted.
relations scene. Workers unable to press their demands by legitimate means are
finding recourse in militant action and are being attracted to
In its March-April issue, 1979, Business India reported that
leaders with militant ideals. The key to the industrial relations
independent plant-based unions have been so successful in
scene in the country rests in the hands of the workers, and their
influencing other workers that the decline or stagnation of once
well-being and commitment is crucial to the progress of
powerful unions ,such as the CPI led AITUC and the Socialist
modern India. Mansara is not a typical example of the new
led HMP and HMS in the major industrial areas is directly
industrial worker. However, it is workers like him who form a
related to their influence. Ketkar, labour correspondent of the
majority of the indus-trial work force-greatly influenced by the
Economic Times, feels that labour is moving away from
new industrial workers who though in a minority, dominate the
politically motivated groups and “has begun to constitute itself
general trend of industrial practices.
as a new estate in society not under the tutelage of another class
or political party but on its own initiative”. This is primarily To Wana Mansara, a 55-year-old unskilled labourer working in a
because of the lack of effective leadership and corruption in factory in North Bombay, modern industrial life has given
trade union politics. Tulpule, however, feels that there is “ample precious little satisfaction. Mansara scarcely fits the image of the
leadership material” in the generation that has come into modern industrial worker. One look at his thin emaciated
industry in the last 15 years. Only if trade unions can prove their frame, soiled clothes and troubled eyes, convinces one that life
mettle will they last out the next generation though they have so far has had little to offer him.
ample scope as the worker really considers his union the last

“There is really nothing I can say about my daily routine,” break up the honest unions. That’s why there is violence. I was


Mansara says cynically. Mansara lives in a small 20' x 10' room in attacked because I refused to become a member of a rival union
one of the foulest slums in the eastern suburbs along with his which is a stooge of the bosses was stabbed three times by a
family of nine. His working hours are 7.15 a.m. to 3.45 p.m. rogue and the doctor had to put 18 stitches. My son, who also
Mansara has to be up before 6 o’clock and stand in a long queue worked in the factory was removed just because he supported
at the municipal tap for water although there are enough people Dr. Samant”, says Mansara in a Marathi which retains the
in his family who can perform that hour-long chore--his wife, flavour of a rural accent even after 24 years of exposure to urban
his 24-year-old daughter, his son-in-law, his 22-year-old son, life.
daughter-in-law, another son, age 14, and another daughter. All
Menacing Tool
of them and Mansara’s young grandson live in the hut. As
But what is so special about Dr. Datta Samant? Why does
soon as he gets dressed, Mansara sets out on foot for the
Mansara believe that Samant is an honest unionist? Mansara is
factory without any breakfast but with a lunch dabba in his hand.
somewhat offended that his leader’s integrity is challenged. His
He cannot afford to buy his lunch in the factory canteen
nostrils flare up. There is almost a menacing look in his eyes.
although it is subsidised. Mansara’s monthly wage works out to
But then, he controls himself and explains: “Look, I have been
less than Rs 600 which barely ensures the hand-to-mouth
in the Godrej factory since 1956. Do you know what the annual
existence of the entire family. In the factory where he has been a
increment in my daily wage scale was then?-12 paise. Dr. Samant
daily wage (bigari) worker for 23 years, his job is to load and
came to our factory in 1972 and the annual increment became 40
unload trucks with finished goods and raw materials and carry
out sundry errands.
“Before Dr. Samant, the union was led by several people. But
Boring and Bad we never know what agreement was signed by our union and
“My job is boring and bad. I’m glad to get off at 3.45 p.m.” when. We knew it only when the workers read it on the notice
says Mansara. “Then I go home and that is all. What else is board. Not so with Dr. Samant. Long before making any
there to do? Think about the stink in the slum? Well, it’s there. agreement with the owners, Dr. Samant tells us in a meeting
The quarrels over the municipal tap, traffic in illicit liquor, the what he is going to do. He never goes alone to the owner to
floods and the slush in the monsoons, the leaking hut and all make an agreement. We know he is honest. We know he is not
that? Well. . . that is life.” a chamcha of the management.”
Mansara feels that his brothers whom he left 24 years ago in Mansara is also bitter about the management’s attitude towards
Nasik district to till a few acres of dry land, are leading a militant workers. “If you are in favour of the management, you
“relatively better life”. But Mansara could not live in the village get all the facilities. If you fight for or assert your rights, then
because the land was not enough to sustain the family. So he God help you. Don’t you think I want to live in a better place?
came to Bombay in search of a livelihood and found a job at But I can’t because I can’t afford it. And I would never get the
the factory. Ever since then Mansara has lived in the hut which company’s quarters because I support Dr. Samant . . .”
he had built himself. “Today I have to pay Rs. 40 to the muni-
Mansara has many complaints against the management. He
cipal authority as rent for the land I occupy. Why should I have
recalls: “When I joined the factory in, 1956, the company was
to pay this rent? It’s absurd. The bloody municipal authorities
producing 26 refrigerators a day. I remember because I used to
have no right to ask me for rent. . . The whole thing is so
load them on to trucks. Today the company manufac-tures 222
refrigerators daily and sells them at much higher prices. And yet
Mansara’s bitterness and grievances are not confined to the our living conditions have not changed though apparently our
municipal authorities. As a scheduled caste turned Budhist, and earnings have increased. Even this increase is not at all propor-
a worker, Mansara feels he has had to suffer in-justice all his life. tionate to the increased production of the fac-tory. Why should
“People in my situation tend to, lose all hope in life, to give up, not I gain anything when the factory has expanded so much?”
to become, tame, submissive and fatalistic. Many of them take
“Really, what we need is leaders like Dr. Samant who can give us
to gambling and alcohol. But fortunately I’m free of such
justice”, Man-sara ruminates. “Management or the government
addictions and stilI have some control over myself. I can still
on their own wi1l never give any-thing to workers.”
Does it mean that good leaders are all that is needed? “Look, all
In fact, Mansara is a militant trade unionist and was the victim
leaders are not like Dr. Samant. . . Owners and big people like
of an assault in January by members of a rival trade union.
those in the government are angry with him not because he
Mansara, inarticulate and incoherent when speaking about his
instigates violence-in fact, he does not, big people do vio-lence
family and his house, suddenly comes to life while talking
to break him-because he cannot be bought or corrupted, . . .
about his union and removes the head cloth he dons like a
because he does not become their chamcha. . . So we need leaders
number of his fellow workers, to show a long raw scar on his
like him... and of course we must have our own organized
strength. Without a militant organization We’ll get nowhere.
“See this?” he asks with visible anger on his face. “This is the
“As long as there is injustice in society, we’ll have to remain
price I have had to pay for supporting Datta Samant and for
organized and vigi-lant to fight it, whether it is economic,
being with his association of Engineering Workers. Employers
political or social injustice”, says Mansara. In Mansara’s view
and the government loathe those unions which really are for the
while there is a great deal of social injustice in India, based on
workers. They only want unions they can pocket. They try to

caste differences, he has not experienced it since he left his

village, even though he is a neo--Buddhist. “I am never made

to feel that I belong to an inferior caste. All workers who work
shoulder to shoulder with me live in the same way as I do, treat
me as a comrade, a mate never thinking of caste. . . . But there
are castes amongst workers. Two castes: the chamchas, scaps,
blacklegs, who are a minority, and the rest who are in the majo-
rity. The first lot belongs to the upper caste and get many special
favours and advanta-ges. The people like me, the majority,
belong to the lower caste and life’s rough for us. But I’m happy
here. I would rather remain here.”
Notes -

LESSON 5: Unit 2

Learning Objectives iv. It includes federations of trade unions also.

After reading this lesson you will be able to understand the v. It achieves its objectives through collective action and group
following. effort.
• The need for trade Union and its effect in the Industrial Thus, a trade union is generally referred to as an organisation of
India since its evolution. workers. It is a voluntary, democratic and continuing
Trade unions. How are unions born? What do they do? To get organisation of workers to protect their socio-economic
all these answers and yet to learn many more attributes about interests. However, under law, the term ‘trade union’ includes
the trade unions let us first look into as to how the trade both the associations of workers and those of employers. Sec.
unions evolved. 2(h) of the Trade Unions Act, 1926 has defined union as “any
combination, whether temporary or permanent, formed
Historical Evolution and Aspects of Trade
primarily for the purpose of regulating the’ relations between
unions in India
the workmen and employers, or between workmen and
After discussing much about industrialization the trade union
workmen, or between employers and employers, or for
movement can be said to be an offshoot of industrialisation.
imposing restrictive conditions on the conduct of any trade or
The growth of modern industrial organisations involving use
business, and includes any federation of two or more trade
of modern technology and employment of large number of
unions.” This definition is very exhaustive as it includes
the workers has been followed by growth in trade unions
associations of both workers and employers and the federa-
throughout the world. This phenomenon has not only been
tions of their associations. But in this book we will use the
observed in advanced countries of the world, but is also being
term ‘trade union’ in a narrow sense to mean the associations
witnessed in developing economies. “The emergence of trade
of workmen and their federations.
unionism is spontaneous and inherent in the growth of
capitalism. The origin of trade unionism lies in the Industrial Why do we need Trade Unions?
Revolution which disrupted the older way of life and created a Trade unions are essentially organisations for the protection and
new society forged by the shop, the factory, the mine and the promotion of the interests of their members in particular and
industry.” Trade unionism has become a vigorous force not workers in general. The primary functions of trade unions are
only in advanced economies like U.K. and U.S.A. but also in to protect the workers against the excesses committed by
developing economies like India. employers and to satisfy the needs of the workers. To be
What Is a Trade Union? specific, however, the trade unions generally pursue the
Dale Yoder has defined a trade union as continuing, long-term following broad objectives:
association of employees formed and maintained for the 1. Steady employment. Steady employment is something,
specific purpose of advancing and protecting the interests of which the employer by himself may not be able to
members in their working relationships. A trade, union is a guarantee to the workers. His ability to provide it is limited
continuous association of workers, which is formed with the by the state of the marl et, which in large part is beyond his
purpose of protecting the interests of workers. To quote Webb control. Achievement of this aspiration may thus involve
and Webb, “A trade union is continuous association of wage workers in political action, through their unions, for the
earners for the purpose of maintaining or improving the maintenance of full employment. Thus, this objective
conditions of their working live” According to Flippo, “A stands for enough jobs with good pay.
labour union or trade union is an organisation of workers. 2. Rationalisation of personnel policies. The economic
formed to promote, protect, and improve, through collective security of an employee is determined not only by the level
action, the social ,economic, and political interests of its of wages and duration of his employment, but also by the
members”. management’s personnel policies in its selection of
From an analysis of the above definitions, the following employees for layoff, retirement, transfer and promotion,
features of trade union emerge: the assignment of employees to jobs, and in the
disciplining of employees. If the decisions of this type are
i. It is an organisation formed by employees or workers.
the result of subjective evaluation and capriciousness, there
ii. It is formed on a continuous basis. It is a permanent body is no security for the workers. If such decisions are,
and not a casual or temporary one. however, governed by statutory rules and rational policies,
iii. It is formed to protect and promote all kinds of interests- there is greater assurance of fair treatment and equal justice.
economic, political and social-of its members. The 3. Voice in decisions affecting workers. The workers may
dominant interest with which a union is concerned is, successfully pressurise for higher wages. He may achieve a
however, economic. satisfactory rationalization of personnel policies. But if the

vital decisions as to the scale and schedule of production, and on the environment of management. As Yoder wrote “

introduction of labour saving devices, the closing or Existence of strong trade unions is a precondition for industrial
relocation of plant etc. remain outside the effective influence peace-and stability of the industrial economy. Decisions taken
of workers, there is no real security for them. Each worker through the process of collective bargaining and negotiation
wants to know if the new machinery would reduce him between the employers and trade unions are bound to be
from a skilled operative to a machine attendant or a respected by both employers and workers. By insisting upon
member of custodial force. He wants to know what his payment of standard rates of wages for their members, trade
chances are for continued attachment to the company. What unions ensure efficient functioning of the industrial units. By
is “the success of the company” to him if in transferring organising fraternal functions, they improve the efficiency of
the plant from Delhi to Ghaziabad he is laid off? The workers. Effective trade unions are helpful in avoiding inarticu-
intervention of the union in such decisions of late unrest of workers involving extensive absenteeism,
management is the only way by which the worker is able to frequent job changes, fighting; wandering from one plant or
achieve any degree of control over the affairs that concern locality to another.
him. Trade unions can play an important role in the planned
4. Recognition and participation. Another objective that economic development of a nation. They can help in the
unions seek to achieve is winning recognition for the fact accelerated pace of economic development in many ways, more
that they are equal partners with management in the task of important of which are as under:
production. This equality is something more than the 1. By helping in the recruitment and selection of workers.
equality at bargaining table. It is an intellectual quality. That
2. By inculcating discipline among the work-force.
is, the intellectual faculties of workers are no inferior to
those of management. 3. By enabling settlement of industrial disputes in a rational
rather than erratic and chaotic manner.
5. Gaining legislative enactments. To provide legal
sanctions to its demands, the unions attempt to get these 4. By helping social adjustments. Workers. have to adjust
framed in the form of Acts so that they become permanent themselves with the new working conditions, the new rules
features of the contract between the employers and the and the new orders. Workers coming from the traditional
workers. For this purpose, unions may take recourse of society (agricultural economy) to the modern society
political action in terms of supporting any political party or (industrial economic) left to themselves may become
forming their own political party. personally disorganized, unsatisfied, and frustrated. Trade
unions help them in such adjustment.
6. Miscellaneous services. Modern trade unions also engage
in providing educational, medical, recreational and other 5. By creating a committed industrial work force.
facilities for the development and welfare of their members Criticism of Trade Unions
and their families, if they have sufficient funds at their Particularly the employers have subjected trade unions to severe
disposal. criticism. At times, they even resist the formation strong trade
Social Responsibilities of a Trade Union unions because of the following reasons:
Trade unions are a part of society and so they must keep the i. Increased Potential for Strikes. Trade union leaders serve
well-being and progress of the community constantly before the threat of strike to the management quite frequently to
them in the midst of their endeavors to help the working class. get their demands accepted. When a trade union fails to get
Unions have a stake in the success of national plans for its demand accepted by the management through collective
economic development, since these are formulated and bargaining and negotiations, it may adopt militant methods
implemented as much for maximizing_ production as for including a strike blockade or work stoppage. Thus, the
distributing the product in equitable manner. Unions have to potentiality for strikes is more in an unionised firm.
adapt themselves to changing social needs and rise above ii. Narrow Perspective. Lack of education makes the workers
divisive forces of caste, religion and language. It is only thus narrow-minded, and prevents them from taking long-term
that they can progressively become instruments for constructive views. Thus, anything, which does not result in an
purposes; in this context, some important social responsibilities immediate reward, becomes unattractive to them. This
of trade unions appear to be in the field of: attitude is responsible for many strikes and lockouts in
i. Promotion of national integration; industrial concerns.
ii. Generally influencing the socio-economic policies of the iii. Resistance to Change. Trade unions do _ not welcome
community through active participation in their rationalisation and improved methods of production for
formulation at various levels and the fear that some of the workers will be put out of work.
iii. Instilling in their members a sense of responsibility They often show resistance to introduction to changes in
towards industry and the community. work methods, procedures and working conditions.
iv. Fear of Increased Costs. All efforts of a trade union to
Aspects and Importance of Trade Unions
gain concessions from management in the form of higher
In the modem industrial society trade unions are a force in
pay, better working conditions, better retirement benefits,
them. No managers of working organisations can ignore “the
etc. for its members imply higher costs to management.
influence of trade unions on the behavior of their work force

Obviously higher costs, if not accompanied by increases in The existence of a union affects not only the overall organiza-


employees’ productivity, are not desirable for the tion, but also the management in many ways. For the personnel
organisation as it will not be able to face competition in the manager, the existence of a union means that all personnel
market in the long-run. decisions shall be subject to union’s checks and controls. Apart
v. Social Costs. When labour unions strike on flimsy from a union’s effect on policy making, there are several other
grounds, incalculable losses occur to producers, community areas, which are affected by the existence of unions. These are
and the nation. Strikes are harmful to the workers also as summarized below:
they have to suffer loss of wages and other benefits. 1. Union policy affects the structure of labour employed.
vi. Lack of Employee Commitment. In an unionised firm, Though this factor is related to management decision, yet it
the employees loyalty is often shifted from the organisation also affects the overall organization.
to the union. This can result in reduced employee 2. The existence of a union does affect the level of wages and
commitment, lower morale, resistance to change, and the terms of their employment. A union may not tolerate
sublimation of the organisations goals to those of the unjust attitude of management with regards to payments
trade union. of increments, overtime, promotion, paid vocations, leave,
vii.Artificial Scarcity of Labour. It is alleged that the labour holidays, insurance plans, pension plans, medical
unions may create artificial scarcity of labour by demanding reimbursement, etc.
that only union members should be employed. In such a 3. A union’s existence may affect the prices of the products
situation, an employer may prefer not to fill the vacancies manufactured by the rganisation.
because of fear of trouble by the union. AF, a result, 4. A union’s policy in an organisation affects the position of
employment gets restricted among ‘the most widely individual workers in the organisation. Generally it has a
accepted general policies of trade unions, the following are positive effect on the workers. -
5. It also affects industrial relations and industrial peace.
1. To bargain collectively and to expand and increase the scope
6. A union might also try to have control over scarce job
of the collective bargaining system.
opportunities. Generally, unions take the stand that a fixed
2. To maintain and expand the security and survival capacity proportion of new jobs should be given to the blood
o f unions and their ability to withstand attacks, and to relation of the existing employees of the organization .
back up demands with solidarity
The mere presence of the union restricts management’s
3. To gain and maintain exclusive control of labour supplies freedom of action in many areas. In dealing with labour
in particular labour markets as a means of enforcing unions, it is important for the -management to recognise that
union demands for what are regarded as appropriate improved union-management relations play a vital role in the
working conditions. success of an organization
4. To improve the economic status and welfare of union
Causes of Emergence of Trade Union Movement
members, increasing their earnings and relative share in
The trade unionism in one country is not comparable to that in
national income and their influence, both in employment
another country because of varying approaches, roles and
and in the larger societies in which they are members.
functions assumed by it from time to time. For instance,
5. To develop and improve the union’s programs, practices, Tannenbaum observed, “Machine is the cause and the labour
and techniques to be used in conflict and defence of the movement is the result.” Hoxie observed, “Trade union
organisation and in expanding its power. . appears as a group interpretation as the social situation in which
6. To represent member in the area of political action, workers find themselves, and as a remedial programme in the
identifying candidates and office holders who are friendly or form of aims, policies and methods.” Perlman came to the
unfriendly, lobbying and securing political concessions for conclusion that “Trade unionism arises from the job-conscious-
unions and their members. ness and scarcity of job opportunities.” According to Marx,
7. To maintain a strong organisation, democratically “Trade unions owe their origin to class struggle between the
controlled, but with enough internal discipline to capitalist employers and their workers. To get more and more
implement such policies as have been described above. profits, the employers exploit the workers, who because of their
common interest to get more wages, unite in trade unions and
8. To facilitate irnproved member understanding of union
then resist the employers,
policies and programmes and’ increase skills and
competence on the part of union officers by appropriate Aspects of Trade Unions in India
educational programs. Trade unions are a major component of the modern industrial
These major policies lead unions into a complex. assortment of relations system. A trade union of workers is an organization
programmes and detailed , practices-from preparing- negotiat- formed by workers to protect their interests, improve their
ing strategies to designing pressure tactics and to developing working conditions, etc. All trade unions have objectives or
cooperative programmes with management. goals to achieve, which are contained in their constitution, and
each has its own strategy to reach those goals.
Impact of a Union on Management

Trade unions are now considered a sub-system, which seeks to they had no unions. Small associations came up in Bombay (e.g.

serve the specific sub-group’s interest (i.e. the workers’) and also the Bombay Mill-hands Association) and in Calcutta.
considers itself a part of the organization, in terms of the The second phase of the Indian trade union movement falls
latter’s viability and contribution to the growth of the commu- between 1900 and 1947. This phase was characterised by the
nity of which it is a part. Therefore, there are trade unions of development of orga-nized trade unions and political move-
blue-collar workers, white-collar employees and also employers. ments of the working class. It also witnessed the emergence of
Trade unions came into being for a variety of purposes. militant trade unionism. The period 1900 to 1915 was the
Individual workers found it more advantageous to band preparatory phase for organized trade union movement. Later
together and seek to establish their-terms and conditions of the First World War (1914-1918) and the Russian Revolution of
employment. They realised that if they bar-gained as individu- 1917 gave a new turn to the Indian trade union movement and
als, the employer would have a better leverage, for an individual led to organized efforts on the part of workers to form trade
would not matter as much as a group in terms of the running unions. It was esti-mated that in 1920 there were 125 unions,
of the enterprise. Since a group’s contribution is much larger with a total membership of 250,000. In 1920, the first national
than an in-dividual’s, so are the effects of its withdrawal. Also, trade union organization (the All India Trade Union Congress)
an individual may not be able to organize and defend his was established. Many of the leaders of this organization were
interests as well as a group can. There-fore, workers saw the leaders of the national movement.
advantages of organizing themselves into groups to improve The third phase began with the emergence of independent
their terms and conditions of employment. India (in 1947), and the. Government sought the cooperation
Employers also found it advantageous to deal with a group, or of the unions for planned economic development.
a repre-sentative of a group rather than go through the process The working class movement was also politicised along the
of dealing with each individual over a length of time. lines of the political parties. For instance, Indian National Trade
With the changed political, social and educational environment Union Congress is the trade union arm of the Congress Party.
in terms of awareness of rights-the right to organize, the right The All India Trade Union Congress is the trade union arm of
to bargain, and settle terms and conditions of employment- the Communist Party of India and sub-sequently the socialists
labour or worker unions sprang up in order to protect and left to set up another national worker federation, the Hind
further worker interests. Additionally, the influence of political Mazdoor Sabha. The Centre of Indian Trade Unions organized
parties interested in acquiring a foothold in the labour move- in 1970, has close links with the Communist Party of India-
ment also provided the impetus for the formation of labour Marxist (CPI-M). Besides workers, white-collar employees,
unions. supervisors and mana-gers are also organized by the trade
In India, the foundation of modern industry was laid between unions, as for example in the banking, insurance and petroleum
1850 and 1870. This was also the period of emergence of the industries.
Indian working class. Indian enterprises started growing side by Why Unions Lack Cohesion and Power
side with the British ones in all spheres of the national The large number of federations and plant level unions to
economy. During this period of the growth of Indian capitalist some extent detract from cohesion and unity of trade unions.
enterprises, the working and living conditions of the labour It can be argued that it is of advantage to have big and powerful
were poor and their working hours were long. This was testified unions for they can behave like respon-sible and high level
by commissions like the Indian Factory Labour Commission agencies in the development of our economic systems. Large
(1908) and the Royal Commission of Labour (1931). In unions would also be in a better position to prospect and
addition to the long working hours, their wages were low and further the workers’ interests.
the general economic condition was poor in industries. In order
The strength of trade unions both in the UK and the USA has
to regulate the working hours and other service conditions of
been traced to powerful national and international unions. The
the Indian textile labourers, the Indian Factories Act was
role of the cen-tral organizations of labour such as the Ameri-
enacted in 1881. As a result, employment of child labour was
can Federation of Labour--Congress of IndustriaI
prohibited. This Act required the formation of a machinery for
Organisations (AFL-CIO) in the USA and the Trade Union
the inspection of factories. Another factor, which provided the
Congress (TUC) in the UK has been seen as one of largely
background for the Indian trade union movement, was the
securing the enactment of legislation and enhancing the legal
birth of the Indian National Congress in 1885. The trade union
status of trade unions and of influencing public opinion in
movement in India can be divided into three phases. The first
favour of organized labour. As national unions, their strength
phase falls between 1850 and 1900 during which inception of
in terms of number and finance makes them strong and viable,
trade unions took place. Guided by educated philanthropists
and this enables them to wield considerable amount of power
and social workers, the growth of the trade union movement
and influence in industrial relations at the national level. These
was slow in this phase. During this period workers possessed
federations also guide the policy formulation of the affiliated
no trade union in the true sense of the term.
unions, taking into account the national perspective, and thus
As a result of the prevailing poor working conditions and long act as a restraining influence. The kind of linkage that the plant
hours of work, many strikes took place in the two decades level local has with its apex body in the US is not the same that
following 18803 in all industrial cities. These strikes taught its counterparts in India have with their national level federa-
workers to understand the power of united action even though tions. Indian trade unions are characterised by a three-tier

structure, the national, the state and the unit level where while any 7 workmen to band together and form a union. What


the policy flows from the top downwards, the state level units would be the repercussions?
are generally more influential. The inter-relationship and • Changed method of reporting for the year.
meshing between the two has somehow not evolved into a fine
knit network, with the parts being greater than the whole in
quite a few instances. Owing to paucity of funds and dearth of (P) Provisional.
experienced trade union leaders these state committees tend to (E) Estimated, repeated the previous year figures in respect of
become mere co-ordination bodies for independent unions those states for which information was not recorded.
instead of being in themselves powerful bodies haying Sources: 1. Pocket Book of Labour Statistics, Labour Bureau,
democratic control. The existing pattern of trade union Ministry of Labour, Government of India, 1976, p. 122.
structure has created organizational problems at all levels. The
2. Indian Labour Statistics, Labour Bureau, Ministry of Labour,
problem originates at the lowest level i.e. plant unions, which
Government of India, 1975, p. 167.
are so small in size that they cannot pay their dues regularly to
the state committees. Moreover, in the existing set-up owing to 3. Digest of Labour Statistics, Labour Bureau, Ministry of
the dearth of union organisers the same functionaries work at Labour, Govern-ment of India, 1961, p. 112. 4. Indian
the local as well as the state level. Labour Year Book 1979, Labour Bureau, Ministry of
Labour, Govern-ment of India: 1982, p. 74, Table 4.1.
Growth of Trade Unions
With the changed political atmosphere in the country and the Recognition of a Union
spreading of ideas about democracy socialism, the right to a There are two issues of concern here: The first is the issue of
living wage, leveling of inequalities, the building of a welfare recognition of a union per se, especially in a non-unionised
state and similar thoughts, there is no doubt that a steadily situation. The first question that arises is: Which union is one
increasing number of workers, particularly in the large metro- to recognise, or should more than one union be recognised?
politan centres, have begun to realise that a trade union Related to this is the problem of verification, the pro-cess by
organization is very essential for the protection and advance- which the contending unions’ claim to membership is cross-
ment of the working classes and their interests. However, this checked, to enable one to seek representative status.
realization alone cannot account for the vast expansion that has The two issues are related to: (i) the need to recognise a union;
taken place in the movement (Table ). The more important and (ii) the process to be employed for verification when a
factors that have led to this development are the creation of union stakes its claim, either in a new union situation or in
new central organizations, the growth of political parties at the multi-union situations. This problem arises because at the
national and regional levels, the encouraging labour policies of moment there is no uniform legislation available in all the states
the government after independence and the propagation of the and union territories with regard to the recognition issue. There
philosophy of trade unionism. have been attempts time and again at restructuring and
Certainly, one of the effects of this mushroom growth has streamlining the system but nothing has been effected so far. It
been the pro-blems at the plant level, especially in situations is only in states where the Bombay Industrial Relations Act is in
where more than one union exists. What is the manager to do force, e.g. Gujarat and Maharashtra, that there are elaborate
in such a situation? The law provides, as was noted above, for provisions regarding recognition. The Act classifies trade unions
into three categories:
TABLE Membership of Workers' Trade Unions 1. Representative union,
Number of Number of Membership Average 2. Qualified union,
unions of unions 3. Primary union,
Year registered membership
submitting submitting The basis of this classification is the
percentage of membership that a union has
unions returns returns per union
at the industry level (e.g. chemical industry)
1951-52 4,505 2,509 19,88,120 792 or at the lowest level, the primary union.
1956-57 8,478 4,370 23,73,000 543 The representative union should be able to
1961-62 11 ,416 6,954 39,60,000 569 muster 15% of the total number of
1969* 18,460 8,254 48,66,000 589 employees, employed in anyone industry in
1970* 20,282 7,692 48,50,000 631 a contiguous area. The qualified union
should have 5% of the employees in an
1971* 22.121 8,909 54,31,000 610
industry enrolled as members and finally the
1972* 23,882~ 8,011 52,77,000 659 primary union should have 15% or more
1973* 25,208~ 7,472 52,81,000 707 employees enrolled in a unit or a plant.
1974* 25,776 5,662 41,97,000 741 Therefore it is apparent that there is a scaling
1975* 24,554~ 56,211 41,29,000 734 down of numbers in terms of the status
accorded. The idea is to provide some basis
1976 (P) 28,910 (E) 8,589 (54.4) - 686
1977 (P) 29,390 (E) 8,286 (55.8) - 660

to assess the relative strength of a union seeking recognition. its income and expen-diture statements to the registrar of trade

unions on or before 31st March.

The Verification Process Under the Code of Discipline
In a situation where a union puts forth a claim to be recognised The union can spend its funds on salaries of office bearers,
under the Code of Discipline the Labour Department satisfies prosecution, defence, etc. for protecting its trade union rights, to
itself about the union’s representation. The department would provide compensation to members, Ievy subscription fees,
collect the following: publish periodicals, etc. More important, a registered union can
claim protection from being prosecuted for legitimate trade
1. Particulars of existing unions in the plant, registration
union activities. This protection is under Section 120B, subsec-
number and date of registration, whether the existing
tion 2 of the Indian Penal Code.
recognised union has com-pleted a two-year period, whether
any of the unions committed a breach of the Code of The issue that arises, therefore, is the distinction between a
Discipline as established by an enquiry of the recognised union under the Code of Discipline and a registered
implementation machinery. Within 10 days the aspirant union under the Trade Union Act of 1926. The former is a
unions and other existing unions wiII have to produce voluntary act and may well concern a representative union, while
documentary evidence to the verification officer in respect of the latter may not always cover a representative union, especially
the list of members who have paid subscriptions for three in multi-union situations where there are many small unions or
months out of the preceding six months. two or three factions. In the absence of any statute, the recogni-
2. Membership and subscription. tion of a majority bargaining union of the workers still remains
a cumber-some process.
3. Money receipt counterfoils.
Multiplicity of Unions
4. Books of accounts.
This plethora of onions, as Table 3.5 indicates, has led to
5. Bank account books (statements). problems at the plant level. In India, many of the unions are
6. A copy of the constitution of the union. general unions. In this environ-ment, a combination of factors
If there are two unions then both need to furnish the required seems to operate-the first being the demo-cratic principle of any
data. However, if the unions abstain from providing data, the seven members being able to form arid register a union. In a
verification officer, after giving 10 days notice, will go ahead with democracy, even a minority is given an opportunity to organize
the verification process and come to a judgement. and further its interests. The Trade Union Act of 1926, also
gives sanction to this principle of seven members forming a
The verification officer scrutinises the documents in the presence
union. Secondly, given the large number of trade union
of the union(s) submitting the above data. If both the unions
federations at the national and regional level, which are vying
have claimed any member then an explanation is called for. The
with each other for increased membership there is bound to be
muster roll of the firm will also be checked to ensure that the
disunity among the workers. There is no single federation to
names tally in terms of employment and union membership.
which all the other federations belong. The trade union leaders,
After this process of checking and rechecking, the unions some of whom are outsiders while others have come up from
concerned can themselves go through the verified list of within the trade union move-ment, have different approaches
members and notify their objec-tions, if any. Only specific to the problems at hand and hence there may, and does come a
objections will be considered. The objections will then have to parting of ways on many occasions.
be verified. In order to establish this, a systematic sample of
In multi-union situations at the plant level, the problem of
employees will be selected for personal interrogation. The
inter-union rivalry frequently poses a managerial problem.
proportion of interviews varies from a figure as high as 29% or
Disagreement among unions to technological change
a minimum of 100 when the number of names objected to is
rationalisation, automation or terms and conditions of
500 to 2% or 250 when the number is above 5000 or more.
employment cause work stoppage. Sometimes one union agrees
The verification officer will then submit his report to the while the other does not, for a variety of reasons. These rifts are
government as well as to the management of the firm. This also due to the rivalry among leaders, or to differences in
verification process is according to the Code of Discipline. strategy to be adopted or to differences in ideology. A clash of
However, since the code is not a statute, his findings have to be personalities and egos also plays its part.
accepted in good faith by both the management and unions
One of the effects of industrialisation, which has meant the
during their bilateral talks. Many agreements incorporate the
stepping up of the rate of capital formation, has been a strain
acceptance of such voluntary codes.
on the living standards of workers. This has been coupled with
Rights and Responsibilities of Registered Unions another side effect, i.e. job insecurity--a problem that workers
While the main clauses of the Trade Union Act of 1926, usually face in the initial stages of industrialisation. The growth
concern the forma-tion of unions, certain other features are also of unions in such cases has generally been to protect the interest
worth noting. Registration, which means ‘formal recognition of of the working class. The process of industrialisation itself
a representative body, also entails certain preconditions. A makes for increase in the rate of unionisation. In India this
registered union must allow membership to anyone over 15 process has not followed the pattern that existed in the
years of age and have 50% of the office bearers from within the developed countries. The merchant-craftsman’s stage of
industry. It must keep its books of account in order and send capitalism was bypassed and we had instead an abrupt transi-
tion from the agricultural pattern of production to the factory

pattern of production. In the process the emphasis on difficult to respond to these union demands as they are not


craftsmen and their skills got de-emphasised. This, when plant-oriented and thus outside the management’s control.
coupled with the low level of skill formation, not only meant a Multiple unionism also leads to multiple enrolment in unions
greater number of unskilled industrial workers, but, also as a and non--subscribing members, causing delay or failure to get
consequence, led to the growth of several general industrial recognition. This restrains a union’s bargaining power during a
unions and hence the pro-blems of inter-union rivalry. period of prolonged strife while the unions are squabbling
Another factor was the political linkage with unionisation. among themselves for dominance, the workers are deprived of
Unions through their collective action are organizations their wages and the plant suffers a loss of produc-tion. One can
concerned with the interest of a particular class. Hence they are say that the effect of multiple unions has by and large been
also concerned with the distribution of power. Since distribu- detrimental to the objectives of the trade union movement.
tion of power and decision-making is linked with the political Again, at the plant level, multiple unionism qualitatively
process, the interrelationship between politics and unionism is weakens the movement resulting in the formation of small-
part of this process which is perpetual. Both political parties sized unions without effective organization, a precarious
and unions have a vested interest in each other as the effect of financial position and an inability to achieve significant benefits
their actions and strength is of interest to each other. Unions or rights to the members through their own efforts. Collective
have a vital stake in the political process and the decisions that bargaining is not possible and there is greater dependence on
wiII change or restructure the balance of power within their government machinery in labour-management relations. This
society. constant power struggle and jostling for the position of being
The growth of the four major national federations can be traced the major trade union results not only in propaganda amongst
directly to the growth of the major political parties, which have fellow workers to gain support for a particular union but at
different ideologies and approaches to the distribution of times in violence and disharmony.
power and the role of labour in society. The ideological links The primary role of a union is to protect the workers and to
between these federations and the political parties are, therefore, channelise their efforts into more rational directions so that the
responsible for cleavages in the union movement. viability of the plant is also enhanced. The effect of having
Another phenomenon has been the role of the ‘outside leaders’ multiple trade unions both at the macro-and-micro-levels
in the union. This is partly due to the low level of education of serves only to weaken the workers’ power base while at the
the workers, their lack of opportunities to gain experience and same time negatively affecting the viability of the plant. A
therefore their dependence on a small elite of educated and variety of remedies have been suggested, which will be dis-
influential people. All these factors have led to the domination cussed later.
of the trade union positions by ‘outside’ leaders. The technical However, it must be noted that in spite of the foregoing there
demands in terms of understanding the voluminous and all- are many organizations where multiple unions exist and the
embracing legislation are formidable and a legalistic approach management does effect-ively negotiate, and conclude agree-
seems to be all-pervading. Therefore familiarity with the various ments. In many plants, workers are unionized-on a craft
pieces of legislation does play a part in getting things done. The basis-their special skills or training bonding them together.
social distance between the manager and the worker has also Multi-unionism is more a problem where general unions exist,
played its part. In a tradition-bound society which gives due for whom all categories can be organized in one general union.
deference to authority, the distance between the manager and
Union Leadership
the worker has been substantial. Politicians turned union
One of the most crucial factors in this sphere is the leadership
executives have therefore filled the gap.
that is pro-vided. The leadership provides the direction and
Detrimental Effect of Multiple Unionism goals for a particular union. The leader’s task is to make the
The large number of national federations at the macro level union effective, by improving the terms and conditions of
means that the ‘unit’ level concept has been considerably de- employment of the worker and also by being con-cerned with
emphasised. It leads to the diffusion of union power at the top the viability of the enterprise. The trade union organization
and therefore damages the political leverage of labour. It also based as it is, in many cases on individuals or the national
leads to inefficient efforts to change or introduce new legislation federations and their ideologies, has not been able to evolve a
in order to improve the lot of workers, which could have been professional cadre of leader-ship at the grass roots to the
possible if there was one cohesive body at the macro level. desired extent. In fact, quite often, a single union executive
Similarly at the micro or plant level the unions have an ‘extra- leader is responsible for running a large number of unions. “A
plant’ orientation of the unions which is inherent in their survey of trade union leadership in Bombay in 1960 showed
political groupings. This restricts their ability to judge a plant that one leader was president pf 17 unions and secretary of two
issue on its own merits without adding an ‘extra’ (political) more. Another was an office bearer of 20 unions. R. J. Mehta is
dimension to it. The different unions are unable to come President of the Free Trade Unions, which control more than
together to submit a common charter of demands as their 14 unions. This brings us to a consideration of the next issue,
differing ideologies make it impossible to take a united stand, i.e. outside leadership vs. internal leadership. In fact, the Trade
with each individual union seeking to gain more leverage for Union Act of 1926 makes a provision for this and allows for
itself from the particular situation. Managements also find it 10% of the leadership to be from outside the sphere of the
organization. An outside leader is one who is not a full time

employee of the organization, whereas the internal leader is organization. Funds there-fore are needed to pursue activities,

such a person. Many lawyers and politicians have been union which will in turn benefit the members who will then contrib-
leaders in the early part of their careers. The former President V. ute, not only financially but also in terms of their services and
V. Giri was one such example, so were former Central ministers sustain their membership. Activities resulting in something
like G. L. Nanda and Khadilkar. There are advant-ages and worthwhile will arouse the enthusiasm of the members and
disadvantages in both the systems. The ‘outsider’ leader has make them concerned for the allocation and proper utilisation
knowledge of industrial practices in comparable organizations of scarce resources. The divisive nature of Indian trade union-
and therefore has more experience when he comes to the ism bas also led to the dissipation of funds amongst a large
negotiating table to bargain. If he is a politician or a person number of organizations, with the result that there are many
with strong political links then he may be able to get some small unions without much financial backing and without
advantages either in terms of policy or in terms of implemen- much staff to do any substantial work. The generation of
tation of administrative action, especially if he belongs to or has funds has been wholly inadequate. In some cases, subscriptions
linkages with the ruling party. On the other hand his involve- are not collected promptly or are paid by members only when
ment with the plant level problems is much less as he is not on they have a problem. In the former case, the trade union
the shop floor to understand the intricate issues applicable to a management for fear of losing membership overlooks it. On
particular plant. Not being an employee of the enterprise or an the other hand, there are according to some trade union
insider, he lacks the required depth of understand-ing of local executives, shrewd members who do not mind paying sub-
issues and specifics. The outsider is a professional who has scription to more than one union in order to protect their
many units under his wing all of which demand his time, interest in times of need.
including the larger function of liaison. The insider would not One other mechanism employed nowadays besides the usual
only have greater know-ledge of the enterprise specifics but also collection is the special levy at the time of distribution of
have more time for sustained work, being concerned as he is bonus. Some national federa-tions and independent unions
with just one enterprise. Also, external issues and ideologies are often generate some reserves to pay at the time of strike as
not unnecessarily inducted, which could happen when outside strike fund or to employ research staff to keep abreast with
leaders are in control for whom ideology may be more im- current trends, but this is not the case with all unions. Table
portant than getting the best deal under the circumstances. TABLE
below givesIncome and Expenditure of Workers Unions
the financial position of trade unions.
No. of unions Average income-
The leadership role in a trade union has a variety of demands Expenditure
Income per annum per
placed on it. Not only does it require a certain amount of Year submitting
(in lakhs) (in lakhs) trade union in
technical knowledge of the nature of business of the particular
returns rupees
organization, but also a sympathetic understanding of the
1951-52 2509 50.84 45.32 2026.32
workers, their attitudes and their problems. A certain amount
1956-57 4390 80.17 71.81 1826.19
of commitment and empathy for a cause, even in uncertain
1961-62 6954 171.13 151.34 2460.89
condi-tions, is necessary. Till now the attraction for persons 1969 8254 340.71 299.98 4127.82
entering this occu-pation has been the possibility of a political 1970 7692 395.83 331.00 5145.99
career in the future. However, there have been some plant 1971 8909 426.91 408.55 4791.89
unions, which have been run very professionally and have at the 1972 8011 461.97 402.87 5766.69
same time been concerned with the viability of the firm or the 1973 7472 491.37 416.67 6576.15
enterprise as well as the good of the workers. The erstwhile 1974 5662 499.35 449.34 8819.32
Simpson Workers Union under the stewardship of 1975*(P) 9690 715.08 628.55 N.A.
Gurumurthy was an example, and TLA is an example of an 1976*(P) 8719 646.90 579.13 N.A.
industry level federation. . 1976**(P) 8177 711.75 611.54 N.A.

Trade Union Finances

If an organization is to grow, survive and meet the needs of its
rank and file members in terms of attaining their objectives etc. • Excludes J&K and West Bengal.
it needs money. For a variety of reasons, the finances of many
trade unions have not been very bountiful. It must be noted
• Excludes J&K, Kerala, Nagaland, Rajasthan and West
that to every general statement, there are a number of excep-
tions and so is the case with some financially strong unions. • Incomplete. Assam, Bihar, H.P., J&K, Kerala, M.P.,
Funds are needed for attracting and retaining competent staff Rajasthan, and West Bengal are excluded.
for, however idealistic the cause, people do need to survive. It is (P) Provisional.
only with competent staff that some of the objectives like Source: Indian Labour Year Book, Labour Bureau, Ministry of
research, comparative data generation, company studies, Labour, Government of India, Simla, 1979, p. 58, Table
presenting demands and resolving workers problems can be 4.04.
achieved. Again, funds are necessary for political lobby-ing; for
Many researchers have written about the woeful lack of funds
sending union representatives to the local bodies, state and
among trade unions resulting in poor organization, and hence
central legislatures. If inertia sets in, an organization will wither
the inability to cope with problems. Also, it is felt that there are
away or the rank and file will shift to a more active and useful
not enough field workers or union officials to cope with the

problems of workers and to protect their interests, especially at Education helps create awareness on the part of the workers in


the time of wage negotiations. the environ-ment around them. Many workers cannot afford
There are, however, some notable exceptions especially in-terms formal education or given the system as it exists, they are unable
of finan-ces. The Simpson Workers Union under the steward- to utilise it to their advantage. While the government too has
ship of Gurumurthy was an organization which built up worker education schemes, the trade unions in some cases have
substantial financial reserves besides ventur-ing into a variety of cooperated and added their own contributions to tailor it to the
pioneering worker welfare activities when Gurumurthy and his specific requirements of the workers. Such educational schemes
colleagues resigned from the stewardship of the Simpson are meant to enhance the worker’s knowledge of his work
Workers Union after 22 years he distributed a sum of Rs. 16 environment and to inform him fully about the issues that
lakhs among the 15,000 members of the union as ‘Union concern him, particularly with reference to his rights and
Gratuity’. responsibilities, procedures and systems that exist in the work
place for redressal of grievances, worker participation schemes
Two factors with regard to union finances are especially worth
and so on.
noting. First, craft unions, which are usually smaller in number
and composed of skilled workers, whose average earnings are Research
high, are usually better funded because of higher contributions. This is an activity, which is gaining significance only in recent
Therefore, they are able to provide better service to their years. Yet it is important for many reasons. The union negotia-
members. On the other hand, the bigger unions with less tors need updated infor-mation systematically collected and
contribution from their members (but the quantum of money analysed at the bargaining table, where the terms and conditions
is made up by the larger numbers) are able to organize more of employment of their rank and file are negotiated. They need
services, in terms of depart-ments etc. in their organizations. to back up their wage claims with knowledge of the industry,
Often, the large size itself provides the necessary momentum. productivity, and comparative industry practices. Therefore the
The range of services and organizations provides an attractive emphasis is much less on academic research and more on the
impetus for the merger of smaller unions with the larger ones. practical problems, especially those issues concerning the day-to-
day affairs of the union and its activities and union
Ancillary Functions of Trade Unions
management relations. Some of the research activities are: (i)
Besides their main function, which basically consists of
collection and analysis of wage data including fringe and
organizing workers and improving their terms and conditions
pension benefits through surveys of comparative practices. This
of employment, many trade unions provide a variety of
could also include data on working conditions and welfare
services to their members and sometimes to the commu-nity
activities; (ii) preparation of background notes and position
of which they are a part. These ancillary functions can be catego-
papers for union officials; (iii) preparation of background notes
rised into four groups: (i) communication; (ii) welfare activities;
etc. for court cases; (iv) collection and analysis of macro data
(iii) educa-tional activities; and (iv) research.
relating to the economy, industry, sectors etc; (v) maintaining
Communication contacts with other unions, research bodies and universities;
Many large unions publish a newsletter of a magazine. Their and (vi) to examine the current organization structure, proce-
main aim is to clarify the union’s policy or stand on certain dures etc. with a view to understanding its relevance to the
principal issues and also to pass on information about the current situation.
union and its activities. Much could be done to improve the This function could be carried out at the headquarters of the
contents and quality of such publications. There is a need to union or the central office but involvement of local officials to
professionalise such publications by hiring specialised persons gather data on local practices etc. would be useful.
to handle the activity. If necessary, these publications could also
be sold to generate addi-tional revenue to augment union Wage Policy of Unions
finances. However, the main function remains that of commu- It is often remarked that the only wage policy of unions is their
nication so that the rank and file are aware of the activities of demand for more and more economic benefits. Of course,
the union. unions do seek more for their members, and wage increases are
unquestionably the most common goal in negotiations.
Welfare Activities Nevertheless, such a. generalization can be misleading; union
Many unions provide a number of welfare activities to improve policy is much more complex.
the quality of the workers’ lives. Included in this sphere are the
As a part of the general policy to improve the living conditions
provision of housing, cooperative societies and in the case of
of workers, unions endorse a policy proposing rising real wages
TLA (Ahmedabad) it has ventured into the area of organizing
and living scales so that wage rates and earnings advance more
working or self-employed women and has even started a
rapidly than costs.of living. They may propose to relate wages
banking activity for this purpose. This separate organization is
to productivity and hence to ensure employee participation in
called the Self Employed Women’s Association (SEWA). Some
the increased profits. They seek to protect labour’s share of
unions also offer training in craft activity, especially for women,
income, to see that rents, interest, and proprietary and manage-
who can then supplement their husbands’ income with a
rial shares are not increased at the expense of workers. They may
cottage industry type of activity, such as sewing.
even propose that a larger overall share of income distributed to
Education workers, on the ground that such a changed distribution is

necessary to maintain purchasing power of workers, prevent

stagnation, and assure continued growth in the economy.

In some cases, union policy has been concerned with an
employer’s ability to pay. In others, policy has proposed to
ignore this consideration. Union policy has sometimes argued-
as”, for example, in the requirement of minimum wages-that
the economy will be better off without employers who are so
inefficient, that they cannot afford to pay. In the advanced
countries, most union officials and probably a majority of
members are keenly aware of the realities of competitive
business and favour a policy that protests the goose that lays
the golden egg. They seek to avoid wage rates that are likely to
have adverse effects on member’s employment. They under-
stand the economic facts of life and recognise elasticities in
demands for labour.
Notes -


Learning Objectives 9. Mahatma Ghandhi’s Sarvodaya theory.


After going through this chapter you will be able to compre-
The Marxian Theory
hend the following.
Karl Marx was the founder of “Scientific Socialism” popularly
• The relevance of the different theories of trade union known as Communism. In the eyes of Marx, the organised
Approaches to Trade Unionism labour movement is an intermediate step in the class struggle,
Trade unionism is the child of industrialization, which caught the fight for power by the proletarian class (workers) to
momentum after industrial revolution in England during the overthrow the capitalist class (bourgeois). Karl Marx traced the
mid nineteenth century. The evolution of the trade unions has origin of trade unionism to the growth of industrial capitalism.
been interpreted in different ways by different authorities. Their And in his views, trade unions represent a prime instrument of
views are expressed in the form of ideologies, approaches, class struggle between proletarian workers and capitalists. To
theories, etc. The purpose of such approaches and theories has Karl Marx, the trade union is an “organising centre.” Without
been to explain the basic motivating factors behind union organisation, workers compete with each other for available
growth and bargaining policies. Unions engage in a wide variety employment. Trade unions developed out of the attempts of
of functions, ranging from organization of workers to the workers to do away with this competition for the purpose
maintaining and protecting their rights. of obtaining at least such contractual-conditions as would raise
them above the status of bare slaves. The labour organisation
John T. Dunlop has been of the view that a useful theory of
provides the locus of the working class towards a change in the
trade unionism must provide answers to the following
structure of the society, and it was to be the center , for
organising the working class for its political emancipation.
i. What factors lead to the organization of a union? According to Marx, with the emergence of trade union move-
ii. What conditions are favorable to bring a union into ment, the decay of capitalism would be inevitable.
existence? Trade unions are essentially political institutions, a means of
iii. What different patterns of growth and development in consolidating the workers’ position on a parity with, and
different industries and different geographical areas are eventually superior to, that of any other member of the
found in the unions? community. The motives which drive workers into joining trade
iv. What are the ultimate goals of the unions? How will these unions are economic insecurity, political exploitation and social
affect the political, economic and social structure of the degradation. The labour movement is a collective movement on
country in the long run? To these, Arthur D. Butler added an international scale in which the interests of the workers are
two more questions, namely: identical and always in opposition to those of their masters.
v. How do unions decide which goals to seek through Webbs’ Theory of Industrial Democracy
collective bargaining? When a union knows it cannot win Webbs’ theory is the classic statement of the assumptions,
everything at a particular bargaining session, how does it purposes and methods of labour organisation. The husband-
decide whether to fight harder for wage increases or wife team of Sidney Webb and Beatrice Webb were dominant
for a better grievance procedure? leaders of the labour party in Great Britain during 1920s and
vi. How do unions decide which techniques to use in 1930s. According to Webbs, trade unionism is an extension of
accomplishing their goals? What determines whether democracy from the political sphere to that of industry and to
unions will select economic or political methods? overcome the dangers of managerial dictatorship. This function
of representing and protecting the working class is not just a
The questions are inter-dependent and the answer to one will
temporary-obligation, arising from the current state of modem
determine answer to others. To answer these questions, the
industrial development, nor does it lead eventually to the all
following theories of labour movement might prove useful:
embracing ‘dictatorship of the proletariat of Marx and Engles.
1. Marxian class struggle theory. They rejected emphatically the “classless society”. Webbs as
2. Webbs’ theory of industrial democracy. “fabian socialists” saw a different outcome in the evolution of
3. Cole’s theory of industrial unionism. political form. In their analysis of the causes of trade Union-
ism, the Webbs’ placed major emphasis upon the adverse
4. Hoxie’s theory of business union.
effects of competition. In the “Higgling” market the ruthless
5. Tannenbaum’s anti-technology theory. struggle for commercial and industrial survival based on
6. Common’s pragmatic approach. comparative prices, with its long chain of pressures extending
7. Perlman’s theory of scarcity consciousness. from the consumer through the retailer to the wholesaler to the
manufacture, is to be found the explanation of the workers
8. Kerr and Associates’ protest theory.

misery. Trade unions perform greatest service in the capitalist , Hoxie’s theory of Business Union

free enterprise society by lifting from the individual employee Robert F. Hoxie explained the origin of trade unionism in
the heavy pressure of competition over wage rates, hours and terms of group psychology. According to him, workers who are
conditions of work. Webbs talked of the class struggles as “the similarly situated economically and socially, closely associated
long drawn-out battle of interests between capitalist employers and not too divergent in temperament and training will tend to
and manual working wage earners. develop a common interpretation’ of their social situation and a
In order to improve their members economic status, the common solution of their problems ofliving.23 This means
unions seek to require each firm to pay at least a minimum rate that to understand the nature of trade unionism one has to
of wages and to provide minimum working conditions, in take into account not only environmental conditions but also
terms of hours, sanitation, safety, etc. Further, to Webbs, trade temperamental characteristics of the workers concerned. Thus,
unionism may extend democracy to the industrial sphere. It differences in group psychology cause different types of unions
may equalize the bargaining power of labour and capital.18 to appear.
Hence, it would be possible to establish uniform rules, which Hoxie’s greatest contribution to the theory of unionism was to
they called as common rules, in respect of wages, working classify labour organisation according to their functional
hours and working conditions, etc. operations and to identify the principal types to be more
According to Webbs, trade union movement is not an instru- common. The main types of trade. unions according to Hoxie
ment of revolution to overthrow the capitalistic order. In fact, were five, Business, Uplift, Revolutionary, Predatory and
they saw the solution of class conflict in equality of bargaining Dependent. A fundamental type is the result of a “common
power and collective negotiation. They did not think it necessary interpretation of the social situation” which produces agree-
to accomplish complete overthrow and liquidation of business ment among the group as to the problem forcing its members
class. It was merely to eliminate industrial autocracy and replace and the kind of remedial programmes, which will solve it. To
it with industrial democracy. Hoxie, trade unionism was a pragmatic, shifting grass-roots
movement. He rejected implicitly the assignment of a fixed
To improve the economic status of the working class and to
basic “Cause, economic or political or historical, as the explana-
infuse industrial democracy, Webbs advocated the methods of
tion of workers’ combination. This amounted to a denial of
mutual insurance, collective bargaining and legal enactment.
the class struggle theory of Marx or Cole and brought him close
According to them, the special function of the’ trade union is
to Common’s environmental adaptation theory without the
the democratic administration of the industry.
latter’s underlying class commitment.The five types of unions
Cole’s Theory of Industrial Unionism and Control of described’ by Hoxie are as follows:
Industry 1. Business Unions. Also known as ‘Bread and Butter
Cole’s views of the proper function of organised labour and its unions’, These unions are trade conscious rather than class
role in the world of the future were clearly stated in “The World conscious. They accept the existing economic system and
of Labour.” published in 1913. As a socialist, he visualized that aim at bringing about improvement in the wages and
in future-the goal of labour as something more than the working conditions of their members. Collective bargaining
Webbs’ representation of the interests of workers and some- is the usual method followed by these unions with heavy
thing less than the Marxian dictatorship of the proletariat. It reliance on strike as a weapon.
was the “control of the industry” by the true producers, the
2. Friendly or Uplift Unions. Such unions are essentially
workers, in partnership with the State. The theory of producer
idealistic in viewpoint. They may be trade, class or society
control, which Cole endorsed with some qualification, was the
conscious. These aspire to elevate the moral, intellectual and
“syndicatist” dogma of ownership and means of production.
social life of the workers. To realise this aim, these unions
The principle of union development necessary to this end’ ’tis
advocate use of political methods such, as setting up of
industrial unionism, of which he has been one of the leading
cooperative enterprises, profit sharing, mutual insurance,
etc. They are law abiding and employ the methods of
Like Webbs, Cole had no doubt about the assumption that collective bargaining for securing benefits for the workers.
(trade Unionism exists to carry on the class struggle. He said
“the class struggle is preached not on the ground that it is
desirable, but on the ground that it is monstrous. 3. Revolutionary Unions. Such unions are extremely radical
both in view point and in action. They are distinctly class
and irrefutable fact.” The class struggle is established in our
conscious rather than trade conscious. They reject private
social institutions, and it is only by means of the class struggle
ownership of productive resources and the wages system.
that we can escape from it. This in turn implies great power,
Their weapons are either political action or direct action in
which can be attained only through universal membership of
the form of strikes, boycotts, sabotage and violence.
the labour class in trade Unions and improved Organisation.
Collective bargaining is also used in so far as the main aim is
Cole gave the intermediate and ultimate stages of the class
not overlooked. Their aim is to overthrow the capitalistic
struggle and remarked, “the control of industry may be the
system and install socialistic system.
future destiny of the trade unions, the direct control of the
whole national life is most emphatically not for them. 4. Predatory Unions. Unions of this kind do not subscribe
to any ideology. Such unions are characterized by their

ruthless pursuit of immediate ends. Their methods include together in a single competitive era and cycles of property and


collective bargaining, secret bribery and violence. depression, which Common found to have a positive correla-
5. Dependent Unions. A dependent union is parasitic in tion with the rise and fall of union activity. The outcome of
nature relying upon the support of the employers or other Common’s theory of labour unionism is non-revolutionary
labour groups. Unions of this type appear in two forms- and implies non-acceptance of capitalism which fell considerably
company union and union label union. The former short of even the Webbs’ expectations of political evolution.
depends entirely on the employer for its support and does Perlman’s Theory of Scarcity Consciousness
not really represent the interest of the workers in so far as it Selig Perlman (1888-1959) was the inheritor of Common’s
is not opposed to the interest of the management. The intellectual leadership in labour economics at Winconsin School.
second type depends upon the union label being imprinted Perlman wrote extensively on the labour: movement, being the
on the products made by the union members. author of “A History of Trade Unionism in United States”
Hoxie predicted that with the rise of union power, collective (1922)-and “A Theory of the Labour Movement” (1928)
bargaining would develop into a form of industrial democracy among others. According to Perlman, unionism developed
and bring an end to the profit system. because of the workers’ scarcity consciousness, which arose in
the minds of the workers because of the fact that their eco-
Tannenbaum’s Anti-Technology Theory
nomic position cannot improve beyond that which is barely
The machine is the centre of gravity in present-day industrial
sufficient to cover minimum essential of an ordinary standard
community-what land did for the noble in the days of feudal-
of living. Out of this scarcity consciousness grew a job-
ism and what the competitive market and free bank connections
conscious unionism, a unionism “which controls the job
do for the merchant, the factory does for the workers.,,24 It is
opportunities. The union establishes certain job rights which it
the dominance of machine that gave rise to trade unionism.
then rations among the members through regulations applying
Frank Tannebaum, a Professor of History of Columbia
to overtime, seniority, etc.
University, U.S.A., saw the emergence of trade union move-
ment as labour’s reaction to the dominance of the machine in Kerr and Associates’ Protest Theory
modern industrial society. The industrial revolution destroyed Kerr, Dunlop, Harbison and Myers observed that labour
the older way of life and left the individual industrial worker to protest is inherent in industrialisation. Organised from of
the mercy of the employer “who became the catalytic agent that protest, according to them, is labour organisation. The-nature
crystalised the workers into a self-conscious group. The workers and role of such organisation depend upon the
became completely dependent upon the machine and the industrialisation process, the industrializing elite and the specific
employer degraded them and made them insecure. The trade culture and environment of a country. These authors used the
union movement aims at control over the machine so as to more general term “labour organisation” in place of trade
overcome insecurity. Thus, according to Tannenbaum, the union. One of the universal responses of labour force to
emergence of unionism is spontaneous and inherent in the industrialisation is protest against it, because “industrialisation
growth of capitalism. It reflects the urge of the human beings makes a universal demand; it requires a-basic change in relation-
to have control over machine. Tannenbaum saw the labour ship between man and his work and inevitably also between
movement ultimately displacing the capitalistic system by man and his cultural setting, and the new recruit to the indus-
industrial democracy. trial labour force resents the imposed discipline.” The worker
often finds his work distasteful and his compensation never
Common’s Pragmatic Approach
commensurate with his contribution. The type of labour
Common advanced a theory of labour. movement based on a
organisation that develops in a country is related to the type of
set of basic premises which are mostly environmental factors.
industrializing elite; there are certain universals, and the
That is why, his theory is also called “environmental theory of
diversities which can be explained in terms of strategies of
labour movement.” The basic premises of his theory were
industrializing elites and cultures and environments;
Marxian, although the conclusions, being those of careful
observer and a restrained reporter, would hardly have satisfied Mahatma Gandhi’s Sariodya Theory
the German revolutionary philosopher. According to Mahatma Gandhi, unions are not anti-capitalistic
Common regarded the labour movement in America as delayed organizations. They are in the least degree political. Their main
and thwarted by a number of factors, the first of which was free aim is to increase their internal strength to work conscientiously
land. Ranking next as a major influence upon. the labour and to take from the employers no more than that what is
movement of the nineteenth century was the tremendous “rightfully due to the workers.
expansion of markets, the third factor is effect of the new Mahatma Gandhi’s philosophy is’ based upon the “Sarvodaya”
competition upon labour movement, which were much like as principles of Truth, Non-violence and Trusteeship, in which
described by the Webbs. It is the function of manufacturer- class harmony prevails. He considered trade unions as essentially
employer to drive hard wage earners to their first conscious reformist organisations and economic institutions, which must
combination with others of their class in trade unions and away be organised the basis that capital and labour are not antagonis-
from the-guild like associations of earlier days. The fourth tic but ate supplementary to each other. He observed: “My ideal
important influence of great importance has been immigration, is that capital and labour should supplement and help each
with its influx of races, nationalities and languages, thrown other. They should be a great family living in unity and
harmony; capital not only looking to the material welfare of the

laborers but their moral welfare also-capitalists being trustees of Thus, it would be evident that Gandhlji insisted that strikes

the welfare of the labouring classes under them. should be undertaken only after adopting the legitimate means
Gandhiji felt that trade unions should not only undertake the of settling disputes. These means in his views were (a) the
functions concerned with improving the economic conditions moral appeals to the conscience of the employers to concede to
of workers, but must also try to raise their moral and intellec- their just demands and (b) when moral appeals failed, resort to
tual standards and should bring about an all round voluntary arbitration. Gandhiji would not like the parties to
development through internal efforts. They should also declare strike or lockout without first trying to refer the dispute
undertake programmes for teaching supplementary occupations to an umpire who would give a decision on the dispute, which
to their members so that uncertainty of employment during would be binding on the parties. Broadly speaking, the origin
strike period may be reduced to the minimum. - and growth of trade unionism is the result of the increased
complexities of economic structure. Industrial Revolution
Regarding the aims and objectives of trade unionism, Gandhiji
made it all the more essential to organize workers to protect
observed, “Trade unionism is not anti-capitalist. The idea is to
their economic rights and secure better working environment.
take from capital labour’s due share and no more, and this, not
Thus, trade unionism is the child of industrialization born out
by paralyzing capital but by reform among labourers from
of the stresses and strains of Industrial Revolution.
within and by their own self-consciousness; not again through
the cleverness of non-labour leaders, but by educating labour to Individual workers have little bargaining power arising due to
evolve its own leadership and its own-self-restraint, self-existing various factors such as their dependence on employers for their
organisation. Its direct aim is not ill the least degree political. Its livelihood, lack of reserve funds and the Perishability of the
aim is internal reform and evolution of internal strength. The labour. But when they unite, their bargaining power is strength-
indirect result of this evolution when, and if, it even becomes ened, and these handicaps are reduced. Trade unions are an
complete, will naturally be tremendously political. important indication of social unrest and social progress-which
are the result of large-scale industrialization. Further, some
It should be noted that Gandhiji was never against strikes as
non-economic factors too have influenced the growth of trade
such. He had himself led some strikes in Ahmedabad and
unionism in any country. As Pigou has observed, “The
declared that strike was an “inherent right of the working men.
conditions necessary for the growth of organized action among
for the purpose of securing justice, but strike must be consid-
the workers are the differentiation of separate wage earning
ered a crime immediately the capitalists accept the principle of
class, some stability of status within that class and some power
of intercommunication among members;” Common national-
Strikes could Succeed if the following conditions are ity and language, uniformity in the work performed by
fulfilled: considerable members, improvement of education, and
a. The cause of strike must be just and only for redressal of political activities also influence the growth of trade unions. The
genuine grievances that strikes ‘should be organised. role of State in giving support to the trade union movement
b. Workers should go on strike only after the capitalists have can’t be undermined. In most of the countries, the govern-
failed to respond to moral appeals and only as a last resort ments have passed laws for the registration of trade unions and
after exhausting all other means of persuading the to grant immunity to the trade union leaders against criminal
capitalists to concede to their just demands. proceedings in the course of their genuine trade union activities.

c. Strike should be resorted to after a ‘fair notice’ being given

to the employers.
d. There should be practical unanimity among the strikers.
e. Strikes should be peaceful and non-violent, i.e., the workers
should refrain from assaulting or abusing capitalists or their
agents and also avoid violence against the non-strikers.
Gandhiji as violence considers even damaging capitalists’
Gandhiji did not favour unions taking part in political activities
for two reasons. First, because the workers were not enlight-
ened, and second, because the political parties exploit the
workers for their own ends. Regarding sympathetic strikes, he
advocated that such strikes should be organised in sympathy of
workers who were seeking, for a just cause after exhausting all
other means of settling disputes and there following the non-
violent path. He, however, disapproved strikes organised by
workers doing essential services. He conceded that “One had
every right to lay down conditions of service (but) the laying
down of conditions is not an absolute right. Even if such an
absolute right would be permitted, it might not be proper to
use it under certain circumstances.”


Learning Objectives educated and working at jobs, which involve utilisation of their
After going through this lesson you will be able to analyze the mental capabilities to a greater extent. The members of these
following: groups usually seem more inclined towards management than
• Characteristics of different Unions and their applicability in blue-collar workers.
the Indian industries. At one time because of their professional skills and social
Now that we have closely examined the approaches of the trade standing they were better paid, and had better terms and
unions and have understood the concept of trade unions we conditions of employment, including more perquisites and
move on to the different types of trade unions. fringe benefits. However, of late, blue-collar workers, especially
the highly skilled categories, who are in greater demand, have
Types Of Union higher wage incomes and perhaps better union protection and
To begin with we will first discuss Craft and General Unions. job security. This is not only because of the efforts made by the
This type of union is more prevalent in developed western unions but also because of the socialist orientation of the
societies, where the industrial way of life has had a longer government, which has been manifested, in its labour legisla-
history. A craft union is built around a certain specialized skill, tion.
which has necessitated a special type of training. Craft unions are
The white-collar workers are concentrated in the fields of
therefore open, to members of a certain trade/ skill, like Air
commerce, transport, storage and communication. The workers
India’s navigator’s union. On the other hand, a general union is
engaged in different occupations that fall under this category are
open to all members irrespective of their skills cutting across
professional, administrative, executive and managerial workers,
trades/ skills and could include unskilled, semi-skilled, and
clerical and related workers, sales staff, farm managers, technical,
skilled workers.
supervisory and other workers engaged in trans-port and
Closed Shop/Union Shop communication services or in sports and recreation facilities,
In such situations the union makes employment conditional artists, musicians.
on union membership, one variation being that employment is
Regardless of the group’s position in the organization structure
routed through the union, where it acts as a labour supplier
of an industry, they are linked with their employers by being
and, in another, once employed, an employee is required to join
associated with that part of the productive process where
the union.
authority is exercised and decisions are taken.
Check Off It has been found that white-collar unionism is expanding.
The check-off system is a practice where the management These wor-kers have begun to fight for better pay scales, more
collects an employee’s union dues, as a wage deduction and fringe benefits, internal promotions, etc. following the method
gives a lump sum amount to the union. This is a facility that of agitation and litigation. Their strong points are a large
ensures totality of collection of union dues, with no excuse for membership, sound finance, internal leadership.
employees to desist from paying for one reason or the other, as
Today, trade unions wield a lot of power. The trade union
it could happen in a voluntary system. Such a facility is provided
leaders play an important role so much so that they “influence
only to a recognised union.
vital channels of pro-ductive and strategic functions. Economic
Blue-Collar and White-Collar Workers and social decisions affecting working class people are taken by
A distinction is made on the basis of the level and status of the the Government in consultation with the leaders of the trade
employee for membership of the unions. All shop floor union movement.” For instance, the trade union leaders
workers (part of the produc-tion system who operate machines participate in the meetings of the Indian Labour Conference,
and related systems) are termed blue--collar workers, and all con-sultative bodies, wage boards, etc.
clerical or office staff, who do not work on the shop floor are Another recent development as far as white-collar unions are
termed white-collar workers. concerned is the militancy among workers. They realise that by
White-collar workers or non-manual workers form a distinct exerting pressure on employers through union power their
social group characterised by divergent socioeconomic back- demands will be met sooner.
grounds, levels of education, manner of speech, social customs Table White-Collar Workers
and ideology. They are paid on a monthly basis unlike their
blue-collar colleagues, enjoy longer holidays and different Sample of occupational groups
privileges as compared to the blue-collar workers. But the most Numbers
important feature is their nature of work. Professional, technical and related workers
The white-collar worker is usually involved in a desk job or 4,083,300
providing services over the counter. They are generally better Administrative and managerial personnel 670,300

Clerical and related workers Source: Indian Labour Statistics, Labour Bureau, Ministry of

5,231,600 Labour, Government of India, Simla, 1976, pp. 169-181.

Sales workers Some of the important trade unions of white-collar employees
are the All India Bank Employees Union, the All India Defence
Employees Federation, the National Federation of P&T
Service workers Workers, the Confederation of Central Government Employees
3,614,500 and the Indian. Federation of Working Journalists. All white-
Farm sectors, supervisors and workers collar unions are independent in that they are not affiliated to
any central trade union organization. Their leadership is largely
Production, transport and communication
Agricultural Labour
Agricultural labourers are those whose main source of income
Workers not classifiable by occupation is farm wage employment. According to the agricultural labour
1,290,500 enquiries, an agricultu-ral labourer is one who is employed not
Source: International Labour Office, Year Book of Labour only in crop production but also hired in employment in other
Statistics, Geneva, 1977, p. 222. agricultural occupations such as dairy farming, horticulture,
In the post-Second World War period, there has been a raising of livestock, bees, poultry, etc.
tremendous increase in the number of white-collar workers in Agricultural labour consists of two such categories (Chart)
India moving to the growth of industries, increase in the namely (i) landless agricultural labour; and (ii) small cultivators,
number of banks, insurance com-panies, commercial offices whose main source of income, due to their small holdings, is
and increase in the number of government and semi-govern- wage employment. Landless labour is again divided into: (i)
ment offices. According to the 1951 census the number of permanent labour attached to a cultivating house-hold; and (ii)
per-sons engaged in non-manual operations was 23 million out casual labour. Casual labour in turn consists of three groups:
of a total working population of 139 million. In 1961, out of cultivators, share croppers and households.
188 million workers 28 million were white-collar workers. Chart
According to the 1971 census the population of India was 540
million of which the total working population was 180 million, AGRICULTURAL LABOUR

(32.92%), white-collar workers being 31 million. Table above

gives the occupational distribution of white-collar workers. Landless agricul-
White-Collar Unions tural labour cultivators
In India unionization among white-collar workers began as (Those who mainly work on
early as 1897 and in 1897, the National Union of Railway men their own
of India and Burma was formed. However, unionization farms but who also work as
among the workers did not have any signi-ficant growth before wage
the Second World War. Since 1947, the growth of unionization Permanent Casual earners in agricultural and related

among white-collar workers has been due to inflation, the labourers labourers activities. This is more so

realization of effectiveness of collective bargaining, etc. with marg-

inal cultivators. Because
Of the 31 million white-collar workers, 1.1 million are union- their land
ized and there are 1,448 trade unions of white-collar workers resources are not capable of
(Table). provi-
TABLE Membership of registered trade unions in certain Culti- Share- House- ding then income
industry groups in India. throughout the
vators croppers holds year so they take up wage
Number of Membership
emplo yment during the
unions sub- in lakhs lean season.)
mitting returns (for 1971)
It has been found that agricultural labour forms some of the
Commerce 593 most dep-rived and underprivileged segments of Indian
society. Some of the difficulties are that:
Transport, Storage,
1. Their wages are low,
Communication 147 2. They perform difficult tasks,
3. They are faced with irregular employment,
Services 708
226 4. They lack social security,
5. They do not have assets of great value,
Total 1448
10.59 6. Their working and living conditions are poor,

7. They are illiterate and thus exploited by the employers, an employer’s spokesman and de it has also ventured into


8. They borrow funds from their employers to support the welfare-oriented activities for the workers like the Family and
family which leads to their becoming bonded labour. Health and Dairy Development Project in the Nilgiris.
Though the wages of casual labourers are better than the other Table below gives the break up of the total population and the
groups, their job prospects are uncertain because they do not get working population in the several categories. The table below
work throughout the year. gives a break up of the various occupational categories of the
working population.
According to the Rural Labour Enquiry (1963-65), the wage
employment of the agricultural labourer is 247 days a year. Table: Classification of India’s Population and Workers in
Because of this low span employment the casual labourers face Organized Industry
acute hardship. 1. Labour Force Structure 1960-1980 (in percentage):
Their poor income is obvious by the fact that a large percentage Agriculture Industry
of them fall below the poverty line-82% of the marginal Services
farmers in Orissa, 79% in Madhya Pradesh, 75% in Uttar
1960-1980 1961-1980
Pradesh, 69% in Maharashtra and Tamil Nadu, 68% in
Rajasthan and Mysore, and 66% in Gujarat are living below the
poverty line. About 50-60% of agricultural labour fall into this 74.0 62.2 11.3 17.2 14.7
category. 20.6
Faced with these problems they need improvement in two India
directions. One hand, wages and working conditions need to be 2. Population of India (in millions):
improved and on the other, there is the necessity of finding job 1981 1971
opportunities and obtaining benefits to which they are entitled. 1961
Thus there is a need for organizing agricultural labour to
Population 685 548
safeguard their interests.
In this regard it is felt that there is a strong case for the union-
Workers (main) 223 180
ization of, agricultural labour, but progress in this direction is
not very satisfying. According to the 1971 census, agricultural
labourers numbered 47.49 million, the membership of their Main workers as % to
unions submitting returns was 93,000 which show poorly total population 33.4% 32.92%
organized agricultural labour is some of the constraints 43%
that come in the way of organizing this group are that they are 3. Employment in Organized Sector (in millions):
scattered, often dependent on their landlords, their lack of Cent. Govt. State Govt. Quasi Govt. Total Pvt. Sector G.Total
cohesiveness because of their diverse cultures and the illiteracy
among them. 1980 3.18 5.48 4.34 15.08 7.23
As such, formation of trade unions by the unorganized and
illiterate agricultural labour could lead to class conflict. Hence it 1981 3.20 5.75 4.55 15.48 7.40
is proposed that in order to solve these problems rural labour 22.88
cooperatives be organized instead of trade unions, whose 1982 3.25 5.85 4.81 15.95 7.55
objectives could be to bring the agricultural labourer the fold of 23.49
some organization similar to trade unions. This would have in Sources: 1. ILO World Labour Report, Geneva, 1984, p. 5.
advantages. Local leaders who know the problems of the 2. Statistical Outline of India, 1984.
labourer and could therefore provide the necessary leadership as
Tata Services Ltd., Bombay, p. 30, 132.
well would run their co-operatives. Efforts have been made in
this direction in Kerala and Gujrat. Note: In the 1981 Census, ‘Main Workers’ were defined as
those who were engaged in any economically productive activity
In India, a distinction is made between agricultural labour and
for a minimum 183 days during the year preceding the date of
plantation labour. The latter have been within the pale of
special legislation and have organized trade unions, which
protect and further their interests through collective bargaining. Table: Economic Classification of Main Workers, 1981*
Some of the plantations are those of tea, coffee, rubber and Total main % distribution Workers
cardamom and they are generally considered an industry. They (in million)
have been well deve-loped and organized since colonial times. Cultivators 92.5 Cultivators 41.6
The United Planters Association south India (UPASI) located at
Agricultural labourers 55.5 Agricultural labourers 24.9
Coonoor is an example of an industry--level employers
organization, which among other things negotiates industry- Livestock,forestry, etc 5.0 Livestock,forestry, etc 2.2
wise -agreements with trade unions covering plantations in the Mining and quarrying 1.3 Mining and quarrying 0.6
southern states of Karnataka, Kerala and Tamil Nadu. Besides Household industry 7.7 Household industry 3.5
settling the terms and conditions of employment and acting as

Other industry 17.4 Other industry 7.8

Construction 3.6 Construction 1.6

Trade and commerce 13.9 Trade and commerce 6.3
Transport, commn, etc. 6.1 Transport, commn. etc. 2.7
Other services 19.5 Other services 8.8
Total 222.5 Total 100
• Based on 5% sample data of the 1981 Census & excludes
Assam statistical out line of India 11984 Total Securities ltd.
This data will provide a useful background to understanding
the process and extent of unionisation, which is discussed
Notes -


Learning Objectives At times, an employee joins a union under group pressure;

After going through this lesson you will be able to compre- if he does not, he often has a very difficult time at work. On
hend: the other hand, those who are members of a union feel that
• Of how the trade unionism spread in India and why. they gain respect in the eyes of their fellow workers. They
can also discuss their problems with the trade union leaders.
Growth Of Unions
viii. Background factors. Historical background factors also playa
Why do Workers Join Unions? part in the disposition of employees to join a union. For
Workers or employees join trade unions for a variety of reasons those who have been raised in a working class
though they may not be conscious of their motive of joining neighborhood where one’s father and indeed all the
unions. These are as follows: working members in the community belong to the union
i. Economic benefit. Every employee wants to increase his acceptance of the union as a normal part of the
income and to have better working conditions. But the employment life seems natural.
individual employee has very little bargaining power in You ca refer the following information related to the V.V. Giri
comparison with that of his employer. If he joins the National Labour Institute research center for many of the
union, the union will take care of his economic interests related issues. See the following:
because the union has great bargaining power to get its
demands accepted by the management. Notes -

ii. Platform for self-expression. The desire for self-expression

is a fundamental human drive for most people. The union
provides a mechanism through which employees can make
their voice heard by the top management. Union serves as a
via media of communication between the employees and
the top management.
iii. Check on arbitrary actions of management. The employees
may join the unions to ensure a just and fair dealing by
management on the basis of a predetermined policy, and
through collective strength restrain the management from
taking any action which may be irrational, illogical,
discriminatory or contrary to their general interests.
iv. Security. The employees may join the unions because of
their belief that it is an effective way to secure adequate
protection from various types of Hazards and income. In
security such as accident injury, illness, unemployment, etc.
For example, trade unions ensure compensation to the
injured workers under the Workmen’s Compensation Act
and secure retirement benefits for the workers and compel
the management to undertake welfare services for the
benefit of the workers.
v. Employer-employee relations. Another reason of
employees joining some union may be the broader
realisation on their part that unions fulfill the important
need for adequate machinery for proper maintenance of
employer-employee or labour-management relations.
vi. Sense of participation. The employees can. Participate in
management of matters affecting their interests only if they
join trade unions. They can influence the decisions, which
are taken as. a result of collective bargaining between the
union and the management.
vii. Sense of belongingness. Many employees join a union
because their fellow workers are the member of the union.


NLI Research Studies Series is the most important medium for disseminating the outputs of the research projects
undertaken by the Institute. They are circulated to all the leading National and International institutions/organisations
dealing with labour studies. The publication serves as as a means to obtain the feedback on the research being undertaken
by the Institute from renowned scholars and practitioners.
Recent Publications under NLI Research Studies Series

No. : 033/2002
Title : Labour Contracts and Work Agreements in Tea Plantations of Assam

Author : Kalyan Das


The study compares the profile of workers in the large tea estates vis-a-vis that of their counterparts in the small-scale
plantations. Based on the interactions with workers in four plantation estates and fourteen small tea gardens, the paper
analyses the labour recruiting mechanisms, socio-economic backgrounds, work history profiles and the evolution of various
enactments and agreements in the plantation sector. Further, the study assesses the working and living conditions, health and
sanitation aspects, wages and employment benefits and the degree of mobilisation of workers in the plantations.

The efficacies of the provisions in the Plantation Labour Act, 1951 and Assam Plantation Labour Rules of 1956 are also
examined in the study. It is observed that the provisions of Plantation Labour Act, 1951 and the bilateral agreements
between workers representative and employers association have ensured well-being to the workers in the estate sector.
However, this is not so in the case of unorganised small-scale plantations sector. Thus, it is concluded that there is an urgent
required need to extend social and economic security to the workers of the emerging small-holding plantations in Assam

No. : 034/2002
Title : Organising and Empowering Rural Labour: Lessions form Kanheepuram in Tamil
Author : Babu P. Remesh

The essay by Babu P. Remesh titled “ Organising and Empowering Rural Labour: Lessions form Kanheepuram in Tamil
Nadu” is based on the author’s experience of coordinating an action-research project in Tamil Nadu. The study forms the
part of an integrated project of the National Labour Institute of Organising Rural Labour of Effective Participation in
Development, which was carried out in four states viz., Uttar Pradesh, Madhya Pradesh, Rajasthan and Tamil Nadu.
The essay by Babu P. Remesh titled “ Organising and Empowering Rural Labour: Lessions form Kanheepuram in Tamil
Nadu” is based on the author’s experience of coordinating an action-research project in Tamil Nadu. The study forms the
part of an integrated project of the National Labour Institute of Organising Rural Labour of Effective Participation in
Development, which was carried out in four states viz., Uttar Pradesh, Madhya Pradesh, Rajasthan and Tamil Nadu.

The methodology of the project is based on holding Rural Labour Camps, a unique approach of participatory action-
research and worker conscientisation that has been designed and refined at the Institute , over the past few decades. The
essence of the method is to develop self-action for sustainable development, which inter alia aims at capacity building
among rural workers through: (a) awareness generation on relevant socio-economic and legal issues; and (b) leadership
development via organization building.

Apart from discussing the learning from the Kancheepuram experience, the paper provides a detailed account of the
temporal changes in the organinsing tactic of Rural Labour Camps. The process of holding camps as well as the attitudinal
/behavioural transformation of the campers are also discussed at length. Most importantly, the author has made an earnest
attempt to critically analyse the outcome of the project, to suggest possible measures for strengthening the contemporary

No. : 035/2002
Title : Child Labour in Chrompet Leather Manufacturing Units of Tamil Nadu
Author : J. Jeyaranjan

The study, Child Labour in Leather Manufacturing Units, is a collaborative effort of the National Resource Centre on
Child Labour at the V.V. Giri National labour Institute, NOIDA and the Institute of Development alternatives, Chennai.
This is one of the series of studies conducted on child Labour in Hazardous industries.
The findings of the study show that there is no gender selectivity in child labour. Adults earn wages that are only
marginally higher than what the children earn. Irrespective of the experience, skill and family size and requirements the wage
payment system remains insensitive and relatively inelastic. Children contribute 20 to 40 per cent of the family income. The
labour in the leather industry is defined by the caste location. While market forces predominantly govern all other aspects of
the industry, the labour is drawn exclusively from the most downtrodden section of the Tamil Society. As heads of 60 per
cent of the households are engaged in leather work, the study establishes the incidence of child labour in leather flaying as
an intergenerational phenomenon.

No. : 036/2002
Title : Trade Unionism in South Indian Film Industry
Author : S. Theodore Baskaran

The essay, Trade Unionism in South Indian Film Industry, forms a part of the research activities carried out by Shri
Theodore Baskaran at the Roja Muthia Research Library, Chennai for the Integrated Labour History Research Programme
of the V.V. Giri National Labour Institute. This project primarily aimed at indexing, documenting and preserving the source
material relating to the trade union movement in South Indian Film Industry, to enrich the regional collections acquired in
the Archives of Indian Labour. The Roja Muthia Research Library was identified as the appropriate organisation to entrust
this unique assignment, as it is the world's largest collection of Tamil film magazines and due to its established reputation in
conservation of sources on social and cultural history.
Trade union activities in film industry of south India have been slow and spasmodic. However, the events connected with
labour activities were reported in the magazines and the discourse on the subject was reflected in the trade journals and film
magazines. Theodore Baskaran's essay effectively utilises these source materials, to portray the growth of trade union
movement and related activities in south India. The study warrants scholarly attention not only due to the fact that the trade
union movement in film industry in South India is a rather unattended area, but also because of the simple but scholarly
narration and analysis adopted by the author.

No. : 037/2002
Title : Migration, Social Networking and Employment: A Study of Domestic
Workers in Delhi
Author : Neetha N.

Domestic service is a major and growing informal sector activity in the urban centres. The conditions of work in
domestic service are deplorable with long working hours, low pay and absence of job security. Women from certain
areas or regions with specific socio economic backgrounds are found concentrated in this informal sector occupation.
This has been seen as an outcome of the transformations in class relations and developments of new styles and patterns
of living. Of late, the demand for domestic workers has increased, with the changed life styles of the middle class. On
the supply side, employment in domestic service appears to be the only promising option for many of the disadvantaged
groups or sections that are faced with limited opportunities. Notwithstanding the growing importance of the occupation
in the urban informal sector in India, no comprehensive data is available on the magnitude and pattern of domestic
work, migration aspects, recruiting systems, working conditions and so on. The essay by Neetha, Migration, Social
Networking and Employment: A Study of Domestic Workers in Delhi, fulfills this long felt requirement.


The essay, through a detailed micro-empirical study of a few worker-settlements and placement organisations provides
a detailed understanding on the work arrangements and employment aspects of domestic service in Delhi. The essay also
invites rethinking on the conventional migration theories. It is argued that female migrants are powerful agents in
building and maintaining social and personal structures pertaining to migration and in the survival of the family in the
city. Further, it is established that social networking is the mechanism through which domestics (re)construct and
maintain cultural and social identities, which are otherwise lost in the urban living.

No. : 038/2002
Title : Study of Child Labour in the Zardosi and Hathari Units of Varansi

Author : J. John & Ruma Ghosh


In India, millions of children enter the labour market at an early age as part of the family’s subsistence strategies.
Although the Child Labour (Prohibition and Regulation) Act, 1986 bans the working of children in some listed
occupations and processes, yet there are several studies which indicate the incidence of child labour in the prohibited
occupations and processes. Besides, studies have also indicated that there are many hazardous occupations and processes
which are still not included under the CLPR Act due to lack of any comprehensive data. The present study therefore
focuses on one such industry – the zardosi and hathari (embroidery) industry of Varanasi, in which although a large
number of children are involved at a very early age, yet no comprehensive data is available on the magnitude and pattern
of working.

The present essay, through a detailed micro-empirical study of the worker settlements provides an understanding of the
structure and functioning of this industry and delineates the factors that perpetuate child labour. The study looks into the
demand as well as the supply side factors and argues that the organisation of production through subcontracting and
home based production lies central to the existence of child labour in this industry. The study reveals that the strong
kinship and neighborhood networks in which the industry operates, makes it doubly easy for the entry of children at an
early age.
• List of Other Publications under NLI Research Studies Series

001/2000 Labour Market Institutions in Globalized Economy: Some
Issues in the Indian Context
— C.S.K. Singh
002/2000 Dynamics of Labour Market in Kerala
— S.K. Sasikumar & S. Raju
003/2000 Women and Labour Market: A Macro Economic Study
— Neetha N.
004/2000 Mode of Payment of Minimum Wages in Bihar
— Navin Chandra & Nikhil Raj
005/2000 Payment of Minimum Wages in Kind and Perceptions
Regarding the Mode of Payment
— S.S. Suryanarayanan & Rajan K.E. Varghese
006/2000 Minimum Wages and Mode of Payment:
The Case of Punjab
— Ruma Ghosh
007/2000 Rural Wages: On Developing an Analytical Framework
— Babu P. Remesh
008/2000 Employment in Food Processing Industries
— S.S. Suryanarayanan & B.V.L.N. Rao
009/2000 Determinants of Rural Wages: An Inquiry Across Occupations

009/2000 Determinants of Rural Wages: An Inquiry Across Occupations


— Babu P. Remesh, J. Jeyaranjan & A.C.K. Nambiar
010/2000 Adverse Sex Ratio and Labour Market Participation of
Women: Trends, Patterns and
— Neetha N.
011/2000 Children of Carpet Looms: A Study of Home-based
Productions of Carpet in Uttar Pradesh
— Nikhil Raj and Ravi Srivastava
012/2000 Child Labour in Slate Industry of Markapur in the Wake of
— K. Suman Chandra, R. Vidyasagar and Y. Gangi Reddy
013/2000 Child Labour in Moradabad Home-Based Industries in the
wake of Legislation
— Ashish Ghosh, Helen R. Sekar
014/2000 Child Labour in Bulandshahar District of Uttar Pradesh
— Tapan Kumar Pachal
015/2001 Outline of a History of Labour
in Traditional Small-Scale Industry in India
— Tirthankar Roy
016/2001 Gender and Class: Women in Indian Industry, 1920-1990
— Samita Sen
017/2001 The Politics of the Labour Movement: An Essay on
Differential Aspirations
— Dilip Simeon
018/2001 Child Labour in Home Based Lock Industries of Aligarh
— Helen R. Sekar, Noor Mohammad
019/2001 Child Labour in Diamond Industry of Surat
— Kiran Desai, Nikhil Raj
020/2001 Gender and Technology: Impact of Flexible Organisation and
Production on Female
Labour in the Tiruppur Knitwear Industry
— Neetha N.
021/2001 Organisational Structure, Labour Relations and Employment in
Kancheepuram Silk
— Babu P. Remesh
022/2001 International Labour Migration from Independent India
— S.K. Sasikumar
023/2001 Cine Workers Welfare Fund in India
— M.M. Rehman
024/2001 Child Labour In Knitwear Industry of Tiruppur
— J. Jayaranjan
025/2001 Child Labour in the Home Based Gem Polishing Industry of
— Kanchan Mathur, Ruma Ghosh
026/2001 Unorganised Workers of Delhi and the Seven Day Strike of
— Indrani Mazumdar
027/2001 Death of an Industrial City: Testimonies of Life Around
Bombay Textile Strike of 1982
— Hemant Babu

— Hemant Babu

028/2001 Child Labour in the Home Based Match Industries of Sivakasi

— R. Vidyasagar, Girija Kumarababu
029/2001 Migration in the North Eastern Region during 1901-1991 and
Environmental Considerations: A Case Study
Deforestation of Assam
— Pushpam Kumar and Suresh Agarwal
030/2001 Women Weavers of Saulkuchi The Silk Town of Assam
— OKD Institute
031/2002 Cash and in-kind Modes of Wages Payment in
__ C. S. K. Singh
032/2002 Child Labour in the Knife Industry of Rampur
__ Ashish Ghosh & Helen R. Sekar


Learning Objectives Methods Of -trade Unions

After going through this lesson you will be able to comprehend In order to achieve their goals; trade unions may adopt any or a
• Of how the trade unions in India functions combination of the following methods:
To attain the objectives, the trade unions generally perform the 1. Method of Mutual Insurance.
following functions: 2. Method of Collective Bargaining.
i. Collective bargaining with the management to settle terms 3. Method of Legal Enactment/Political Action.
and conditions of employment 4. Method of Direct Action.
ii. Advise the management on personnel policies and practices. Let us now briefly look into these methods so as to know what
iii. Taking up the individual and collective grievances of the these methods really speak of.
workers with the management
1 Mutual Insurance
iv. Work for achieving better say of workers in the When we talk about ‘mutual’ it relates that this method
management of affairs of the enterprise which influence the consists mainly of welfare activities, conducted by trade unions
lives of the workers directly. for their members. Activities like medical aid, educational loans,
v. Organising demonstrations, strikes, etc. to press the recreational activities, cooperative societies, credit facilities,
demands of the workers. sickness aid, etc. come in the form of mutual insurance or
vi. Education of workers and their children, mutual aid. These amenities and aids are provided out of the
funds that its members contribute in the shape of membership
vii. Welfare and recreational activities for their members.
subscriptions and donations, etc. Thus, the effectiveness of this
viii. Representing of worker in various national and method is directly dependent upon the income of trade unions.
international forums. . The Indian trade unions have lagged far behind their counter-
ix. Securing legislative protection for the workers from the parts in U:K. and U.S.A. in taking recourse to mutual insurance
Government. primarily because of their poor financial position.
The functions performed by the trade unions may be broadly 2 Collective Bargaining
classified into three categories, viz., (i) militant functions, (ii) Another prevalent method used by trade unions for improving
fraternal functions, and (iii) political functions. . the economic and social conditions of their members is
Militant Functions. The chief purpose of the trade unions is collective bargaining. This is essentially a bi-partite method
to secure better conditions of work and employment. The under which trade union as a representative organisation of
unions also endeavor to secure some share in productivity gains workers bargains with the employers over the various issues
and a greater share in the management or even control of such as terms and conditions of employment, wages, bonus;
industry. When the unions fail to accomplish these ends by the hours of work, working conditions, welfare facilities, etc. and
method-of collective bargaining and negotiations, they adopt enter into agreement, called collective agreement, with the
imitational methods and put up a fight with the management employer.
in the form of strike, boycott, gherao; etc. - a situation that Since individual worker is a weak bargainer, the method of
often turns into fierce antagonism. collective bargaining is preferred. Bargaining may be made at the
Faternal Functions. A trade union is a fraternal association or local level (i.e., a factory or a plant), at the regional level or at the
a mutual-benefit organisation supporting the members out of industry or national level.
their own funds during the period of work-stoppage due to a The process of collective bargaining is bi-partite, that is,
strike or lockout. It also provides financial assistance to the between employers/management and the trade unions. It
members during the period when they are unfit for work should be free of external agencies as government. However,
because of illness or employment injury or when they are for various reasons, the bargaining power of the union is weak,
temporarily unemployed. which they have secured by statute and bargaining is often done
Political Functions. Many trade unions seek to improve the in courts. For this reason, we have in India judicially controlled
political status of the union, the leader, and the union mem- bargaining rather than free bi-partite collective bargaining. There
bers. They contest political elections and try to acquire political are certain prerequisites of free collective bargaining. Which
power. In many countries, some strong labour parties have include mutual recognition and the will to bargain and come to
grown up e.g., in the United Kingdom, many times, labour settlement. Since unions are weak and there is no uniform law
party has been in power. In India, such activities of trade for the recognition of a representative union, collective bargain-
unions are not important, though sometimes they have been ing has not made much headway in India.
successful in influencing the labour policy of the government.

3 Legal Enactment/Political Action

Under this method, trade unions engage in political action for

securing working and living conditions for the workers.
Exerting pressure for getting progressive labour laws passed by
the legislature and to get them enforced properly does this. For
getting protective and pro-labour legislation passed by the
legislatures, the unions send competent representatives of the
workers to the Legislative Assembly and the Parliament.
Unlike mutual insurance and collective bargaining, which are
designed to benefit only the trade union members or employ-
ees of a particular plant, region or industry, political action is
intended to benefit the working class in general.
4 Direct Action
When the trade unions fail to achieve their goals by the
methods described above, they resort to direct action. It is
manifested in several forms like strikes, gheraos, bandhs, etc.
Since this method is harmful to all concerned in terms of loss
of production, - loss of wages, scarcity or non-availability of
goods, etc every effort should be made to avoid the use of this
weapon in the armory of trade unions. What is required is
cooperation and not conflict.
Under the diversity of objectives and methods of trade unions,
which ones can be said to be “legitimate and which others,
‘illegitimate’? There is no objective standard by which- one can
judge the legitimate functions and methods of trade union in
general. Trade unionism is essentially a pragmatic movement,
which constantly reshapes its organisation structure, reformu-
lates its policies and objectives and reexamines and evaluates its
methods, keeping all the time in its view the welfare of the
working class as its goal.
Notes -


Learning Objectives The general council consists of the president, seven vice-
After going through this chapter you will be able to compre- presidents, a general secretary, a treasurer and not more than five
hend the following: secretaries and mem-bers elected by the AITUC on the basis of
• Where lies the place of national level federation in the the total affiliated membership of unions in each state, roughly
context of Indian Trade Unionism at the rate of one representative for every 5000 members.
The working committee consists of all office bearers of the
Unionisation: Law and Environment
AITUC as ex-officio members and 35 elected by the general
Two factors are relevant to the process of unionisation in India.
council by a system of cumu-lative voting.
They relate to trade union law and to political parties and their
labour strategy.The Trade Union Act, 1926, states as follows: The general session of the AITUC meets once in two years, the
general council meets once a year, and the working committee at
Any seven or more members of a trade union may, by subscrib-
least twice a year. The General Secretary and his administrative
ing their names to the rules of the trade union and by
staff at the national and state levels carry out the day-to-day
otherwise complying with the provisions of this Act with
operation and implementation.
respect to registration, apply for registra-tion of the trade union
under this Act. Objectives
Undoubtedly, this provision in labour legislation has contrib- The major objectives of AITUC are:
uted to the formation of many unions as the data on the • To establish a socialist state in India and the nationalisation
number of registered trade unions shows. Needless to add, of the means of production, distribution and exchange as
there are many more unregistered trade unions. far as possible.
Another factor to be taken note of is that the major political • To improve the economic and social conditions of the
parties such as the Congress, Communist, the CPI and the working class, by securing better terms and conditions of
Socialist each has a federa-tion at the apex or national level to employment.
which unions at the plant and state level are affiliated. • To safeguard and promote the workers’ right to free speech,
The organization pattern of a trade union federation is usually freedom of association and assembly and the right to strike.
three-tiered. Units exist at the plant or shop, state and the Methods
national level. We shall now examine the three levels in some For the furtherance of these objectives the means to be adopted
detail. by AITUC are to be legitimate, peaceful, and democratic, viz.
National Level Federations legislation, education, propagation, mass meeting, negotiations,
Historically, four major federations have been in existence and demonstrations, and as a last resort the staging of a strike.
have estab-lished a national network of federated unions. They
Membership and Finance
are the All India Trade Union Congress (AITUC), Indian
The source of funds is: (i) an annual contribution of Rs.15 for
National Trade Union Congress (INTUC), United Trade Union
unions with 500 members and less; (ii) affiliation fees at the rate
Congress (UTUC), and Hind Mazdoor Sabha (HMS). The
of 5 paise per member with a minimum of Rs.20 for unions
UTUC has to a certain extent merged with the Centre of Indian
with a membership above 500; (iii) a delegate fee of Rs.12 per
Trade Unions (CITU) and therefore we shall examine the CITU
delegate; and (iv) any other levy which may be fixed by a two-
thirds majority of the General Council. The levy is fixed at the
All India Trade Union Congress (AITUC) rate of Rs.5 per 1000 members.
This national federation was established in 1921. Ideologically it Indian National Trade Union Congress (INTUC)
is linked with the communist philosophy and therefore This union was organized in 1947 with active support and
espouses a more radical approach, as compared to some of the encouragement from Congress leaders. It wanted to bring
other federations, in attaining the workers’ interests and goals. about a peaceful and non-violent solution to industrial
In 1979 it had a total of 1,307,471 members. disputes.
Organizational Structure It has a total membership of 2,388,451 which makes it the
The organizational set up is as follows: (i) The affiliated unions largest national federation.
(unit/local level); (ii) provincial bodies (state level); (iii) the
general council including office bearers (which incorporates the Organizational Structure (See Chart )
working committee of the general council); and (iv) the The basic pattern of organization in the INTUC is the industry
delegates to the general or special session. level federation. In other words, units are grouped together for
the purpose of negotiating the terms and conditions of
employment, such as wage rates hours of work and other

related fringe benefits and working conditions at the industry Hind Mazdoor Sabha (HMS)

level which are to be implemented at the lower level. This This national federation came into being in 1948. It had an
method enables a perspective being taken for the entire industry, affiliated membership of 852,558 in 1979. This federation
rather than a piecemeal approach unitwise. The regional espouses the socialist philosophy and has linkages with socialist
branches and the councils provide the support services. The parties. However, there has been a division within the socialist
apex body, which is representative of the federation, takes an ranks with the emergence of the Hind Mazdoor Panchayat,
overall point of view, regarding the broader issues, such as another federation with socialist leanings.
environment, legislation and governmental policies, and gives
Organizational Structure
directions to the regional branches.
The general council is composed of the president, not more
Chart Organizational Structure of INTUC than five vice presidents, a general secretary, not more than two
secretaries, a treasurer and other members representing various
industrial sections. The office bearers are elected at the annual
General Council
Working Committee and Other
Committees Objectives
Assembly of Delegates
The main aims of the Hind Mazdoor Sabha are:
State Level • To promote the economic, political and social interests of
Regional Branches and Council the workers and to improve their terms and conditions of
Industry Level Federation • To form a federation of unions from the same industry or
occupation at the national level.
Unit Level • To promote the formation of co-operative societies and to
foster workers’ education.
It seeks to establish a society in which there is an opportunity
The method employed shall be legitimate, peaceful and
for the development of individuals and the eradication of anti-
social concentration of power in any form and therefore to
nationalise industry. The main objectives are: Membership and Finance
The membership of HMS is open to all bonafide trade unions,
• To ensure full employment.
including federations of trade unions. The general council of
• To secure greater participation of workers in the the Sabha has authority to accept or reject any application.
management of enter-prises.
The collection of funds of HMS is carried out through: (i)
• To secure complete organization of all categories of workers affiliation fees of 5 paise per member per annum subject to a
including agricultural labour. -To organize workers on an minimum of Rs. 20; (ii) a delegate fee of Rs. 3 per delegate; and
industry-wise basis. (iii) any other levy that may be fixed by the general council.
• To improve the conditions at work and to provide various
Centre of Indian Trade Unions (ClTU)
social security measures.
This is a national federation which was established in 1971 as a
• To develop among the workers a sense of responsibility result of the split in the AITUC which was a sequel to the split
towards industry and the community. in the CPI a new centre, the Centre of Indian Trade Unions
Methods (CITU) emerged owing to its allegiance to the CPI(M). In 1979
The means to be adopted for the furtherance of these objectives it had 817,805 members.
are to be peaceful through due process of law and negotiations. Objectives
Membership and Finance It is animated by the goal of organizing workers to further their
Any organization of workers accepting the constitution of the interests in economic, social and political matters.
INTUC and with a subscription rate of not less than 25 paise Organizational Structure
per month is entitled to affiliation with the INTUC provided it The organizational set-up is as follows: (i) central committee
is not affiliated with any rival organization or any of its (national level, general council, including office bearers); (ii) a
executive committee members are not members of a rival state committee (state level); and (iii) affiliated unions (unit
union. All the unions affiliated to INTUC and belonging to the level) (the Primary unions).
same industry are required to join the corresponding industrial
The General Council consists of the president, four vice-
federation, e.g. the Indian National Textile Workers Federation,
presidents, the general secretary, not more than four secretaries,
the National Federation of Indian Railwaymen, etc.
and the treasurer. Mem-bers are elected by CITU on the basis of
Every affiliated organization is required to pay the Congress an the total affiliated membership of unions in each state, at the
annual affiliation fee at the rate of 10 paise per member on its rate of one delegate for every 500 members. The general council
rolls subject to a minimum of Rs.15. of CITU meets once in two years, and the state committee at

least twice a year. The general secretary and his staff at the state whole. Hence all the textile mills who are members of the Mill-


level carry out the day-to-day operations and administra-tion. owners Association and workers who are a part of TLA are
governed by this agreement. By and large, the majority of both
the categories are covered by these agreements.
To further its objectives the methods to be adopted by CITU
are legislation, demonstrations, agitations and intensification of Local Units
the class struggle. Many Indian unions are not affiliated to an industry level
Membership and Finance federation and in many cases may not have any affiliation to the
Any union can be affiliated to CITU by paying a subscription national federation. They are thus independent local unions
(affiliation fee) of 20 paise per year per member (minimum of centred around a particular plant or a multi-plant organization.
Rs. 40 per union if it is small). Each union applies to the state These plant firm-wise unions embrace all employees of a plant/
committee, which after scrutinising recommends its acceptance unit irrespective of occupational groups. They vary in numerical
to the central committee. strength from small units to medium and large ones. In some
cases, in times of crisis, they do seek the assistance or guidance
The funds of CITU are derived from: (i) the affiliation fees of of the larger federations or other large unions in related
20 paise per member per year to a minimum of Rs. 40; (ii) the industries. At times many union functionaries may have
delegate fee of Rs. 5 per delegate; (iii) any other levy that may be political loyalties but no union affiliation to a natio-nal labour
fixed by the general council. federation. Such political loyalties may be to a particular regio-nal
Other National Trade Unions party or to a certain ideology. Typically, the union has a presi-
Besides these three federations at the national level, there are dent, a secretary, a treasurer and some committee members.
others like the United Trade Union Congress (UTUC), the Membership is on the basis of employment and payment of
National Labour Organization (NLO), the Bhartiya Mazdoor dues. At certain times of the year extraordinary collections are
Sangh (BMS), and the Hind Mazdoor Panchayat (HMP)-an off- made, as at the time of disbursement of bonus. These unions
shoot of the Socialist Party. Some of these have stronger are more concerned with specific issues regarding the workers
regional affiliations than a national coverage. and their terms and conditions of employment in a particular
Industry Level Unions
We will now examine the pattern of an industry level union-the Notes -
Textile Labour Association, Ahmedabad (TLA). Though TLA
has diversified into an unorganized sector, its strength and
major contribution has been in the textile industry.
The Textile Labour Association was formally launched in 1920
and is substantially influenced by Gandhian philosophy in its
trade union activities. It started as a craft union, with the
warpers informally negotiating a wage increase. Subsequently it
grew into a confederation of several craft unions (occupational
groupings functioning under the aegis of TLA). With the pas-
sage of time, the craft unions, and the confederations have all
merged into one single entity: The organizational structure
reveals the pyramidal type of organization with a federation or
the joint representative board of the vari-ous occupations being
formed on the basis of member strength. The Textile Labour
Association has a shop steward system, where the union
functionary on the shop floor takes an active role with regard to
the rights and interests of the worker. There is also a com-
plaints cell where grievances of workers vis-a-vis their job roles
are recorded and followed up. Moreover, there is another cell
which takes up employee claims and problems with regard to
the operation of the ESI scheme. Many welfare activities are
conducted including the setting up of a special cell for women.
Of late it has ventured into organizing the workers in backward
rural areas in what is termed the unorganized sector. Their
approach is non-violent, i.e. peaceful strategies are adopted to
further their objectives. Consequently the textile industry in
Ahmedabad has an industry level union. Similarly the mill-
owners also bave an industry association to represent them in
all matters concerning nego-tiations with TLA. These two
organizations mutually agree to the terms and conditions of
employment, including welfare, leave, etc. for the indus-try as a



Learning Objective: officer in charge of the industrial establishment shall be the

The study of this lesson will help you identify: ‘employer’ in respect of that establishment; and
• Of how different industrial disputes can be settled with the ii. In relation to an industry concerning railways, carried on by
help of the Central Govt. rules. it under the authority of a Department of the Central
You know this lesson is fully with the Acts. You can pick up Government,-
these Acts on the basis of the given chapters as is shown below: a. In the case of establishments of a Zonal Railway, the
General Manager of that Railway shall be the ‘employer’ in
Chapter: Preliminary
respect of regular railway servants other than casual labour;
Section 1: Title and Application
b. In the case of an establishment independent of a Zonal
1. These rules may be called the Industrial Disputes (Central) Railway, the officer in charge of the establishment shall be
Rules, 1957. the ‘employer’ in respect of regular railway servants other
2. They extend to Union territories in relation to all industrial than casual labour; and
disputes and to the States in relation only to an industrial c. The District Officer in charge or the Divisional Personnel
dispute concerning- Officer or the Personnel Officer shall be the ‘employer’ in
a. Any industry carried on by or under the authority of the respect of casual labour employed on a Zonal Railway or
Central Government or by a railway company; or any other railway establishment independent of a Zonal
b. A banking or an insurance company, a mine, an oilfield, or a Railway.
major port;or Chapter: Procedure for Reference of
c. Any such controlled industry as may be specified under Industrial Disputes to Boards of
Section 2(a)(i) of the Act by the Central Government: Conciliation etc
Chapter: Preliminary Section 3: Application
An application under sub-section (2) of section 10 for the
Section 2: Interpretation
reference of an industrial dispute to a Board, Court, Labour
In these rules, unless there is anything repugnant in the subject Court, Tribunal or National Tribunal shall be made in Form A
or context- and shall be delivered personally or forwarded by registered post
a. ‘’Act’’ means the Industrial Disputes Act, 1947 (14 of to the Secretary to the Government of India in the Ministry of
1947); Labour and Employment (in triplicate), the Chief Labour
b. “Chairman” means the chairman of a Board or Court or, if Commissioner (Central), New Delhi, and the Regional Labour
the Court consists of one person only, such person; Commissioner (Central), and the Assistant Labour Commis-
sioner (Central) concerned. The application shall be
c. ‘’committee’’ means a Works Committee constituted under
accompanied by a statement setting forth-
sub-section (1) of section 3 of the Act;
a. The parties to the dispute;
d. ‘’form’’ means a form in the Schedule to these rules;
b. The specific matters in disputes;
e. ‘’section’’ means a section of the Act;
c. The total number of workmen employed in the
f. In relation to an industrial dispute in a Union territory, for
undertaking affected;
which the appropriate Government is the Central
Government, reference to the Central Government or the d. An estimate of the number of workmen affected or likely
Government of India shall be construed as a reference to to be affected by the dispute; and
the Administrator of the territory, and reference to the e. The efforts made by the parties themselves to adjust the
Chief Labour Commissioner (Central), Regional Labour dispute.
Commissioner (Central), Assistant Labour Commissioner Chapter: Procedure for Reference of
(Central) shall be construed as reference to the appropriate Industrial Disputes to Boards of
authority, appointed in that behalf by the Administrator of Conciliation etc
the territory;
Section 4: Attestation of Application
g. With reference to clause (g) of section 2, it is hereby
The application and the statement accompanying it shall be
prescribed that-
i. In relation to an industry, not being an industry referred to
a. In the case of an employer by the employer himself, or
in sub-clause (ii), carried on by or under the authority of a
when the employer is an incorporated company or other
Department of the Central or a State Government, the

body corporate, by the agent, manager or other principal Chapter: Arbitration Agreement


officer of the Corporation;
Section 8: Attestation of the Arbitration Agreement
b. In the case of workmen, either by the President and The arbitration agreement shall be signed-
Secretary of trade union of the workmen, or by five
a. In the case of an employer, by the employer himself, or
representatives of the workmen duly authorised in this
when the employer is an incorporated company or other
behalf at a meeting of the workmen held for the purpose;
body corporate by the agent, manager, or other principal
c. In the case of an individual workman, by the workman officer of the Corporation;
himself or by any officer of the trade union of which he is a b. In the case of workmen,by any officer of a trade union of
member or by another workman in the same establishment the workmen or by five representatives of the workmen
duly authorised by him in this behalf: Provided that such duly authorised in this behalf at a meeting of the workmen
workman is not a member of a different trade union. held for the purpose;
Chapter: Procedure for Reference of c. In the case of an individual workman, by the workman
Industrial Disputes to Boards of himself or by any officer of a trade union of which he is
Conciliation etc member or by another workman in the same establishment
Section 5: Notification of appointment of Board, duly authorised by him in this behalf:
court, Labour Court, Tribunal or National Tribunal Provided that such workman is not a member of a different
The appointment of a Board, Court, Labour Court, tribunal or trade union.
National Tribunal together with the names of person constitut- Explanation - In this rule “officer” means any of the following
ing the Board, Court, Labour Court, Tribunal or National officers, namely-
Tribunal shall be notified in the Official Gazette. a. The President;
Chapter: Procedure for Reference of b. The Vice-President;
Industrial Disputes to Boards of c. The Secretary (including the General Secretary);
Conciliation etc
d. A Joint Secretary;
Section 6: Notice to Parties to Nominate
e. Any other officer of the trade union authorised in this
behalf by the President and Secretary of the Union.
1. If the Central Government proposes to appoint a Board, it
shall send a notice in form B to the parties requiring them Chapter: Arbitration Agreement
to nominate within a reasonable time persons to represent Section 8-A: Notification Regarding Arbitration
them on the Board. Agreement by Majority of each Party.
2. The notice to the employer shall be sent to the employer Where an industrial dispute has been referred to arbitration and
personally, or if the employer is an incorporated company the Central Government is satisfied that the persons making
or a body corporate, to the agent, manager or other principal the reference represent the majority of each party, it shall publish
officer of such company or body. a notification in this behalf in the Official Gazette for the
information of the employers and workmen who are not
3. The notice to the workmen shall be sent-
parties to the arbitration agreement but are concerned in the
a. In the case of workmen who are members of a trade union, dispute.
to the president or Secretary of the trade union; and
Chapter: Powers, Procedures and Duties
b. In the case of workmen who are not members of a trade
of Conciliation Officers, Boards, Courts,
union, to any one of the five representatives of the
Tribunals and Arbitrators
workmen who have attested the application made under
rule 3; and in this case a copy of the notice shall also be sent Section 9: Conciliation Proceedings in Public utility
to the employer who small display copies thereof on notice Service
boards in a conspicuous manner at the main entrance to the 1. The Conciliation Officer, on receipt of a notice of a strike or
premises of the establishment. lockout given under rule 71 or rule 72, shall forthwith
Chapter: Arbitration Agreement arrange to interview both the employer and the workmen
concerned with the dispute at such places and at such times
Section 7: Arbitration Agreement as he may deem fit and shall endeavour to bring about a
An arbitration agreement for the reference of an industrial settlement of the dispute in question.
dispute to an arbitrator or arbitrators shall be made in form C
2. Where the Conciliation Officer receives no notice of a strike
and shall be delivered personally or forwarded by registered post
or lockout under rule 71 or rule 72 but he considers it
to the Secretary to the Government of India in the Ministry of
necessary to intervene in the dispute he may give formal
Labour (in triplicate), the Chief Labour Commissioner
intimation in writing to the parties concerned declaring his
(Central), New Delhi, and the Regional Labour Commissioner
intention to commence conciliation proceedings with effect
(Central) and the Assistant Labour Commissioner (Central)
from such date as may be specified therein.
concerned. The agreement shall be accompanied by the consent,
in writing, of the arbitrator or arbitrators.

Chapter: Powers, Procedures and Duties 4. The party raising a dispute may submit a rejoinder if it

of Conciliation Officers, Boards, Courts, chooses to do so, to the written statement(s) by the
Tribunals and Arbitrators appropriate party or parties within a period of fifteen days
from the filing of written statement by the latter.
Section 10: Conciliation Proceedings in Non-public
utility Service 5. The Labour Court,Tribunal or National Tribunal, as the case
Where the Conciliation Officer receives any information about may be, shall fix a date for evidence within one month from
an existing or apprehended industrial dispute which does not the date of receipt of the statements, documents, list of
relate to public utility service and he considers it necessary to witnesses, etc., which shall be ordinarily within sixty days of
intervene in the dispute, he shall give formal intimation in the date on which the dispute was referred for adjudication.
writing to the parties concerned declaring his intention to 6. Evidence shall be recorded either in Court or on affidavit
commence conciliation proceedings with effect from such date but in the case of affidavit the opposite party shall have the
as may be specified therein. right to cross-examine each of the deponents filing the
Chapter: Powers, Procedures and Duties affidavit. As the oral examination of each witness proceeds,
of Conciliation Officers, Boards, Courts, the Labour Court, Tribunal or National Tribunal shall make
Tribunals and Arbitrators a memorandum of the substance of what is being
deposed. While recording the evidence the Labour Court,
Section 10-A: Parties to Submit Statements Tribunal or National Tribunal shall follow the procedure
The employer or the party representing workmen or in the case laid down in rule 5 of order XVIII of the First Schedule to
of individual workman, the workman himself involved in an the Code of Civil Procedure,1908.
industrial dispute shall forward a statement setting forth the
7. On completion of evidence either arguments shall be heard
specific matters in dispute to the Conciliation Officer concerned
immediately or a date shall be fixed for arguments/oral
whenever his intervention in the dispute is required.
hearing which shall not be beyond a period of fifteen days
Chapter: Powers, Procedures and Duties from the close of evidence.
of Conciliation Officers, Boards, Courts, 8. The Labour Court, Tribunal or National Tribunal, as the
Tribunals and Arbitrators case may be, shall not ordinarily grant an adjournment for a
Section 10-B: Proceeding before the Labour Court, period exceeding a week at a time but in any case not more
Tribunal or National Tribunal. than three adjournment in all at the instance of the parties
1. While referring an industrial dispute for adjudication to a to the dispute:
Labour Court, Tribunal or National Tribunal, the Central Provided that the Labour Court, Tribunal or National Tribunal,
Government shall direct the party raising the dispute to file as the case may be, may for reasons to be recorded in writing,
a statement of claim complete with relevant documents, list grant an adjournment exceeding a week at a time but in any case
of reliance and witnesses with the Labour Court, Tribunal not more than three adjournments at the instance of any one
or National Tribunal within fifteen days of the receipt of of the parties to the dispute.
the order of reference and also forward a copy of such 9. In case any party defaults or fails to appear at any stage the
statement to each one of the opposite parties involved in Labour Court, Tribunal or National Tribunal, as the case
the dispute. may be, may proceed with the reference ex parte and decide
2. The Labour Court, Tribunal or National Tribunal after the reference/application in the absence of the defaulting
ascertaining that copies of statement of claim are furnished party:
to the other side by party raising the dispute shall fix the fist Provided that the Labour Court, Tribunal or National
hearing on a date not beyond one month from the date of Tribunal, as the case may be, may on the application of
receipt of the order of reference and the opposite party or either party filed before the submission of the award revoke
parties shall file their written statement together with the order that the case shall proceed ex parte, if it is satisfied
documents, list of reliance and witnesses within a period of that the absence of the party was on justifiable grounds.
15 days from the date of first hearing and simultaneously 10. The Labour Court, Tribunal or National Tribunal, as the
forward a copy thereof to the other party. case may be, shall submit its ward to the Central
3. Where the Labour Court, Tribunal or National Tribunal, as Government within one month from the date of oral
the case may be, finds that the party raising the dispute hearing/arguments or within the period mentioned in the
though directed did not forward the copy of the statement order of reference whichever is earlier.
of claim to the opposite party or parties, it shall give 11. In respect of reference under section 2A, the Labour Court,
direction to the concerned party to furnish the copy of the Tribunal or National Tribunal, as the case may be, shall
statement to the opposite party or parties and for the said ordinarily submit its awards within a period of three
purpose or for any other sufficient cause, extend the time- months:
limit for filing the statement under sub-rule (1) or written Provided that the Labour Court, Tribunal or National Tribunal
statement under sub-rule (2) by an additional period of 15 may, as and when necessary, extend the period of three months
days. and shall record its reasons in writing to extend the time for
submission of the award for another specified period.

Chapter: Powers, Procedures and Duties Chapter: Powers, Procedures and Duties


of Conciliation Officers, Boards, Courts, of Conciliation Officers, Boards, Courts,
Tribunals and Arbitrators Tribunals and Arbitrators
Section 11: Omitted Section 17: Summons
The Conciliation Officer may hold a meeting of the representa- A summons issued by a Board, Court, Labour Court, Tribunal
tives of both parties jointly or of each party separately. or National Tribunal shall be in form D and may require any
Chapter: Powers, Procedures and Duties person to produce before it any books, papers or other
of Conciliation Officers, Boards, Courts, documents and things in the possession of or under the
Tribunals and Arbitrators control of such person in any way relating to the matter under
investigation or adjudication by the Board, Court, Labour
Section 12: Omitted Court, Tribunal or National Tribunal which the Board, Court,
The Conciliation Officer shall conduct the proceedings expedi- Labour Court, Tribunal or National Tribunal thinks necessary
tiously and in such manner as he may deem fit. for the purposes of such investigation or adjudication.
Chapter: Powers, Procedures and Duties Chapter: Powers, Procedures and Duties
of Conciliation Officers, Boards, Courts, of Conciliation Officers, Boards, Courts,
Tribunals and Arbitrators Tribunals and Arbitrators
Section 13: Place and Time of hearing Section 18: Service of Summons or Notice
Subject to the provisions contained in rule 10A and 10B, the Subject to the provisions contained in rule 20, any notice,
sittings of a Board, Court, Labour Court, Tribunal or National summons, process or order issued by a Board, Court, Labour
Tribunal or of an Arbitrator shall be held at such times and Court, Tribunal, National Tribunal or an arbitrator empowered
places as the Chairman or the Presiding Officer or the Arbitra- to issue such notice, summons, process or order, may be served
tor, as the case may be, may fix and the Chairman, Presiding either personally or by registered post and in the event of
Officer or Arbitrator, as the case may be, shall inform the parties refusal by the party concerned to accept the said notice, sum-
of the same in such manner as he thinks fit. mons, process or order, the same shall be sent again under
Chapter: Powers, Procedures and Duties certificate of posting.
of Conciliation Officers, Boards, Courts, Chapter: Powers, Procedures and Duties
Tribunals and Arbitrators of Conciliation Officers, Boards, Courts,
Section 14: Quorum for Boards and Courts Tribunals and Arbitrators
The quorum necessary to constitute a sitting of a Board or Section 19: Description of Parties in Certain Cases
Court shall be as follows: Where in any proceeding before a Board, Court, Labour Court,
i. In the case of a Board-Quorum Tribunal or National Tribunal or an Arbitrator, there are
Where the number of members is 3 2 numerous persons arrayed on any side, such persons shall be
described as follows-
Where the number of members is 5 3
1. All such persons as are members of any trade union or
ii. In the case of a Court-
association shall be described by the name of such trade
Where the number of members is not more than 2 1 union or association; and
Where the numbers of members is more than 2 but less than 5 2 2. All such persons as are not members of any trade union or
Where the number of members is 5 or more 3 association shall be described in such manner as the Board,
Court, Labour Court, Tribunal, National Tribunal or
Chapter: Powers, Procedures and Duties
Arbitrator, as the case may be, may determine.
of Conciliation Officers, Boards, Courts,
Tribunals and Arbitrators Chapter: Powers, Procedures and Duties
Section 15: Evidence
of Conciliation Officers, Boards, Courts,
A Board, Court, Labour Court, Tribunal or National Tribunal
Tribunals and Arbitrators
or a arbitrator may accept, admit or call for evidence at any stage Section 20: Manner of Service in the Case of
of the proceedings before it/him and in such manner as it/he Numerous Persons as Parties to a Dispute.
may think fit. 1. Where there are numerous persons as parties to any
Chapter: Powers, Procedures and Duties proceeding before a Board, Court, Labour Court, Tribunal
of Conciliation Officers, Boards, Courts, or National Tribunal or an arbitrator and such persons are
Tribunals and Arbitrators members of any trade union or association, the service of
notice on the Secretary, or where there is no Secretary, on the
Section 16: Administration of Oath principal officer, of the trade union or association shall be
Any member of a Board or Court or Presiding Officer of a deemed to be service on such persons.
Labour Court, Tribunal or National Tribunal or an Arbitrator
may administer an oath. 2. Where there are numerous persons as parties to any
proceeding before a Board, Court, Labour Court, Tribunal

or National Tribunal or an arbitrator and such persons are same powers as are vested in a civil court under the Code of

not members of any trade union or association, the Board, Civil Procedure, 1908, when trying a suit, in respect of the
Court, Labour Court, Tribunal, National Tribunal or following matters, namely-
Arbitrator, as the case may be, shall, where personal service a. Discovery and inspection;
is not practicable, cause the service of any notice to be made
b. Granting adjournment;
by affixing the same at or near the main entrance of the
establishment concerned. c. Reception of evidence taken on affidavit; and the Board,
Court, Labour Court, Tribunal, or National Tribunal may
3. A notice served in the manner specified in sub-rule (2) shall
summon and examine any person whose evidence appears
also be considered as sufficient in the case of such workmen
to it to be material and shall be deemed to be a civil court
as cannot be ascertained and found.
within the meaning of sections 480 and 482 of the Code of
Chapter: Powers, Procedures and Duties Criminal Procedure, 1898.
of Conciliation Officers, Boards, Courts, Chapter: Powers, Procedures and Duties
Tribunals and Arbitrators of Conciliation Officers, Boards, Courts,
Section 21: Procedure at the First Sitting Tribunals and Arbitrators
At the first sitting of a Board, Court, Labour Court, Tribunal or
Section 25: Assessors
National Tribunal, the Chairman or the Presiding Officer, as the
Where assessors are appointed to advise a Tribunal or National
case may be, shall call upon the parties in such order as he may
Tribunal under sub-section (4) of section 7-A or sub-section (4)
think fit to state their case.
of section 7-B or by the Court, Labour Court, Tribunal or
Chapter: Powers, Procedures and Duties National Tribunal under sub-section (5) of section 11, the
of Conciliation Officers, Boards, Courts, Court, Labour Court, Tribunal or National Tribunal, as the case
Tribunals and Arbitrators may be, shall, in relation to proceeding before it, obtain the
Section 22: Board, Court, Labour Court, Tribunal, advice of such assessors, but such advice shall not be binding
National Tribunal or Arbitrator may proceed ex parte on it.
If without sufficient cause being shown, any party to proceed- Notes -
ings before a Board, Court, Labour Court, Tribunal, National
Tribunal or Arbitrator fails to attend or to be represented, the
Board, Court, Labour Court, Tribunal, National Tribunal or
Arbitrator may proceed as if the party had duly attended or had
been represented.
Chapter: Powers, Procedures and Duties
of Conciliation Officers, Boards, Courts,
Tribunals and Arbitrators
Section 23: Power of entry and Inspection.
A Board, or Court, or any member thereof, or a Conciliation
Officer, a Labour Board, Court, Labour Court, Tribunal or
National Tribunal in this behalf may, for the purposes of any
conciliation, investigation, enquiry or adjudication entrusted to
the Conciliation Officer, Board, Court, Labour Court, Tribunal
or National Tribunal under the Act, at anytime between the
hours of sunrise and sunset and in the case of a person
authorised in writing by a Board, Court, Labour Court,
Tribunal or National Tribunal after he has given reasonable
notice, enter any building, factory, workshop, or other place or
premises whatsoever, and inspect the same or any work,
machinery, appliance or article therein or interrogate any person
therein in respect of anything situated therein or any matter
relevant to the subject-matter of the conciliation, investigation,
enquiry or adjudication.
Chapter: Powers, Procedures and Duties
of Conciliation Officers, Boards, Courts,
Tribunals and Arbitrators
Section 24: Power of Boards, Courts, Labour Courts,
Tribunals and National Tribunals.
In addition to the powers conferred by the Act, Boards, Courts,
Labour Courts, Tribunals and National Tribunals shall have the


Learning Objective: The representatives of the parties appearing before a Board,

The study of this lesson will help you identify: Court, Labour Court, Tribunal or National Tribunal or an
• Of how different industrial disputes can be settled with the arbitrator shall have the right of examination, cross-examina-
help of the Central Govt. rules. tion and of addressing the Board, Court, Labour Court,
Tribunal or National Tribunal or arbitrator when an evidence
Chapter: Powers, Procedures and Duties has been called.
of Conciliation Officers, Boards, Courts,
Tribunals and Arbitrators Chapter: Powers, Procedures and Duties
of Conciliation Officers, Boards, Courts,
Section 26: Fees for copies of awards or other Tribunals and Arbitrators
documents of Labour Court, tribunal or National
Tribunal. Section 30: Proceedings before a Board, Court,
Labour Court, Tribunal or National Tribunal
1. Fees for making a copy of an award or an order of a Labour
The proceedings before a Board, Court, Labour Court, Tribunal
Court, Tribunal or National Tribunal or any document filed
or National Tribunal shall be held in public. Provided that the
in any proceedings before a Labour Court, Tribunal or
Board, Court, Labour Court, Tribunal or National Tribunal may
National Tribunal shall be charged at the rate of Re.1 per
at any state direct that any witness shall be examined or its
proceedings shall be held in camera.
2. For certifying a copy of any such award or order or
document, a fee of Re. 1 shall be payable. Chapter: Remuneration of Chairman and
Members of Courts Presiding Officers of
3. Copying and certifying fees shall be payable in cash in
Labour Courts and Tribunals etc
4. Where a party applies for immediate delivery of a copy of Section 31: Travelling Allowance
any such award or order or document, an additional fee The Chairman or a member of a Board or Court or the
equal to one-half of the fee leviable under this rule shall be Presiding Officer or an Assessor of a Labour Court, Tribunal or
payable. National Tribunal, if a non-official, shall be entitled to draw
travelling allowance and halting allowance, for any journey
Chapter: Powers, Procedures and Duties performed by him in connection with the performance of his
of Conciliation Officers, Boards, Courts, duties, at the rates admissible and subject to the conditions
Tribunals and Arbitrators applicable to Government servant of the first grade under the
Section 27: Decision by Majority Supplementary Rules issued by the Central Government from
All question arising for decision at any meeting of a Board or time to time.
Court, save where the Court consists of one person, shall be Chapter: Remuneration of Chairman and
decided by a majority of the votes of the members thereof Members of Courts Presiding Officers of
(including the Chairman) present at the meeting. In the event Labour Courts and Tribunals etc
of an equality of votes the Chairman shall also have a casting
vote. Section 32: Fees
The Chairman and a member of a Board or Court, the
Chapter: Powers, Procedures and Duties Presiding Officer and an Assessor of a Labour Court, Tribunal
of Conciliation Officers, Boards, Courts, or National Tribunal wherever he is not a salaried officer of
Tribunals and Arbitrators Government may be granted such fees as may be sanctioned by
Section 28: Correction of Errors the Central Government in each case.
A Board, Court, Labour Court, Tribunal, National Tribunal or Chapter: Remuneration of Chairman and
arbitrator may at any time correct any clerical mistake or error Members of Courts Presiding Officers of
arising from an accidental slip or omission in any proceedings, Labour Courts and Tribunals etc
report, award or decision either of its or his own motion or on
the application of any of the parties. Section 33: Expenses of Witnesses
Every person who is summoned and duly attends or otherwise
Chapter: Powers, Procedures and Duties appears as a witness before a Board, Court, Labour Court,
of Conciliation Officers, Boards, Courts, Tribunal or National Tribunal or an Arbitrator shall be entitled
Tribunals and Arbitrators to an allowance for expenses according to the scale for the time
Section 29: Right of Representatives being in force with respect to witnesses in civil courts in the

State where the investigation, enquiry, adjudication or arbitra- b. How their membership is distributed among the sections,

tion is being conducted. shops or departments of the establishment.

Chapter: Representation of Parties 2. Where an employer has reason to believe that the
information furnished to him under sub-rule (1) by any
Section 34: Notice of Change
trade union is false, he may, after informing the union, refer
Any employer intending to effect any change in the conditions
the matter to the Assistant Labour Commissioner (Central)
of service applicable to any workmen in respect of any matter
concerned for his decision; and the Assistant Labour
specified in the Fourth Schedule to the Act shall give notice of
Commissioner (Central), after hearing the parties, shall
such intention in Form E.
decide the matter and his decision shall be final.
Chapter: Notice of Change Chapter: Works Committee
Section 35: Omitted Section 42: Groups of Workmen’s Representatives
Omitted. On receipt of the information called for under rule 41, the
Chapter: Representation of Parties employer shall provide for the election of workmen’s represen-
tatives on the Committee in two groups-
Section 36: Form of Authority under Section 36
The authority in favour of a person or persons to represent a 1. Those to be elected by the workmen of the establishment
workman or group of workmen or an employer in any who are members of the registered trade union or unions,
proceeding under the Act shall be in Form F. and

Chapter: Representation of Parties 2. Those to be elected by the workmen of the establishment

who are not members of the registered trade union or
Section 37: Parties bound by Acts of Representative unions, bearing the same proportion to each other as the
A party appearing by a representative shall be bound by the acts union members in the establishment bear to the non-
of that representative. members:
Chapter: Works Committee Provided that where more than half the workmen are members
Section 38: Constitution of the union or any one of the unions, no such division shall
Any employer to whom an order made under sub-section (1) be made:
of section 3 relates shall forthwith proceed to constitute a Provided further that where a registered trade union neglects or
Works Committee in the manner prescribed in this part. fails to furnish the information called for under sub-rule (1) or
rule 41 within one month of the date of the notice requiring it
Chapter: Works Committee
to furnish such information such union shall for the purpose
Section 39: Number of Members of this rule be treated as if it did not exist:
The number of members constituting the Committee shall be Provided further that where any reference has been made by he
fixed so as to afford representation to the various categories, employer under sub-rule (2) of rule 41, the election shall be
groups and classes of workmen engaged in, and to the sections, held on receipt of the decision of the Assistant Labour
shops or departments of the establishment: Commissioner (Central).
Provided that the total number of members shall not exceed
Chapter: Works Committee
Provided further that the number of representatives of the Section 43: Electoral Constituencies
workmen shall not be less than the number of representatives Where under rule 42 the workmen’s representatives are to be
of the employer. elected in two groups, the workmen entitled to vote shall be
divided into two electoral constituencies, the one consisting of
Chapter: Works Committee those who are members of a registered trade union and the
Section 40: Representatives of Employer other of those who are not:
Subject to the provisions of these rules, the representatives of Provided that the employer may, if he thinks fit,sub-divide the
the employer shall be nominated by the employer and shall as electoral constituency or constituencies, as the case may be and
far as possible be officials in direct touch with or associated with direct that workmen shall vote in either by groups, sections,
the working of the establishment. shops or departments.
Chapter: Works Committee Chapter: Works Committee
Section 41: Consultation with Trade Unions Section 44: Qualification of Candidates for Election
1. Where any workmen of an establishment are members of a Any workman of not less than 19 years of age and with a
registered trade union, the employer shall ask the union to service of not less than one year in the establishment may if
inform him in writing- nominated as provided in these rules be a candidate for election
a. How many of the workmen are members of the union; as a representative of the workmen on the Committee:
and Provided that the service qualification shall not apply to the first
election in an establishment which has been in existence for less
than a year.

Explanation: A workman who has put in a continuous service ineligible for membership under rule 44 or (b) the


of not less than one year in two or more establishments requirements of rule 47 have not been complied with:
belonging to the same employer shall be deemed to have Provided that where a candidate or an attesting person is unable
satisfied the service qualification prescribed under this rule. to be present at the time of scrutiny, he may send a duly
Chapter: Works Committee authorised nominee for the purpose.
Section 45: Qualifications for Voters Chapter: Works Committee
All workmen, who are not less than 18 years of age and who Section 48-A: Withdrawal of Candidates Validly
have put in not less than 6 months continuous service in the Nominated
establishment shall be entitled to vote in the election of the Any candidate whose nomination for election has been accepted
representative of workmen. may withdraw his candidature within 48 hours of the comple-
Explanation: A workman who has put in a continuous service tion of scrutiny of nomination papers.
of not less than 6 months in two or more establishments
Chapter: Works Committee
belonging to the same employer shall be deemed to have
satisfied the service qualification prescribed under this rule. Section 49: Voting in Election
Chapter: Works Committee 1. If the number of candidates who have been validly
nominated is equal to the number of seats, the candidates
Section 46: Procedure for Election shall be forthwith declared duly elected.
1. The employer shall fix a date as the closing date for receiving 2. If in any constituency the number of candidates is more
nominations from candidates for election as workmen’s than the number of seats allotted to it, voting shall take
representatives on the Committee. place on the day fixed for election.
2. For holding the election, the employer shall also fix a date 3. The election shall be held in such manner as may be
which shall not be earlier than three days and later than convenient for each electoral constituency.
fifteen days after the closing date for receiving nominations.
4. The voting shall be conducted by the employer, and if any
3. The dates so fixed shall be notified at least seven days in of the candidates belong to a union such of them as the
advance to the workmen and the registered trade union or union may nominate shall be associated with the election.
unions concerned. Such notice shall be affixed on the notice
5. Every workman entitled to vote at an electoral constituency
board or given adequate publicity amongst the workmen.
shall have as many votes as there are seats to be filled in the
The notice shall specify the number of seats to be elected by
the groups, sections, shops or departments and the number
to be elected by the members of the registered trade union Provided that each voter shall be entitled to cast only one vote
or unions and by the non-members. in favour of any one candidate.
4. A copy of such notice shall be sent to the registered trade Chapter: Works Committee
union or unions concerned. Section 50: Arrangements for Election
Chapter: Works Committee The employer shall be responsible for all arrangements in
connection with the election.
Section 47: Nomination of Candidates for Election
1. Every nomination shall be made on a nomination paper in Chapter: Works Committee
Form ‘G’ copies of which shall be supplied by the employer Section 51: Officers of the Committee
to the workmen requiring them. 1. The Committee shall have among its office bearers a
2. Each nomination paper shall be signed by the candidate to Chairman, a Vice-Chairman, a Secretary and a Joint Secretary.
whom it relates and attested by at least two other voters The Secretary and the Joint Secretary shall be elected every
belonging to the group, section, shop or department the year.
candidate seeking election will represent, and shall be 2. The Chairman shall be nominated by the employer from
delivered to the employer. amongst the employer’s representatives on the Committee
Chapter: Works Committee and he shall, as far as possible, be the head of
Section 48: Scrutiny of Nomination Papers
2A. The Vice-Chairman shall be elected by the members on the
1. On the day following the last day fixed for filing
Committee representing the workers, from amongst
nomination papers, the nomination papers shall be
scrutinised by the employer in the presence of the
candidates and the attesting persons and those which are Provided that in the event of equality of votes in the election of
not valid shall be rejected. the Vice-Chairman, the matter shall be decided by draw of a lot.
2. For the purpose of sub-rule (1), a nomination paper shall 3. The Committee shall elect the Secretary and the Joint
be held to be not valid if (a) the candidate nominated is Secretary provided that where the Secretary is elected from
amongst the representatives of the employers, the Joint
Secretary shall be elected from amongst the representatives

of the workmen and vice versa:

Provided that the post of the Secretary or the Joint Secretary,

as the case may be, shall not be held by a representative of
the employer or the workmen for two consecutive years.
Provided that the representatives of the employer shall not
take part in the election of the secretary or joint secretary, as
the case may be, from amongst the representatives of the
workmen and only the representatives of the workmen
shall be entitled to vote in such elections.
4. In any election under sub-rule (3), in the event of equality
of votes, the matter shall be decided by a draw of lot.
Chapter: Works Committee
Section 52: Term of Office
1. The term of office of the representatives on the Committee
other than a member chosen to fill a casual vacancy shall be
two years.
2. A member chosen to fill a casual vacancy shall hold office for
the unexpired term of his predecessor.
3. A member who without obtaining leave from the
Committee, fails to attend three consecutive meetings of
the Committee shall forfeit his membership.
Chapter: Works Committee
Section 53: Vacancies
In the event of workmen’s representative ceasing to be a
member under sub-rule (3) of rule 52 or ceasing to be em-
ployed in the establishment or in the event of his ceasing to
represent the trade or vocation he was representing, or resigna-
tion or death,his successor shall be elected in accordance with the
provisions of this Part from the same category, group,section,
shop or department to which the member vacating the seat
Chapter: Works Committee
Section 54: Power to Co-opt
The Committee shall have the right to co-opt in a consultative
capacity persons employed in the establishment having
particular or special knowledge of a matter under discussion.
Such co-opted member shall not be entitled to vote and shall be
present at meetings only for the period during which the
particular question is before the Committee.

Notes -


Learning Objective: Chapter: Miscellaneous

The study of this lesson will help you identify:
Section 58: Memorandum of Settlement
• Of how different industrial disputes can be settled with the
1. A settlement arrived at in the course of conciliation
help of the Central Govt. rules.
proceedings or otherwise, shall be in form H.
Chapter: Works Committee 2. The settlement shall be signed by-
Section 55: Meetings a. In the case of an employer, by the employer himself, or by
his authorised agent, or when the employer is an
1. The Committee may meet as often as necessary but not less
incorporated company or other body corporate, by the
often than once in three months (a quarter).
agent, manager or other principal officer of the corporation;
2. The Committee shall at its first meeting regulate its own
b. In the case of the workmen, by any officer of a trade union
of the workmen or by five representatives of the workmen
Chapter: Works Committee duly authorised in this behalf at a meeting of the workmen
Section 56: Facilities for Meeting, etc. held for the purpose.

1. The employer shall provide accommodation for holding c. In the case of the workman in an industrial dispute under
meetings of the Committee. He shall also provide all section 2A of the Act, by the workman concerned.
necessary facilities to the Committee and to the members Explanation.- In this rule ‘’officer’’ means any of the following
thereof for carrying out the work of the Committee. The officers, namely:-
Committee shall ordinarily meet during working hours of a) The President;
the establishment concerned on any working day and the b. The Vice-President;
representative of the workmen shall be deemed to be on
duty while attending the meeting. c. The Secretary (including the General Secretary);
d. A Joint Secretary;
2. The Secretary of the Committee may, with the prior
concurrency of the Chairman, put up notice regarding the e. Any other officer of the trade union authorised in this
work of the Committee on the notice board of the behalf by the President and Secretary of the Union.
establishment. 3. Where a settlement in arrived at in the course of conciliation
Chapter: Works Committee proceeding the conciliation officer shall send a report
thereof to the Central Government together with a copy of
Section 56-A: Submission of returns the memorandum of settlement signed by the parties to
The employer shall submit half-yearly returns as in Form G-I in the dispute.
triplicate to the Assistant Labour Commissioner (Central)
4. Where a settlement is arrived at between an employer and
concerned not later than the 20th day of the month following
his workmen otherwise than in the course of conciliation
the half-year.
proceeding before a Board or a Conciliation Officer, the
Chapter: Works Committee parties to the settlement shall jointly send a copy thereof to
Section 57: Dissolution of Works Committee the Central Government, the Chief Labour Commissioner
The Central Government, or where the power under section 3 (Central) New Delhi, and the Regional Labour
has been delegated to any officer or authority under section 39, Commissioner (Central) and to the Assistant Labour
such officer or authority may, after making such inquiry as it or Commissioner (Central) concerned.
he may deem fit, dissolve any Works Committee at any time, by Chapter: Miscellaneous
an order in writing, if he or it is satisfied that the Committee
Section 59: Complaints Regarding Change of
has not been constituted in accordance with these rules or that
Conditions of Service etc.
not less than two-thirds of the number of representatives of
the workmen have, without any reasonable justification failed to 1. Every complaint under section 33-A of the Act shall be
attend three consecutive meetings of the Committee or that the presented in triplicate in Form ‘I’ and shall be accompanied
Committee has, for any other reason, ceased to function: by as many copies of the complaint as there are opposite
parties to the complaint.
Provided that where a Works Committee is dissolved under
this rule the employer may, and if so required by the Central 2. Every complaint under sub-rule (1) shall be verified at the
Government or, as the case may be, by such officer or authority, foot by the workmen making it or by some other person
shall take steps to re-constitute the Committee in accordance proved to the satisfaction of the Labour Court, Tribunal or
with these rules.

National Tribunal to be acquainted with the facts of the of the receipt of the names and addresses under sub-rule

case. (1), the list of workmen recognised as protected workmen

3. The person verifying shall specify, by references to the for the period of twelve months from the date of such
numbered paragraphs of the complaint, what he verifies of communication.
his own knowledge and what he verifies upon information 3. Where the total number of names received by the employer
received and believed to be true. under sub-rule (1) exceeds the maximum number of
4. The verification shall be signed by the person making it and protected workmen, admissible for the establishment,
shall state the date on which and the place at which it was under section 33, sub-section (4), the employer shall
signed. recognise as protected workmen only such maximum
number of workmen:
Chapter: Miscellaneous
Provided that, where there is more than one registered trade
Section 60: Application under Section 33 union in the establishment, the maximum number shall be so
1. An employer intending to obtain the express permission in distributed by the employer among the unions that the
writing of the Conciliation Officer, Board, Labour Court, numbers of recognised protected workmen in individual
Tribunal or National Tribunal, as the case may be, under unions bear roughly the same proportion to one another as the
sub-section (1) or sub-section (3) of section 33 shall present membership figures of the union. The employer shall in that
an application in Form J in triplicate to such Conciliation case intimate in writing to the President or the Secretary of the
Officer, Board, Labour Court, Tribunal or National Tribunal union the number of protected workmen allotted to it:
and shall file along with the application as many copies Provided further that where the number of protected workmen
thereof as there are opposite parties. allotted to a union under this sub-rule falls short of the
2. An employer seeking the approval of the Conciliation number of officers of the union seeking protection, the union
Officer, Board, Labour Court, Tribunal or National shall be entitled to select the officers to be recognised as
Tribunal, as the case may be, of any action taken by him protected workmen. Such selection shall be made by the union
under clause (a) or clause (b) of sub-section (2) of section and communicated to the employer within five days of the
33 shall present an application in Form K in triplicate to receipt of the employer’s letter.
such Conciliation Officer, Board, Labour Court, Tribunal or 4. When a dispute arises between an employer and any
National Tribunal and shall file along with the application as registered trade union in any matter connected with the
many copies thereof as there are opposite parties. recognition of ‘protected workmen’ under this rule, the
3. Every application under sub-rule (1) or sub-rule (2) shall be dispute shall be referred to any Regional Labour
verified at the foot by the employer making it or by some Commissioner (Central) or the Assistant Labour
other person proved to the satisfaction of the Conciliation Commissioner (Central) concerned,whose decision thereon
Officer, Board, Labour Court, Tribunal or National Tribunal shall be final.
to be acquainted with the facts of the case. Chapter: Miscellaneous
4. The person verifying shall specify by reference to the Section 62: Application for Recovery of Dues
numbered paragraphs of the application, what he verifies
1. Where any money is due from an employer to a workman
of his own knowledge and what he verifies upon
or a group of workmen under a settlement or an award or
information received and believed to be true.
under the provisions of Chapter V-A or Chapter V-B, the
5. The verification shall be signed by the person making it and workman or the group of workmen, as the case may be,
shall state the date on which and the place at which it was may apply in Form K-1 for the recovery of the money due:
verified. Provided that in the case of a person authorised in writing
Chapter: Miscellaneous by the workman, or in the case of the death of the
workmen, the assignee or heir of the deceased workman,
Section 61: Protected Workmen
the application shall be made in Form K-2.
1. Every registered trade union connected with an industrial
2. Where any workman or a group of workmen is entitled to
establishment, to which the Act applies, shall communicate
receive from the employer any money or any benefit which
to the employer before the 30th April every year, the names
is capable of being computed in terms of money, the
and addresses of such of the officers of the union who are
workman or the group of the workmen, as the case may be,
employed in that establishment and who, in the opinion of
may apply to the specified Labour Court in Form K-3 for
the union should be recognised as ‘’protected workmen’’.
the determination of the amount due or, as the case may
Any change in the incumbency of any such officer shall be
be, the amount at which such benefit should be computed:
communicated to the employer by the union within fifteen
Provided that in the case of the death of a workman,
days of such change.
application shall be made in form K-4 by the assignee or
2. The employer shall, subject to section 33, sub-section (4) , heir of the deceased workman.
recognise such workmen to be “protected workmen” for the
purposes of sub-section (3) of the said section and Chapter: Miscellaneous
communicate to the union, in writing, within fifteen days Section 63: Appointment of Commissioner

Where it is necessary to appoint a Commissioner under sub- computing the money value of a benefit, the Labour Court may


section (3) of Section 33-C of the Act, the Labour Court may issue a Commission to a person referred to in rule 63 directing
appoint a person with experience in the particular industry, trade him to make such investigation and to report thereon to it.
or business involved in the industrial dispute or a person with
Chapter: Miscellaneous
experience as a judge of a civil court, or as a stipendiary magis-
trate or as a Registrar or Secretary of a Labour Court, or Tribunal Section 67: Commissioner’s Report
constituted under any Provincial Act or State Act or of a Labour 1. The Commissioner after such local inspection as he deems
Court, Tribunal or National Tribunal constituted under the Act necessary and after reducing to writing the evidence taken by
or of the Labour Appellate Tribunal constituted under the him, shall return such evidence together with his report in
Industrial Disputes (Appellate Tribunal) Act, 1950. writing signed by him to the Labour Court.
Chapter: Miscellaneous 2. The report of the Commissioner and the evidence taken by
him (but not the evidence without the report) shall be
Section 64: Fees for the Commissioner, etc.
evidence in the industrial dispute and shall form part of the
1. The Labour Court shall, after consultation with the parties, record of the proceedings in the industrial dispute; but the
estimate the probable duration of the enquiry and fix the Labour Court or, with the permission of the Labour Court,
amount of the Commissioner’s fees and other incidental any of the parties to the industrial dispute may examine the
expenses and direct the payment thereof, into the nearest Commissioner personally before the Labour Court
treasury, within a specified time, by such party or parties and regarding any of the matters referred to him or mentioned
in such proportion as it may consider fit. The in his report or as to his report, or as to the manner in
Commissioner shall not issue until satisfactory evidence of which he has made the investigation.
the deposit into the treasury of the sum fixed is filed before
3. Where the Labour Court is for any reason dissatisfied with
the Labour Court:
the proceedings of the Commissioner it may direct such
Provided that the Labour Court may from time to time direct further enquiry to be made as it shall think fit.
that any further sum or sums be deposited into the treasury
within such time and by such parties as it may consider fit: Chapter: Miscellaneous
Provided further that the Labour Court may in its discretion, Section 68: Powers of Commissioner
extend the time for depositing the sum into the treasury. Any Commissioner appointed under these rules may, unless
2. The Labour Court may, at any time, for reasons to be otherwise directed by the order of appointment-
recorded in writing, vary the amount of the a. Examine the parties themselves and any witnesses whom
Commissioner’s fees in consultation with the parties. they or any of them may produce, and any other person
3. The Labour Court may direct that the fees shall be whom the Commissioner thinks proper to call upon to give
disbursed to the Commissioner in such installments and evidence in the matter referred to him;
on such dates as it may consider fit. b. Call for and examine documents and other things relevant
4. The undisbursed balance, if any, of the sum deposited shall to the subject of enquiry;
be refunded to the party or parties who deposited the sum c. At any reasonable time enter upon or into any premises
in the same proportion as that in which it was deposited. mentioned in the order.
Chapter: Miscellaneous Chapter: Miscellaneous
Section 65: Time for Submission of Report Section 69: Summoning of Witnesses, etc.
1. Every order for the issue of a Commission shall appoint a 1. The provisions of the Code of Civil Procedure, 1908 (5 of
date, allowing sufficient time, for the Commissioner to 1908) relating to the summoning, attendance, examination
submit his report. of witnesses and penalties to be imposed upon witnesses,
2. If for any reason the Commissioner anticipates that the shall apply to persons required to give evidence or to
date fixed for the submission of his report is likely to be produce documents before the Commissioner under these
exceeded, he shall apply, before the expiry of the said date, Rules.
for extension of time setting forth grounds thereof and the 2. Every person who is summoned and appears as a witness
Labour Court shall take such grounds into consideration in before the Commissioner shall be entitled to payment by
passing orders on the application: the Labour Court out of the sum deposited under rule 64,
Provided that the Labour Court may grant extension of time of an allowance for expenses incurred by him in accordance
notwithstanding that no application for such extension has with the scale for the time being in force for payment of
been received from the Commissioner within the prescribed such allowances to witnesses appearing in the civil courts.
time-limit. Chapter: Miscellaneous
Chapter: Miscellaneous Section 70: Representation of Parties before the
Section 66: Local Investigation Commissioner
In any industrial dispute in which the Labour Court deems a The parties to the industrial dispute shall appear before the
local investigation to be requisite or proper for the purpose of Commissioner, either in person or by any other person who is

competent to represent them in the proceedings before the The notice of lock-out or strike in a public utility service to be

Labour Court. submitted by the employer under sub-section (3) of Section 22,
shall be in Form N.
Chapter: Miscellaneous
Section 70-A: Preservations of records by the Chapter: Miscellaneous
National Industrial Tribunals, Industrial Tribunals or Section 74: Report of Notice of Strike or Lock-out
Labour Courts. The report of notice of a strike or lock-out to be submitted by
1. The records of the National Industrial tribunals, Industrial the employer under sub-section (6) of section 22 shall be sent
Tribunals or Labour Courts specified in Column 1 of the by registered post or given personally to the Assistant Labour
Table below shall be preserved, for the periods specified in Commissioner (Central) appointed for the local area concerned,
the corresponding entry in column 2 thereof after the with copy by registered post to-
proceedings are finally disposed of by such National 1. The Administrative Department of the Government of
Tribunals,Industrial Tribunals Labour Courts. India concerned,
TABLE 2. The Regional Labour Commissioner (Central) for the Zone,
———————————————————————— 3. Chief Labour Commissioner (Central),
Records Number of years for 4. Ministry of Labour of the Government of India,
which the records shall be preserved 5. Labour Department of the State Government concerned,
-------------------------------------------------------------------------------- and
----------------------------------------------------------------------- 1 2 6. The District Magistrate Concerned.
i. Order and judgements of National Chapter: Miscellaneous
Industrial Tribunals,Industrial Tribunals Section 75: Register of Settlements
or Labour Courts. 10 years The Conciliation Officer shall file all settlements effected under
ii. Exhibited documents in the above this Act in respect of disputes in the area within his jurisdiction
mentioned Tribunals or Courts 10 years in a register maintained for the purpose as in Form O.

iii. Other papers. 7 years Chapter: Miscellaneous

————————————————————————— Section 75-A: Notice of lay off
2. Notwithstanding anything contained in sub-rule (1), the 1. If any workman employed in an industrial establishment as
records of the National Industrial Tribunals, Industrial defined in the Explanation below section 25A not being an
Tribunals or Labour Courts, connected with writ petitions, industrial establishment referred to in sub-section (1) of
if any, filed in the High Courts or Supreme Court, or that section is laid off, then, the employer concerned shall
connected with appeals by special leave, if any, filed in the give notices of commencement and termination of such
Supreme Court shall be preserved at least till the final lay-off in Forms O-1 and O-2 respectively within seven days
disposal of such writ petitions or appeal by special leave. of such commencement or termination, as the case may be.
Chapter: Miscellaneous 2. Such notices shall be given by an employer in every case
irrespective of whether, in his opinion, the workman laid-
Section 71: Notice of Strike off is or is not entitled to compensation under section 25-
1. The notice of strike to be given by workmen in a public C.
utility service shall be in Form L.
Chapter: Miscellaneous
2. On receipt of a notice of a strike under sub-rule (1), the
employer shall forthwith intimate the fact to the Section 75-B: Application for Permission for Lay-off
Conciliation Officer having jurisdiction in the matter. under Section 25-M
1. Application for permission to lay-off any workman under
Chapter: Miscellaneous
sub-section (1), or for permission to continue a lay-off
Section 72: Notice of Lock-out under sub-section (3) of section 25-M shall be made in
The notice of lock-out to be given by an employer carrying on a Form O-3 and delivered to the authority specified under
public utility service shall be in form M. The Notice shall be sub-section (1) either personally or by registered post
displayed conspicuously by the employer on a notice board at acknowledgment due and where the application is sent by
the main entrance to the establishment and in the Manager’s registered post the date on which the same is delivered to
Office: the said authority shall be deemed to be the date on which
Provided that where a registered trade union exists, a copy of the application is made, for the purposes of sub-section (5)
the notice shall also be served on the Secretary of the Union. of the said section.
Chapter: Miscellaneous 2. The application for permission shall be made in triplicate
and copies of such application shall be served by the
Section 73: Report of Lock-out or Strike
employer on the workmen concerned and a proof to that

effect shall also be submitted by the employer along with shall be sent to the Central Government, the Regional Labour


the application. Commissioner (Central), the Assistant Commissioner (Cen-
3. The employer concerned shall furnish to the authority to tral), and the Employment Exchange concerned, within 3 days
whom the application for permission has been made such of the agreement.
further information as the authority considers necessary for Chapter: Miscellaneous
arriving at a decision on the application, as and when called
Section 76-A: Notice of, and Application for
for by such authority, so as to enable the authority to
Permission for, Retrenchment.
communicate the permission or refusal to grant permission
within the period specified in sub-section (5) of section 1. Notice or, as the case may be, the application under sub-
25M. section (1) of Section 25N for retrenchment shall be served
in Form PA and served on the Central Government or such
4. Where the permission to lay-off has been granted by the
authority as may be specified by that Government under the
said authority, the employer concerned shall give to the
said clause either personally or by registered post
Regional Labour Commissioner (Central) concerned, a
acknowledgment due and where the notice is served by
notice of commencement and termination of such lay-off
registered post, the date on which the same is delivered to
in Forms O-1 and O-2 respectively and where permission to
the Central Government or the authority shall be deemed to
continue a lay-off has been granted by the said authority,
be the date of service of the notice for the purposes of
the employer shall give to the Regional Labour
sub-section (4) of the said section.
Commissioner (Central) concerned, a notice of
commencement of such lay-off in Form O-1, in case such a 2. The notice or, as the case may be, the application, shall be
notice has not already been given under sub-rule (1) of rule made in triplicate and copies of such notice, or as the case
75A, and a notice of termination of such lay-off in Form may be, the application, shall be served by the employer on
O-2. the workmen concerned and a proof to that effect shall also
be submitted by the employer along with the notice or, as
5. The notice of commencement and termination of lay-off
the case may be, the application.
referred to in sub-rule (4) shall be given within the period
specified in sub-rule (1) of rule 75-A. 3. The employer concerned shall furnish to the Central
Government or the authority to whom the notice for
Chapter: Miscellaneous retrenchment has been given or the application for
Section 76: Notice of Retrenchment permission for retrenchment has been made, under sub-
If any employer desires to retrench any workman employed in section (1) of Section 25-N, such further information as the
his industrial establishment who has been in continuous service Central Government or, as the case may be, the authority
for not less than one year under him (hereinafter referred to as considers necessary for arriving at a decision on the notice
‘workman’ in this rule and in rules 77 and 78), he shall give or, as the case may be, the application, as and when called
notice of such retrenchment as in Form P to the Central for by such authority so as to enable the Central
Government, the Regional Labour Commissioner (Central) and Government or the authority to communicate its
Assistant Labour Commissioner (Central) and the Employ- permission or refusal to grant permission within the period
ment Exchange concerned and such notice shall be served on specified in sub-section (4) of Section 25-N.
that Government, the Regional Labour Commissioner
Chapter: Miscellaneous
(Central), the Assistant Labour Commissioner (Central), and
the Employment Exchange concerned, by registered post in the Section 76-B: Notice of Closure
following manner: If an employer intend to close down an undertaking he shall
a. Where notice is given to the workman, notice of give notice of such closure in Form Q to the Central Govern-
retrenchment shall be sent within three days from the date ment, the Regional Labour Commissioner (Central), the
on which notice is given to the workman; Assistant Labour Commissioner (Central), and the Employ-
ment Exchange concerned, by registered post.
b. Where no notice is given to the workman and he is paid one
months wages in lieu thereof, notice of retrenchment shall Chapter: Miscellaneous
be sent within three days from the date on which such
Section 76-C: Notice of, and application for
wages are paid; and
permission for, closure
c. Where retrenchment is carried out under an agreement 1. Notice under sub-section (1) of Section 25-O of intended
which specifies a date for the termination of service, notice closure shall be given in Form QA and served on the
of retrenchment shall be sent so as to reach the Central Central Government either personally or by registered post
Government, the Regional Labour Commissioner (Central), acknowledgement due.
the Assistant Labour Commissioner (Central), and the
Employment Exchange concerned, at least one month A copy of such application shall be served simultaneously by
before such date: registered post on the President or Secretary of registered trade
union(s) functioning in the establishment and a notice in this
Provided that if the date of termination of service agreed upon regard shall also be displayed conspicuously by the employer on
is within 30 days of the agreement, the notice of retrenchment a notice board at the main entrance to the establishment for the

information of all the concerned workmen at the same time Chapter: Miscellaneous

when applications are served on the Central Government. Section 79: Penalties
2. The notice, or, as the case may be, the application shall be Any breach of these rules shall be punishable with fine not
made in triplicate. exceeding fifty rupees.
3. The employer concerned shall furnish to the Central Chapter: Miscellaneous
Government to whom the notice of intended closure has
been given or the application for permission to close down Section 80: Repeal
has been made such further information as that The Industrial Disputes (Central) Rules, 1947, are hereby
Government considers necessary, for arriving at a decision repealed:
on the notice, or, as the case may be, the application, and Provided that any order made or action taken under the rules so
calls for from such employer. repealed shall be deemed to have been made or taken under the
Chapter: Miscellaneous corresponding provisions of these rules.

Section 77: Maintenance of Seniority List of

Workmen Notes -
The employer shall prepare a list of all workmen in the
particular category from which retrenchment is contemplated
arranged according to the seniority of their service in that
category and cause a copy thereof to be pasted on a notice board
in a conspicuous placed in the premises of the industrial
establishment at least seven days before the actual date of
Chapter: Miscellaneous
Section 78: Re-employment of Retrenched Workmen
1. At least ten days before the date on which vacancies are to be
filled, the employer shall arrange for the display on a notice
board in a conspicuous place in the premises of the
industrial establishment details of those vacancies and shall
also give intimation of those vacancies by registered post to
every one of all the retrenched workmen eligible to be
considered therefor, to the address given by him at the time
of retrenchment or at any time thereafter:
Provided that where the number of such vacancies is less than
the number of retrenched workmen, it shall be sufficient if
intimation is given by the employer individually to the
seniormost retrenched workmen in the list referred to in rule 77
the number of such seniormost workmen being double the
number of such vacancies:
Provided further that where the vacancy is of a duration of less
than one month there shall be no obligation on the employer
to send intimation of such vacancy to individual retrenched
Provided also that if a retrenched workman, without sufficient
cause being shown in writing to the employer, does not offer
himself for re-employment on the date or date specified in the
intimation sent to him by the employer under this sub-rule, the
employer may not intimate to him the vacancies that may be
filled on any subsequent occasion.
2. Immediately after complying with the provisions of sub-
rule (1), the employer shall also inform the trade unions
connected with the industrial establishment, of the number
of vacancies to be filled and names of the retrenched
workmen to whom intimation has been sent under that
Provided that the provisions of this sub-rule need not be
complied with by the employer in any case where intimation is
sent to every one of the workmen mentioned in the list
prepared under rule 77.

Objective regulating the relations between workmen and employers or

The study of this lesson will help you identify: between workmen and workmen, or between employers
and employers, or for imposing restrictive conditions on
Chapter: Preliminary
the conduct of any trade or business, and includes any
Section 1: Short Title, Extent and Commencement federation of two or more Trade Unions ; Provided that
1. This Act may be called the [* * * ] Trade Unions Act, 1926. this Act shall not affect-
2. It extends to the whole of India [* * * ]. i. Any agreement between partners as to their own business ;
3. It shall come into force on such date as the [Central ii. Any agreement between an employer and those employed
Government] may by notification in the [Official Gazette], by him as to such employment ; or
appoint. iii. Any agreement in consideration of the sale of the goodwill
Chapter: Preliminary of a business or of instruction in any profession, trade or
Section 2: Definitions
Chapter: Registration of Trade Unions
In this Act, the appropriate Government’ means, in relation to
Trade Unions whose objects are not confined to one [State], the Section 3: Appointment of Registrars
Central Government, and in relation to other Trade Unions, the 1. The appropriate Government shall appoint a person to be
[State] Government, and, unless there is anything repugnant in the Registrar of Trade Unions for each State.
the subject or context, -
2. The appropriate Government may appoint as many
a. “executive” means the body, by whatever name called, to Additional and Deputy Registrars of Trade Unions as it
which the management of the affairs of the Trade Union, is thinks ft for the purpose of exercising and discharging,
entrusted; under the superintendence and direction of Registrar, such
b. “office-bearer” in the case of a Trade Union, includes any powers and functions of the Registrar under this Act as it
member of the executive thereof, but does not include an may, by order, specify and define the local limits within
auditor; which any such Additional or Deputy Registrar shall exercise
c. “prescribed” means prescribed by regulations made under and discharge the powers and functions so specified.
this Act; 3. Subject to the provisions of any order under sub-section
d. “registered office” means that office of a Trade Union, (2), where an Additional or Deputy Registrar exercises and
which is registered under this Act as the Head Office discharges the powers and functions of a Registrar in an
thereof; area within which the registered office of a Trade Union is
situated, the Additional or Deputy Registrar shall be
e. “registered Trade Union” means a Trade Union registered
deemed to be the Registrar in relation to the Trade Union
under this Act;
for the purposes of this Act.]
f. “Registrar” means -
Chapter: Registration of Trade Unions
i. A Registrar of Trade Unions appointed by the appropriate
Government under Section 3, and includes any additional or Section 4: Mode of Registration
Deputy Registrar of Trade Unions ; and 1. Any seven or more members of a Trade Union may, by
ii. In relation to any Trade Union, the Registrar appointed for subscribing their names to the rules of Trade Union and by
the State in which the head or registered office, as the case otherwise complying with the provisions of this Act with
may be, of the Trade Union is situated] ; respect to registration, apply for registration of the Trade
Union under this Act.
g. “trade dispute” means any dispute between employers and
workmen or between workmen and workmen, or between 2. Where an application has been made under sub-section (1)
employers and employers which is connected with the for the registration of a Trade Union, such application shall
employment or non-employment, or the terms of not be deemed to have become invalid merely by reason of
employment or the conditions of labour, of any person, the fact that, at any time after the date of the application,
and “workmen” means all persons employed in trade or but before the registration of the Trade Union, some of the
industry whether or not in the employment of the applicants, but not exceeding half of the total number of
employer with whom the trade dispute arises ; and persons who made the application, have ceased to be
members of the Trade Union or have given notice in
h. “Trade Union” means any combination, whether temporary
or permanent, formed primarily for the purpose of

writing to the Registrar dissociating themselves from the h. The manner in which the members of the executive and the

application. other [office-bearers] of the Trade Union shall be appointed

and removed ;
Chapter: Registration of Trade Unions
i. The safe custody of the funds of the Trade Union, and
Section 5: Application for Registration
annual audit, in such manner as may be prescribed, of the
1. Every application for registration of a Trade Union shall be accounts thereof, and adequate facilities for the inspection
made to the Registrar, and shall be accompanied by a copy of the account books by the [office-bearers]and members
of the rules of the Trade Union and a statement of the of the Trade Union ; and
following particulars, namely-
j. The manner in which the Trade Union may be dissolved.
a. The names, occupations and addresses of the members
making the application ;
Chapter: Registration of Trade Unions
b. The name of the Trade Union and the address of its head Section 7: Power to call for Further Particulars and
office ; and to Require Alteration of Name
c. The titles, names, ages, addresses and occupations of the 1. The Registrar may call for further information for the
office-bearers of the Trade Union. purpose of satisfying himself that any application complies
with the provisions of Section 5, or that the Trade Union is
2. Where a Trade Union has been in existence for more than
entitled to registration under Section 6, and may refuse to
one year before the making of an application for its
register the Trade Union until such information is supplied.
registration, there shall be delivered to the Registrar,
together with application, a general statement of the assets 2. If the name under which a Trade Union is proposed to be
and liabilities of the Trade Union prepared in such form registered is identical with that by which any other existing
and containing such particulars as may be prescribed. Trade Union has been registered or, in the opinion of the
Registrar, so nearly resembles such name as to be likely to
Chapter: Registration of Trade Unions deceive the public or the members of either Trade Union,
Section 6: Provisions to be Contained in the Rules of the Registrar shall require the persons applying for
a Trade registration to alter the name of the Trade Union stated in
Union A Trade Union shall not be entitled to registration under the application, and shall refuse to register the Union until
this Act, unless the executive thereof is constituted on accor- such alteration has been made.
dance with the provisions of this Act and the rules thereof Chapter: Registration of Trade Unions
provide for the following matters, namely-
Section 8: Registration
a. The name of a Trade Union ;
The Registrar, on being satisfied that the Trade Union has
b. The whole of the objects for which the Trade Union has
complied with all the requirements of this Act in regard to
been established ;
registration, shall register the Trade Union by entering in a
c. The whole of the purposes for which the general funds of register to be maintained in such form as may be prescribed, the
the Trade Union shall be applicable, all of which purposes particulars relating to the Trade Union contained in the state-
shall be purposes to which such funds are lawfully ment accompanying the application for registration.
applicable under this Act ;
Chapter: Registration of Trade Unions
d. The maintenance of a list of the members of the Trade
Union and adequate facilities for the inspection thereof by Section 9: Certificate of Registration
the [office-bearers] and members of the Trade Union ; The Registrar, on registering a Trade Union under Section 8,
e. The admission of ordinary members who shall be persons shall issue a certificate of registration in the prescribed form
actually engaged or employed in an industry with which the which shall be conclusive evidence that the Trade Union has
Trade Union is connected, and also the admission of the been duly registered under this Act.
number of honorary or temporary members as [office- Chapter: Registration of Trade Unions
bearers] required under Section 22 to form the executive of
Section 10: Cancellation of Registration
the Trade Union ;
A certificate of registration of a Trade Union may be withdrawn
ee. The payment of a subscription by members of the Trade or cancelled by the Registrar-
Union which shall be not less than twenty-five naye paise
a. On the application of the Trade Union to be verified in
per month per member] ;
such manner as may be prescribed, or
f. The conditions under which any member shall be entitled
b. If the Registrar is satisfied that the certificate has been
to any benefit assured by the rules and under which any fine
obtained by fraud or mistake, or that the Trade Union has
or forfeiture may be imposed on the members ;
ceased to exist or has wilfully and after notice from the
g. The manner in which the rules shall be amended, varied or Registrar contravened any provision of this Act or allowed
rescinded ; any rule to continue in force which is inconsistent with any
such provision, or has rescinded any rule providing for any
matter provision for which is required by Section 6:

Provided that not less than two months’ previous notice in Section 14: Certain Acts not to Apply to Registered


writing specifying the ground on which it is proposed to Trade Unions
withdraw or cancel the certificate shall be given by the The following Acts, namely-
Registrar to the Trade Union before the certificate is a. The Societies Registration Act, 1860 (29 of 1860),
withdrawn or cancelled otherwise than on the application of
b. The Cooperative Societies Act, 1912 (2 of 1912). [* * *] and
the Trade Union.
c. The Companies Act, 1956 (1 of 1956), shall not apply to
Chapter: Registration of Trade Unions any registered Trade Union, and the registration of any such
Section 11: Appeal Trade Union under any such Act shall be void.
1. Any person aggrieved by any refusal of the Registrar to
register a Trade Union or by the withdrawal or cancellation
Notes -
of a certificate of registration may, within such period as
may be prescribed, appeal-
a. Where the head office of Trade Union is situated within the
limits of a Presidency town [* * *], to the High Court, or
b. Where the head office is situated in any other area, to such
Court, not inferior to the Court of an additional or
assistant Judge of a principal Civil Court of original
jurisdiction, as the [appropriate Government] may appoint
in this behalf for that area.
2. The appellate Court may dismiss the appeal, or pass an
order directing the Registrar to register the Union and to
issue a certificate of registration under the provisions of
Section 9 or setting aside the order for withdrawal or
cancellation of the certificate, as the case may be, and the
Registrar shall comply with such order.
3. For the purpose of an appeal under sub-section (1) an
appellate Court shall, so far as may be, follow the same
procedure and have the same powers as it follows and has
when trying a suit under the Code of Civil Procedure, 1908,
and may direct by whom the whole or any part of the costs
of the appeal shall be paid, any such costs shall be recovered
as if they had been awarded in a suit under the said Code.
4. In the event of the dismissal of an appeal by any Court
appointed under clause (b) of sub-section (1), the person
aggrieved shall have a right of appeal to the High Court,
and the High Court shall, for the purpose of such appeal,
have all the powers of an appellate Court under sub-
sections (2) and (3), and the provisions of those sub-
sections shall apply accordingly.
Chapter: Registration of Trade Unions
Section 12: Registered Office
All communications and notices to a registered Trade Union
may be addressed to its registered office. Notice of any change
in the address of the head office shall be given within fourteen
days of such change to the Registrar in writing, and the changed
address shall be recorded in the register referred to in Section 8.
Chapter: Registration of Trade Unions
Section 13: Incorporation of Registered Trade Unions
Every registered Trade Union shall be a body corporate by the
name under which it is registered, and shall have perpetual
succession and a common seal with power to acquire and hold
both movable and immovable property and to contract, and
shall by the said name sue and be sued.
Chapter: Registration of Trade Unions



Objective: during that year and of the balance at the credit of those
The study of this lesson will help you identify: funds at the commencement of that year ; and
• Rights, liabilities and regulations of registered TU k. Subject to any conditions contained in the notification, any
• Penalties and Procedure other object notified by the appropriate Government in the
Official Gazette.
Chapter: Rights and Liabilities of
Registered Trade Unions Chapter: Rights and Liabilities of
Registered Trade Unions
Section 15: Objects on which General Funds may be
Spent Section 16: Constitution of a Separate Fund for
The general funds of a registered Trade Union shall not be Political Purposes
spent on any other objects than the following, namely- 1. A registered Trade Union may constitute a separate fund,
a. The payment of salaries, allowances and expenses to office- from contributions separately levied for or made to that
bearers of the Trade Union ; fund, from which payments may be made, for the
promotion of the civic and political interests of its
b. The payment of expenses for the administration of the
members, in furtherance of any of the objects specified in
Trade Union, including audit of the accounts of the general
sub-section (2).
funds of the Trade Union ;
2. The objects referred to in sub-section (1) are -
c. The prosecution or defence of any legal proceeding to which
the Trade Union or any member thereof is a party, when a. The payment of any expenses incurred, either directly or
such prosecution of defence is undertaken for the purpose indirectly, by a candidate or prospective candidate for election
of securing or protecting any rights of the Trade Union as as a member of any legislative body constituted under [* *
such or any rights arising out of the relations of any *] the Constitution or of any local authority, before, during,
member with his employer or with a person whom the or after the election in connection with his candidature or
member employs ; election ; or
d. The conduct of trade disputes on behalf of the Trade b. The holding of any meeting or the distribution of any
Union or any member thereof ; literature or documents in support of any such candidate or
prospective candidate ; or
e. The compensation of members for loss arising out of trade
disputes ; c. The maintenance of any person who is a member of any
legislative body constituted under [* * *] the Constitution
f. Allowances to members of their dependants on account of
or of any local authority ; or
death, old age, sickness, accidents or unemployment of
such members ; d. The registration of electors or the selection of a candidate
for any legislative body constituted under [* * *] the
g. The issue of, or the undertaking of liability under, policies
Constitution or of any local authority ; or
of assurance on the lives of members, or under policies
insuring members against sickness, accident or e. The holding of political meetings of any kind, or the
unemployment ; distribution of political literature or political documents of
any kind.
h. The provision of educational, social or religious benefits for
members (including the payment of the expenses of 2-A. In its application to the State of Jammu and Kashmir,
funeral or religious ceremonies for deceased members) or references in sub-section (2) to any legislative body
for the dependants of members ; constituted under the Constitution shall be construed as
including references to the Legislature of that State.
i. The upkeep of a periodical published mainly for the
purpose of discussing questions affecting employers or 3. No member shall be compelled to contribute to the fund
workmen as such ; constituted under sub-section (1); and a member who does
not contribute to the said fund shall not be excluded from
j. The payment, in furtherance of any of the objects on which
any benefits of the Trade Union, or placed in any respect
the general funds of the Trade Union may be spent, of
either directly or indirectly under any disability or at any
contributions to any cause intended to benefit workmen in
disadvantage as compared with other members of the Trade
general, provided that the expenditure in respect of such
Union (except in relation to the control or management of
contributions in any financial year shall not at any time
the said fund) by reason of his not contributing to the said
during that year be in excess of one-fourth of the
fund ; and contribution to the said fund shall not be made
combined total of the gross income which has up to that
a condition for admission to the Trade Union.
time accrued to the general funds of the Trade Union

Chapter: Rights and Liabilities of Section 21: Rights of Minors to Membership of


Registered Trade Unions Trade Unions
Any person who has attained the age of fifteen years may be a
Section 17: Criminal Conspiracy in Trade Disputes
member of a registered Trade Union subject to any rules of the
No office-bearer or member of a registered Trade Union shall
Trade Union to the contrary, and may, subject as aforesaid, enjoy
be liable to punishment under sub-section (2) of Section 120-B
all the right of a member and execute all instruments and given
of the Indian Penal Code (45 of 1860), in respect of any
all acquittance necessary to be executed or given under the rules :
agreement made between the members for the purpose of
furthering any such object of the Trade Union as is specified in Chapter: Rights and Liabilities of
Section 15, unless the agreement is an agreement to commit an Registered Trade Unions
offence. Section 21-A: Disqualifications of Office-bearers of
Chapter: Rights and Liabilities of Trade Unions
Registered Trade Unions 1. A person shall be disqualified for being chosen as, and for
Section 18: Immunity from Civil Suit in Certain being, a member of the executive or any other office-bearer
Cases of a registered Trade Union if-
1. No suit or other legal proceeding shall be maintainable in i. He has not attained the age of eighteen years ;
any Civil Court against any registered Trade Union or any ii. He has been convicted by a Court in India of any offence
office-bearer or member thereof in respect of any act done involving moral turpitude and sentenced to imprisonment,
in contemplation or furtherance of a trade dispute to which unless a period of five years has elapsed since his release.
a member of the Trade Union is a party on the ground only 2. Any member of the executive or other office-bearer of a
that such act induces some other person to break a contract registered Trade Union who, before the commencement of
of employment, or that it is in nterference with the trade, the Indian Trade Unions (Amendment) Act, 1964, has been
business or employment of some other person or with the convicted of any offence involving moral turpitude and
right of some other person to dispose of his capital or of sentenced to imprisonment, shall on the date of such
his labour as he wills. commencement cease to be such member or office-bearer
2. A registered Trade Union shall not be liable in any suit or unless a period of five years has elapsed since his release
other legal proceeding in any Civil Court in respect of any before that date.
tortious act done in contemplation or furtherance of a trade 3. In its application to the State of Jammu and Kashmir,
dispute by an agent of the Trade Union if it is proved that reference in sub-section (2) to the commencement of the
such person acted without the knowledge of, or contrary to Indian Trade Unions (Amendment) Act, 1964, shall be
express instructions given by, the executive of the Trade construed as reference to the commencement of this Act in
Union. the said State.
Chapter: Rights and Liabilities of Chapter: Rights and Liabilities of
Registered Trade Unions Registered Trade Unions
Section 19: Enforceability of Agreements Section 22: Proportion of Office-bearers to be
Notwithstanding anything contained in any other law for the Connected with the Industry
time being in force, an agreement between the members of a Not less than one-half of the total number of the office-
registered Trade Union shall not be void or voidable merely by bearers of every registered Trade Union shall be persons actually
reason of the fact that any of the objects of the agreement are engaged or employed in an industry with which the Trade
in restraint of trade : Union is connected :
Provided that nothing in this section shall enable any Civil Provided that the appropriate Government may, by special or
Court to entertain any legal proceeding instituted for the express general order, declare that the provisions of this section shall
purpose of enforcing or recovering damages for the breach of not apply to any Trade Union or class of Trade Unions specified
any agreement concerning the conditions on which any mem- in the order.
bers of a Trade Union shall or shall not sell their goods, transact
business, work, employ or be employed. Chapter: Rights and Liabilities of
Registered Trade Unions
Chapter: Rights and Liabilities of
Registered Trade Unions Section 23: Change of Name
Any registered Trade Union may, with the consent of not less
Section 20: Right to Inspect Books of Trade Union than two-thirds of the total number of its members and
The account books of a registered Trade Union and the list of subject to the provisions of Section 25, change its name.
members thereof shall be open to inspection by an office-bearer
or member of the Trade Union at such times as may be Chapter: Rights and Liabilities of
provided for in the rules of the Trade Union. Registered Trade Unions
Chapter: Rights and Liabilities of Section 24: Amalgamation of Trade Unions
Registered Trade Unions

Any two or more registered Trade Unions may become Chapter: Rights and Liabilities of

amalgamated together as one Trade Union with or without Registered Trade Unions
dissolution or division of the funds of such Trade Unions or
Section 27: Dissolution
either or any of them, provided that the votes of at least one-
half of the members of each or every such Trade Union entitled 1. When a registered Trade Union is dissolved, notice of the
to vote are recorded, and that at least sixty per cent of the votes dissolution signed by seven members and by the Secretary
recorded are in favour of the proposal. of the Trade Union shall, within fourteen days of the
dissolution, be sent to the Registrar, and shall be registered
Chapter: Rights and Liabilities of by him if he is satisfied that the dissolution has been
Registered Trade Unions effected in accordance with the rules of the Trade Union,
Section 25: Notice of Change of Name or and the dissolution shall have effect from the date of such
Amalgamation registration.
1. Notice in writing of every change of name and of every 2. Where the dissolution of a registered Trade Union has been
amalgamation, signed, in the case of a change of name, by registered and the rules of the Trade Union do not provide
the Secretary and by seven members of the Trade Union for the distribution of funds of the Trade Union on
changing its name, and, in the case of an amalgamation, by dissolution, the Registrar shall divide the funds amongst
the Secretary and by seven members of each and every Trade the members in such manner as may be prescribed.
Union which is a party thereto, shall be sent to the Registrar, Chapter: Rights and Liabilities of
and where the head office of the amalgamated Trade Union Registered Trade Unions
is situated in a different State, to the Registrar of such State.
Section 28: Returns
2. If the proposed name is identical with that by which any
other existing Trade Union has been registered or in the 1. There shall be sent annually to the Registrar, on or before
opinion of the Registrar, so nearly resembles such name as such date as may be prescribed, a general statement, audited
to be likely to deceive the public or the members of either in the prescribed manner, of all receipts and expenditure of
Trade Union, the Registrar shall refuse to register the change every registered Trade Union during the year ending on the
of name. 3lst day of December next preceding such prescribed date,
and of the assets and liabilities of the Trade Union existing
3. Save as provided in sub-section (2), the Registrar shall, if he
on such 3lst day of December. The statement shall be
is satisfied that the provisions of this Act in respect of
prepared in such form and shall comprise such particulars as
change of name have been complied with, register the
may be prescribed.
change of name in the register referred to in Section 8, and
the change of name shall have effect from the date of such 2. Together with the general statement there shall be sent to
registration. the Registrar a statement showing all changes of office-
bearers made by the Trade Union during the year to which
4. The Registrar of the State in which the head office of the the general statement refers, together also with a copy of the
amalgamated Trade Union is situated shall, if he is satisfied rules of the Trade Union corrected up to the date of the
that the provisions of this Act in respect of amalgamation despatch thereof to the Registrar.
have been complied with and that the Trade Union formed
thereby is entitled to registration under Section 6, register 3. A copy of every alteration made in the rules of a registered
the Trade Union in the manner, provided in Section 8, and Trade Union shall be sent to the Registrar within fifteen
the amalgamation shall have effect from the date of such days of the making of the alteration.
registration. 4. For the purpose of examining the documents referred to in
sub-sections (1), (2) and (3), and Registrar, or any officer
Chapter: Rights and Liabilities of
authorized by him, by general or special order, may at all
Registered Trade Unions
reasonable times inspect the certificate of registration,
Section 26: Effects of Change of Name and of account books, registers, and other documents, relating to a
Amalgamation Trade Union, at its registered office or may require their
1. The change in the name of a registered Trade Union shall production at such place as he may specify, in this behalf,
not affect any rights or obligations of the Trade Union or but no such place shall be at a distance of more than ten
render defective any legal proceeding by or against the Trade miles from the registered office of a Trade Union.
Union, and any legal proceeding which might have been Chapter: Regulations
continued or commenced by or against it by its former
name may be continued or commenced by or against it by Section 29: Power To Make Regulations
its new name. 1. The appropriate government may make regulations for the
2. An amalgamation of two or more registered Trade Unions purpose of carrying into effect the provisions of this Act.
shall not prejudice any right of any such Trade Unions or 2. In particular and without prejudice to the generality of the
any right of a creditor of any of them. foregoing power, such regulations may provide for all or
any of the following matters namely :-

a. The manner in which trade unions and the rules of trade no such office-bearers or person, every member of the


unions shall be registered and the fees payable on executive of the trade union, shall be punishable with fine
registration; which may extend to five rupees and, in the case of a
b. The transfer of registration in the case of any registered continuing default, with an additional fine which may
trade union which has changed its head office from one extend to five rupees for each week after the first during
State to another; which the default continues :
c. The manner in which, and the qualifications of persons by Provided that the aggregate fine shall not exceed fifty rupees.
whom, the accounts of registered trade unions or of any 2. Any person who wilfully makes, or causes to be made, any
class of such unions shall be audited; false entry in, or any omission from, the general statement
d. The conditions subject to which inspection of documents required by section 28, or in or from any copy of rules or of
kept by Registrars shall be allowed and the fees which shall alterations of rules sent to the Registrar under that section,
be chargeable in respect of such inspections, and shall be punishable with fine which may extend to five
hundred rupees.
e. Any matter which is to be or may be prescribed.
3. Every notification made by the Central Government under Chapter: Penalties and Procedure
sub-section (1) of section 22, and every regulation made by Section 32: Supplying False Information Regarding
it under sub-section (1), shall be laid, as soon as may be Trade Unions
after it is made, before each House of Parliament, while it is Any person who, with intent to deceive, gives to any member
in session, for a total period of thirty days which may be of a registered trade union or to any person intending or
comprised in one session or in two or more successive applying to become a member of such trade union any
sessions, and if, before the expiry of the session document purporting to be a copy of the rules of the trade
immediately following the session or the successive sessions union or of any alterations to the same which he knows, or has
aforesaid, both Houses agree in making any modification in reason to believe, is not a correct copy of such rules or alter-
the notification or regulation, or both Houses agree that the ations as are for the time being in force, or any person who,
notification or regulation should not be made, the with the intent, gives a copy of any rules of an unregistered
notification or regulation shall thereafter have effect only in trade union to any person on the pretence that such rules are the
such modified form or be of no effect, as the case may be; rules of a registered trade union, shall be punishable with fine
so, however, that any such modification or annulment shall which may extend to two hundred rupees.
be without prejudice to the validity of anything previously
done under that notification or regulation.
Chapter: Penalties and Procedure
4. Every notification made by the State Government under Section 33: Cognizance of Offences
sub-section (1) of section 22 and every regulation made by 1. No court inferior to that of a Presidency Magistrate or a
it under sub-section (1) shall be laid, as soon as may be after Magistrate of the first class shall try any offence under this
it is made, before the State Legislature. Act.
Chapter: Regulations 2. No court shall take cognizance of any offence under this
Act, unless complaint thereof has been made by, or with
Section 30: Publication of Regulations the previous sanction of, the Registrar or, in the case of an
1. The power to make regulations conferred by section 29 is offence under section 32, by the person to whom the copy
subject to the condition of the regulations being made after was given, within six months of the date on which the
previous publication. offence is alleged to have been committed.
2. The date to be specified in accordance with clause (3) of
section 23 of the General Clauses Act, 1897 (10 of 1897), as
that after which a draft of regulations proposed to be made
will be taken into consideration shall not be less than three
months from the date on which the draft of the proposed
regulations was published for general information.
3. Regulations as made shall be published in the Official
Gazette, and on such publication shall have effect as if
enacted in this Act.
Chapter: Penalties and Procedure
Section 31: Failure to Submit Returns
1. If default is made on the part of any registered trade union
in giving any notice or sending any statement or other
document as required by or under any provisions of this
Act, every office-bearer or other person bound by the rules
of the trade union to give or send the same, or, if there is


Learning Objective ‘most effective method of resolving industrial disputes. It


• The study of this lesson will help you: occurs when representatives of two groups (labour union and
management) meet and attempt to negotiate an agreement that
• Understand the rights and interest of the employee in the
specifies the nature of future relationships between the two. It
could be to determine employees wages and benefits, to create
Introduction or revise work rules, and to resolve disputes or violations of the
As we can put and all will agree that industrial relations (IR) is lobour contract.
inherently a bipartite relationship. Like in any other relationship The bargaining is collective in the sense that the chosen
IR too has parties to it. The parties to this relationship include representative of the employees (i.e. the union) acts as a
union and management, representing workers and employer, bargaining agent for all the employees in carrying out negotia-
respectively. Similar to other relationships, the union manage- tions and dealing with the management.
ment relationship is highly complex.
In the case of the corporation in which the paid professional
The complexity can be attributed to: managers represent the interest of the stockholders and the
Divergence of interests, board of directors in bargaining with the union leaders.
Perspectives, On the employee side too it could be collective in those
Expectations, common situations in which the companies have joined
Value systems and together in an employer association for purposes of bargaining
with union.
Goals of the two parties.
The ILO (International Labour Organization) Workers Manual
Consequently, there is immense possibility of misunderstand- defines collective bargaining as:
ing incongruence and conflict at any point of time in
organizational setting over the terms and conditions of Negotiations about working conditions and terms of employ-
employment. As the organizations find it difficult to survive ment between an employer, a group of employers or one or
and grow in an environment of conflict and misunderstand- more employers’ organizations and one or more representatives
ings, it is desirable that both the parties sit together to resolve workers’ organizations on the other, with a view to reaching
their differences and conflicts through mutual discussions and agreement wherein the terms of an agreement serve as a code
negotiations without the intervention of a third party. This defining the rights and obligation of each party in their
process of resolving the differences between union and employment relations with one another; it fixes a large number
management in the absence of any third party is widely of detailed conditions of employment, and during its validity
designated as collective bargaining. none of the matters it deals with can in normal circumstances
give grounds for dispute concerning an individual worker’.
Perhaps, Sydney and Beatrice Webb coined the term ‘Collective Thus, as opposed to individual bargaining, it relates to group
Bargaining’ in 1897. Probably, it means: ‘to bar the gains (of bargaining about wages and salaries and working conditions.
others), collectively’. The parties may be trade unions or their federations on the one
According to Harbinson, collective bargaining is ‘a process of hand and an employer or his representative or an employers’
accommodation between two institutions which have both association or federation, on the other.
common and conflicting interests’. It purports not to attain Flanders identifies the distinctive nature of collective bargaining
industrial peace at any price. Rather, it aims at the attainment of to be basically a political institution in which the rules are made
the commonly held goals of a free society. by trade unions of workers, employers and corporations/
Irrespective the causes of industrial disputes the consequences organizations. In fact, despite the divergence in their structures
are harmful to all and functions, trade unions have a common objective of
Stakeholders negotiation with the employer about a written agreement
Management embracing employment conditions as well as labour manage-
ment relationship on mutually accepted terms. Thus, collective
Employees bargaining is nothing but negotiation, administration and
Economy and interpretation of written agreement between the union and
Society management, which covers a specific period of time. It is a
As the famous saying goes ‘United we stand and Divided we procedure adopted by union and management to compromise
fall’. A dispute therefore needs to be settled as early as possible. their conflicting interests. Further, it is collective, because, it is a
Among the various available methods for resolving disputes group action involving two parties having trade unions or their
Collective Bargaining is one. And we can say it is probably the federations on the one hand and the employer or his represen-

tative or an employers’ association or federation on the other. It market place haggling by a group of workmen with an em-


is opposed to individual bargaining because it relates to group ployer.
bargaining about wages and salaries and working conditions of As we have already mentioned Flanders identifies the distinctive
the entire organization. It is a democratic process in the labour nature of collective bargaining to be basically a political institu-
management relationship as parties to this process discuss and tion in which the rules are made by the trade unions of
solve their problems across the negotiation table. workers, employers and corporations/organizations.
According to Dunlop and Healy, the system of collective Secondly, since the two aspects of administration and legislation
bargaining represents the extension of the democratic idea into are interlinked, there is a considerable degree of joint regulation
work organizations and it gives workers the feeling of participa- by both the parties, governed by the conventions and customs
tion in the affairs of their department and organization that prevail at the enterprise level.
through various committees.
Thirdly, collective bargaining is not merely an economic process,
According to Adams, collective bargaining is considered to be but more a socio-economic one. The values, aspirations and
the major function of trade unions. expectations also playa significant role.
Jones and Morris viewed that collective bargaining in all its
current complexities is the bread and butter activity of trade
unions, their life blood what their member regard as the reason
for their existence normal means of defending their interests
and maintaining and improving their living standard. More-
over, collective bargaining is a mutual obligation not
compulsion of parties to sign agreement in good faith on
wages and allied conditions of employment.
According to Leap and Crino, one primary indication of good
faith bargaining is willingness to compromise during negotia-
tions and the key for negotiation is to maintain a flexible
attitude and willingness to listen to proposals submitted by the
other side and to make counter offer on those proposals.
Further, it is a continuous and dynamic activity in the employer
and employee relationship because once the agreement period
expires, similar agreement or with different other demands
come up and the nature and duration of agreement may change
with the changing expectations, circumstances and position of
the parties. As, rigidity and arrogance on any party creates
bitterness and gap in any healthy and long lasting relationship,
collective bargaining brings flexibility and dynamism between
the parties in industrial relationship.
Salient Features of Collective Bargaining are:
1. It is a ‘group’ process, wherein one group representing the
employers and the other representing employees sit
together to negotiate terms of employment.
2. It is a process in the sense that it consists of a number of
steps. The starting point is the presentation of the charter
of demands and the last stage is reaching of an agreement,
or a contract, which would serve as the basic law governing
labour management relations over a period of time in an
3. Negotiations form an important aspect of the process of
collective bargaining, Le. there is considerable scope for
discussion, compromise or mutual give and take in the
collective bargaining deliberations rather than confrontation.
4. It is a bipartite process. The employers and the employees
are the only parties, involved in the bargaining process.
There is no third party intervention. The conditions of
employment are regulated by those directly concerned.
The concept of collective bargaining needs to be understood in
its proper perspective. It is not merely a replacement of the



Learning Objective objectives and conceals their real positions ‘until the proper
The study of this lesson will help you: times have reached. Further, the union representatives attempt
• Understand of how and in what levels the collective to pose of winning the management in the long run rather
bargaining can be done. than getting accepted in the current bargaining year.
Collective bargaining is generally structured and con- Early Stages
ducted at three levels: As Dunlop and Healy point out, neither group can normally be
• Plant level experienced to permit the new demand the first time it is posed.
Indeed, a new issue initially causes merely opposition Item the
• Industry level
other group but it may be less novel and seen less outrageous
• National level after the passing of one year. The opposite group may avail
Plant Level opportunity to think it over and visualize administrative
This is the basic or micro level unit, where negotiations are difficulties involving mutual diagnosis. Accordingly, proposals
conducted between the management of the plant and union(s) regarding a pension of a health and welfare issue made by
of the plant. Generally the unions are centered around the union representative may obtain a cool reception initially.
plant, with little or no involvement in other bodies. There are Explicitly, several years may be required before the management
many plant, level agreements but the pioneers, in this field, are is in a position to consider such issues carefully. There is a
Tata Iron and Steel Co. Ltd. period of gestation involved in new contract demands.
Sometimes, despite the large number of initial demands,
Industry Level several new demands are introduced at any point during the
Several units in the same industry band together and form an ‘long period of negotiations prior to the [mal agreement. Some
association, which negotiates with a union having a similar of the demands by the union may be related to its apparent
status. The agreements are somewhat broader in scope and madness and used as ploys in a logical bargaining strategy. There
delineation than the plant level settlements that are very specific. demands should not to taken literally. Some management
The Rashtriya Mill Mazdoor Sabha negotiates with the mill- representation representative appreciates the strategic significance
owners of Mumbai on behalf of the workers, as it is the of the large number of demands and makes similar counter
recognized industry union. proposals.
National Level However because of theses exaggerated demands and similar
Here the terms of reference and scope are much wider though unrealistic counter proposals, the parties remain quite remote
such agreements are not so common in India. The representa- from each other in the initial stage.
tives of the trade union and the employer negotiate and arrive Indeed, in the initial meetings, it is not possible to reach
at a settlement, but given the industry-cum-region convention agreement because of presence of numerous invited guests
in India, such national level agreements are few. At some from the ranks of each group. Of course, the initial participa-
tripartite conferences convened by the Government of India, tion of rank and files as well as lawyers and consultants is of
certain specific issues have been negotiated and contracted, e.g. utmost significance from political and human relations
the Agreement to Rationalise Work Practices and manning and standpoints. These initial meetings have also utmost educa-
related issues, concluded in 1951 between labour unions tional significance for the bargainers. The presence of numerous
(INTUC) and management. factors does not refrain the bargainers to evaluate each other’s
Stages in Collective Bargaining general position and precisely assess the quality of the other
Sloane and Witney classify the contract negotiation process in side’s proposals are being taken seriously and which are simply
three stages including the early stages, the later stages and the introduced to establish bargaining position. It may be noted
final stages. Union representatives who propose numerous that time element is very crucial in negotiation process. Through
economic and non-economic demands initiate the negotiation experience and understanding of the tactics of the other group,
process. The management representatives, who do not have any the bargainers can effectively use the time principle. Indeed, they
prior experience in bargaining, visualize these demands as should know when to listen, speak, stand firm and concede,
unjustified. Some of the extreme demands may include when to make counter proposals, compromise and suggestion,
appointment of union officers in the board of directors and when to sue illustration or a funny story to resolve tension and
free transportation for all employees. The experienced manage- when to become deadly serous and take a final position.
ment representatives are not at all disturbed by these demands Later Stages
because they consider unions as “political animals” which throw As Sloane and Witney observe, after the termination of the
untenable but “pet” demands of the workers. One of the stage, both parties have adequate understanding of the overall
reasons of these unreasonable demands is that their real

climate of the negotiation process. The union tends to separately in an informal way and reach new agreements. The


understand the objectives of management while the manage- extremely insolvable issues may be entrusted to along-range
ment tends to realize what the union is proposing. Both parties joint study committee to solve subsequently.
end to determine to what extent t they have to go in the Accordingly, as Stevens observes, the approach of the deadline
negotiation, the maximum levels they will accept. At these later squeezes elements of bluff and deception out of the negotia-
stages, the skilled negotiators don not take extreme., rigid tion process as well as exerts pressures to bear with others
positions and tend to throw something on the table for changing the earlier unfavourable situation. Indeed the threat to
discussion without taking a defmite stand on a particular issue. strike or lockout tends to bring about conditions necessary for
A pattern of agreement seems to appear with the minimized an agreement. The deadline seems to foster positive attitudes
disagreement and offer of mutual concessions. They tend to and cause positive actions between the two groups. However,
understand each other’s ultimate goals buy evaluating the sometimes strikes take place, especially in situations where the
arguments and attitudes towards proposals on the bargaining union representatives feel that the package of settlement would
table. Through the process of counter proposal and compro- be refused by the rank and files. They may also happen where
mise, they finally reach a “package” of settlement representing the negotiators fail to evaluate the significance of concession to
the minimum and maximum levels acceptable to both groups. the other group and refuse to grant it. In some cases, in some
Frequently, the skied negotiators employ several techniques to cases bargainers do not give up initial position because of pride
determine the content of the alternative packages. Among, as well as in rare situations they desire a strike to provide an
these techniques are included trading points and counter outlet and accomplish allied objectives.
proposals. As regards the trading points, there are several Before the process of collective bargaining is initiated there
perquisites of this technique. First, attempt should be made to would thus appear to be certain preconditions without which
access the demands of the union from the quantities as well as collective bargaining cannot exist. Here we are going to view and
qualitative standpoints. The negotiators should visualize the discuss the prerequisites for collective bargaining.
points at which the group is very serious. For example, the
union representatives seem utmost concerned about reduction Prerequisites for Collective Bargaining
of work hours. Later on, they realize that the management 1. Careful thought and selection of the negotiation team is
cannot accept it and therefore, they withdraw it in return for imperative. The team should have a mixed composition,
wage increases and union shop. Thus, reduction of hours is including production, finance and IR experts. A person,
used as a trading point. Counter proposals relate it the compro- preferably personnel, should head it and industrial relation
mise in bargaining process. For example, if the union specialist of seniority who has an adequate brief to commit
representatives demand four weeks’ vacation with pay for the enterprise and take decisions, without frequent referrals
employees having three years of service with the company and to top management. For instance, many organizations have
one week for those having less than three years’ service. a vice –president personnel or director-personnel heading
Sometimes, several counter proposals are made prior to the the team with a brief to commit the organization up to a
attainment of a final agreement. certain amount which can be spread out depending on the
negotiating situation based on union demands.
Final Stage
In the final stages of the contract negotiation process, several 2. It is necessary for the management to recognise the union
strategies may be used to reach the agreement. For example, in and to bargain in more good faith, in unionized situations.
some situations, the mere silence may indicate a concession Unions as representatives of the workers’ interest are a
while in others the extent of stress on different points can growing phenomenon. This also puts pressure on the
provide a significant hint. They may suggest a position by citing union to formulae plans and demands in a systematic
statistics or by discussing a settlement in some other industry. manner. Strong union and progressive managements can
On the basis of these strategies, the parties may reach agreement help create an atmosphere of mutual confidence.
on even thorny issues on management rights, union security, 3. The necessity of having open minds, to listen and
the role of seniority and financial benefits. Frequently, prepara- appreciate the others’ concern and point of view and to
tion of an acceptable package involving these may become a have some flexibility in making adjustments to demands
complicated function. This may even lead to a strike deadline, made.
which frequently provides motivation to labour relation’s 4. The need to study adequately or do ‘homework’ on the
agreement. Both groups tends to reassesses their ‘final’ position demands presented, i.e. to gather data on wages and welfare
and balance their rock bottom demands as well as visualize the benefits in similar industries in the geographical area.
earlier bargaining position from a different standpoint.
5. Both the management and the union should be able to
Explicitly, in view of threats of strikes both group are willing to
identify grievances, safety and hygiene problems on a
promise as they are exposed to reality. Indeed, the stoppage of
routine basis and take appropriate remedial steps.
work may cause uncertainties and loss of income to the both
parties and accordingly, they are more keen to bridge differences 6. Trade unions should encourage internal union democracy
than before. This stage is characterized by new developments and have periodic consultations with the rank and file
because each side tends to offer new and generous final members.
proposals. The chief representative from each side may meet

7. Trade unions should equally be concerned with, both claim that they are undecided about benefits when the workers

leading up to a consistent concern for the viability of the themselves do not know what they want. Sengupta (1993 ) feels
firm and its product/services. that ‘the trade union movement, barring a few centres, is still
8. Strikes/lockouts should be resorted to, in the ultimate quite weak in India’ (p.6). Obviously, such disparity in power is
analysis. Periodic discussion may be necessary between the not conducive to collective bargaining.
management and the union to interpret the provisions of But even in the public sector units, there is a weakness of
the contract and clarify doubts. another kind . Excessive political interference and supervision
The above mentioned prerequisites are important for both the by the controlling ministries reduces reduces managements’
parties before they start with the process of collective bargaining. elbowroom and weakens them. Political links make unions
In addition to the above we shall also talk and examine the appear larger than they really are and intimidate managers of
other conditions prior to the process of collective bargaining. these undertakings. But the main blame may well lie with the
government, which did little to give bargaining the legitimacy
To begin with let us first talk about Parity of Power between
that it badly needed.
the two parties-management and unions should be more or les
equal in the matter of power or strength to achieve genuine Bargaining in good faith is another problem. It has been
bargaining status. A weak union, as already seen cannot force observed in several industries like ‘jute, that bargaining is never;
managements even to bargain, let alone achieve anything of undertaken unless employers can exercise a large degree of
substance for its members. But it holds equally well for the intimidation over the other side: Often; bargaining is taken
managements, and a weak management can surrender so many towards a deadlock, which is used as a pretext to close down the
things to powerful unions that the agreement cannot be plant. Bargaining is not done, therefore, in good faith. If
rightfully said to represent the results of a bargain. unions are at all able ,to force it on an unwilling management,
the employers’ intention may well be to engineer a stalemate
Bargaining In Good Faith is another aspect which the bona
and then declare a closure or lockout It is only when both the
fides of the bargaining parties have to be clear right from the
management and unions want to arrive at a settlement, that
start and the existence of hidden agendas can only hamper the
they will behave rationally. .
The other conditions necessary for bargaining to culminate in an
Bargaining may often result in a stalemate, with neither
outcome is the existence of deadlock-breaking devices. These
managements nor unions budging from their respective offers
exist, since strikes and lockouts’ are both legitimate industrial
or demands. Therefore there should exist Mechanisms To
activities. Except for certain restrictions on timing of strikes or
Break A Deadlock . The breaking of this deadlock can be
lockouts, there is considerable freedom for both unions and
achieved in two ways, either through an ultimatum like strikes
managements to make their position clear with regard to certain
or lockouts, or through third party mediation, like arbitration or
issues and try and break the rigidity of the other party by calling
a strike or. a lockout. At the same time, the existence of
Having talked about these conditions let us examine whether conciliation and arbitration also leaves the parties with options
these conditions exist or not. other than striking or closing. In fact, it is found that in recent
Parity of power does not exist in many enterprises. In the years, many of the negotiations end up in .he conciliation
MNCs, where union legitimacy was accepted from the start, officers’ chambers and emerge as Section 12(3) settlements
though not always with good grace, unions had a locus standi under the Industrial Disputes Act. But voluntary arbitration is a
vis-à-vis management. Consequently they had some power. In relatively weak process, since there is’ no standard body of
the public sector units, union legitimacy was never in doubt and arbitrators and few, if any, norms exist for dispute arbitration.
unions thrived in the PSU ambience, though there were other The large private sector organisations where bipartite bargaining
constraints. Collective bargaining therefore , flourished in these takes place relatively freely may find that they are unable to
enterprises. But there are sectors where management have compose their differences and appeal to the government to step
strongly and persistently resisted collective bargaining, just in, either by way of ministerial intervention or by way of
because it bestows the unions with legitimacy. There being no conciliation. Many of the outstanding disputes may get carried
statutory compulsion to bargain, employers have often refused over to the judicial sphere, ‘as has been happening m recent
point blank or in some cases tried to pre-empt union demands years. The deadlock-breaking strike or lockout is often not
by giving workers fairly large wage increases as a preventive possible in India because of the low sustaining power of
measure. In other sectors and enterprises, union existence itself workers and the government’s frequent interventions in the
was in doubt and collective bargaining made either a late start or process, by requesting the two parties to settle up.
is still in its infancy. In some sectors, like informal and small-
Another problem’, which keeps recurring in collective bargain-
scale export industries, collective bargaining if it exists at all, is
ing, is the bargainability of issues. Even in those sectors where
rudimentary, dealing only with basic wages. Government
collective bargaining has been accepted as a way of industrial
employees still have no bargaining.
relations” there still seem to be doubts about the issues which
Multiplicity of unions has further reduced union strength and can or should be bargained. Obviously, unions would like to
managements are only too easily able to play one union off bargain about as many issues as possible” since bargaining
against the other. Rival union demands weaken not only the establishes dual control over those issues. But managements
unions but also the workers’ case. Managements can rationally equally strongly would like to retain their control over as many

decisions as possible. A good example of this is the Bank of


Baroda strike in Calcutta in late 1987.
In this incident, the management of the regional office
,transferred some ‘TaI1ch employees on a Friday afternoon.
Saturday and Sunday were holidays at that time and employees
could not react. Earlier, there had been several representations
against ad hoc transfers in the bank. Except for a tribunal award
in the early 1950s and a 1981 circular of the bank management
laying down norms for non-executive transfers, there were no
proper guidelines for transfers. Banking had undergone major
changes in structure, clientele, purpose and location of branches,
and transfers had become a key issue. Unions wanted a
thorough discussion while the management continued to
maintain that transfer was a managerial prerogative and was not
negotiable. Several other banks had negotiated bipartite
corporate-level agreements on this thorny issue and achieved a
measure of peace. Bank of Baroda was not one of them. On
the Monday following the transfer order, a strike decision was
taken. A 50-day strike ensued, which was called off only at the
intervention of the Chief Minister. The main union involved
was the CITU-affiliated BEFI. But the Chief Minister’s
intervention actually” put the unions and management face-to-
face on the issue. They had to discuss the transfers and arrive at
an agreement, and transfer became negotiable, after a 50-day
The primary issue in this strike was the bargainability of transfer
as an issue. This was not a problem confined to the public
sector. Many private sector companies have also refused to
bargain on some specific issues from time to time, though in
the end, many of them have capitulated. In the Mico case
mentioned earlier, it was the issue of manning of machines.
The management refused to bargain on the ground that
manning and deployment were managerial prerogatives, a fact
disputed by the unions.
But in spite of the non-existence of some pre-conditions for
successful bargaining, or a minimal infrastructure in the form of
determination of bargaining agent, or compulsion to negotiate,
collective bargaining has been growing. In other words, it is
obviously the more preferred form of dispute resolution
‘among industrial enterprises. Even though the wage boards
gave decisions favourable to workers, both unions and
managements showed their preference for collective bargaining,
no matter how circumscribed it was.



Learning Objective difficult to isolate. This data therefore serves as the base for
The study of this lesson will help you: negotiations to move on, coupled with other
• Understand of how collective bargaining concept helps in arguments by unions, particularly in boom and normal periods.
the fixation of wages. The engine plant of Amalgamations group in Madras did
A significant feature of collective bargaining is the wages that resort to a productivity type bargain many years back. In the
will be paid for the work done by the employees. The union’s plantation industry, work norms are established for each type of
concern as well as that of the management is the criteria utilized activity. The emphasis here is on achievements of targets. If the
in wage negotiations. In actual fact the union is rarely involved worker is fast and does not take the full time for scheduled
in setting the original job rates; management does this. The breaks and if he [mishes his assigned task early, then he does
union is actually involved in enhancing, or, at least, preventing a not have to wait; he may leave the work spot. The emphasis
decrease of wages. This factor is significant in determining the here is not on time spent, but on output and quality. The
union’s wage criteria and is to be taken in conjunction with the Indian Railways have also established a productivity base, taking
economic factors prevalent in the plant or the industry. The a base year as a norm and comparing subsequent years’ perfor-
major criteria used by mance with the base, to identifY variations and establish the
unions and management in setting wage levels can be classified productivity achieved. In fact the Government of India tried
as: (i) measures of equity; (ii) measures of need; and (iii) hard to propagate the concept of productivity-linked bonus, to
measures of contribution. However the most commonly used boost output and control inflation, especially at the time of
criteria are comparable wages, cost power. Only unions use the payment during the festive season.
living wages and purchasing power criteria as a justification for In India, collective bargaining as one of the methods of wage
their demands. To the management, wages are a cost and to the fixation has been adopted in many industries. Most of the
worker (union) income. Some concerns for management would agreements are at the plant level, though some significant
be in terms of saving by reducing workers or transferring industry level agreements have also been concluded. The
resources for technological improvements. The workers numbers of long-term agreements are also on the increase in
(unions) will constantly the range of two to five years. Since the Industrial Disputes Act
compare themselves with others in the same field. These issues 1947, which governs the relations between management and
are usually examined in the context of the commonly used workers of Industrial establishments, does not provide for
wage criteria referred to earlier. recognition of trade union as a sole bargaining agent, collective
bargaining has been more frequent in industries where there are
Another area of significance is that of productivity bargaining.
majority unions.
The concept of productivity bargaining has gained increasing
attention in the Indian industrial relations system. In such Apart from dealing with issues relating to wage matters,
agreements advantages such as higher wages or increased leisure collective agreements cover a wide range of aspects of employ-
are given to workers for accepting changes on established work ment from recruitment to retirement.
practices and organization of work itself, thus reducing/ The scope of collective bargaining agreements now covers issues
eliminating waste and leading to more effective working. such as:
Randle and Wortman state: “ Productivity usually refers to Wages Bonus
output in physical units per man-hour of work. It is a measure Overtime Paid holidays
of the relationship between the volume of goods produced
Paid sick leave Safety wear
and one factor of input-Iobour time.” However, labour is only
an input and there are several other variables such as “ more Production norms
efficient utilization of fuel, more economical materials; technical Hours of work Performance appraisal
improvements in machines; in organization and in processes; Workers’ participation in management Hiring
the skill and effort of the work force; the efficiency of manage-
Fixing of job evaluation norm and Modernization.
ment and the state of Lobour Relations”. Increased
productivity is usually reflected in increased ability to pay and Although the scope of collective bargaining is expanding, wages
therefore industries with high or increasing productivity are remain their main concern. The ILO in its comparative study of
generally able to pay high wages. Data shows that historically collective bargaining methods and practices in industrialized
productivity has been going up at the aggregate for the national countries notes that in many of the countries the terms of
level. Productivity data is computed both nationally and plant- employment settled across the table set a pattern in industries,
wise. Man-hour production over time is the basis for calculating i.e. the new terms are incorporated informally. In other coun-
the productivity, but as argued earlier Lobour’s contribution is tries, the terms settled across the bargaining table received a legal

sanction. For instance, in USA and Canada, the law enforces that down by it. These included prima facie establishment of a case


the union certified as the exclusive bargaining agent represent for Governmental intervention, as much as feasibility of
the interests of all employees in the bargaining unit, whether or enforcement, including the cost of such enforcement. Legisla-
not they are union members. Collective bargaining in most tion was also hinted at if the need was proved. That
industrialized countries has gained acceptance to such a great Commission was, however, more concerned with the problem
extent that it is regarded as synonymous with, or as constitut- of payment of wages. Unfair deductions seemed to be the rule
ing, an essential part of the industrial relation system. then, and special measures were needed to check them. A direct
result of the emphasis in the Whitley Commission’s report on
Wage Policy - Assessment and Issue
unfair deductions and the need to check them was the passing
In all countries, wage policy is a complex and sensitive area of
of the Payment of Wages Act, 1936. Among other observa-
public policy. This is because the relative status of workers in
tions of that Commission we would like to point out one
the society, their commitment to industry and attitude towards
which holds good even today. The Commission felt that the
management, their morale and motivation towards productiv-
problems of wages of the industrial workers should not be
ity, their living standard and in fact their way of life are all
considered in isolation; the prosperity of the industrial workers
conditioned by wages. Hence, a policy dealing with this crucial
and the community would have to advance simultaneously. In
problem cannot be simply economic, as it has to reckon with
this regard it observed:’ “Indian industry is not a world in itself;
the realities of multi-dimensional social phenomena, in which
it is an element, and by no means the most important element,
besides the worker and the management, the consumer and the
in the economic life of the community. Care must be taken,
society at large, and in consequence the State, are all vitally
therefore, to ensure that, in adopting measures for the better-
interested. Wage policy is a determinant of the shares of the
ment of industry or of industrial workers, the interests of the
rival claimants of the product of industry and national
community as a whole are not overlooked.”
dividend, but there may often be a conflict between its short
run and long run objectives as well as between private and social There were no significant developments in the field of wage
interests. There are, of course, theoretical generalisations or policy consequent on the Whitley Commission’s report. But
principles that may provide scientific guidelines for framing a towards the end of the thirties, ad hoc committees were
wage policy. Equally important in this context are the concrete appointed for settling the wage structure in some Provinces.
social facts that must be taken into account in its formulation at Active Government intervention started on an all-India basis
any given time. No principle of wage policy can ever be applied only during the Second World War. Additional payments in the
in vacuum and in disregard of the realities of a situation. Wage form of dearness allowance to workers for rise in prices and a
policy has to be pragmatic, though it does not follow that it has share in war-time prosperity through bonuses became more
to be unscientific and remain simply a matter of expediency. commonly acceptable than in the past. The Rege Committee
which surveyed the position prevailing at that time felt that in
In well-organised and developed economies, inter-relations
the matter of wage fixation the guiding principles, if any,
between wages and other factor prices can be worked out on a
appeared to be in favour of maintaining the status quo ante. It
priori considerations. In others with a large measure of
felt that the practice of thinking in terms of short term gains
regimentation, dogmatic solutions can be enforced. But in an
without adopting a scientific attitude in regard to wage fixation
economy in the process of development and with people
would be in the long run detrimental no less to labour than to
wedded to democratic institutions, the difficulties in framing a
industry. It also referred to the difference in the levels of wages
wage policy are manifold. It is in this setting that we have to
in agriculture and in industries and observed that such differ-
view the various issues connected with wage policy in our
ences should not be over-emphasised; they could be partly
justified because of the conditions under which the industrial
Early History workers were made to work and live. The fact that agricultural
For a long time, laissez faire operated in dealing with wage wages were low could not be a justification for keeping indus-
problems. But the beginnings of third party intervention are trial wages low as well1 The 1946 Programme referred to the
not all that recent as is popularly believed. Without Govern- following three elements of wage policy which are equally
ment being brought in, settlement of wage demands through relevant today:
third party intervention was accepted in Ahmedabad as far back
i. “the statutory prescription of minimum wages in sweated
as 1918 at the instance of Mahatma Gandhi. Ad hoc enquiry
industries and occupations and in agriculture”,
committees, without statutory backing, for settling specific wage
issues were not unknown either. Government’s intervention in ii. “promotion of ‘Fair Wage’ agreements”, and
the field of industrial relations came with the Indian Trade iii. “steps to secure for workers in plantations, a living wage”.2
Disputes Act, 1929; and in early days such intervention was Policy Statements Since Independence
mainly for regulation of wages. The Whitley Commission The next significant event of the period was the adoption of
which reported later, apart from giving a factual account of wage the Industrial Truce Resolution (1947) which was an aftermath
levels in different industries, referred to questions connected of the industrial unrest immediately prior to and after Indepen-
with minimum wages, standardisation, inter-sectoral wages and dence. The relevant portion3 of the Resolution states. “...The
incentives, and suggested surveys for collection of wage data. system of remuneration to capital as well as labour must be so
It—recommended a minimum-wage fixing machinery of a devised that while in the interests of the consumers and the
wage board type for industries satisfying certain criteria laid primary producers excessive profits should be prevented by

suitable measures of taxation and otherwise, both will share the To give effect to the recommendations of the CFW, the Fair

product of their common effort after making provision for Wages Bill was introduced in the Constituent Assembly of
payment of fair wages to labour, a fair return on capital India (Legislative). Though it was not enacted, the then Prime
employed in the industry and reasonable reserves for the Minister, the late Shri Jawaharlal Nehru, stated in the Parliament
maintenance and expansion of the undertaking”. in April, 1950: “Government are committed to the principles of
The Industrial Policy Resolution (1948) emphasised inter alia its fair wages as recommended by the Tripartite Committee”.2 The
intension (a) to fix statutory minimum wages in sweated Bill lapsed after the dissolution of the Constituent Assembly. It
industries and (b) to promote fair wage agreements in the more was not pursued in the Parliament later. The Constitution of
organised industries. To facilitate the former, the Minimum India which was adopted in November, 1949 included the
Wages Act, 1948 had already been passed. For the latter the securing of a ‘living wage’ to workers as one of the Directive
Government appointed the Committee on Fair Wages (CFW) Principles of State Policy. An important development at about
“to determine the principles on which fair wages should be this time was the setting up of the First Pay Commission
based and to suggest the lines on which these principles should (1946-47) which examined and reshaped the salary structure of
be applied”. the Central Government employees. The principles of wage
fixation enunciated by that Commission and accepted by
The CFW defined three distinct levels of wages, viz., living
Government influenced the wage fixing authorities when they
wage, fair wage and minimum wage. The ‘living wage’ according
dealt with cognate issues. It would also be not incorrect to state
to it, represented a standard of living which provided not
that the Pay Commission was itself influenced by what was
merely for a bare physical subsistence but for maintenance of
happening in the field of wages and salaries in non-Govern-
health and decency, a measure of frugal comfort including
mental employment. It is possible that this aspect off
education for the children, protection against ill-health, require-
inter-relationship will continue to have an impact on any policy
ments of essential social needs and some insurance against the
leading to remuneration for work.
more important misfortunes. The ‘minimum wage’ was to
ensure not merely the bare sustenance of life but the preserva- The First Plan, while cautioning against a general upward
tion of the efficiency of the worker by providing some measure movement of wages which would set in motion a wage-price
of education, medical requirements and amenities. It envisaged spiral, recommended that wage increases should be granted
that while the lower limit for “fair wage” must obviously be the mainly to remove anomalies or where the existing rates were
minimum wage, the upper limit was set by the capacity of the very low. It also recommended restoration of the pre-war levels
industry to pay. Between these two limits the actual wage would of real wages as a first step towards the ‘living wage’ through
depend on (i) the productivity of labour, (ii) the prevailing rates increased productivity. Factors like the need for reduction of
of wages, (iii) the level of national income and its disparities in income, the distance which wages of different
distribution,and (iv) the place of the industry in the economy categories of workers had to cover before attaining the living
of the country.* In the actual calculation of the fair wage, the wage standard, the need for standardisation, and maintenance
CFW observed that it was not possible to assign any definite of wage differentials at a level necessary to provide incentives
weights to these factors. The wage fixing machinery should were suggested for being taken into account in making wage
relate a fair wage to a fair load of work and the needs of a adjustments. These features were reasserted in the Second Plan,
standard family consisting of three consumption units inclusive but a shift in emphasis was introduced; it required that
of the earner. The capacity of a particular industry in a specified improvement in wages should result mainly from increased
region should be taken into account to determine ‘the capacity productivity brought about not merely by more efficient work
to pay’ and this in turn could be ascertained by taking a fair on the part of labour but also by better layout of plants,
crosssection of the industry in the region concerned. The improvements in management practices and the like. A wider
Committee recognised, “the present level of our national application of the system of payment by results, subject to
income does not permit of payment of a ‘living wage’ on safeguards like fall-back wages, protection against fatigue and
standards prevalent in more advanced countries”. But, according undue speed-up, was envisaged. But the more significant
to it this should not preclude the fixation of fair wages on contribution of the Second Plan was its recommendation that
different and lower standards. “At almost any level of the for settling industry-wise wage disputes, tripartite wage boards
national income, there should be a certain level of minimum which gave the parties themselves a hand in shaping the wage
wages which the society can afford; what it cannot afford are structure would be more appropriate. Two other developments
minimum wages fixed at a level which would reduce employ- in this period which deserve special mention are: (i) the
ment itself and thereby diminish the national income” recommendations of 15th Indian Labour Conference in regard
to the need-based minimum wage, and (ii) the report of the
The CFW recognised that the concepts laid down by it could
Second Pay Commission in respect of Central Government
not be viewed in any static sense; they would vary from time to
employees, whose recommendations about the need-based
time, depending on the economic and social developments in
minimum wage created a public controversy.3 The Third Plan
the country. The principle that luxuries of today become
generally endorsed the recommendations made in the earlier
necessities of tomorrow was implicit in this recognition. These
Plans in regard to minimum wage fixation, reduction of
recommendations have exerted considerable influence on wage
disparities, wage differentials and the like, but brought into
fixing authorities in the period under review.
sharper focus the role of productivity in improving the living
standards of workers. It observed “neither the exercise of their

organised strength in industrial conflicts, nor laws and the However, a part of the increased time loss could be attributed


intervention of the State can help the workers much in realising to the number of new units established in recent years and the
their aspirations. Their gains can arise only out of the strength consequent increase in industrial employment and improve-
and dynamism of the economy, the only enduring basis of ments in the methods of reporting mandays lost. Taking these
which is a rising level of productivity”.1 Thus, while the policy factors into account, we feel that loss of production through
in regard to wages as enumerated in the Plans remained more or wage disputes is not that significant. This statement should not
less the same in its essential features, a shift in emphasis be interpreted to suggest that we are indifferent to the possible
towards productivity in recent years is discernible. effects of work stoppages on production, nor do we wish to
minimise the serious consequences of a work stoppage in a key
Indicators of Assessment
sector which results in indirect production loss elsewhere.
Every aspect of wage policy cannot be evaluated in this section
nor is such an evaluation called for. Some aspects, however, Levels of living
figure in the detailed analysis in the following chapters. What is The level of living is a function of real wages. It has been urged
attempted here is an assessment of the general wage policy, and before us by the
in this, the first task is to identify the indicators for such workers’ representatives that the industrial relations machinery
evaluation. This is not easy since different indicators may not set up by the Government to settle wage disputes worked in
necessarily lead to the same conclusion, while firm data may not such a manner as to result in a restraint on wages. This has been
be available for some. We have, therefore, chosen the indicators so on account of the time taken in the judicial process or by the
which are intended to provide an overall view and tried to make tribunals in giving wage awards particularly when these were
our assessment as reliable and practicable within the limitations extended beyond their original period of application. While it is
cf the data available to us. The indicators selected by us are: (i) not possible to say what the precise impact of this aspect on
the state of industrial harmony; (ii) the changes in workers’ level levels of living has been, taking the period 1947 to 1966 for
of living; (iii) changes in productivity; (iv) the impact of wages which data have been analysed in the last chapter, it would
on prices; and (v) the share of wages in the value added by appear that real wages after a rise in the period 1947 to 1955
manufacture. (reaching in the process the 1939 real wage level in 1952, and
Industrial Harmony improving upon it thereafter) have been declining subsequently.
An index of industrial harmony is the number of mandays lost Part of the real wage increase between 1947 and 1955 was
owing to industrial disputes. Although the break-up of the fortuitous because of a tall in living costs. The net effect of the
total time loss is not available according to the causes of operations of the industrial disputes machinery on wages of
disputes for the whole period, it would not be unreasonable to factory workers has been that in 1965 the industrial workers at
assume that the trend in time loss would be considerably the lower levels were earning hardly a real wage corresponding to
influenced by disputes relating to wages and cognate issues as that of the year 1952. Evidence from the side of labour has
they constitute nearly 40 per cent of the total number of emphasised this fact. Some independent researches also
disputes even now. An appraisal of the trend in mandays lost corroborate this fall in real earnings. Wages of coal miners,
over the period shows that the loss was maximum between however, have
Independence and the First Plan which also happened to be the consistently improved since 1956. But this improvement is due
period when the real earnings of industrial workers were below to the initial low level of wages at which the miners worked
the 1939 level. On an average, 11.3 million mandays were lost prior to 1956. In plantations, the situation appeared to be
per annum between 1946 and 1950. The improvement in real somewhat better than in the case of factory establishments. In
wages brought about in the years of the First Plan seems to ports and docks and in some sections of white collar employ-
have had a salutary effect on industrial harmony; the loss was ments, workers did secure gains. On the whole, between 1952
on an average only 3.9 million mandays per annum. More than and 1965, while per capita real income has improved, the real
the absolute level cf earnings, it appears that it was the rate of wages of workers have, with few exceptions, at best not fallen.
improvement in real earnings which was significant. Between But the situation has deteriorated since 1965—66 due to a
the Second Plan and the first four years of the Third Plan, for further rise in living costs.
which we have reliable data, real earnings have been falling. The
Changes in Productivity
time loss was higher than what was witnessed in the First Plan,
Labour productivity and changes therein are difficult to measure
but much below that in the years prior to 1950. Provisional
and there are no reliable indices available in. this respect. A few
figures on real earnings for the two years thereafter show a
independent researches in the field in specified industries have
confirmation of this downward trend. The spurt in price level
generally been limited by the assumptions made and lack of
in 1967 eroded the real wage further. The years 1966 and 1967
availability of data and precision in operational concepts. Their
saw a deterioration in the industrial harmony with the time loss
results have not been generally acceptable. The main difficulty in
per annum averaging much higher than in the years between
measuring labour productivity arises owing to the output not
1956 and 1965.
being an exclusive product of labour. Capital, technology and
For a realistic appreciation of the industrial relations situation, it management—all contribute to it along with labour and these
is not enough to study only the trend in time loss over a period seldom remain constant. In consequence, increases in per capita
of years. It has to be related to the time worked. On this we do output cannot be attributed to labour alone, much less the total
not have reliable information to come to a definite conclusion. output. Valuation of the physical product presents another set

of problems. All that we have is information about changes in Trend of Evidence

output per worker at constant prices. These cannot, of course, In the evidence before us, every group, Government, employers,
be taken as indices of labour productivity. With these limita- trade unions or independent persons, agreed that wage policy
tions on understanding the changes in productivity, we notice should be geared to policies for economic development. Each
that for industries for which serial data are group, however, had its own notions of how development
available, value added by manufacture has increased from Rs. should be achieved. Employers emphasised that industrial
2,113 in the year 1952 to Rs. 4,621 in 1964.1 wages should have relationship with wages in agriculture as also
with the average per capita national income. Linking wages to
Adjusting the increase in net output for price changes during
productivity was another argument of theirs though in the
the period 1952 to 1964—and in this case it would be safe to
course of further discussion, they admitted such linkage to be
use the index numbers of wholesale prices (for manufac-
valid only for levels beyond the basic minimum wage. They
tures)—we find that production per worker has increased by
agreed that a subsistence minimum wage must be a primary
about 63 per cent between 1952 and 1964. A part of it must
charge on the employer, but the minimum as defined by the
have been contributed by labour whose real earnings have
CFW should have some relationship with the capacity to pay.
remained almost static during the period.
Employers also sense some dangers in the present arrangement
Impact on Prices of neutralising rise in prices by providing dearness allowance
An analysis of data in the Census of Indian Manufactures upto linked with consumer price index numbers. They feel the need
1958 and in its for a flexible wage arrangement, consistent with industry’s need
successor, the Annual Survey of Industries, for later years to raise resources out of its own surpluses, to meet at least a
shows that between 1952 and 1958, money wages as a percent- part of the cost of its expansion programme as suggested by
age of total output dropped from 13.7 to 11.4. Between 1960 the Government.
and 1964, on the basis of the new series of the Annual Survey Unions in their evidence emphasised restoration of the recent
of industries, the drop was from 10.9 to 9.7. The decline varies fall in real earnings as a first step and, eventually, raising of
from industry to industry but has been registered in all cases, living standards of workers through increases in wages
except in case of fair sized units in the match industry where commensurate with increases in productivity. Some of the facts
wage costs as a proportion of the cost of production have gone which have been brought out in the earlier section of this
up. Even after adjusting the gross output in 1964 for prices chapter have been mentioned in support of their demand.
(1952=100) and working out the share of wages to the output, Workers’ organisations do not recognise that their claim is
so adjusted, there is a fall between 1952 and 1964. antithetical to development. Fair wage to labour is an item of
Share of Wages cost. Resource requirements for the development of industry
Finally, one has to take into account the share of workers in the capital formation and return to entrepreneur in their opinion,
value added by should come after provision of fair wages for labour. According
to unions, planning in India, in spite of its operations for the
manufacture. And in this indicator, only two shares count: (i)
last 18 years, has not improved the per capita availability of
of employers and those who have provided capital in the
consumer goods to the common man. On the contrary, the
expectation of a dividend and (ii) of workers. The percentage
supply position has been such as to have resulted in a sacrifice
of wages to the value added by manufacture, on the basis of
by the working class. Income disparities have, likewise, not been
the CMI data, shows a decline from about 50 per cent in the
reduced nor is there any evidence in the current policies that they
period 1949-50 to about 40 per cent in 1958. This trend seems
will be kept under control. Some of the arguments used by
to have continued in the subsequent years as revealed by the
employers for shaping wage policy so as to deny to workers
data from the ASI. For instance, wages as a percentage of value
their proper share could, with equal justification, be used against
added declined from about 40 per cent in 1960 to 36.5 per cent
capital. Established social and economic relationship will have
in 1964, the latest year for which information is available. Even
to change if progressive wage policies are to be pursued; and
if the money value of benefits and privileges is taken into
national commitment to planning should amount to a change
account, the conclusion remains the same, though the decline
in the established social order. Administrative agencies have
then becomes less sharp.
lacked vigour in giving relief to labour even where beneficial
To sum up, we note that increases in money wages of industrial legislation has been enacted and suitable policies have been
workers since Independence have not been associated with a rise framed.
in real wages nor have real wage increases been commensurate
The State Governments have generally recognised the need for a
with improvements in productivity. Simultaneously, wage costs
change in wage policy. The relative emphasis which according to
as a proportion of total costs of manufacture have registered a
them is now in favour of labour should be modified and the
decline and the same is true about workers’ share in value added
interest of consumers should also be taken into account.’ While
by manufactures. Wage disputes under these conditions have
in this respect their evidence seems to go counter to that of
continued to be the single most important cause of all indus-
labour representatives, they are at one with labour in accepting
trial disputes.
that such beneficial policy measures as have been enunciated or
enacted have suffered for want of adequate implementation.
Government’s commitment to improve living conditions in the
country and to bring about a fair distribution of income and

wealth have been reiterated in a memorandum which we market imperfections in agriculture and cottage industries


received from the Cabinet Secretary in response to the leading to sweated labour, but it also tails to recognise the
Chairman’s request to the then Deputy Prime Minister and economic necessity of a higher wage in the modern
Minister for Finance and to the Home Minister for an authorita- organised sector to transfer labour from the traditional
tive statement from Government on some issues relating to sector. It is generally so in all transitional economies where
wages. It was also urged by the Government spokesmen that such ‘pull factors’ have to be built up. The disparity between
the scope of economic development to raise living standards industrial and other wages may not be due to the fact that
and to provide more employment in the immediate future was the former are disproportionately high, but because the
limited by resources. The same view was expressed by the latter are disproportionately low. It was for this reason that
Planning Commission. the Minimum Wages Act had to be enacted in 1948 to cover
We analyse at this stage some of the suggestions made in the the scheduled industries. In any case, agricultural wages have
evidence before us. A point is made that industrial wages been increasing in recent years; and in all areas, agricultural
should not be out of alignment with (a) per capita national labour is seldom available in the peak season on the
income, (b) wages earned in the agriculture/cottage industries, statutory minimum wages. But a certain amount of
(c) the general level of earnings of the self-employed, and (d) disparity between industrial wages and wages in agriculture
levels of productivity. This needs examination. or cottage industries is necessary and must continue for the
general health of the economy.
a. The main contentions of those advocating a linkage of
industrial wages with per capita income are that (i) wages at c. The earnings of the self-employed persons and wages of
any given time in any sector should not be out of gear with employees can bear no comparison anywhere. Their effort
average earnings as reflected by per capita income and (ii) and sacrifices are altogether different and so are their
wage changes over time should not be out of tune with working conditions. Their respective productivities and
changes in per capita income. The first contention fails to earnings cannot be related. Very often a self-employed
recognise that in any economy sectoral productivities are worker may be under-employed. His earnings, therefore,
bound to differ due to differences in skills, technology and cannot be taken as a criterion to determine the wages of a
capital and hence wage differentials are not only inevitable worker required to put in full-time work.
but based on sound grounds. It is of course necessary that d. The argument that wages be linked to productivity has
the extremes which reflect imperfections of the market and much to commend itself on principle. It is actually on this
inadequacies of measurement should be avoided. The basis that wage differentials have a justification; and on this
second contention would be valid if wages in each sector basis, industrial wages in general have to be higher than
were related to marginal productivity and the latter changed wages in agriculture or cottage industries. It may further be
at the same rate throughout the economy. In so far as this is conceded that wage changes beyond a certain level must
not so, wage changes cannot rightly be related to changes in reflect productivity changes. But it is the application of this
per capita income. Here again, it has to be recognised that principle in practice that presents difficulties as contribution
while changes in real per capita income reflect changes in to productivity levels and changes therein are not easy to
productivity of the economy as a whole, wage variations in measure. It may be hoped that efforts to solve these
any particular sector may not always be based on practical difficulties will be intensified and made to succeed.
productivity changes. A check against unsound wage Even then, productivity will be one of the factors affecting
increases may be provided by changes in per capita income. wages.
But this would ever remain a crude index and its limitations Our Approach
must be fully recognised in applying it to any specific case or We sought the assistance of the Study Group on Wage Policy
situation. which we constituted to sort out the issues connected with
b. The argument that industrial wages should be at par with wage policy and help us in framing our recommendations in
agricultural wages or wages in small-scale industries is this difficult area. The Group could not reach unanimity. The
apparently based on the assumption that marginal report it presented has two minutes of dissent, and rejoinders
productivity of unskilled labour is the same throughout the by its Chairman to each. We have carefully considered all these
economy. This is nowhere true, far less in our own views in leaching our conclusions. We believe that on an overall
economy, where marginal productivity due to surplus plane, issues concerning wage policy are inter-related with
labour in agriculture may be almost zero. The same applies broader economic decisions on the one hand and on the other
to workers in cottage industries and handicrafts. Apart from with the goals set for social policy. Wage rates and differentials
differential productivity, this argument ignores differences in have a functional role in sustaining and developing the structure
costs of subsistence of workers in agriculture and cottage of society and thus merge with other elements of economic
industries on the one hand and in the organised sector on and social policy.
the other. An industrial worker has to pay for many things The functional role of wages is evident, since wages are a price
the cost of which is simply nominal at the margin in his for labour as a factor of production. The prices paid for various
village home. There are similar differences in the disutility types of skills and labour inputs, therefore, influence among
of work or the effort that a worker has to put in, in other factors the pattern of allocation of labour. At the same
different sectors. Finally, this argument ignores not only time, these prices are also the incomes of wage earners and

provide the necessary motivation for organisation of economic constraint. On the other hand, in order to maintain the tempo

activity. If these factor prices are not in harmony with other and the pace of growth, consumption increases cannot be
prices in the system, the result is a disequilibria which may continuously postponed or kept in abeyance in a period of
manifest itself in deflationary or inflationary tendencies. In rising expectations and possible social tensions. In fact increase
either case, the ensuing consequences affect the stability of the in consumption may be necessary to sustain and improve the
economy. morale of workers and thereby the level of production and pace
It is this need for ensuring the stability of the economy which of economic growth. Wage earners expect to share in the gains
has led countries like Netherlands, Norway, Sweden, France and of economic development and growth. Commensurate with
the United Kingdom to adopt wage policies which are closely checks and restraints on consumption required for sustaining
linked with policies relating to incomes and prices. The main the growth process, the standard of living of the workers has
aim has been to ensure that wage increases and increases in to improve. A democratic society with ideals of social justice will
other incomes do not outstrip the growth in real national have to reconcile considerations of equity and fairness with
product. Wage increases inconsistent with the rate of growth of economic compulsions.
real output and productivity have been looked upon as a cause In our country, due to large additions to the working force, the
of wage-price spiral’. The emphasis on the practical measures effect of wage levels on employment has a particular relevance.
adopted for achieving this stability by the countries referred to With an inadequate rate of growth of the economy, the sheer
above has indeed varied according to the social and political number of new entrants to the working population exerts a
environments in which they operate. Although conditions are downward pressure on wage rates. Low wages, however, do not
different in our country in many respects, the experience does generate more employment in a less developed economy, since
indicate that the wage policy has to be framed taking into the latter is limited by scarcity of means of employment and the
account such factors as the price level which can be sustained, the rate of capital formation. But high wages may result in a shift in
employment level to be aimed at, requirements of social justice, favour of capital-intensive techniques and industries aggravat-
and capital formation needed for future growth. ing further the employment situation. To the extent this in not
In our context while an integrated type of incomes and prices done, high wages may reduce the surplus for capital formation
policy may hold out promise of fruitful and affect employment potential. There is thus a conflict
between the employment and wage goals. Its intensity depends
results, the limits in pursuing it have to be recognised. In
on the choice of techniques and industries in the course of
contrast with advanced countries, which have a predominance
planned development. We, however, believe that this conflict,
of wage employment, self-employment is dominant in our
even when the techniques are given and cannot be changed in
economy. The incomes and wages policy that may be formu-
certain sectors of the economy, is not such that it cannot be
lated has to take into account this structural feature of the
resolved. Technologically, our economy will have to be for long
economy and has to be in accord with the pattern of income
a dual economy with a large range of capital and labour
generation and distribution as envisaged in our development
intensive techniques. Wage policy should foster an appropriate
plans. Even so,the social basis of wage policy we have referred
choice of techniques so as to maximise employment at rising
to earlier may require consideration of wage policy as a distinct
levels of productivity and wages.
element of the incomes policy. We have to accept it as a distinct
entity in the overall framework of policies for economic growth. Wage policy should aim at a progressive increase in real wages.
Having said this, we recognise that each one of the consider- At the same time, any sustained
ations which have guided wage policies in other countries is improvement in real wages cannot be brought about without
present in varying degrees in ours too. Viewed thus, our wage increasing productivity. The real wages of any group of workers
policy will comprise a set of principles capable of being cannot be unrelated to their productivity unless inroads into the
consciously adopted to guide, by means of legislation or share of other groups are made. The urgency of improving
otherwise, actions of Government as also of parties vitally productivity levels to sustain increases in real wages cannot be
concerned. overemphasised. This in turn needs a widening and deepening
It is often argued that in all industrially advanced countries like of capital to raise technology on the one hand and investment
the U.S.A. the U.K., West Germany, Japan and the USSR, both in human capital on the other.
the absolute level of per capita wages and the share of labour in The wage levels will also have to recognise the dualism which
the national product were more or less stable or were declining reflects itself in different areas of wage employment. We have
during the initial period of economic development. But in all for instance the modern capital intensive large scale sector where
of them, the political and social factors at the time of develop- rewards will continue to be more attractive, both to capital and
ment were different from those obtaining in our country. The labour. We have also, side by side, small enterprises and other
growth of the economy certainly depends on the rate of traditional labour-intensive sectors, including agriculture. A
investment which in turn depends on the rate of savings. To uniformity in wage levels is either likely to affect the growth of
the extent wage incomes are consumption oriented rather than the latter if the wage level is high or make inequalities even
savings oriented, rise in wage levels signifies a corresponding more glaring if the level is low and fiscal measures inefficient.
diversion of a portion of the total national product from Wage differentials consequent on this dualism, i.e., simulta-
savings and investment to consumption. In certain situations neous existence of the modern capital-intensive sector and the
this can retard the process of economic growth and can act as a traditional labour-intensive sector, are therefore, inevitable and

desirable. But this does not necessarily mean that all existing cost of living further, giving rise to the well-known spiral in


differentials are scientific or based on differences in productivity. which wages and living costs push up each other continuously.
Steps should therefore be taken to standardise job classifications This last relationship or the feed-back mechanism is, however,
and reduce differentials, wherever necessary, to suitable limits on often exaggerated. Firstly, the increased purchasing power in the
a scientific basis. hands of the workers on account of compensatory payments
The determination of wages implies evolving and sustaining a for rise in cost of living forms a small part of the overall
wage structure which (i) permits a fair increase in purchasing power. Secondly, the elasticity of compen-
satory payments to changes in cost of living is generally less
remuneration to labour, (ii) permits a fair return to capital and
than unity so that the feed-back must taper oft. Money wage
(iii) strengthens incentives to efficiency. Apart from these intra-
stability, though important for price stability, is seldom a
industry wage-differentials, the inter-industry and inter-regional
necessary, much less a sufficient condition for it. On the other
wage differentials have a relevance. The latter may be due to the
hand, holding of the price line, particularly of the cost of living,
limitations of the market or on account of inter-regional
is an adequate condition for preventing increases in money wage
disparities in productivity due to differences in technology,
payments that are not related to increases in productivity. This
capital per worker or organisation. It is expected that with the
alone can prevent a fall in real wages. Hence, policies that hold
industries competing for skill in the country as a whole these
down living costs should form an integral part of wage policy.
will soon be eliminated. Inter-industry differentials likewise are
A successful implementation of such policies would not only
also unjustified except on grounds of local differences in
restrain increases in dearness allowance and compensatory wage
technology and capital per worker.
payments, but it would also lead to the stabilisation of prices
Obviously, a crucial issue in regard to the wage-structure is that of goods whose costs are sensitive to wages.
of the level at which it should be fostered. Here, the right of
Any wage policy, to be effective, has to take into account the
the workers for a fair standard, the claim of industry for
existing practices in regard to methods and modes of paying
expansion through its own surplus, the charges on the industry
wages as well as the machinery for wage determination. In the
for public revenues, the need of the economy for resources and
context of improving production and productivity, it will have
the need of the consumer to get supplies at stable and fair
to recognise the role and the feasibility of introduction of
prices, all become relevant factors. But we are clear about one
payment by results in particular lines of activity with necessary
point that the first claim is of the worker for a basic minimum
safeguards. The extent of prevalence of the system of payment
wage irrespective of any other consideration. Beyond this,
in kind and the existing practice of looking at the total wage as
however, in the determination of wage differentials the capacity
comprising different components like basic wage, dearness
to pay becomes relevant.
allowance and bonus have practical significance in wage determi-
These considerations highlight the need for a wage-regulating nation and regulation. Benefits and privileges in kind partake
mechanism that should deal both with wage structure and its the nature of substitutes for cash compensatory allowances.
level from time to time.
In the unorganised sector for the most part, adequate govern-
An area of wage adjustment which we would like to specifically mental or quasi-governmental machinery may be necessary to
mention, and which is dealt with in detail in the next chapter, is provide for minimum wage regulation according to conditions
in regard to adjustments in wage levels due to price changes. in different areas and industries, but more specifically to protect
Often enough, the growth process may lead to a rise in the the workers in weak position. Thus it may be that different
general level of prices and a change in the structure of relative institutional arrangements for wage fixation may be needed for
prices. In order to protect the real wages from erosion, the level different groups. In one case, it could consist of Commission/
of money wages has to be adjusted to price changes. The Boards for framing wage awards and suitable administrative
present practice in this regard has been to pay dearness or dear arrangements for supervising their implementation. In others,
food allowance over and above the basic pay to take account of both for reaching wage decisions and for enforcing them,
an increase in prices. It is possible that this practice of adjust- bipartite arrangements or collective bargaining between workers
ment of wage levels may conceivably lead to inflation. It is also and employers may be the most appropriate system. In still
possible that in an inflationary situation the mere maintenance other cases, a tripartite machinery may be appropriate. All these
of the real wage itself may entail monetary outlays on a scale can co-exist in the country depending upon the traditions and
which reduces the surpluses available for further investment. experience which are built up for utilising them.
Keeping living costs under check should therefore form an
The broad objectives of wage policy as outlined by us have to
integral part of wage policy. At the same time, social consider-
be looked upon as guidelines for instituting concrete steps as
ations do cast an obligation to mitigate through some
the economy moves from one phase to another. In each phase,
adjustment mechanism the hardships caused by price increases
the emphasis on different objectives may change. The main aim
at least in respect of the vulnerable sections of labour.
of a wage policy as we envisage it is to bring wages into
We would like to emphasise here that the existing system of conformity with the expectations of the working class and, in
neutralisation of a rise in the cost of living either through the process, seek to maximise wage employment.
dearness allowance or periodic wage adjustment can not fully
safeguard against a fall in real wages. Firstly there is a time lag; Review of Wages and Wage Policy
secondly neutralisation can seldom be cent per cent at all levels; Our terms of reference make only a tangential and incidental
and thirdly, the very process of neutralisation may push up the reference to the question of wages and productivity. They do

not form part of the central focus of the task that has been and the Government of India prepared a Bill on such disputes

entrusted to us. Even so, it cannot be denied that wages and in 1924. However, the Indian Trade Disputes Act 1929 pro-
productivity are among the central concerns of workers as well vided for setting up Courts of Inquiry and Boards of
as entrepreneurs. One seeks employment so that one can attain Conciliation for the settlement of industrial disputes. Some
a ‘decent’ or dignified standard of living. The wage or income provincial Governments assumed statutory powers to intervene
that one obtains from one’s work is therefore, what enables one in labour management disputes and established machinery to
to achieve a fair standard of living. One seeks a fair wage both to bring both labour and management together to settle such
fulfill one’s basic needs and to feel reassured that one receives a disputes. These developments made a significant contribution
fair portion of the wealth that one works to generate for society. towards the evolution of a wage policy aimed at protecting
Society, in its turn, feels that it has a duty to ensure a fair wage to wages. The first direct step in this regard was taken in 1936,
every worker, to ward off starvation and poverty, to promote when the Payment of Wages Act was passed.
the growth of human resources, and to ensure social justice With the commencement of the Second World War, the
without which continuous threats to law and order may Government assumed more powers under the Defence of
undermine economic progress. India Rules to ensure uninterrupted industrial production. Rule
But the resources to pay wages have also to be created. They 81A of the Defence of India Rules issued in January 1942 gave
have to come from the economic Government wide powers to make rules or issue special orders
viability and profit of undertakings. So those who run under- to restrain strikes and lockouts and to refer any dispute
takings are concerned with their capacity to pay the wages that including wage disputes to conciliation or adjudication. The
are considered to be fair both in terms of individual needs and broad features of these measures were later incorporated in the
the social responsibility to citizens. Industrial Disputes Act of 1947 and agencies like Conciliation
Officers, Industrial Tribunals, Labour Courts etc. were set up by
Our Constitution accepts the responsibility of the state to create
the Government to promote the settlement of industrial
an economic order in which every citizen finds employment and
receives a ‘fair wage’. One of the earliest decisions taken by the
government of free India was to set up a Committee to define In September 1946, the Interim Government announced a five-
a fair wage, and indicate the economic and legal means for year programme of legislative and administrative action in the
ensuring a fair wage to every employed citizen. An examination field which included: 1. Statutory prescription of minimum
of this question established the integral relation between the wages in sweated industries, 2. Standardisation of wages and
quantum of the fair wage and the capacity to pay the wage, and occupational terms in all major industries and the determina-
the need to balance and constantly upgrade both to ensure a fair tion of differentials in wage rates as between various
standard of life, social security and social justice. occupations in an industry, and 3. Promotion of “fair wage”
agreements wherever possible with due regard to the capacity of
Ever since then, we have made many attempts to define the
the industry to pay.
concept of a fair wage, a minimum wage, a floor wage, and a
living wage. We have also tried to identify how far the capacity to In December 1947, the Government convened a tripartite
pay can be allowed to determine the minimum wage, and at conference at which an Industrial Truce Resolution was adopted
what point the capacity to pay should be taken into account and unanimously. The object of the Resolution was to devise
should be regarded as the main determinant. The meandering measures to arrest rapidly deteriorating relations between labour
progress that we have made is reflected in the reports of and management and to increase industrial production.
Committees, Conferences, Commissions, and Judgments of According to this Resolution, “the system of remuneration to
the Supreme Court. They can also be traced to the Fundamental capital as well as labour must be so devised that while in the
Rights and Directive Principles specified in our Constitution interest of the consumers and primary producers, excessive
and the International Conventions we have accepted or ratified. profits should be prevented by suitable measures of taxation
We will therefore, begin our observations with a review of the and otherwise, both will share the product of their common
thinking and legislation on wages in our country, and the ideas effort after making provision for payment of fair wages to
and attempts at making wage differentials more equitable. labour, a fair return on capital employed in the industry and
reasonable reserve for the maintenance and expansion of the
A Brief History of Wages undertakings”.
As early as in the year 1860, Government of India passed the
The Industrial Policy Resolution announced on 6th April 1948
Employers’ and Workmen’s (Disputes)Act. This Act was an
emphasised (1) fixation of statutory minimum wages in
enabling measureand was designed to secure settlement of
sweated industries and (2) promotion of fair wage agreements
wage disputes by magistrates summarily. Along with this it also
in the more organised industries.
provided for penal sanctions for breaches of contract by
workers. In the year 1929, the Royal Commission on Labour This made it necessary to quantify or lay down clear criteria to
found that the Act had ceased to be used. The Government identify a fair wage. Therefore, the Central Advisory Council in
therefore, repealed the Act in 1932. its first session (November 1948) appointed a Tripartite
Committee on Fair Wages consisting of representatives of
Legislation for the settlement of industrial disputes including
employers, employees and Government to enquire into and
the setting up of Wage Boards was the subject of investigation
report on the subject of fair wages to labour.
by the Governments of Bengal and Bombay in 1921 and 1922,


Learning Objective deciding upon a minimum wage, tribunals and courts had
The study of this lesson will help you: largely been guided by considerations of the minimum needs
• Understand of how collective bargaining concept helps in of workers and of the capacity of industry to pay. It was
the fixation of wages. therefore of the view that the wage fixing machinery should
relate to a fair wage, a fair rate of work and that in case of doubt
Committee on Fair Wages whether the existing work-load was reasonable or not proper,
The Committee on Fair Wages defined three different levels of time and motion studies should be instituted on a scientific
wages viz; living wage, fair wage and minimum wage. The basis.
Committee felt that the living wage should enable the worker to
As regards the prevailing rates of wages, its observations were
provide for himself and his family not merely the basic
that, while prevailing rates of wages fixed as a result of proper
essentials of food, clothing and shelter but a measure of frugal
collective bargaining would bear a close approximation to fair
comfort including education for children, protection against ill
wages and should, therefore, be taken into account in fixing fair
health, requirements of essential social needs and a measure of
wages, the same could not be said of prevailing wages resulting
insurance against more important misfortunes including old
from unequal bargaining. The wage fixing machinery should
age. The Committee was not sure how it could aim at or
therefore make due allowance for any distortion of wages
approach this standard in the prevailing economic conditions.
caused by unequal bargaining.
It, therefore, analysed the basis for fixing a minimum wage, and
came to the conclusion that a living wage should be the target. It then referred to the question of the capacity of the industry
Even in advanced countries the general level of wages and the to pay. It first observed that the capacity would mean one of
capacity of the industry to pay had been considered relevant. In three things, viz. (1) the capacity of a particular unit (marginal,
India, the level of the national income was so low that it was representative or average) to pay; (2) the capacity of a particular
generally accepted that the country could not afford to prescribe industry as a whole to pay; or (3) the capacity of all industries in
by law a minimum wage which would correspond to the the country to pay.Ideas on this subject have varied from
concept of the living wage described in the preceding para- country to country. The Committee was, however, of the
graphs. Taking Indian conditions into consideration, the opinion that capacity should not be measured in terms of the
Committee was of the view that a minimum wage must individual establishment, but the main criterion should be the
provide not ‘merely for the bare sustenance of life, but for the profit-making capacity of the industry in the whole province.
preservation of the efficiency of the worker’. For this purpose The Fair Wages Committee was of the view that in determining
the minimum wage must also provide for some measure of the capacity of the industry to pay, it would be wrong to go by
education, medical requirements and amenities. It further the capacity of a particular unit or the capacity of all the
observed that its members were unanimous that the fair wage industries in the country. The relevant criterion should be the
should on no account be less than the minimum wage. It also capacity of a particular industry in a specified region, and as far
observed that while the lower limits of the fair wage must as possible the same wages should be prescribed for all units of
obviously be the minimum wage the upper limit should be set the industry in that region.
by what may broadly be called the capacity of industry to pay. As regards the measure of the capacity, there were two points of
This would depend not only on the present economic position view in the Committee itself. One view was that the wage fixing
of the industry but also on its future prospects. The Commit- machinery should, in determining the capacity of the industry
tee further recalled that between these two limits the actual to pay, have regard to: (1) a fair return on capital and remunera-
wages should depend on a consideration of the following tion to management; and (2) a fair allocation to reserves and
factors: a. the productivity of labour; b. the prevailing rates of depreciation so as to keep the industry in a healthy condition.
wages in the same or similar occupations in the same or The other view was that the fair wage must be paid at any cost,
neighboring localities; c. the level of the national income and its and that industry must go on paying such a wage as long as it
distribution; and d. the place of the industry in the economy of does not encroach on the capital to pay that wage. The Commit-
the country. tee was of the view that the main objective of the fixation of
It then went on to consider the first item, that is, productivity fair wages should not be lost sight of. The objective was not
of labour. It observed that in India collective bargaining had merely to determine wages which are fair in the abstract, but to
not so far been a potent factor in the determination of wages. see that employment at the existing levels is not only main-
That being so it was more than likely that at least in certain tained but if possible increased. From this point of view, it will
occupations and industries the workers were getting a wage be clear that the level of wages should be such as enables the
lower than the value of their marginal net product. It also industry to maintain production with efficiency. The Commit-
observed that the awards of industrial tribunals and courts had tee, therefore, recommended that the capacity of the industry to
made only a casual reference to the productivity of labour. In pay should be assessed by the wage board in the light of this

very important consideration. The wage board should also be industry level, and through Government controlled wage

charged with the duty of seeing that the fair wages fixed for any boards. Since there were not much regional variations, this
particular industry are not very much out of line with wages in system worked well for quite some time.
other industries in the region because wide disparities would In 1973 and 1978, Indian economy suffered two oil shocks.
inevitably lead to movement of labour and consequent During these years the actual growth rates of industrial
industrial unrest not only in the industry concerned but in other production fell far below the plan targets; unemployment rates
industries as well. doubled, new forms of workers’ protests such as hartal, go-
The Committee then considered the classes of workers for slow and gherao emerged. The number of strikes and the
whom, and industries in regard to which, fair wages should be number of mandays lost increased considerably. This culmi-
determined. It came to the conclusion that in the initial stages, nated into an all India Railway Strike in May 1974 that paralysed
in view of administrative and other difficulties, provision the entire economy.
needed to be made for the fixation of fair wages of only This period also saw the growth of independent plant based
categories up to the supervisory level. The Committee observed militant unions without any political affiliations. In order to
that in the written evidence received by them, there was share the monopoly gains of an industrial unit and productivity
unanimity of opinion that fair wages should be determined on increases as a result of technological changes, such unions were
an industry-cum-region basis. The Committee supported that organised on unit basis, and through their militancy, they were
view since it felt that it would not be feasible to fix wages on successful in obtaining much higher wages and other facilities
any other basis. for the workers. Slowly industry-wise wage boards and wage
The Committee then identified the criteria that had to be settlements took a back seat, and company-wise negotiations
considered in fixing wage differentials as: 1. the degree of skill, and wage settlements emerged. Though there are many
2. the strain of work, 3. the experience involved, 4. the training principles that are taken into consideration in wage determina-
required, 5. the responsibility undertaken, 6. the mental and tion in the unit-based bargaining system, the two main
physical requirements, 7. the disagreeableness of the task, 8. the principles are: first, the capacity of the industrial unit to pay, and
hazard attendant on the work, and 9. the fatigue involved. second, the bargaining strength of the trade union to negotiate
The Committee was of the view that the wage fixing authorities with the management.
should carefully go into the question of wage differentials after Sectoral Bargaining at the National Level
deciding on the weight to be attached to each of the above As has been said earlier, prior to the 1970s, Wage Boards
factors. It felt that it was not possible to advise the wage fixing appointed by the Government gave awards on wages and
machinery on what weight should be attached to each factor, as working conditions. The number of Wage Boards declined
it was a matter that would have to be evolved gradually on the from 19 in the late 1960s to two (one for journalists and other
basis of experience. The Committee also suggested that the for non-journalist newspaper employees) in the late 1990s. Since
wage board should try to evolve standard occupational nomen- the early 1970s sectoral bargaining at the national level has been
clature so that the work of classifying and assessing may be occurring mainly in industries in which the government was the
undertaken on a uniform basis throughout the country. dominant player. These included banks and coal, steel and ports
We have dealt in detail about the report of this Committee and docks. Fifty eight private, public and multinational banks
because it has influenced the principles of wage fixation, the are members of the Indian Banks’ Association. They negotiate
form of wage fixation machinery and other matters for a long long-term settlements with the All India Federations of Bank
time. The judiciary too has evolved many principles of wage Employees. There is one national agreement for the entire coal
fixation basing themselves on the criteria prescribed by this industry. In steel, there is a permanent bipartite committee for
Committee. integrated steel mills in the public and private sectors. Since
1969, this Committee, called the National Joint Consultative
Setting up of Wage Boards
Committee for Steel Industry (NJCS), has signed six long-term
The First and Second Five Year Plans gave importance to (1)
settlements. The 11 major ports in the country have formed the
laying down principles for bringing wages in conformity with
Indian Ports’ Association. They hold negotiations with the
the aspirations of the working class and (2) setting up an
industrial federations of the major national trade union centres
appropriate machinery for the application of these principles.
in the country.
According to them, the existing machinery for the settlement of
disputes, namely the Industrial Tribunals, had not succeeded in A feature of national-level sectoral bargaining is the presence of
giving full satisfaction to the parties and, therefore, they a single employer body and the involvement of the concerned
recommended authorities like Tripartite Wage Boards consisting administrative ministry from the employers’ side. In many
of equal representatives of employers and workers and an sectors, two to five major national centres of trade unions,
independent Chairman. Accordingly, Wage Boards were set up which have a major presence through their respective industry
for the following sectors: cotton textile industry, jute, planta- federations of workers’ organisations, negotiate. In banks, coal
tions, mines, engineering, iron and steel, chemicals, sugar, and ports and docks, often agreements have been preceded by
cement, railways, posts and telegraphs, ports and docks etc. strikes or threats of strike. It is only in the steel industry that
12.152 For quite some time, these Wage Boards determined the this has not happened during the past 29 years. Even though
wages and other remuneration to be given to the workers in industry-wide bargaining is not extended to the oil sector,
these industries. Thus wage bargaining mostly took place at the which was nationalised in the 1970s, the oil coordination

committees achieve a great deal of standardisation in pay and Rise in Real Wages


service conditions even if collective bargaining occurs at the firm A wage policy will also have to aim at a progressive rise in real
and/or plant level (for instance, Hindustan Petroleum Corpora- wages. Wage increases can come on account of increase in cost
tion Limited). Agreements in banking and coal covered 8,00,000 of living and improvement in standard of living. As a result of
workers each while those in steel and ports and docks covered increase in prices, there is an erosion in the wage levels in real
2,50,000 workers each. terms, and in order to prevent such an erosion, dearness
allowance is paid and it is linked to the consumer price index.
Wage Policy – Theory and Various Issues
There are various methods of linking the consumer price index
Wage policies have engaged the attention of politicians, with the dearness allowance and determining the extent of
administrators, and academic analysts for many years now. We neutralisation of price rise through payment of D. A. Some
have the classical theory of wages, insideroutsider models, and enterprises pay a fixed dearness allowance and also a variable
the efficiency wage theory - that have emerged in the USA, and dearness allowance linked to the consumer price index. Some
quite a few other models and theories. Perhaps it is also pay dearness allowance only linked to the consumer price index.
possible to visualise other criteria and models. But we have not The extent of neutralisation also differs from organisation to
gone into the advantages and disadvantages or compulsions of organisation.
all these theories because we feel that a self-contained and
In 1978, Government of India appointed a Committee on
detailed discussion of all these are beyond the terms of
Consumer Price Index Numbers under the chairmanship of Dr.
reference of our Commission. We have suggested elsewhere
N. Rath. After examining the method of constructing con-
that the Government should appoint a high level committee
sumer price index numbers that was being followed at that time
with technically competent people including economists, trade
by the Labour Bureau, Shimla, the Committee made a number
unionists, entrepreneurs, consumers, and establishments to go
of suggestions regarding collection of information for
into all aspects of the inter-related questions and to formulate a
constructing index numbers, the number of centres to be
national wage policy. It should have been done much earlier in
covered, coverage of workers, sample size design for family
view of the commitments in our Constitution and the
living surveys, selection of commodities, linking factors, etc. We
Conventions we have accepted. The need has become all the
are told that based on the recommendations of this Commit-
more important in the light of the new circumstances and
tee, the series were suitably revised.
changed factors that have emerged with globalisation and new
technology. The present series of consumer price index for industrial
workers for 70 centres, all India and 6 additional centres (on the
Growth in Inequality of Wages and base year 1982 = 100) is based on the working class family
Earnings income and expenditure surveys conducted during 1981-82.
There is increasing inequality in the labour market, and wage
These series were released w.e.f October 1988 index. As per ILO
differentials present among various groups and various sectors
Recommendation (Recommendation No. 170 vis-à-vis
of the economy. There are large interindustry and intra-industry
Convention No. 160 ratified by India in 1992) the Household
wage differentials. In different sectors of the economy, a worker
Expenditure Surveys should be conducted at least once in every
will be paid differently though he may be doing the same kind
ten years. But the work was delayed because of the delay in
of job. Even in the same industry, different units may pay
sanctioning the scheme. Now in 1999 - 2000, the surveys have
different wages for the worker who is having the same measur-
been conducted at 78 centres by the Labour Bureau, Shimla
able skills. First the differentials are found across a occupations:
through the NSSO. On the basis of this survey, new series are
the firms that pay professionals a premium over the market
likely to be released in 2003. Thus there is a considerable delay in
average also pay less skilled workers a premium over the average
conducting the survey and in constructing the new series of
in their occupations. Second, these differentials have a strong
index numbers.
tendency to persist over time, industries that pay premia in one
period tend to be found paying them in later periods. Therefore, the very purpose of linking dearness allowance to the
price index is lost. This is because the consumption pattern of
Different areas of wage employment will have different wage
the population undergoes changes, many varieties of items go
levels and we have to recognise this fact. We have the modern
out of the market and prices for them are not available, some
capital intensive organised sector of IT industry, petro-
items become obsolete, and since the index numbers have an
chemicals, pharmaceuticals, etc., where wages and other
upward bias, the employers have to pay higher dearness
allowances are likely to be more attractive than in small-scale
allowance than is necessary.
industry and other traditional labour-intensive sectors such as
the unorganised urban and rural sector and agriculture. Though Therefore, it is necessary that the consumption surveys are
our efforts should be to reduce these wage differentials and conducted with fixed periodicity and new series of index
introduce some sort of standardisation, as the matter stands numbers are constructed every ten years. A suggestion has been
today, it is practically very difficult and these differences in made that there should be a separate legislation to ensure that
earnings of the workers in different sectors of industry are likely new index series are undertaken on the basis of fixed time
to continue. Much depends upon the capacity to pay and schedules. For this provision has to be made for necessary
profitability of these sectors. Any wage policy will have to take resources, staff components, cooperation from NSSO and State
these factors into consideration. Governments etc. The Commission endorses this suggestion
and would request the Ministry of Labour to move in the

matter. Apart from the organised sector, dearness allowance is Recommendations of the First National

also paid to workers in the unorganised sector as a part of Commission on Labour

minimum wages. Their dearness allowance is revised every six The First National Commission on Labour discussed this issue
months depending upon the movement of index numbers. and came to the conclusion that “a national minimum wage in
This is how erosion in the purchasing power of workers in the the sense of a uniform minimum monetary remuneration for
unorganised sector is prevented. For them too, it is necessary to the country as a whole is neither feasible nor desirable. If one is
assure revision of consumer price index at fixed time intervals. fixed, the dangers are that there will be areas which will not
afford the minimum if the minimum is worked out somewhat
Wages in the Unorganised Sector
optimistically. And if calculations are allowed to be influenced
If one is considering the problem of a wage policy from the by what a poorer region or industry can pay, the national
point of view of the national economy, one cannot restrict minimum will not be worthy enforcing”.
one’s vision only to the organised sector. A national wage policy
The Commission also pointed out the difficulties in construct-
must bring within its purview problems of workers in the
ing a national minimum wage because of the large variations in
unorganised sectors who are not unionised and therefore who
consumption patterns of persons in different regions, the wide
have no bargaining strength. In fact the entire emphasis of
variety of items used by them, regional price variations and so
Government wage policy should be on fixing minimum wages
on. In view of these, the Commission suggested that in
and implementing them for the workers in the unorganised
different homogeneous regions in each state regional minima
sector. Fixing a national minimum wage, fixing minimum
could be notified. The Commission recommended fixation of
wages for different jobs in the unorganised sector, revising these
such regional minima in view of the wide variation in rates of
wages periodically, linking them to dearness allowance in order
minimum wages fixed under the Act even within a small
to prevent erosion in real wages and the like assume much
geographical region.
significance in this context. Government has to set up a proper
machinery for fixing these wages and also ensuring that they are Recommendations of the Bhoothlingam
paid. Committee
Objectives of a Rational Wage Policy Government of India set up a Study Group on Wages,
What can be the objectives of a rational wage policy? There are Incomes and Prices, popularly known as the Bhoothlingam
many objectives, and we have to isolate and discuss them Committee in 1977. The Committee gave its report to the
separately. a) Do we need a national minimum wage in order to Government in 1978. This Committee did not agree with the
ensure that those who are employed in any region or in any recommendations of First National Labour Commission, and
sector of the economy are assured of a minimum income that said that “in our view, the real minimum wage can only be the
can buy minimum necessities of life for them? b) Do we need a absolute national minimum, irrespective of sectors, regions or
wage policy under which we have to secure as much employ- States below which no employment would be permitted”. This
ment as possible? Is it necessary to have a poverty level low Group also observed that in determining such a national
wage for this purpose? c) Do we need a wage policy as part of a minimum wage, several considerations had to be kept in view
total anti-poverty programme in which our goal is to remove and it had to be consistent with factors like (a) the per capita
poverty of the bottom classes of our society through the use national income adjusted after applying the participation rate (b)
of employment at a level of wages which removes such average national income per consumption unit and (c) per capita
poverty? d) Do we want to remove the differentials of wages of rural consumption expenditure. It could not also deviate too
workers in the organised sectors, and between the organised much from prevalent earnings in the small-scale sector and its
and the unorganised sectors? Is it possible to do so? e) Is it impact must not be such as to inhibit the generation of
possible to standardise wages in the same type of industry? employment. It recommended that the national minimum
Should we attempt to do so? f ) Should we give more empha- wage should be Rs.150 per month at 1978 prices, to be achieved
sis on prescribing wages for the unorganised sector, and leave within a period of seven years, starting with not less than Rs.4
the wages in the organised sector to be decided by collective per day for eight hours of unskilled work or not less than Rs.
bargaining? g) What can we do to ensure at least a minimum 100 per month and being revised every two years to achieve the
income to the workers in the unorganised sector? h) Can the goal. Thereafter the revision in the minimum wage should be
wage rise be linked to increase in productivity? i) Can we have a done every three years (as was also recommended by the
wages, incomes and prices policy? What is the practical shape it National Commission on Labour, 1969) in relation to the trend
can take, and what will be the machinery to enforce it? increase in per capita national income. This minimum wage was
to be applicable throughout the country for unskilled work for
National Minimum Wage every adult of 18 years or above, irrespective of sex, bringing up
Various Committees and Commissions have discussed the the statutory minimum wages wherever they were lower. State
necessity of introducing the concept of a national minimum Governments were to continue to have the freedom to fix
wage below which no employer should be allowed to engage higher minimum wages wherever they were lower. For the
any worker in the country. The advocates of a national mini- agricultural sector the Group felt that a desirable minimum rural
mum wage claim that such a minimum would have more household income would be a more meaningful concept
extensive coverage, and would make implementation easier and because of the irregular and seasonal nature of employment
effective because of its simplicity and applicability to all types of and unstable and varied sources of income. The minimum
employments in all parts of the country.

income to be aimed at should be such as to enable the bottom Accordingly, the Government issued guidelines in July, 1987 for


30% to come up roughly to the level of the next higher decile. setting up Regional Minimum Wages Advisory Committees.
It was placed at Rs.1800 per annum (1977-78 prices) for These committees renamed subsequently as Regional Labour
planning purposes. Policy measures should be directed towards Ministers’ Conference, made a number of recommendations
creating conditions in which the households of those who which included reduction in disparities in minimum wages in
work part time or sporadically, as well as landless labourers and different States of a region, setting up of Inter-State Coordina-
marginal farmers are enabled to earn the minimum within a tion Council, consultation with neighbouring States while
period of seven years. The measures were to include improve- fixing/ revising minimum wages etc.
ment of the productivity of marginal farmers through higher
Floor Level Minimum Wage
value crops and increasing opportunities for work with better
In the absence of a National Minimum Wage Policy, the Central
Government introduced the concept of a National Floor Level
Recommendations of the National Minimum Wage of Rs. 35/- per day in 1996 based on the
Commission on Rural Labour recommendations of the National Commission on Rural
In 1991, the National Commission on Rural Labour consti- Labour. The floor level of minimum wage was further
tuted under the chairmanship of Dr. C. H. Hanumanth Rao enhanced to Rs. 40 per day in August 1998. We were told that
made a strong recommendation for a national minimum wage this had been revised to Rs. 45 this year, and accordingly the
for rural labour. They deplored the wide variations in the Prime Minister had written letters to all State Governments. For
minimum wages prescribed for unskilled workers in agriculture the time being this has become a sort of national minimum
by various State Governments, and laid down the following wage. It can, therefore, be that till such time as a National
principles for fixation of minimum wages: a) the cost of living Minimum Wage Policy is evolved, this floor level minimum
relating to the minimum subsistence level for the worker and wage may be treated as the current national minimum wage.
his family of three adult consumption units, and b) the In view of the importance of the subject, our Commission
minimum wage will be the same for all employments feels that the Government of India should appoint an expert
The National Commission on Rural Labour thought that the Committee to study the pros and cons of this subject and
application of these principles would naturally bring about make suitable recommendations for the construction of such a
uniformity in the minimum wages throughout the country national minimum wage.
irrespective of the authorities notifying the wage. The Commis- Our Constitution gives us a mandate to assure ‘fair wages’ to
sion called this the basic minimum wage applicable for the the workers. We have endorsed this commitment in the
country as a whole, and no wage should be fixed or permitted International Conventions and Declarations that we have
below this level. This is to be distinguished from the minimum accepted. A Fair Wage Committee was appointed in 1948. In
wage which may be notified above this level under the Mini- spite of all this, we have not been able to determine a national
mum Wages Act by different State Governments. Differences in minimum wage. The diversities in the different parts of the
the wages arrived at on the basis of cost of living would be country and different regions in the same State, including
accounted for only by the differences in the comparative cost of unequal capacities to pay, have delayed the fulfilment of the
living between various regions in the country. The Commission promise in the Constitution. Some Committees have held the
felt that this approach will admit of minor variations. view that a uniform national minimum wage is difficult to
Recommendation by the National determine, and will be even more difficult to enforce every-
Commission on Self Employed Women where. Some members of our Commission hold the same
In 1987, the National Commission on Self Employed Women view, and feel that it may be impractical to suggest a national
and Women in the Informal Sector was appointed with Mrs. minimum wage. The general opinion in the Commission is
Ela Bhatt as the Chairperson. In its report, the Commission that the concept or commitment of a national minimum wage
recommended a reasonable wage of Rs. 500 for women can not abandoned on the plea that there are difficulties. It has
workers. The Commission did not call it a national minimum to remain an ideal or goal to be reached. We have recommended
wage, but it amounts to the same. that an Expert Committee must be appointed to study all
aspects, and make a recommendation that is practical and leads
The National Minimum Wage has been discussed on many to the goal even if it is in progressive phases. Till we reach the
other occasions in different fora. Because fixation of wages target, our immediate attempt should be to progress towards
depends on a number of criteria like local conditions, cost of the next phase, leading from a floor level minimum wage to a
living and paying capacity which vary from State to State and regional minimum and finally to a national minimum. In
from industry to industry, many difficulties have been pointed determining such a wage, the recommendations of different
out. The Indian Labour Conference held in November, 1985 Committees, the 15th session of the ILC, and the judgments
expressed the following view: “Till such time a national wage is of the Supreme Court should be used as guidelines
feasible, it would be desirable to have regional minimum wages
in regard to which the Central Government may lay down the Low Wage Policy
guidelines. The Minimum Wages should be revised at regular As is said earlier, now no one advocates a low wage policy, and
periodicity and should be linked with rise in the cost of living”. payment of the minimum wage as prescribed is legally binding
on the employers. But such a low wage policy was advocated by
a few economists and politicians in order to encourage employ-

ment in the country, and in order to keep industrial costs down. mum salary of the lowest Government employee rose from

The first Five Year Plan had also warned against any upward Rs.55 to Rs.2,060. b) During the same period, the pretax
movement of wages. Their theory was that if wages are low, maximum salary rose from Rs. 3,000 to Rs. 16,580, while the
more employment can be generated in the country, and costs of post-tax salary rose from Rs. 2,263 to Rs. 12,615. c) The
production of products can also be held under check. disparity ratio between the maximum pre-tax remuneration and
the minimum went down progressively from 54.5 (1948) to
Differentials in Wages
46.2 (1949), 37.5 (1959), 34.0 (1965), 24.8 (1970), 10.7 (1986)
What should be the maximum-minimum differential in wages and 8.0 (1996). d) The post-tax disparity ratio came down even
of employees of an organisation? more drastically from 41.0 (1948) to 6.1 (1996). The post-tax
It is difficult to lay down a clear cut criterion for fixing an ratios were naturally lower than the pre-tax ratios because of
appropriate ratio between salaries of the top management and progressive rates of taxation.
wages paid to the worker at the lowest rung of the ladder. In The falling disparity ratio was the result of a deliberate policy
general, the ratio seems to be high in a developing country followed by successive Commissions. This was probably in
where the level of higher education in many fields is not tune with the prevalent socialist ideas of the time. The ratios
commensurate with the needs of economic development and did not remain constant even in the intervening period between
where the general level of education of workers is not very high. two consecutive Pay Commissions. Thus the pre-tax ratio
Therefore, the unskilled worker is paid the minimum, and slipped from 10.7 (1986) to 8.0 (1996). This phenomenon is
managerial experts whose skills are rare are paid much more. explained by the prevailing practice of offering only partial
Sometimes, foreign experts are also hired, from countries where neutralisation for increased cost of living at the higher levels,
the general levels of pay are high compared to our country, and while there is complete neutralisation at the lower level.
they have to be paid much higher salaries than would be
warranted by the paying capacity of our country. Higher salaries International Comparisons
are thus fixed externally at the international level. Thus they get The Fifth Pay Commission had also collected data from various
completely out of line with the wages of purely local labour countries in order to know these differentials in wages. The
which is unskilled and which is abundant in supply. information received on maximum-minimum Government pay
scales in different countries was as follows:
It would be worthwhile to quote the example of China. In
China as well as in the erstwhile communist East European International Disparity ratios, 1995
economies bringing down maximum and minimum differen- Country Ratio Country Ratio Malaysia 3.0 Sweden 4.0 France 6.6
tial had been one of the important objectives of a wage policy. Indonesia 6.9 Australia 7.7 China 8.0 Thailand 9.0 Hongkong
Government of India had tried to fix a ceiling on managerial 40.0 Perhaps the disparity ratios are likely to be different for the
remuneration, and thus an effort was made to bring down the private sector enterprises in these countries.
differential in wages in private enterprises. But as a result of The Fifth Pay Commission had also carried out studies on
persistent demand and severe criticism, after the new economic remuneration paid to top management personnel in the private
policy of liberalisation, the ceiling on managerial remuneration sector. Their observations were as follows: a) The CEO in
was raised substantially in July 1993 and relaxed completely for private sector gets a pay packet which is nearly 50% higher than
profit making companies in February 1994. Companies were his counterparts in public sector undertakings and Government.
required to make disclosures for employees earning more than b) In addition to the salary, the CEO in private sector draws an
Rs. 12 lakh annually. But their number has increased consider- average performance related incentive which works out to 65%
ably over the years. Now under Schedule XIII of the of the basic salary. c) The CEO in private sector draws sundry
Companies Act 1956, companies can pay 100% increase in the allowances for club membership, credit cards, services, ameni-
maximum level of remuneration. Therefore, the clause has been ties, domestic servants, use of car, housing, free travel etc.
amended, and Companies need to give details of only such Thus there was, and even now there is a difference in the
employees as are paid over Rs. 24 lakh per annum. The trend is compensation paid to employees in the private sector and to
towards increased remuneration to top management and Government employees. It can be observed that the disparity
widening differentials. Apart from the removal of such ceilings, ratio ranges between 3 in Malaysia and 40 in Hongkong.
most of the top managerial personnel receive a share of 1 or 2
percent in the profits of the company. In addition to this they An OECD study on the salaries of senior functionaries has
also receive perquisites like free housing, chauffeur driven cars, reported that Japan, UK and Canada reward their senior civil
free club memberships, free international travel etc. In the servants better than Germany, USA, the Netherlands, Ireland,
absence of full data, it is very difficult to comment generally on Australia, France, Finland and Sweden. While the real incomes
the wage-differentials. But the general observation is that after of senior civil servants rose in the range of 20 to 40% between
the policy of economic liberalisation, these differentials have 1980 and 1990 in the case of Japan, UK, Canada, Ireland,
been further widened. Finland, Sweden and US, it fell in the case of Germany, the
Netherlands, Australia and France. Differentials between the
The Fifth Pay Commission appointed by Government of India senior and lower grades are clearly compressed in the case of
has discussed this issue while fixing maximum pay for Govern- Canada, Australia, France, Germany, the Netherlands, UK and
ment servants. The Commission had analysed the maximum US. Also substantial remuneration discounts for public service
and minimum disparity ratios of Government servants. Their vis a vis private service exist in countries like France, Germany
conclusions were: a) During the period 1948-1996, the mini-

and the United Kingdom. This information is for the year 1995 same place. This problem has been discussed in India since


and for Government servants in the respective countries. long. As far back as in 1922, the Bombay Industrial Disputes
The increase in the salaries of the Government employees as a Committee discussed this problem and again the Textile Tariff
result of the Pay Commission recommendations, resulted in Board did so in 1927. The Whitley Commission pointed out
pre-tax disparity ratio between maximum and minimum the need for adopting a common standard of payments for
remuneration reach the level of 10.7 similar classes of work in some of the leading industries. In
1934, a wage census was conducted by the Government of
Logic of Wage Differentials Bombay and it compiled data for standardisation. The Textile
What is the logic of this differential in wages? The chief factor Labour Enquiry Committee (1940) and Committee on Fair
determining the excess earning of trained personnel over Wage (1948) showed strong preference in favour of
minimum wage is the cost of investment in education, standardisation. The First National Commission advocated
including time spent on education, the excess earning being standardisation of occupational nomenclature and arrange-
meant to compensate for the investments and time spent in ments for a wage census on a regular basis because it felt that,
education. Secondly, in the case of top managerial personnel, that would assist in standardising wage rates
they have adequate technical experience of management, they
In the changed circumstances, with a variety of wage rates in
have to carry risks of business and are responsible to produce
different industries and in enterprises of the same industry,
results. Their job is more than full-time. Therefore, they are to
standardisation has become pretty difficult. This is because of
be paid higher salaries to compensate for the risks and for
the large variation in the capacity of each industry to pay and
sacrificing all their time for business. Such managerial talents are
different market conditions in which they operate.
rare to be found and therefore, they have to be adequately
compensated and retained. 12.196 How does it happen that a West Bengal Experiment
film star receives a remuneration which is so much higher than But because of the peculiar circumstances in the seventies, this
that of a street cleaner? Why does a foreman receive more than standardisation was brought about in the engineering industry
an unskilled worker, or an accountant more than a sweeper? in West Bengal. This was a unique experiment that is worth
These are stock questions to be found in economic text books. mentioning.
The answers given also are stock answers. Foremen and In the sixties, wages in major industries in West Bengal such as
accountants are few have to spend long years in training and jute, cotton textiles, plantation and engineering, wage fixation
unskilled workers and sweepers are available in plenty and they and revision in salary scales was done through awards of
need no training. This is the way the differentials in employ- industrial adjudication. Thus in the case of the engineering
ments are sought to be justified. The actual higher or lower industry, there were three omnibus engineering tribunal awards
wages depend upon the scarcity of labour in that category. namely that of 1948, of 1950 and of 1958. These were followed
The country needs to reward persons who have put in more by Wage Board recommendations for the engineering industry
efforts to acquire specialised skills, as long as better quality or in 1966. There was also a Special Engineering Tribunal Award
talent is sought to be recruited or trained. Moreover the which was known as the 7th Industrial Tribunal Award which
differentials will continue to exist when the intellectual capital of related to engineering establishments employing less than 250
a person, skills and experience acquired differ from person to employees.
person. This also differs from industry to industry. In a labour Around 1969, when the leftist government came to power in
intensive industry say cotton textile industry, where wages West Bengal, the image of West Bengal industry suffered a set
constitute 25% of the total costs, we see that wages per worker back. Those were the days of gheraos, strikes, sudden stoppage
are lower than in a capital intensive industry like petro-chemicals of work, frequent intimidation by workers etc. As a result, the
or fine chemicals. Again a small industry or an industry in rural State received a big set back in its industrial development.
area is not expected to pay the same wages and fringe benefits to Investors were not prepared to go to West Bengal and no new
workers as in large-scale industry. The capacity and profitability industrial projects were coming up in West Bengal. The
of such industries is much less, and the skills required from Government wanted to improve this tarnished image of the
workers in such small units are also less. We can hope that over state. It took considrable interest in settling labour problems
a period of time these differentials will narrow. and in ensuring investors that there would be no labour
Thus the differentials in wages are bound to persist and it is problems in the state. Most of the trade unions were controlled
difficult to eliminate them. Their differential ratio perhaps can by the leftist parties and, therefore, it was easy to convince the
be brought down by judicious wage policies to be pursued at trade unions and force them to be more accommodative and
the enterprise level. It is up to the management of the enter- less militant. As a part of this effort, the parties in power
prise to initiate action. almost forced trade unions in the State to come together and
As long as we follow a laissez-faire policy in respect of wages carry on negotiations with industry to have industry-wise wage
and both employers and employees are free to fix their wages, settlements. As a result, the first wage settlement in the
the Government will find it difficult to exercise strict control. engineering industry in West Bengal was signed in 1969. The
Government played a major role in bringing the two parties
As has been mentioned earlier, there have been differences in
together and forcing them to sign such a settlement. Following
the wages paid in different sectors. These differences prevailed
this settlement, four successive industry wise agreements
for the same skills within an industry itself and that too at the
through collective bargaining and intervention of the Govern-

ment were reached in 1973, 1979, 1983 and 1988. Most of the into through conciliation and/or registered with the appropriate

Federations of Trade Unions, and the Confederation of Indian government, the labour commissioners concerned are expected
Engineering Industries (CIEI) would sit and negotiate wages to ensure that the wages, benefits and other conditions are not
of all types of workers in engineering industries in West Bengal. lower than the applicable minimum wages and other standards
A good deal of preparatory work was also done by both unions laid down in labour laws
and employers.
Special Features of such Collective
Role played by the State Government Agreements
The State Government played a positive role in bringing about In any industry, some units are doing well and some are not
the settlements. All the meetings of negotiations were presided doing so well. While signing wage agreements on industry-wise
over by the Labour Commissioner and he acted as a conciliation basis, one has to take care of what is affordable to the least
officer. If there was an impasse in negotiations, there was profitable unit in the industry. Many times workers in more
political intervention and the Labour Minister as well as the profitable units feel that they are not given adequate remunera-
Chief Minister intervened to see that the negotiations were tion and facilities. This was one important reason why trade
successful. The State Government tried to bring both parties unions in such profitable units opted out, and signed indi-
together. It used its influence and saw that there was a reason- vidual agreements with managements of such companies. As a
able settlement. The State Government was also a party to the result, they got better remuneration and better facilities. As has
settlement and, therefore, this was a tripartite settlement. This been started earlier, workers in such prosperous enterprises were
was a unique experiment and, therefore, it has been narrated in able to wages that were described as disproportionate. They
detail. At no other place, according to our information, were were also able to share the monoply gains of such companies
such experiments carried out. Now we are told that this system because of the militant methods they followed.
of industry-wise negotiations do not take place, and unit-wise Following are the some of the special features of such agree-
bargaining is resorted to. ments: (a) A steep rise in wages not comparable to any other
Wage Determination through Collective sector of the economy. Unions were able to achieve better terms
Bargaining because of their bargaining power. (b) As a result of the steep
We have earlier refered to the elimination of Industry level Wage increase in wages, incomes of many workers became taxable.
Boards and the increasing trend of resorting to collective Unions then preferred a variety of allowances apart from rise in
bargaining at the individual plant level. Let us understand the wages. Some of these allowances were not taxable. One will
legal position of such agreements. There is no law at the thus find a variety of allowances being added to emoluments.
national level for recognition of trade unions. But some states Thus, as in the case of managerial personnel, workers too have
like Maharashtra and Madhya Pradesh have legal provisions for had the benefit of augmenting incomes through special
recognition. In some states like Orissa, West Bengal and allowances and perquisites
Andhra Pradesh, unions are recognised as bargaining agents Wages are generally defined as only basic wage, fixed and variable
through secret ballots. Under section 2(p) of the Industrial dearness allowance and not any other allowance and benefits.
Disputes Act, 1947 collective agreements can be reached with or Thus all the other allowances paid and monetary value of the
without the involvement of the conciliation machinery facilities provided by employers in the organised sector are not
established by legislation. While settelments reached in concilia- included in “wages”. But the value of all these allowances and
tion are binding on all parties, settelments arrived at, otherwise perquisites is substantial if one is to compute the total remu-
than in the course of conciliation proceedings are binding only neration paid to the workers.
on parties to the agreement. It is not binding on workmen who
Court Decisions
did not sign the agreement or did not authorise any other
The principles of wage determination have been greatly
workman to sign on his behalf. A collective agreement presup-
influenced by Court decisions from time to time. In many cases
poses the participation and consent of all the interested parties.
of wage disputes, the Supreme Court has given decisions which
When workmen are members of different unions, every union,
lay down some principles of wage fixation and these principles
without regard to whether or not it represents a majority,
later have become important factors in wage determination.
cannot, but be considered an interested party. Also, some
Here are a few important decisions.
workmen may not choose to be members of any union and
one or more unions may, for reasons of their own, not like to In the case of Crown Aluminium Works vs. their workmen
reach a settlement. Section 2(p), and 18(3) of the Industrial (1958 I LLJ 1), on the specific issue of capacity to pay, the
Disputes Act, 1947 deal with such practical difficulties by Supreme Court has said “There is, however, one principle which
making collective agreements binding even on indifferent or admits of no exceptions. No industry has a right to exist unless
unwilling workmen as the conciliation officer’s presence is it is able to pay its workmen at least a bare minimum wage. It is
supposed to ensure that the agreement is bonafide quite likely that in the under-developed countries where
unemployment prevails on a very large scale, unorganised
Unorganised Sector labour may be available on starvation wages.....
Collective bargaining is not common in the unorganised sector.
If an employer can not maintain his enterprise without cutting
In several cases bipartite collective agreements in the
down the wages of his employees below even a bare subsis-
unorganised sector have provided for wages lower than the
applicable minimum wages. Where such agreements are entered

tence or minimum wage, he would have no right to conduct his whereby it has directly imposed statutory minimum standards


enterprise on such terms”. on the scheduled employments.
In M/s Unichem Laboratories Ltd. vs. Their Workmen, [1972 – Components of Minimum Wages
I LLJ 576, 590, 591], the Supreme Court observed as follows:
In Unichoyi vs. State of Kerala, (1961 – I LLJ-631), the
“In the fixation of wages and dearness allowance the legal
Supreme Court explained what the components are that would
position is well established that it has to be done on an
make up the minimum wages and stated: “It is, therefore,
industry-cum-region basis having due regard to the financial
necessary to consider what are the components of a minimum
capacity of the unit under consideration.... Industrial adjudica-
wage in the context of the Act. The evidence led before the
tion should always take into account, when revising the wage
committee on fair wages showed that some witnesses were
structure and granting dearness allowance, the problem of the
inclined to take the view that the minimum wage is that wage
additional burden to be imposed on the employer and ascertain
which is essential to cover the bare physical needs of a worker
whether the employer can reasonably be called upon to bear
and his family, whereas the overwhelming majority of witnesses
such burden.... As pointed out in Greaves Cotton and Co. and
agreed that a minimum wage should also provide for some
others vs. Their Workmen, [1964 – I LLJ 342], (1964) 5 S.C.R.
other essential requirements such as a minimum of education,
362, one of the principles to be adopted in fixing wages and
medical facilities and other amenities. The committee came to
dearness allowance is that the Tribunal should take into account
the conclusion that a minimum wage must provide not merely
the wage scale and dearness allowance prevailing in comparable
for the bare subsistence of life but for the preservation of the
concerns carrying on the same industry in the region....”
efficiency of the worker, and so it must also provide for some
From an examination of the decisions of the Court, it is clear measure of education, medical requirements and amenities. The
that the floor level is the bare minimum subsistence wage. In concept about the components of the minimum wage thus
fixing this wage, Industrial Tribunals will have to consider the enunciated by the committee have been generally accepted by
position from the point of view of the worker, the capacity of industrial adjudication in this country. Sometimes, the mini-
the employer to pay such a wage being irrelevant. The fair wage mum wage is described as a bare minimum wage in order to
must take note of the economic reality of the situation and the distinguish it from the wage-structure which is “subsistence
minimum needs of the worker having a fair-sized family with plus” or fair wage, but too much emphasis on the adjective
an eye to the preservation of his efficiency as a worker “bare” in relation to the minimum wage is apt to lead to the
Minimum Wage - a Statutory Obligation erroneous assumption that the minimum wage is a wage which
A minimum wage was considered a necessary catalyst to advance enables the worker to cover his bare physical needs and keep
the social status of the worker even according to our ancient law, himself just above starvation. That clearly is not intended by
and treated as an obligation of the State the concept of minimum wage. On the other hand, since the
capacity of the employer to pay is treated as irrelevant it is but
In the Secunderabad Club vs. State of Andhra Pradesh case
right that no addition should be made to the components of
(1997- I LLJ 434), Mr. Justice Y. Bhaskara Rao adverting to the
the minimum wage which would take the minimum wage near
concept of minimum wages as laid down in the SUKRA
the lower level of the fair wage, but the contents of this concept
NEETI, observed: “It would be relevant to look at the
must ensure for the employee not only his sustenance and that
conditions governing wage, life and other social aspects of
of his family but must also preserve his efficiency as a worker.
workers, which are delineated in SUKRA NEETI, an ancient
The Act contemplates that minimum wage rates should be
treatise. The English translation of which is: ‘Wages to be
fixed in the schedule industries with the dual object of provid-
considered as fair must be sufficient to procure the necessities
ing sustenance and maintenance of the worker and his family
of life from out of the wages. The wage of an employee
and preserving his efficiency as a worker.”
should therefore be a fair wage, so as to enable him to procure
all the necessary requirements of life.’ (SUKRA NEETI II, 805- Industry-cum-Region
806) ‘By payment of very low wages, employees (of the king) The principles which govern the field have been laid down in
are likely to become his enemies and they are also likely to several judgments of the Supreme Court. One of the early
become plunderers of treasuries and cause harassment to the decision was a decision of the Supreme Court in French Motor
general public.’ (SUKRA NEETI II, 807-808) Car Company Ltd vs Their Workmen, reported in 1962 II LLJ
744, in which it was held that: “It is now well settled that the
Thus the concept of payment of minimum wages is inbuilt in
principle of industry-cum-region has to be applied by industrial
our society even before the introduction of the Minimum
court, when it proceeds to consider questions like wagestructure,
Wages Act of 1948. The principle that it is the duty of the State
dearness allowance and similar conditions of service. In
to ensure the payment of minimum wages has been recognised
applying that principle industrial court have to compare wage-
by the framers of the Constitution by incorporating Article 43
scales prevailing in similar concerns in the region with which it is
in the Constitution of India. Though this Article is included in
dealing, and generally speaking, similar concerns would be those
the Chapter on Directive Principles, and in its sweep contem-
in the same line of business as the concern with respect to
plates payment of ‘living wages’ to a worker, nevertheless, it is
which the dispute is under consideration.” It was also
the duty of the State to ensure that workers are paid minimum
obsevered that amongst the factors which must be considered
wages. The exercise to fix minimum wages thus is the responsi-
for the purpose of wage fixation were (i) the extent of business
bility of the State. It enacted the Minimum Wages Act in 1948,
carried on by the concern, (ii) the capital invested therein, (iii) the

profits made, (iv) the nature of the business carried on, (v) the Pretax profits of the Company

standing of the business, (vi) the strength of the labour force, In Unichem Laboratories Ltd. vs. Their Workmen, reported in
(vii) the presence or absence and the extent of the reserves, (viii) 1972 I LLJ 576, a Bench of three Learned Judges of the
the dividend declared and (ix) the prospects of the future of the Supreme Court referred to the earlier Judgment in
business and other relevant circumstances. Comparability would Gramophone Company Ltd. vs. Its Workmen, (1964 II LLJ.
also postulate that there must be comparability of size. 131), where the Court had held that: “When an Industrial
The Supreme Court in Greaves Cotton & Co Ltd vs Their Tribunal is considering the question of wage structure and
Workmen, (1964 I LLJ 342) held that where there are large gratuity which in our opinion stands more or less on the same
number of industrial concerns of the same kind in the same footing as wage structure, it has to look at the profits made
region, it would be proper to put greater emphasis on the without considering provision for taxation in the shape of
industry part of the industry-cum-region principle as this income-tax and for reserve. The provision for income-tax and
would place all concerns on an equal footing in the matter of for reserve must in our opinion take second place as compared
production cost and in the matter of competition in the to provision for wage structure and gratuity, which stands on
market. On the other hand, where the number of comparable the same footing as provident fund which is also a retirement
concerns were small in a particular region and the aspect of benefit.” This principle was quoted with approval by the
competition is not the same importance, the region part of the Supreme Court in Unichem Laboratories case.
industry-cum-region formula assumes greater importance. The Principles of Wage Fixation
Supreme Court in the Greaves Cotton case also observed that In Kamani Metals & Alloys ltd. vs their workmen, [1967 – II
the Industrial Tribunal while making a comparison must take LLJ 55]; (1967) 2 S.C.R. 463, the Court observed as follows:
into account the total wage packet for each category of factory “Fixation of a wage-structure is always a delicate task because a
workmen balance has to be struck between the demands of social justice
Financial Capacity of the Employer which requires that the workmen should receive their proper
share of the national income which they help to produce with a
The judgment of the Supreme Court in Ahmedabad
view to improving their standard of living, and the depletion
Millowners, Association vs. Textile Labour Association, [1966 I
which every increase in wages makes in the profits as this tends
LLJ 1], enunciates the considerations which must inter alia
to divert capital from industry into other channels thought to
guide the Industrial Tribunal in dealing with the financial
be more profitable. The task is not rendered any the easier
capacity of the employer to meet an additional burden occa-
because conditions vary from region to region, industry to
sioned by a revision of the wage structure. In this regard the
industry and establishment to establishment. To cope with
Supreme Court held as follows: “On the other hand, in trying
these differences certain principles on which wages are fixed have
to recognise and give effect to the demand for a fair wage,
been stated form time to time by this Court. Broadly speaking
including the payment of dearness allowance to provide for
the first principle is that there is a minimum wage which, in any
adequate neutralisation against the ever-increasing rise in the
event, must be paid, irrespective of the extent of profits, the
cost of living, industrial adjudication must always take into
financial condition of the establishment or the availability of
account the problem of the additional burden which such
workmen on lower wages. This minimum wage is independent
wage-structure would impose upon the employer and ask itself
of the kind of industry and applies to all alike big or small. It
whether the employer can reasonably be called upon to bear
sets the lowest limit below which wages cannot be allowed to
such burden.... What has been the progress of the industry in
sink in all humanity. The second principle is that wages must be
question; what are the prospects of the industry in future; has
fair that is to say, sufficiently high to provide a standard family
the industry been making profits; and if yes, what is the extent
with food, shelter, clothing, medical care and education of
of profits; what is the nature of demand which the industry
children appropriate to the workmen but not at a rate exceeding
expects to secure; what would be the extent of the burden and
his wage, earning capacity in the class of establishment to which
its gradual increase which the employer may have to face? These
he belongs. A fair wage is thus, related to the earning capacity
and similar other considerations have to be carefully weighed
and the workload. It must, however be realized that ‘fair wage’
before a proper wagestructure can be reasonably constructed by
is not ‘living wage’ by which is meant a wage which is sufficient
industrial adjudication vide Express Newspapers (Private) Ltd.,
to provide not only the essentials above mentioned but a fair
& Anr. Vs. Union of India & Ors. [1961-I LLJ 339]. Unusual
measure of frugal comfort with an ability to provide for old age
profit made by the industry for a single year as a result of
and evil days. Fair wage lies between the minimum wage, which
adventitious circumstances, or unusual loss incurred by it for
must be paid in any event, and the living wage, which is the
similar reasons, should not be allowed to play a major role in
the calculations which industrial adjudication would make in
regard to the construction of a wage-structure. A broad and In Hydro (Engineers) (Private) Ltd. vs. their workmen, 1969 – I
overall view of the financial position of the employer must be LLJ 713-716], the Supreme Court further observed as follows:
taken into account and attempt should always be made to “It is thus clear that the concept of minimum wages does take
reconcile the natural and just claims of the employees for a fair in the factor of the prevailing cost of essential commodities
and higher wage with the capacity of the employer to pay it; and whenever such minimum wage is to be fixed. The idea of fixing
in determining such capacity, allowance must be made for a such wage in the light of cost of living at a particular juncture
legitimate desire of the employer to make a reasonable profit”. of time and of neutralizing the rising prices of essential

commodities by linking up scales of minimum wages with the is that the incomes policy asks the rationale of these differences.


cost of living index cannot, therefore, be said to be alien to the But the effect of market forces cannot be ignored. An income
concept of a minimum wage”. policy based on rigid differentials may break down. This has
In the case of Killick Nixon Ltd. Vs Union (1975- II LLJ 53SC), been the experience even in the communist countries. Soviet
the Supreme Court has laid down certain considerations of Russia was not able to control such differences in remuneration
fixing wages. They are as follows: 1) Condition of the wage of different persons working in various sectors of its economy.
scales prevalent in the Company. 2) Condition of the wage level Income policy in the sense of controlling incomes of different
prevalent in the industry and the region. 3) The wage packet as a sectors of the economy and freezing the existing incomes may
whole of each earner in the company with all amenities and run into problems. The case for an incomes policy is strong if
benefits and its ability and potency to cope with the economic we use it in India as one important policy element in supplying
requirements of daily existence consistent with his status in a sense of proportion to the various competing groups, as an
society, responsibilities, efficiency at work and industrial peace. 4) important weapon of “high growth, higher distribution”,
The position of the company concerns in relation to other strategy of development, as a supplier of valuable guidelines to
comparable concerns in the industry and the region. 5) Pre- anomalies not only in wages but also in investments, prices and
emptive necessity for full neutralisation of the cost of living at profits, and as an instrument not only of rationalising wages,
the rock-bottom of the wage scale if at all just above the bonus and dearness allowance, but of the system of price
subsistence level. 6) The rate of neutralisation which is being controls, investment and taxation.
given to the employees in each salary slab. 7) Avoidance of huge As we said earlier, in 1977, a Study Group was appointed on
distortion of wage differentials taking into reckoning all wages, incomes and prices under the chairmanship of Dr. S.
persons employed in the concern. 8) Degree of sacrifice Bhoothlingam and their recommendations for a price, wage
necessary even on the part of workers in general interest. 9) The income policy were as follows: a) Wage policy has to strike a
compulsive necessity of securing social and distributive justice balance between ensuring minimum incomes for unorganised
to the workmen. 10) Capacity of the company to bear the labour and increasing opportunities for employment. This
additional burden. 11) Interest of the national economy. 12) policy must pay adequate attention to rationalisation of wage
Repercussions in other industries and society as a whole. 13) structure and ironing out anomalies. It should encourage
The state of the consumer price index at the time of decision. systems of incentives for higher productivity and better
14) Forebodings and possibilities in the foreseeable future as far performance. b) Incomes policy should cover all non-wage
as can be envisaged. incomes. The level of incomes of those below poverty level
We should also point out that the revision of DA is not the should be enhanced. Apart from progressive taxation, the
same as the revision of wages. emphasis should be on encouraging savings and investments,
discouraging ostentations and luxury and reducing disparities in
Price, Income and Wage Policy
consumption. c) The main objectives of prices policy should be
In the context of wage fixation, very often questions regarding
to maintain reasonable stability of prices while reasonable prices
price policy and income policy are raised. In fact it is advocated
can be assured to producers like farmers. Consumers should
that there should be an integrated price, income and wage policy
also be taken care of. Wherever subsidised prices are imple-
in a country. It is necessary to consider a number of questions
mented, efforts should be to see that the benefits actually go to
in this context. a) What could be the minimum wage and what
those for whom they are intended. Price system should serve
are the norms on which a minimum wage should be based? b)
the economic objective of growth and development.
Will the minimum wage be different or same for (i) agriculture,
industry and the service sectors (ii) organised and unorganised What is the scene like today? Economic conditions have
sectors (iii) urban and rural sectors (iv) different states and changed in the last few decades. We are no longer in a regi-
regions (v) between different employers in the organised sector mented economy or a semi-regimented economy, economic
c) What would be the criteria for determining differentials forces are now allowed to play freely. Government is not in a
between minimum and maximum wages, could the ratio be position to fix the incomes of workers or the management in
different for different industries? d) What can be the criteria for the organised sector; it cannot put any ceilings over the incomes
determining the maximum income? Should there be any of self-employed persons; price controls operate on a very few
relationship between maximum income and maximum wages? commodities.
e) Can there be any common policy for fixation of wages, In fact prices of some commodities like fertilisers, cooking gas,
income and prices in the economy? kerosene etc. are controlled through subsidies on their prices.
All these issues go into the making of a price, income and wage For foodgrains, higher prices are offered as a part of Govern-
policy. The Government has to take a position on all these ment monopoly procurement policies. The result is an
issues and attempt implementation and coordination of these overflowing stock of foodgrains in Government godowns.
policies. Both these policies have put considerable strain on Govern-
ment resources and Government is reconsidering these policies.
Take for instance differentials of wages and incomes. Differen-
But because of anti-poverty considrations, it has to continue
tials between different sectors of the economy are bound to
these policies. Will it be possible to control prices of all
exist in a dynamic society. As we have seen earlier, they are
commodities and services? For instance, it is not possible to cut
indicative of differences in skills formation, capital endow-
back the incomes of some categories of highly paid doctors or
ments, risk taking abilities, forecasting skills etc., only difference

lawyers or the selfemployed. Quite often their high incomes are that in fixing the need-based minimum wage the capacity to pay

earned only during certain phases of their working lives. It is should be taken into account
also not possible to control the income of a private business- In 1991, the Supreme Court, in its judgment in the case of
man. It can be done only through steep taxation. But the Reptakos Brett and Co. versus others, expressed the view that
experience is that if we have such steep taxation, businessmen the criteria recommended by the Indian Labour Conference
do not disclose their incomes and large business operations take 1957 may not suffice. It held that an additional component for
place outside the books. We thus come across the difficulties children’s education, medical requirements, recreation including
that the government is experiencing in controlling prices, wages festivals/ceremonies and provisions for old age and marriage
and incomes. The moot question seems to be whether we can should constitute 25% of minimum wages
have a free economy or an economy in which the state does not
The Minimum Wages Advisory Board (Central) in its 24th
want to exercise the functions of control, and at the same time
Meeting in 1991 recommended that minimum wages should be
formulate and implement a policy of wages, prices and
linked to productivity, and the appropriate Government under
the Minimum Wages Act may fix piece-rate wages wherever
Minimum Wages feasible.
The 15th Session of the Indian Labour Conference held on The Indian Labour Conference in its Thirtieth Session in
11th and 12th of July 1957 at New Delhi adopted a resolution September, 1992 expressed the view that while the tendency to
on the fixation of minimum wages. It was agreed by the fix minimum wages at unrealistically high levels must be
Conference that the minimum wage had to be need based, and checked, implementation of wages once fixed must be ensured.
had to ensure the minimum human needs of the industrial It felt that the implementation machinery, consisting of labour
worker, irrespective of other considerations. To calculate the administration in the States had been far from effective. It was
minimum wage, the Committee accepted the following norms desirable that workers’ organisations and non-governmental
and recommended that they should guide all wage fixing voluntary organisations etc., played a greater role instead of
authorities, including minimum wage committees, wage engaging an army of inspectors for this purpose.
boards, adjudicators, etc.: (i) In calculating the minimum wage,
the standard working class family should be taken to consist of Approach of the Pay Commissions
3 consumption units for one earner; the earnings of women, The Pay Commissions of the Central Government took
children and adolescents should be disregarded; (ii) Minimum different approaches for the determination of the Minimum
food requirements should be calculated on the basis of a net Wages for government employees. They were as follows: (i) The
intake of 2,700 calories, as recommended by Dr. Akroyd for an need based approach; (ii) Capacity to pay approach; (iii) Relative
average Indian adult of moderate activity; (iii) Clothing Parities approach; (iv) Job evaluation approach; (v) Productivity
requirements should be estimated at a per capita consumption approach; (vi) Living wage approach
of 18 yards per annum which would give for the average We are not suggesting that each of these was an exclusivisit
worker’s family of four, a total of 72 yards; (iv) In respect of approach. These various aspects have found mention and been
housing the norm should be the minimum rent charged by given varying emphasis in the report of different Pay Commis-
Government in any area for houses provided under the sions. The decision of the Pay Commissions on minimum
Subsidised Industrial Housing Scheme for low-income groups; wages was often determined by some kind of harmonisation
and (v) Fuel, lighting and other ‘miscellaneous’ items of between the first two i.e., the need-based approach and the
expenditure should constitute 20 percent of the total minimum capacity to pay approach. This was essential because a minimum
wage. wage which was found to be socially desirable was not necessar-
The Committee took note of the steps taken by Government ily economically feasible. Job evaluation and measurement of
for conducting (a) a wage census, and (b)family budget enquiries productivity was not found to be feasible by the earlier Pay
in various industrial centres. Commissions, and fair comparisons with the public and private
sector were also not conceded by them. On living wages they
As for fair wages, it was agreed that the Wage Boards should go
observed that a living wage was a desirable level towards which
into the details in respect of each industry on the basis of the
the State must endeavour to go.
recommendations contained in the report of the Committee on
Fair Wages. These recommendations of the Fair Wages The Fifth Pay Commission after comparing public sector and
Committee should also be made applicable to employees in the private sector employees, comparisons with State Governments
Public Sector. and considering the expectation of the employees tried to work
out a minimum wage for Central Government Employees of
Thus in 1957, the Minimum wage was evolved as a need based
the lowest cadre. The Commission used a modified version of
the constant relative income criterion and fixed Rs : 2440/- as
In 1968, some more criteria for the determination of minimum the salary of lowest paid employee of the Central Government.
wages came to be recognised when the International Labour This meant more than a three-fold jump in the basic pay from
Organisation listed three criteria for fixing minimum wages. Rs. 750/- to Rs. 2400. The Commission had estimated that this
These were (i) the needs of the worker; (ii) the capacity to pay of would mean an additional outgo to the tune of Rs. 294.1 crores
the employer; and (iii) wages paid for comparable work. In every year for this category of employees.
1969, the capacity to pay was explicitly admitted as a relevant
factor by the National Commission on Labour when it held

It is not necessary to describe the pressure that such a steep rise In West Bengal, when we enquired why the minimum wage law


in pay scales of Government Employees causes on the was not being enforced, we were told that both the Trade
Government’s Budget. Unions and the Government Department had agreed to the
below-minimum wage payments as both were agreed on
Minimum Wage vis-a-vis Government Pay
protecting the jobs of bidi workers. We have enough reasons to
Our Study Group on Unorganised Labour recommended that
believe that similar arrangements are entered into elsewhere too
the minimum wage prescribed by the Fifth Pay Commission
by the enforcing authorities and the representatives of workers.
for the lowest category of Government employees (Rs. 2400 +
We believe that any law that creates such a situation becomes a
Rs. 2100 DA = Rs. 4500/-) should be the minimum wage for a
mockery, if not a self-inflicted fraud. We, therefore, feel that we
worker in the unorganised sector. We could not agree with this
should legislate only what is capable of being put into practice
recommendation. It may be adviseable to repeat our arguments
at the ground level. Anything higher that is desirable will have
on this question from earlier paragraphs in our chapter on the
to remain an aspiration or an eventual goal, not a clause in the
‘Unorganised Sector’.
law. Any other course will breed disrespect, unconcern and
We fully appreciate the considerations that have prompted the contempt for the law and law enforcing authorities. We feel that
Study Group to make this recommendation. But we regret that the purpose of the law and highly desirable social goals can be
we do not find it possible to accept and endorse this sugges- better served by prescribing an adequate minimum wage, and
tion. Firstly, in monetary terms, the minimum wage that the providing for compulsory review of the adequacy of the
Study Group has recommended will approximate to Rs. 4500/- minimum to keep pace with aspirations, needs and the cost of
. Secondly, there are lakhs of people with very low incomes both living (and increasing levels of expectancy about higher stan-
in the rural areas, and in the urban areas, – perhaps just around dards of living to which the worker is entitled).
the amount that the Study Team has recommended as the
Almost all the Committees and Commissions are against a
minimum wage, who engage or employ others as domestic
subsistence level minimum. In principle, every committee
servants or in sundry services like those provided by dhabas
constituted in this regard has agreed with the standard con-
(eating places) in the rural areas. They may not be able to pay a
sumption units and calorie contents. However, the Wage
minimum wage almost as high as their own incomes. In such a
Boards after the Second Pay Commission (1957-59) have not
situation, if the law on minimum wages is observed or
found it possible to fix the need-based minimum wages
enforced in letter and spirit, many lakhs of workers will cease to
recommended by the Indian Labour Conference (1957). The
be employed. They will lose their jobs. An alternative scenario
Report of the Committee, set up by the first National Com-
will be that to protect their jobs or employment, domestic
mission on Labour, on the Functioning of the System of Wage
workers and others of the kind we have referred to earlier, will
Boards (cited in the Report of NCL, 1969) found it infeasible
agree to work for a sum of remuneration that is lower than the
because the need-based minimum would be beyond the
prescribed minimum wages. The worst development will be
capacity of the industry to pay and might result in the transfer-
when the custodians of law and order who are mandated to
ence of the burden to the consumer.
enforce the law on minimum wages and trade unions who are
committed to struggle for and protect the rights and real wages Sub-committee ‘D’ of the Standing Committee of Labour
of workers come to an agreement, outside the law, on a Ministers (1981) recommended that the level of minimum
remuneration or wage far below or appreciably below the legally wage should not be below the poverty line. The Report of the
prescribed minimum. Such a possibility is not a creation of our Committee of Secretaries of States (1981) has also recom-
imagination. In the course of the evidence tendered before us in mended that the minimum wages should be at such a level as
West Bengal, we were informed that the actual wage paid to bidi to take a family of 3 adult units of consumption above the
workers in West Bengal is much less (Rs. 35 per 1000) than poverty line, and the consumption basket should consist of per
notified minimum wage (Rs. 70 per 1000 bidis). capita per day requirements of 2400 calories in rural areas and
2100 calories in urban areas as well as clothing, shelter, fuel,
Disparity in minimum wages, lapses in the implementation of
light, education, etc. The Report of the National Commission
the law and enforcement, periodic nonrevision of minimum
on Rural Labour (1991) endorsed a similar concept of three
wages are among the factors that make a mockery of such an
consumption units.
Act. The State government of Bihar fixed Rs. 27.30 as the
minimum wage for agricultural workers in 1996, while an Variable DA and Price Adjustments
agricultural worker near Dhanbad received Rs. 20. A female Though there is no definition for the term minimum wage in
agricultural labourer in the same area received a daily wage of Rs. the Act, its section 4(1) states that the minimum rates of wages
15 and 200 to 250 grams of muri (puffed rice). In Fatehpur, fixed or revised by the appropriate authority for the scheduled
Ahrawa and Fulepur villages of Barh in Bihar, the agricultural employments shall take into account the following: (i) a basic
workers got as wages one kilogram of rice or flour and half a rate of wages and a special allowance at a rate to be adjusted at
kilogram of sattu for breakfast. In the Baruhi village of intervals with the variation in the cost of living index number
Bhojpur, in 1996, women got Rs. 15 and a breakfast comprising applicable to such workers; or (ii) a basic rate of wages with or
of 2 rotis, while men got Rs. 25, lunch and breakfast. Bihar, without the cost of living allowance, and the cash value of the
which has the highest number of inspectors exclusively for the concessions in respect of supplies of essential commodities at
agricultural sector could not enforce the minimum wages, set by concessional rates, where so authorised; or (iii) an all inclusive
the State government during this period.

rate allowing for the basic rate, the cost of living allowance and have authorities like the claims authority under section 15 of the

the cash value of the concessions, if any. Payment of Wages Act 1936 or section 20 of the Minimum
That means that the minimum wage consists of (1) a basic rate Wages Act 1948, or the authority under section 39 (2) of the
of wage (2) cost of living allowance, and/or (3) cash value of Bidi and Cigar Workers (Conditions of Employment) Act
concessions or (4) a combination of all the three components. 1966, at levels not higher than that of the Block or Panchayat
It also means that the cost of living allowance varies with Samiti. It also says that already some State Governments have
changes in prices. 12.255 The Minimum Wages Advisory Board amended the central laws to provide for appointment of claims
(1981) observed that it would be desirable to attach a variable authorities under the Payment of Wages Act and the Minimum
DA formula to the minimum wages so that it may be adjusted Wages Act at these levels, for example, Minimum Wages
as and when necessary to protect the real wages of the workers. (Maharashtra Amendment) Act 1975, and the Wage Laws
The Subcommittee ‘D’ of the Standing Committee of Labour (Rajasthan Amendment) Act, 1976. We agree that it is necessary
Ministers (1981) also recommended that the variable DA and important to take an effective settlement machinery down
should be an element of minimum wage wherever possible. to the local level.
The Report of the Committee of Secretaries of States (1981) The involvement and mediation of local bodies including
said that the DA might be revised once in six months based on village panchayats in the enforcement of the rates and payment
the average All India Consumer Price Index numbers of the of wages is important. The prevailing government enforcement
series 1960=100. The Gurudas Dasgupta Committee (1988) machinery cannot redress their grievances. The fixation of
recommended that the minimum wages should be linked to minimum rates of wages and the widespread awareness of
the movement of consumer price index (CPI) to account for these rates would become a great basis of protection to the
the cost of living. To protect the minimum wage from falling workers. The moment the rates fixed are known to the working
below subsistence level, the National Commission on Rural people, voluntary organisations and workers’ organisations and
Labour (1991) suggested that the cost of living element (DA) the public at large, they will mount vigil, and the implementa-
should be linked to the minimum wage and adjusted every six tion of the minimum rates will become easy. In cases of
months. dispute, the local bodies and panchayats can provide relief
through persuasion, mediation and Lok Adalats etc. to which
Revision of Minimum Wages
we have referred in our earlier.
The Minimum Wages Act stipulates that review/revision of
minimum wages in the scheduled employments should be
undertaken at intervals not exceeding 5 years. However, the first
National Commission on Labour (1969) recommended that the
period should be reduced to three years. At the 31st session of
the Labour Ministers Conference held in July 1980, it was
decided that the minimum rates of wages may be reviewed and
revised if necessary, within a period not exceeding two years, or
on a rise of 50 points in the CPI numbers, whichever is earlier.
The 36th Labour Ministers Conference held in May 1987 also
reiterated these recommendations. The Gurudas Dasgupta
Committee (1988) recommended a revision every two years or
on a rise of 50 points in the CPI. The Umbrella legislation
should provide a separate facility within the body to be
instituted for the unorganised sector workers, to undertake a
constant review of wages as and when needed, as for example
with changes in prices. We feel that the wages may be revised
after an interval of 2 to 3 years. It will be difficult to administer
if too frequent revisions take place.
The 31st Labour Ministers’ Conference had recommended in
July 1980 that both the Central and State Governments should
bring down the periodicity of fixation of wages from 5 years to
2 years and should link the variable dearness allowance. Despite
these recommendations, we are told that many State Govern-
ments have not been able to bring down the periodicity of
fixation of minimum wages from 5 years to 2 years while only
19 out of 32 states and union territories have been able to link
minimum wages to dearness allowance.
The Shramshakti report (pg. 100) proposes the panchayat or
block level administrative set-up for the execution of provisions
of different labour laws, especially on payments and claims, as
far as possible . The Report says that it would be necessary to


Learning Objective Orissa 42.50 -

The study of this lesson will help you: Punjab 69.25 151.32
• Understand of how collective bargaining concept helps in Rajasthan 47.05 60.00
the fixation of wages.
Sikkim (Minimum Wages Act, 1948 not yet
Non-Implementation of Minimum Wages extended and enforced)
A number of States that have reviewed and revised minimum
Tamil Nadu 35.00 115.80
wages in scheduled employments for which they are the
appropriate governments show disturbing results. In Sikkim, Tripura 20.63 45.00
the Minimum Wages Act is yet to be extended and enforced. Uttar Pradesh 42.02 70.62
Only 19 states/union territories have made provision for West Bengal 48.21 87.28
Variable Dearness Allowance as a part of the minimum wage
Andaman & Nicobar Islands 50.00 86.76
for a few or all of the scheduled employments. The wages vary
from state to state; the disparity is so wide that one has to Chandigarh 81.65 -
conclude that different appropriate Governments are following Dadar & Nagar Haveli 60.00 71.00
different criteria for the fixation of minimum wages. The Daman & Diu 50.00 60.00
adjustment of Variable Dearness Allowance is also very
Delhi 93.00 -
irregular. The lowest among the minimum wages, meant most
probably for unskilled workers, was below Rs.30 in some states Lakshadweep 46.80 -
and union territories, as on October 1, 2000: Rs.19.25 in Pondicherry 19.25 65.00
Pondicherry, Rs.20.63 in Tripura, Rs.21 in Goa, Rs.26 in Source: Ministry of Labour, Annual Report 2000-2001, p. 50.
Himachal Pradesh and Karnataka, and Rs.27 in Andhra Pradesh
An evaluation study conducted by the Labour Bureau, Ministry
(see Table12.16). The daily minimum wages for different
of Labour, on the implementation of Minimum wages in the
occupations vary widely within the States. The Table carries both
agricultural sector in selected States shows that agricultural
the minimum and maximum payment from among the variety
workers are not receiving full minimum wages in the surveyed
of occupation-specific wages fixed as Minimum Wages within
States. The surveyed States were Karnataka, Rajasthan, Andhra
each State.
Pradesh, Uttar Pradesh, Bihar and Gujarat. The situation is
Table: Daily Minimum Wages (in Rs.) as on 01/10/2000 similar in the low technology labour intensive sectors like
Centre/ States/Union Territories Min. Max. forestry, fisheries, cottage industries and artisanry, and in urban
Central Sphere 80.74 90.19 employments like vending and slum based and home based
Andhra Pradesh 27.00 63.19
Arunachal Pradesh 35.60 37.60 Need for Minimum Wages in the
Unorganised Sector
Assam 32.80 55.70
The character and nature of the informal or unorganised sector
Bihar 49.19 61.59 are undergoing fundamental changes. The movement is from
Goa 21.00 125.00 permanent to casual, contractual, temporary employment; from
Gujarat 34.00 92.40 establishment based to home-based production; from time-rate
to piece-rate work; male dominated to female intensive work
Haryana 70.30 74.30
situation; regulated to unregulated forms of labour. Mean-
Himachal Pradesh 26.00 51.00 while, the labour market, in particular, the rural labour market,
Jammu & Kashmir 30.00 – is experiencing the influx of casual labour from the traditional
Karnataka 26.00 74.03 subsistence occupations like forestry, fisheries, agriculture,
handlooms, etc. as a result of dispossession of assets, and the
Kerala 30.00 164.77
integration of these sectors into the market economy. At the
Madhya Pradesh 50.46 56.46 same time, researchers point out that the labour force is highly
Maharashtra 42.46 108.95 segmented due to factors like sectoral disparities, variations in
Manipur 44.65 55.00 skills, education, caste, religion, and regional and linguistic
differences. In such a situation, workers cannot be given
Meghalaya 50.00 –
minimum protection unless minimum wages are prescribed
Mizoram 70.00 – and enforced in the unorganised sector. 12.263 India signed the
Nagaland 40.00 – ILO Convention 26 of 1928 (Concerning the Creation of

Minimum Wage-Fixing Machinery) as early as in 1955. India Union Territories

accepted the commitment to offer minimum wages to its 27. Andaman & Nicobar Islands 4
28. Chandigarh 44
The minimum wages are different for different industries. The
29. Dadra & Nagar Haveli 43
following table shows the number of schedules of employ-
ment each state government has notified. We feel that the state 30. Daman & Diu 72
government should specify a minimum wage for all unskilled 31. Delhi 29
category workers and these wages should be the same for all 32. Lakshadweep 9
industries. This is a need-based minimum wage and it has to be
33. Pondicherry 6*
the same for all workers irrespective of where they are em-
ployed. This has to be paid irrespective of the capacity to pay. TOTAL 1254**
Hence it is not necessary to fix different types of wages for * Also includes scheduled employments for which minimum
different industries or professions. In other words, we recom- wages have not been fixed yet.
mend that the distinction between scheduled and unscheduled **Includes 44 scheduled employments under State Sphere for
employment should be given up, and whatever the employ- which minimum wages have not been fixed yet.
ment, the notification should prescribe the same minimum
The irregularities committed under the Minimum Wages Act are
wage to all. Perhaps the Minimum Wage Committee may fix
on the increase. In 1997, 1,05,639 irregularities were brought to
the minimum wage for a region and then the Governments can
notice. This number went up to 1,41,913 in 1998. A study
notify these, and the minimum wage for the region can be
could be undertaken of such irregularities to find out why such
made applicable to all employments in that region.
large numbers of irregularities take place. On the basis of the
Table: No. of Scheduled Employments in Different States: study, either the law or practices, can be modified.
Sl.No. Centre/States/UTs No. of Scheduled
Procedure for Fixation/Revision
In Section 5 of the Minimum Wages Act, 1948, two methods
1. Central Sphere 44 have been provided for fixation/revision of minimum wages.
2. Andhra Pradesh 72* These are the Committee method and the Notification method.
3. Arunachal Pradesh 25 (a) Committee Method Under this method, committees and
sub-committees are set up by the appropriate Governments to
4. Assam 72*
hold enquiries and make recommendations with regard to the
5. Bihar 74 fixation and revision of minimum wages, as the case may be.
6. Goa 23 (b) Notification method In this method, the Government
7. Gujarat 49 publishes its proposals in the Official Gazette for information
of the persons likely to be affected thereby, and specifies a date
8. Haryana 50
not less than two months from the date of the notification for
9. Himachal Pradesh 24 taking the proposals into consideration.
10. Jammu & Kashmir 18 After considering the advice of the Committee/Sub-commit-
11. Karnataka 59 tees and all the representations received by the specified date, the
12. Kerala 46* appropriate Government will, by notification in the Official
Gazette, fix/revise the minimum wage in respect of the
13. Madhya Pradesh 36
concerned scheduled employment, and that will come into force
14. Maharashtra 62 on the expiry of three months from the date of issue of the
15. Manipur 5 notification. 12.268 We feel that the second alternative is better
16. Meghalaya 21 because it gives an opportunity to all concerned to have a say in
the matter. Mutual consultations and understanding the
17. Mizoram 3
difficulties and problems of both are possible in this method.
18. Nagaland 36
Productivity – Wage Relation
19. Orissa 83 Though we have been talking of th