Institute of Rural Management Anand

Course Name: Human Resource Management Programme: PRMX - 02 (2020-21)

Date: 08/07/2020 Term – III Roll No.______________

Mid – Term Examination (Open Book)

Duration of Exam:2 Hrs Weightage: 30 percent Total Marks:30

• Please read the case below carefully and respond to the questions at the end of it
• Ensure that your answers to the questions are in the same order as the questions appear in this
paper
• Do not copy the questions to your answer scripts
• Q1 to Q6 carry 4 Marks each and Q7 carries 6 Marks
• Please remember brevity is the key to successful communication; Well thought-out, articulate, and
brief communication shows that you respect and value others' time.

Rural Development International

Suresh Pratap, the chief executive officer (CEO) of the India office of Rural Development
International (RDI), was pondering over the situation that had come up in his organization due to his
decision to reduce the number of employees so as to confront the impact of the economic downturn.
He was wondering whether laws that apply to business establishments could be made applicable to
an NGO like RDI. This NGO had been working very smoothly since inception, and in an atmosphere
of employee trust and engagement. But suddenly it found itself in a difficult situation.

RDI which was operating worldwide had its headquarters in New Jersey, USA. It managed its Indian
operations from its office in Gurgaon. Its key activities included rural development research and
action programmes oriented at rural poverty alleviation through different interventions. RDI started
its India operations in 1989 and had expanded substantially. It received grants from different
international agencies, as also Indian government for its programmes. As part of its income-
generating activities, it was also undertaking projects from other Indian and international
governmental and non-governmental agencies. The money so earned helped it to sustain itself and
fulfill its charitable objectives of facilitating rural development and poverty alleviation, including
water research, skill development, and women empowerment activities among the villagers.

Three types of employees worked in RDI: 188 permanent employees; 26 temporary project
employees; and 21 contractor’s employees. The 188 permanent employees comprised of the
following five categories: 1) 14 managerial personnel, 2) 7 supervisor category employees, 3) 24
research investigators, 4) 97 field staff, and 5) 46 others including clerical and support staff.

The 26 temporary employees worked on project-specific assignments on projects lasting one to three
years. As per a contract, MS Services Ltd., a service provider contracting firm, was providing three
types of services to RDI and employed 21 employees in these three operations: Canteen (employing

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10 employees),Computer maintenance (employing 2 employees), and Security services (employing 9
employees).

In the employment contract with the permanent employees, one of the clauses stated that the
employment contract of any employee could be terminated by giving a three months’ notice by either
side. In case of temporary employees, the employment contract included a clause that the
employment will come to an end on the completion of the project.

RDI had framed its own rules about the service conditions and conduct of employees. It never
applied for certification of its standing orders as per the Industrial Employment (Standing Orders)
Act 1946. It believed that it was not governed by any industrial relations laws.

Since June 2008, RDI was finding it difficult to sustain itself during the economic downturn as it had
limited new projects. Usually, when a project was over, RDI used to absorb that project’s staff on
other such projects that were expected to be started in future. It almost never asked them to leave the
organization for non-availability of further work. It had made tremendous efforts in minimizing the
discrepancies between its income and expenditure during the slow-down period, but somehow could
not tide over the unusual situation that had resulted from the global recession.

Consequently, on 3 February 2009, it served notice of removal from service to 4 managers, 10

research investigators, and 10 other field staff members as part of its economy measures. It also
refused to give any further work to 6 project employees whose projects had just got completed. RDI
served a three months’ notice on the 24 employees mentioned above stating that their services would
not be needed any more and that they should settle their dues finally after the expiry of three months.

The employees felt shocked at RDI’s decision to remove some of them as part of economic
measures. Disappointed and anguished as they were, some 25 field staff members decided to form a
union hoping that more people would join the union later. An application was made by them for
union registration to the Registrar of Unions at Chandigarh on 13 February 2009. It was signed by
these 25 employees. When the management came to know of this move by these field employees,
they terminated the services of five of these union activists immediately for “causing indiscipline” in
the organization and “disturbing peace in the work environment.” The RDI management also leveled
a false charge on these leaders that they had assaulted a manager. In fact, these activists just had
some heated arguments with this manager over the termination issue; and there was no assault on
anyone. But they gheraod him for two hours. i Except this incident, there was no other violence by
the employees. The management tried to stall the union registration by pleading with the labour
officials concerned that this organization does not deserve to be subjected to any trade union. They
also engaged a labour advocate to guide it in confronting the agression of these employees. RDI
suggested that the NGO was a charitable organization and not an industry; therefore, a union could
not be registered by its employees. It also pleaded that in any case the presence of such a union
would disturb employee relations atmosphere in the organization, which was meant to promote
charitable objectives and interest of common public in rural India.

RDI succeeded in breaking the unity of these 25 field-staff members, who had challenged the
management’s plan. It did so by giving promotion to 4 of them and assured them that they would not

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be asked to leave RDI in any case. So, in their self-interest they withdrew themselves from the trade
union campaign. It certainly dampened the union-organization spirit of the employees. However, the
union could eventually be registered on 18 May 2009 with the help of the All India Trade Union
Congress (AITUC), a trade union federation that had been active in the region since long. The union
leaders sat down to chalk out the course of action that they would follow in the matter.

The employee relations climate at RDI was certainly vitiated, as employees thought that RDI had
enough reserve funds to withstand the shock of the downturn and to retain the surplus employees
during the downturn that was not going to last forever. They argued that it was not appropriate on the
part of this NGO to take away jobs of people who have been loyal to the NGO for so long. The union
leaders made an application to the conciliation officer (CO) for his intervention on 28 may, 2009.
They demanded re-instatement of the 5 union activists, withdrawal of the notice of removal of 24
employees mentioned above including the managers, and reversal of decision on the project staff that
was being retained after their projects had been completed.

When the union activists realized that the management was adamant on its decision, they gave a call
for strike; almost 60 per cent employees participated in the strike. It lasted 6 days from 28 May to 4
June 2009; but the management did not budge. The management threatened that action would be
taken on the striking employees if they did not return to work. RDI contended that termination of the
services of excess employees was an inherent right of an NGO that did not have enough business to
sustain a larger workforce. The 6-day strike resulted in loss of two big international projects that RDI
could have got; that resulted in an expected loss of Rs. 50 million to this NGO. The management
wanted to hold the union leaders responsible for that loss and used this instance to blame the strikers
and the union leaders while convincing the employees in general that the strikers were harming the
interest of all the employees. RDI threatened to file a civil suit on the striking workmen and the union
for the damages. The union leaders realized that they would not be able to sustain the strike for long
as it was difficult to maintain the workers’ unity in support of the work stoppage. So, they voluntarily
called off the strike in what they said “the larger interest of our beloved RDI.” They hoped that the
management would humanely deal with the situation keeping in view the atmosphere of trust that had
prevailed in the organization since the beginning.

The management contended before the CO that it had a right to terminate the services of the
employees concerned as per the clause to that effect in the employment contract; and that they cannot
be considered as “workmen” ii under the IDA so as to attract conciliation officer’s intervention. It also
pleaded that since the NGO was not an industry, and thus the employees concerned were not
workmen as per the Industrial Disputes Act 1947 (IDA), the CO did not have any jurisdiction to enter
into any conciliation proceedings. It also thought that the Haryana Government had no jurisdiction to
refer the dispute for adjudication by the industrial tribunal. The union argued that it had no demand
except the withdrawal of termination of all employees including the 4 managers. It took the plea that
these managers were friends of the other employees and that the union would like them to remain in
employment so as to promote a fraternal feeling in the organization.

The CO disagreed with these contentions of the management. He was also the labour officer of the
area. As labour officer, he suggested to the RDI management to constitute a works committee (WC).
RDI constituted a WC consisting of 10 members including six workers and 4 managers so that it

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dealt with matters that were essential for maintaining peace and amity in the organization. The CO
suggested that the differences between the two sides should be sorted out amicably keeping in view
their respective interests, and the works committee would help in that process. Even as RDI
disagreed with the proposal of the CO, it did constitute a works committee as suggested. But nothing
came out of the deliberations that went on in the three meetings of the WC as the atmosphere was not
cordial at all and both the sides were not willing to deviate from their initial position. The CO held
five conciliation meetings lasting 34 days from 28 May to 2 July, 2009. Nothing substantial came
out of these meetings due to non-cooperation towards a solution.

The CO suggested to the parties that they might like to voluntarily appoint an arbitrator to decide the
dispute. But the employees stated that they did not have faith in any arbitration. They threatened non-
cooperation with the management unless the dispute was resolved in just and fair manner. The CO
sent a conciliation failure report to the Government of Haryana. On 25 October, 2009 the
Government of Haryana made a reference of the dispute to Industrial Tribunal, Haryana for
adjudication. The reference questions were framed as follows:

1) Whether the termination of the five union activists by RDI was justified or not; and if not
what relief should be given in the matter?
2) Whether the termination of the 10 research investigators and 10 other field staff members
was justified and proper; if not, what relief are they entitled to?
3) Whether the 6 project employees whose projects had just completed were entitled to be
retained by RDI in its employment as per the past practice?
The employees were not happy at the reference, nor were the management representatives joyous at
these developments. The CEO was keen that the dispute should be over the soonest and RDI should
be able to return to normal working. But the impasse and the non-cooperation of the employees
continued. He was examining options that he had in the matter.

End Notes:

i
Gherao is wrongful confinement and is an offence under the Indian Penal Code, 1860 (IPC), which contains the
key crimes that can be committed by persons in India.

Section 340 of IPC defines wrongful confinement as follows: Whoever wrongfully restrains any person in such a
manner as to prevent that person from proceedings beyond certain circumscribing limits, is said "wrongfully to
confine" that person. Illustrations: A causes Z to go within a walled space, and locks Z in. A is thus prevented from
proceeding in any direction beyond the circumscribing line of wall. A wrongfully confines Z.

ii
As per section 2 (s) of the IDA, “workman” means any person (including an apprentice) employed in any industry
to do any manual, unskilled, skilled, technical, operational, clerical or supervisory work for hire or reward, whether
the terms of employment be express or implied…. but does not include any such person - (i) who is subject to the
Air Force Act, 1950 , or the Army Act, 1950, or the Navy Act, 1957; or (ii) who is employed in the police service or
as an officer or other employee of a prison; or (iii) who is employed mainly in a managerial or administrative
capacity

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Q1 – Which ‘Employment Relationship’ model best explains the events in the case? State
reasons for your assertion in bullet points only.

Q2 – Referring to John Dunlop’s Industrial Relations System Model explain the context and
outcomes before and after the decision of RDI to serve notice of removal from service to staff
members.

Q3 - Do you think that RDI is justified in its pleading that it was a charitable organization and
therefore cannot be treated as an industry under the Industrial Disputes Act, 1947?

Q4 - If the answer to the above question is no, out of many categories of persons working in RDI
which ones are workmen under the IDA and why?

Q5 - Did RDI management commit any Unfair Labor Practice/S (ULPs, if so which of its acts
were ULPs?

Q6 - What action should the management take on the gherao of a manager by the employees?
Refer to the correct provisions and instruments that organizations have.

Q7 - If you were the CEO of RDI, how would you have handled the situation so as to prevent the
tension that had arisen in this NGO?

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