INDUSTRIAL AND LABOUR LAWS

BRIEF DISCUSSION
1. DEFINE COLLECTIVE BARGAINING BRIEFLY. PROVIDE THE OBJECTIVES
OF COLLECTIVE BARGAINING.

Collective Bargaining refers to the discussion and negotiation between the employer and the
employees on the terms of employment, including the working environment, conditions of
employment, shift length, work holidays, vacation time, sick leave, and health care benefits, as
well as compensation-based items like basic pay, overtime pay and retirement benefits.

Collective bargaining is a process of negotiating between management and workers represented

by their representatives for determining mutually agreed terms and conditions of work which
protect the interest of both workers and the management. According to Dale Yoder’,
“Collective bargaining is essentially a process in which employees act as a group in seeking to
shape conditions and relationships in their employment”.

Michael J. Jucious has defined collective bargaining as “a process by which employers, on

the one hand, and representatives of employees, on the other, attempt to arrive at agreements
covering the conditions under which employees will contribute and be compensated for their
services”.

Edwin B. Flippo – “Collective bargaining is a process in which the representatives of labour

organization and the representatives of business organization meet and attempt to negotiate a
contract or agreement which specifies the nature of the employer – employee union
relationship.”

Dale Yoder – “Collective bargaining is the term used to describe a situation in which the
essential conditions of employment are determined by a bargaining process undertaken by
representative of a group of workers on the one hand and one or more employers on the other.”

J.H. Richardson – “Collective bargaining takes place when a number of work people enter
into a negotiation as a bargaining unit with an employer or group of employers with the object
of reaching an agreement on working conditions of the employees.”

Thus, collective bargaining can simplify be defined as an agreement collectively arrived at by

the representatives of the employees and the employers. By collective bargaining we mean the
‘good faith bargaining’. It means that proposals are matched with counter proposals and that

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both parties make every reasonable effort to arrive at an agreement’ It does not mean either
party is compelled to agree to a proposal. Nor does it require that either party make any specific
concessions.

Why is it called collective bargaining?

It is called “collective” because both the employer and the employee act collectively and not
individually in arriving at an agreement. It is known as ‘bargaining’ because the process of
reaching an agreement involves proposals and counter proposals, offers and counter offers.

What is the Collective Bargaining Agreement?

Collective Bargaining may lead to the Collective Bargaining Agreement (CBA), which
contains the policies acceptable to both i.e. the company’s management and workers. It states
the terms and conditions of employment and relation amidst the two parties. Further, CBA is
legally binding in nature.

Why is collective bargaining important?

Collective bargaining is important because it allows unionized employees to advocate for their
needs and define the terms of their employment. Through this process and a resulting collective
agreement, employees may gain access to various benefits that allow them to foster more
professional satisfaction and focus on producing high-quality work in the long term. Here are
a few of those benefits explained to help you understand the value of collective bargaining:

• Standardized process for negotiation: Collective bargaining allows employees to

access a regulated process for negotiation through which they can effectively address
workplace challenges and introduce solutions that benefit an organization's workforce.

• **Resulting contractual agreement:** As stated above, collective bargaining usually

results in a contract called a collective agreement that defines the terms and conditions
of employment for stakeholders. This agreement is typically binding, and therefore, all
parties involved must adhere to its terms until renegotiation occurs.

• ****Higher rates of pay:**** Collective bargaining allows unionized employees to

advocate for higher rates of compensation overall. According to a 2019 report from
the U.S. Bureau of Labor Statistics (BLS), union employees earn approximately 19%
more in weekly pay than their nonunion counterparts, which is likely a result of
collective bargaining.

• ****Workplace protections:**** Through collective bargaining, employees can

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 negotiate their workplace conditions and achieve protections regarding the number of
hours they can work on a daily, weekly or monthly basis, safety regulations and the
type of work they can perform. This can help employees establish a more secure work
environment.

• ****Comprehensive benefits packages: **** Collective bargaining and their resulting

agreements often provide employees with more comprehensive benefits packages.
These packages typically include provisions for benefits like employer-sponsored
health care, dental insurance, life insurance, paid time off (PTO), sick leave and family
leave.

• Arbitration provisions: Through collective bargaining, employees and employers can

come to an agreement about arbitration, an internal dispute-resolution method that
serves as an alternative to standard litigation processes. Arbitration allows for both
employees and employers to access a streamlined process for addressing employment
issues.

TYPES OF COLLECTIVE BARGAINING

It can be classified into five major types –

1. Distributive Bargaining: In this type of negotiation process, one party benefits at the
expense of others. It discusses redistribution of profit sharing to increase wages,
bonuses, or financial benefits.

2. Integrative Bargaining: In this type of bargaining, the agreement is reached so that

both the participating sides tend to benefit – a win-win situation. In other words, both
parties consider each other’s needs and concerns.

3. Productivity Bargaining: In this type of bargaining, the negotiations revolve around

productivity and pay. The two parties agree to certain changes that promise to boost
productivity in exchange for higher wages.

4. Composite Bargaining: This type of negotiation emphasizes various factors not

directly related to pay but rather focused on employee welfare and job security. It
ensures the long-term relationship between employer and employee that is mutually
beneficial.

5. Concessionary Bargaining: In this type of bargaining, the union sacrifices some

benefits to bail out the employer during the stressed economic situation, which benefits

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 the employees in the long run.

OBJECTIVES OF COLLECTIVE BARGAINING

Collective Bargaining is an effective way through which the employer and the trade union can
set fair wages and working conditions. It helps in improving the quality of labour relations.
The basic objective of collective bargaining is to arrive at an agreement between the
management and the employees determining mutually beneficial terms and conditions of
employment. The objectives of collective bargaining are:

1. Improve wages and benefits - The primary objective of unions in collective bargaining
is to negotiate higher wages and more comprehensive benefits for their members. This
helps improve members' standard of living and economic security.

2. Establish fair work rules and policies - Unions aim to bargain for policies and rules
that protect members' rights, ensure due process and promote fairness and justice in the
workplace. This includes grievance procedures, discipline policies, health and safety
standards, etc.

3. Secure job protections - Unions negotiate for contract provisions that protect
members' jobs like just cause for dismissal, seniority rights, layoff procedures, recall
rights and severance pay. This gives members stability and security.

4. Gain union rights and resources - Unions seek contract language that provides them
with the rights and access needed to effectively represent members. This includes rights
like dues deduction, access to members at work and relevant employer information.

5. Foster due process and fairness - Unions aim to develop grievance and dispute
resolution processes that ensure an impartial procedure and fair outcomes for members.
This protects against arbitrary management decisions.

6. Promote worker voice and input - Unions seek to establish formal channels for
workers to provide feedback and input into workplace decisions that impact them. This
empowerment benefits both workers and employers.

7. Advance social justice goals - Unions aim to negotiate for policies, practices and
benefits that promote equity, diversity and fair treatment of all workers. This supports
unions' broader mission of advancing social and economic justice.

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Furthermore, the major objective of collective bargaining can be divided into the following
sub-objectives:

• To foster a pleasant and cordial relationship between employer and employees.

• To equally safeguard the interests of both employer and employees.

• To ensure that the government intervention is maintained at a minimum level.

• To encourage the maintenance of a democratic environment at the workplace.

• To arrive at a decision or settlement which is mutually beneficial.

IMPORTANCE OF COLLECTIVE BARGAINING

The need for and importance of collective bargaining is felt due to the advantages it offers to
an organisation.

The chief ones are as follows:

1. Collective bargaining develops better understanding between the employer and the
employees:

It provides a platform to the management and the employees to be at par on negotiation table.
As such, while the management gains a better and deep insight into the problems and the
aspirations of die employees, on the one hand, die employees do also become better informed
about the organisational problems and limitations, on the other. This, in turn, develops better
understanding between the two parties.

2. It promotes industrial democracy:

Both the employer and the employees who best know their problems, participate in the
negotiation process. Such participation breeds the democratic process in the organisation.

3. It benefits the both-employer and employees:

The negotiation arrived at is acceptable to both parties—the employer and the employees.

ADVERTISEMENTS:

4. It is adjustable to the changing conditions:

A dynamic environment leads to changes in employment conditions. This requires changes in

organisational processes to match with the changed conditions. Among other alternatives

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available, collective bargaining is found as a better approach to bring changes more amicably.

5. It facilitates the speedy implementation of decisions arrived at collective negotiation:

The direct participation of both parties—the employer and the employees—in collective
decision making process provides an in-built mechanism for speedy implementation of
decisions arrived at collective bargaining.

The importance of collective bargaining is given as under:

• It improves wages and working conditions, as well as it promotes equality.

• It provides a stage to both the parties, i.e. management and workers to stand on the same
level at the negotiation table.

• It is influential in ensuring the adaptability of the companies and economies during the
economic crisis.

• It helps in developing trust and mutual respect between employers, workers and their
organizations.

• It increases stability and productivity in labour relations.

• It benefits both the parties, as the workers get fair remuneration for the work performed,
without impairing the capacity of the employers to work profitably.

• It facilitates the adaptability of the enterprise to a short term rise or falls in demand.

• It facilitates instant implementation of the decisions, made during the bargaining

process.

• It results in an increased worker’s commitment and enables information sharing.

• It also eliminates income inequality.

• It demonstrates the relative strength of the opposing parties.

Collective Bargaining takes place between employer and workers, to negotiate the new
contracts, as well as to renegotiate the existing ones.

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2. EXPLAIN THE PRE-REQUISITES OF SUCCESSFUL COLLECTIVE
BARGAINING PROCESS.
Existence of a strong representative trade union in the industry that believes in constitutional
means for settling the disputes.
• Existence of a strong and enlightened management which may integrate the different
parties, i.e., employees, owners, consumers and society or Government.
• Agreement on basic objectives of the organisation between the employer and the employees
and on mutual rights and liabilities.
• Existence of a fact-finding approach and willingness to use new methods and roles for the
solution of industrial problems. The negotiation should be based on facts and figures and
both the parties should adopt constructive approach.
• Proper records for the problem should be maintained.
• Collective bargaining should be best at plant level. If there are more than one plant of the
firm, the local management should be delegated proper authority to negotiate with the local
trade union.
• In order that collective bargaining functions properly, unfair labour practices must be
avoided by both the parties.
• The contract must include arbitration clause in case there is a dispute. The institution of
collective bargaining represents a fair and democratic attempt at resolving mutual disputes.
Wherever it becomes the normal mode of settling outstanding issues, industrial unrest with
all its unpleasant consequences is minimised.

CONDITIONS ESSENTIAL FOR SUCCESSFUL COLLECTIVE BARGAINING:

In order to make collective bargaining effective the following conditions must be satisfied:
A Favourable Political Climate: The Government and the public opinion must he convinced
that collective bargaining is the best method of regulating employment conditions. The
Government should remove all legislative restrictions which hamper collective bargaining. It
can also confer a right to bargain collectively, lay down the form and content of collective
agreement, register these agreements and assist in their enforcement.
Freedom of Association: Collective bargaining is not possible if employees are not free to
form trade unions, as they please. A strong and representative trade union is required to bargain
with the employer on equal basis. In some countries, governments have made illegal any
attempt by employers to interfere with the right of workers, to form their unions. Trade unions

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must be stable and strong enough to honour the collective bargaining agreement. The union
should have enough members to justify entering into collective bargaining. Inter-union rivalry
often creates instability in unions.
Recognition of Unions: Employers should be required by law to give recognition to
representative trade unions. It is in the interest of an employer to recognize a strong union to
avoid strikes and to safeguard against under-cutting labour standards.
Willingness to give and take: Both employers and union leaders should bargain in a spirit of
compromise and reciprocity. If the either party adopts a adamant attitude, bargaining will not
be possible. Willingness to give and take does not mean that concessions made by one side
must be marked by equal concessions by the other side. One party may win concessions for the
other depending upon their relative strength. But exaggerated demands must be toned down to
reach an agreement.

Everything you need to know about the pre-requisites for effective collective bargaining.
Collective bargaining is an important method of regulating relations between employers and
employees.
Collective bargaining involves negotiation, administration and enforcement of the written
contracts between the employees and the employers.
Collective bargaining also includes the process of resolving labour-management
conflicts. Collective bargaining is a joint decision-making process by employers and
employees.
Therefore, its effectiveness depends on their attitudes and the relevant environment in which
collective bargaining takes place. If these factors are conducive, collecting bargaining may be
a good mechanism for preventing the emergence of industrial disputes.
The pre-requisites for effective collective bargaining are:-
1. Favourable Political and Social Climate
2. Stability of Trade Unions
3. Approach of Management and Unions
4. Recognition of the Bargaining Agent
5. Deciding the Level of Bargaining
6. Determining the Scope and Coverage of Bargaining
7. Fair Labour Practices

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8. Freedom of Association
9. Continuous Dialogue
10. Problem-Solving Attitude
11. Availability of Data
12. Recognition of Union and Willingness to Give and Take.

3. Prerequisites of Collective Bargaining

Prerequisites for Collective Bargaining – 3 Conditions: Favourable Political & Social
Climate, Stability of Trade Unions & Approach of Management & Unions
Collective bargaining is a joint decision-making process by employers and employees.
Therefore, its effectiveness depends on their attitudes and the relevant environment in which
collective bargaining takes place. If these factors are conducive, collecting bargaining may be
a good mechanism for preventing the emergence of industrial disputes.
From this point of view, the following conditions are essential for effective collective
bargaining:
Condition # 1. Favourable Political and Social Climate:
Favourable political and social climate is a necessary condition for effective collective
bargaining. The history of the development of collective bargaining throughout the world
indicates that it has emerged and progressed in those countries where it has been supported by
the government and the public opinion has been favourable for the bargaining as a means for
settling terms and conditions of employment.
In fact, many countries have encouraged collective bargaining as a means for settling
differences between employers and employees. These countries have the system of
adjudication and arbitration but put in operation only when voluntary bargaining fails. As
against these countries, some countries influenced by socialistic moves have almost abolished
the very basic concept of collective bargaining.
In India, collective bargaining has not been effective because of the adverse political and legal
system though our traditional socio-cultural features which encourage trust, mutuality,
tolerance, and participation are more conducive.
Each major political party has sponsored a central trade union and these parties take the favour
of employees not based on the merit of the issues of the collective bargaining but based on their
political considerations. Similarly, the existence of plethora of legal laws also creates
unfavourable climate for bargaining.
Condition # 2. Stability of Trade Unions:
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In any democratic country, employees have fundamental rights to organize trade unions or
other associations for protecting their interest. The right to organize is a positive feature for
collective bargaining as employees may negotiate with management on equal footing.
However, mere right to organize does not ensure stability of employees’ associations in the
form of trade unions.
The indiscriminate use of the right for organizing leads to multiplicity of trade unions with
conflicting approaches, and sometimes even objectives, making the total industrial relations
system including collective bargaining unworkable. In India, multiplicity of unions and inter-
union rivalry have wrecked the system of collective bargaining. Where it has succeeded, it is
due to single union which has been recognized by the management.
Condition # 3. Approach of Management and Unions:
Collective bargaining is an institutional system of defining and achieving mutuality between
employers and employees.
It functions well when:
(a) Management fully accepts it as a mechanism for overcoming differences with employees
and union is accepted as an institution to participate in the process on the basis of equality.
(b) The union fully accepts the rights of management to manage and operate the organization
and recognizes that the welfare of the employees is linked to the successful operation of the
organization.
(c) The union and management mutually trust each other and have no major ideological
differences.
(d) Both the parties adopt flexible approach characterized by ‘give and take’ and the bargaining
outcomes as ‘win-win’ phenomenon.
(e) Neither party adopts unfair practices before negotiation, during negotiation, and after
negotiation.
To the extent such approaches are adopted by both management and union, the collective
bargaining will be effective. If the approach is to defeat the opposite party in negotiation room
(the place of battle through the words and approach), neither the meaningful negotiations will
be held nor there will be positive outcomes.
Collective bargaining is not merely a mechanism of outwitting another party with the use of
debating skill; it is a spirit of mutuality of interests which must prevail over words.

Prerequisites for Collective Bargaining – Pre-Requisites for Successful Collective

Bargaining Process
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A successful collective bargaining process must have the following prerequisites:
i. Careful thought and selection of the negotiating team is imperative. The team should have a
fixed composition, including production, finance and IR experts. It should be headed by a
person, preferably a personnel and industrial relations specialist of sufficient seniority who has
an adequate brief to commit the enterprise and take decisions without frequent referrals to top
management.
ii. It is necessary for the management to recognize the union and to bargain in more good faith,
in unionized situation. Unions as representatives of the workers’ interest are a growing
phenomenon. This also puts pressure on the union to formulate plans and demands in a
systematic manner. Strong unions and progressive managements can help create an atmosphere
of mutual confidence.
iii. The members of the bargaining teams must have open minds, to listen and appreciate the
other’s concern and point of view and to have some flexibility in making adjustments to the
demands made.
iv. It is necessary to study adequately or do ‘homework’ on the demands presented by gathering
data on wages and welfare benefits in similar industries in the geographical area.
v. Both the management and the union should be able to identify grievances, safety and hygiene
problems on a routine basis and take appropriate remedial steps.
vi. Trade unions must encourage internal union democracy and have period consultations with
the rank-and-file members.
vii. Trade unions should equally be concerned with both quantity of work output as agreed
upon and quality of work, both leading up to a consistent concern for the viability of the firm
and its products/services.
viii. Strikes/lockouts should be resorted to, in the ultimate analysis. Periodic discussions may
be necessary between the management and the unions to interpret the provisions of the contract
and clarify doubts.

Prerequisites for Collective Bargaining – Recommended by National Commission of

Labour
According to A. Flanders, there are certain conditions which must be satisfied before collective
bargaining can survive as a viable process. These are- The parties must attain a sufficient
degree of organization; Mutual recognition – the parties must be ready to enter into agreements
with each other; The agreements must generally be observed and implemented by those to
whom they apply.
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The collective bargaining relation is between the organized bodies as distinct from the contract
of employment reached between workers and employers in the 19th century. The organizations
of workers or trade unions are formed to protect and promote the interests of workers through
collective bargaining.
So long as trade unions remain organizationally and financially weak, their ability to bargain
with employers is weakened and impaired. Workers’ effectiveness in bargaining is dependent
on their organizational strength.
The employers, workers and their trade unions must realize that for a successful collective
bargaining relationship they must develop a considerable degree of consensus, support and co-
operation. They must recognize each other and also recognize that accommodation and
adjustment between them are necessary for the achievement of their goals.
The next condition relates to the sanctions behind the agreement and also the sanctions required
ensure the observance of rules regarding the employment relationship incorporated in the
agreement. The main issue in this regard is whether the parties themselves conform to the rules
or whether they will seek the help of a third party – the government.
In terms of these pre-requisites, collective bargaining is practiced in different countries at
different stages of the organizational growth of the parties involved, the nature and extent of
mutual recognition and the sanctions required to ensure the observance of the agreements.
Recommendations of the National Commission of Labour for Successful Functioning of
Collective Bargaining:
National Commission of Labour in 1969, made the following recommendations after
considering the problem.
(a) Government intervention in Industrial relations particularly in the settlement of industrial
disputes should be reduced gradually to the minimum possible extent. Compulsory
adjudication of disputes should be used only as a last resort.
(b) Trade unions should be strengthened both organisationally and financially by amending the
Trade Union Act of 1926 to make registration of unions compulsory, enhance the union
membership fee, and reduce the presence of outsiders in the union executive and among the
office-bearers and increase the minimum number of members in respect of union applying for
registration.
(c) Legal provision may be made either by a separate legislation or by amending an existing
enactment for-
(1) Compulsory recognition of trade unions and certification of unions as bargaining agents.
(2) Prohibition and penalisation of unfair labour practices.
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(3) Bargaining in good faith by both employers and unions.
(4) Conferring legal validity and legitimacy on collective agreements.
Recommendations of NCL, 1969:
The National Commission on Labour offered the following recommendations:
1. Good Faith:
In the absence of arrangements for statutory recognition of unions except in some States and
provisions which require employers and workers to bargain in ‘good faith’, it is no surprise that
reaching of collective agreements has not made much headway in our country. Nonetheless,
the record of collective agreements has not been as unsatisfactory as it is popularly believed.
Its extension to a wider area is certainly desirable.
2. Adjudication:
There is a case for shift in emphasis and increasingly greater scope for and reliance on
collective bargaining. Any sudden change replacing adjudication by a system of collective
bargaining is neither called for nor is practicable. The process has to be gradual. A beginning
has to be made in the move towards collective bargaining by declaring that it will acquire
primacy in the procedure of settling industrial disputes.
3. Congenial Condition:
Conditions have to be created to promote collective bargaining. The most important among
them is statutory recognition of a representative union as the sole bargaining agent. The place
strikes/lock-out should have in the overall scheme of industrial relations needs to be defined;
collective bargaining cannot exist without the right to strike/lock-out.

Prerequisites for Collective Bargaining – Equal Bargaining Power, Free Consultation,

Representative Union, Mutual Confidence, Proactive Approach and a Few Others
(i) Equal bargaining power – Constructive consultation between trade union and management
is possible only when the bargaining power of two parties is relatively equal and is exercised
with responsibility and discrimination.
(ii) Free consultation – Two parties of collective bargaining accept the principle of ‘free
consultation’ and ‘free enterprise’ consistent with the advancement of public interest.
(iii) Representative union – The willing acceptance by management to recognise representative
union for this purpose.
(iv) Mutual confidence – Both the parties must have mutual confidence, good faith and a desire
to make collective bargaining machinery a success.
(v) Proactive approach – Management should not await the union to raise problems but should
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make every reasonable effort to prevent them from arising and to remove them promptly when
they arise. Thus, management should have proactive approach.
(vi) Problem solving, not legalism – An emphasis upon a problem solving approach with de-
emphasis upon excessive legalism.
(vii) Quick disposal – Dispose of the issues in the same meeting and minimise of the pending
of items.
(viii) Desire to settle – Desire of the management to settle the issues to the satisfaction of
employees. This does not mean that management must relinquish its right to direct the company
or that it must accede to all union demands.
(ix) Union cooperation – Unions must understand the economic implications of collective
bargaining and realise that union demands must be met from the income and resources of the
organisation.
(x) Mutual respect – Both the parties should respect the rights and responsibilities of each other.
(xi) No unfair practices – The process of bargaining should be free from unfair practices.
(xii) Unanimity among workers – Before entering into negotiations, there must be unanimity
among workers. At least the representatives of workers should be able to represent the opinion
or demands of majority of workers.
(xiii) Positive attitudes – The attitudes of the parties (involved) should be positive. Both the
parties should reach the negotiating table with an intention to find better solutions.
(xiv) Give and gain – The parties involved in collective bargaining should be prepared to give
away something in order to gain something.
(xv) Respect previous agreements – Both the parties to collective bargaining should observe
and follow the terms and conditions of previous agreements that are reached. Collective
Bargaining, being a continuous process, can be effective only with the successful
implementation of previous agreements. Any lapse on the part of any party concerned shows
its effect on present process.
(xvi) Clarity of implications – The representatives of both the parties should fully understand
and be clear about the problems and their implications.
(xvii) Beyond salaries – The workers can make effective use of collective bargaining process
to achieve participative management and good working conditions. They should not confine
collective bargaining for mere monetary benefits.

Prerequisites for Collective Bargaining – Recognition of the Bargaining Agent, Deciding

the Level of Bargaining & Determining the Scope and Coverage of Bargaining
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Collective bargaining is an important method of regulating relations between employers and
employees. It involves negotiation, administration and enforcement of the written contracts
between the employees and the employers. It also includes the process of resolving labour-
management conflicts.
The important pre-requisites for effective collective bargaining are:
1. Recognition of the Bargaining Agent:
The management should give recognition to the trade union for participating in the collective
bargaining process. In case there is more than one union, selection could be done through
verification of membership by a government agency giving representation to all the major
unions through joint consultations. Thus, the bargaining agent of the workers should be
properly identified before initiating any action.
2. Deciding the Level of Bargaining:
Whether the dealings are confined to enterprise level, industry level, regional or national level
should be decided as the contents, scope and enforcement agencies differ in each case.
3. Determining the Scope and Coverage of Bargaining:
It would be better to have a clear understanding of what are the issues to be covered under
bargaining. Many a time, bargaining is restricted to wage and working conditions related issues
but it would be advantageous for both the management and union to cover as many issues as
possible to prevent further friction and disputes. Therefore, all the important and interrelated
issues are to be taken for consideration. Please note that all the three points are needed for
applying collective bargaining effectively.

Prerequisites for Collective Bargaining – 8 Important Pre-Requisites: Favourable

Political Climate, Fair Labour Practices, Freedom of Association and a Few Others
Collective bargaining is the process where terms and conditions of employment are determined
by mutual agreement between the management and the workers. According to Jucissous,
“Collective Bargaining refers to a process by which employers on the one hand and
representative of employees on the other, attempt to arrive at agreement covering the conditions
under which employees will contribute and be compensated for their services”.
It is a process in which the representatives of the employer and of the employees meet and
attempt to negotiate a contract governing the employer-employee union relationship.
In order to make collective bargaining effective the following pre-requisites must be
satisfied:
Pre-Requisite # 1. A Favourable Political Climate:
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Collective bargaining is the best method of regulating employment condition. Therefore,
government remove all legislative restriction which hamper collective bargaining. It can also
confer a right to bargain collectively lay down the form and content of collective agreement
register. These agreements assist in their enforcement.
Pre-Requisite # 2. Fair Labour Practices:
Both the employer and the trade union should avoid unfair labour practices. Collective
bargaining is possible only in an atmosphere of mutual recognition and respect. Management
must recognize and accept the worker’s right to organise and fight for justice. Similarly worker
and their union must recognise and accept the employer’s right to manage. In the absence of
such recognition, collective bargaining is a mere trial of strength.
Pre-Requisite # 3. Freedom of Association:
Collective bargaining is not possible if employees are not free to form trade union as they
please. A strong trade union, is required to bargain with the employer for their own interest, an
equal basis. Trade union must be stable and strong enough to honour the collective bargaining
agreement. In some of the countries government opposed, the action taken by employers
against the right of workers to form their union.
Pre-Requisite # 4. Continuous Dialogue:
For successful collective bargaining, continuous dialogue between the employer and employee
is necessary. As highly controversial issues are easily solved through continuous dialogue.
Pre-Requisite # 5. Problem-Solving Attitude:
For successful collective bargaining, both employer and employee must adopt a problem-
solving approach rather than fighting approach. The teams should consist of persons with an
analytical mind, objective outlook and cool temper. And they have an intimate knowledge of
operation, working condition and other relevant factors. They must have full authority to speak
and take decision on behalf of their sides.
Pre-Requisite # 6. Availability of Data:
The employer must ensure that all the required records are readily available. Facts and figures
concerning rates of pay, fringe benefits, manpower forecast, technological changes etc. provide
a rational basis for negotiations. But unless the trade union believes in the data and accepts the
same, collective bargaining process may be hampered.
Pre-Requisite # 7. Recognition of Union:
Employers should be required by law to give recognition to representative trade union. It is in
the interest of an employer to recognise a strong union, to avoid strikes and to safeguard against
undercutting labour standards.
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Pre-Requisite # 8. Willingness to Give and Take:
Both employers and union leaders should bargain in a spirit of compromise and reciprocity. If
either party adopts an adamant attitude, bargaining will not be possible. Willingness to give
and take does not mean that concession made by one side must be marked by equal concession
by the other side. One party may win concessions over the other depending upon their relative
strength. But exaggerated demands must be toned down to reach an agreement.

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3. LIST OUT THE VARIOUS ACTS INCLUDED IN THE OCCUPATIONAL SAFETY,
HEALTH & WORKING CONDITIONS CODE, 2020.
The Code comprises amalgamates, subsumes, and simplifies the below-mentioned laws under
its 14 Chapters 143 Sections 3 Schedules.
The following 13 Central Acts will be repealed by this Code:
1. Factories Act, 1948;
2. Mines Act, 1952;
3. Dock Workers (Safety, Health and Welfare) Act, 1986;
4. Building and Other Construction Workers (Regulation of Employment and Conditions
of Service) Act, 1996;
5. Plantations Labour Act, 1951;
6. Contract Labour (Regulation and Abolition) Act, 1970;
7. Inter-State Migrant Workmen (Regulation of Employment and Conditions of Service)
Act, 1979;
8. Working Journalist and other Newspaper Employees (Conditions of Service and
Miscellaneous Provision) Act, 1955;
9. Working Journalist (Fixation of Rates of Wages) Act, 1958;
10. Motor Transport Workers Act, 1961;
11. Sales Promotion Employees (Condition of Service) Act, 1976;
12. Beedi and Cigar Workers (Conditions of Employment) Act, 1966; and
13. Cine-Workers and Cinema Theatre Workers (Regulation of Employment) Act, 1981

• The Code simplifies the registration process prescribing that the establishment having
ten or more employees are required to be registered with the registering officer
appointed by the appropriate Government thereby minimizing the statutory
compliances.

• Defines factory with increase in the threshold on number of workers from ten and
twenty workers to twenty and forty workers respectively and fixed the maximum limit
of daily working hours for the factory workers as eight hours per day.

• Mandates issuance of appointment letters to the employees and workers.

• Defines core activity of establishment as any activity which is the purpose of

18
 constituting an establishment and activities that are incidentally essential and thereby
prohibits employment of contract labour in such core activities, however, exempts a
few situations such as, (i) the normal functioning of the establishment is such that the
activity is ordinarily done through contractor, (ii) the activities are such that they do not
require full time workers for the major portion of the day, or (iii) there is a sudden
increase in the volume work in the core activity which needs to be completed in a
specified time.

• Expands the list of benefits to the inter-state migrant workman such as the benefits of
the insurance and provident fund benefits either in the native state or the state of
employment, portability of benefits of the inter-state migrant worker working for
building or other construction work out of the building and other construction cess fund
in the destination State where such inter-state migrant worker is employed.

• Mandates free health check-ups for who attained the age of forty five years for
prescribed industries such as factories, mines, plantations, workers employed in
hazardous process.

• Introduces the concept of limiting the carryover of annual leaves (paid leaves) to a
maximum of 30 days but provision made for encashment of leave in excess of 30 days.
Therefore, the concept of leave lapse will cease to exist by virtue of encashment.

• Introduced the penalty provisions more strictly such as contravention of any provision
of the Code shall attract a fine up to Rs. 2 Lakhs to 3 Lakhs.

Applicability

The Central Government will notify in the Official Gazette the date on which the Code will
become effective and operational. It may be a single date appointed to bring the entire Code
operational, or there may be different dates appointed for different provisions to come into
force.

The Code is not applicable to the offices of the Central Government, offices of the State
Government and any ship of war of any nationality, provided that the Code shall apply in case
of contract labour employed through contractor in the offices of the Central Government or in
the offices of the State Government, where the Central Government or, as the case may be, the
State Government is the principal employer.

19
Registration of Establishment

Every employer of any establishment, that comes into existence after the commencement of
this Code, and to which this Code is applicable, should, within sixty days from the date of such
applicability of this Code, make an application electronically to the registering officer
appointed by the appropriate Government for the registration of such establishment.

Any change in the ownership or management or in any that occurs after the registration of an
establishment under this Code, should be intimated by the employer electronically to the
registering officer within thirty days of such change in such form as may be prescribed and
such amendment will be carried out in the certificate of registration electronically.

The employer of an establishment should, within thirty days of the closing of the establishment
inform the closing of such establishment and certify payment of all dues to the workers
employed in such establishment, to the registering officer and the registration will be cancelled
in 60 days.

The employer of an establishment who has not registered the establishment as prescribed in
this Code; or has not preferred appeal against the cancellation or revocation of the registration
certificate of the establishment or the appeal so preferred has been dismissed, should not
employ any employee in such establishment.

The establishment to which this Code applies, that has been already registered under any
Central labour law, or any other law that may be notified by the Central Government and that
applies to such establishment which is in existence at the time of the commencement of this
Code, shall be deemed to have been registered under the provisions of this Code, subject to the
condition that the registration holder provides the details of registration to the concerned
registering officer within such time and in such form as may be prescribed.

Duties of Employer & Employees

Employers

Every employer should:

• ensure that workplace is free from hazards which cause or are likely to cause injury or
occupational disease to the employees;

• comply with the occupational safety and health standards declared under the rules,

20
 regulations, bye-laws, or orders made under this Code;

• provide such annual health examination or test free of costs to such employees of such
age or such class of employees of establishments or such class of establishments, as
may be prescribed by the appropriate Government;

• provide and maintain, as far as is reasonably practicable, a working environment that is

safe and without risk to the health of the employees;

• ensure the disposal of hazardous and toxic waste including disposal of e-waste;

• issue a letter of appointment to every employee on his/her appointment in the

establishment, with such information and in such form as may be prescribed by the
appropriate Government and where an employee has not been issued such appointment
letter on or before the commencement of this Code, he/she shall, within three months
of such commencement, be issued such appointment letter;

• ensure that no charge is levied on any employee, in respect of anything done or provided
for maintenance of safety and health at workplace including conduct of medical
examination and investigation for the purpose of detecting occupational diseases;

• relating to factory, mine, dock work, building or other construction work or plantation,
ensure and be responsible for the safety and health of employees, workers and other
persons who are on the work premises of the employer, with or without his knowledge,
as the case may be.

Without affecting the above-mentioned, the duties of an employer shall particularly in respect
of factory, mines, dock, building or other construction work or plantation include:

• the provision and maintenance of plant and systems of work in the workplace that are
safe and without risk to health;

• the arrangements in the workplace for ensuring safety and absence of risk to health in
connection with the use, handling, storage and transport of articles and substances;

• the provision of such information, instruction, training, and supervision as are necessary
to ensure the health and safety of all employees at work;

• the maintenance of all places of work in the workplace in a condition that is safe and
without risk to health and the provision and maintenance of such means of access to,
and egress from, such places as are safe and without such risk;

21
 • the provision, maintenance or monitoring of such working environment in the
workplace for the employees that is safe, without risk to health as regards facilities and
arrangements for their welfare at work.

National & State Occupational Safety and Health Advisory Board

The Central Government will constitute the National Occupational Safety and Health Advisory
Board to discharge the functions conferred on it by or under this Code and to advise the Central
Government on the matters relating to:

• standards, rules, and regulations to be declared or framed under this Code;

• implementation of the provisions of this Code and the standards, rules and regulations
relating thereto;

• the issues of policy and programme relating to occupational safety and health referred
to it, from time to time, by the Central Government; and

• any other matter in respect of this Code referred to it, from time to time, by the Central
Government.

The State Government shall constitute a Board to be called the State Occupational Safety and
Health Advisory Board to advise the State Government on such matters arising out of the
administration of this Code as may be referred to it by the State Government.

Occupational safety and health standards

The Central Government shall declare, by notification, standards on occupational safety and
health for workplaces relating to factory, mine, dock work, beedi and cigar, building and other
construction work and other establishments.

Such standards shall relate to:

• physical, chemical, biological and any other hazards to be dealt with for the working
life of employee to ensure to the extent feasible on the basis of the best available
evidence or functional capacity, that no employee will suffer material impairment of
health or functional capacity even if such employee has regular exposure

• to such hazards;

22
 • the norms, appraising the hazards to employees and users to whom such hazards are
exposed; relating to relevant symptoms and appropriate energy treatment and proper
conditions and precautions of safe use or exposure; for monitoring and measuring
exposure of employees to hazards; for medical examination and other tests which shall
be made available, by the employer or at his cost, to the employees exposed to hazards;
and

• for hazard evaluation procedures like safety audit, hazard and operability study, fault
free analysis, event free analysis and such other requirements;

• medical examination including criteria for detection and reporting of occupational

diseases to be extended to the employees even after he ceases to be in employment, if
he is suffering from an occupational disease which arises out of or in the course of
employment;

• such aspects of occupational safety and health relating to workplaces which the Central
Government considers necessary on the report of the authority designated by such
Government for such purpose;

• such safety and health measures as may be required having regard to the specific
conditions prevailing at the workplaces relating to mine, factory, building and other
construction work, beedi and cigar, dock work or any other establishments notified; and

• matters specified in the Second Schedule to this Code.

Safety Committee and Safety Officers

The appropriate Government may, require any establishment or class of establishments to

constitute a Safety Committee consisting of representatives of employers and workers engaged
in such establishment in prescribed manner.

In every establishment which is a:

• factory wherein five hundred workers or more; or

• factory carrying on hazardous process wherein two hundred fifty workers or more; or

• building or other construction work wherein two hundred fifty workers or more; or

• mine wherein one hundred workers or more, are ordinarily employed.

23
The employer shall also appoint such number of safety officers, who shall possess such
qualifications and perform such duties, as may be prescribed by appropriate Government.

Responsibility of employer for maintaining health, safety and working conditions

The employer is responsible to maintain in the establishment such health, safety and working
conditions for the employees as may be prescribed by the Central Government. The Central
Government may prescribe for providing all or any of the following matters in the
establishment or class of establishments, namely:

• cleanliness and hygiene;

• ventilation, temperature, and humidity;

• environment free from dust, noxious gas, fumes, and other impurities;

• adequate standard of humidification, artificially increasing the humidity of the air,

ventilation, and cooling of the air in work rooms;

• potable drinking water;

• adequate standards to prevent overcrowding and to provide sufficient space to

employees or other persons, as the case may be, employed therein;

• adequate lighting;

• sufficient arrangement for latrine and urinal accommodation to male, female, and
transgender employee separately and maintaining hygiene therein;

• effective arrangements for treatment of wastes and effluents; and

• any other arrangement which the Central Government considers appropriate.

24
4. LIST THE ADVANTAGES OF COLLECTIVE BARGAINING.
The advantages of collective bargaining have been stated below.
1. Higher wages and better help for union members. Unions can negotiate collectively for
gains unique workers could not reach alone. For example, unionized workers typically earn
10-30% higher wages than their non-union peers.
2. Fairer work rules and policies. Collective deals help establish workplace order, justice, and
due process. Clear grudge policies and discipline policies benefit both workers and regime.
3. Improved job joy, productivity, and loyalty. Union fellows report higher job joy due to
better pay, benefits, and protections. This leads to lower turnover, less truancy, and higher
productivity.
4. More social justice through the fairer distribution of economic gains. Collective bargaining
helps narrow wage gaps between executives and non-executive workers. For example,
CEO-to-median worker pay ratios are typically lower at unionized firms.
5. Safer working needs. Union contracts often include extensive health and safety conditions
that enhance workplace safety. Union workers have lower occupational injury and fatality
rates.
6. Greater worker voice and input. Unions provide an organized channel for workers to
provide input on workplace issues that affect them. This charge enhances decision-making
and creation.
7. More stable job and income. Collective bargaining typically includes conditions like
seniority rights, just cause, and severance, feeding job security for union fellows during
financial downturns.
8. Spillover benefits for non-union workers. Union contracts set standards that non-union
employers must match to remain competitive. This "union premium" spills to non-union
workers through higher pay and better benefits.
9. Higher labor force participation. Research shows collective bargaining rights increase
women's and older workers' labor force participation by feeding benefits like paid leave,
flex time, and retiree healthcare.
10. More economic equality. Collective bargaining helps redistribute income from capital to
labor, easing economic inequality. Countries with stronger union rights tend to have less
income disparity.
11. Early resolution of disputes. Grudge courses in union contracts provide an set process for
fixing conflicts early to avoid costly arbitration or litigation.
12. Greater adaptability and creation. When joint, unions can work with management to
25
 identify gain options that benefit both workers and the firm.
13. Higher bars for non-union firms. Union contracts set wages, benefits, and working needs
that non-union firms match to attract talented workers and remain competitive. This raises
bars for all.
14. System of checks and balances. Collective bargaining serves as a balance to corporate
power, securing workers have a voice in decisions that impact them and holding direction
liable. This enables a fairer economy.
15. Democratic participation in the workplace. Through unions, workers gain a joint voice and
participation in results that affect their jobs and livelihoods. This fosters democracy and
worker license.
In summary, while higher wages and benefits remain the most visible benefits, collective
bargaining - when effective - can also promote broader financial and social uses like greater
equality, productivity, innovation, participation, and democracy in the workplace. However,
disadvantages also exist and must be weighed.

Here are some merits which would be helpful for both the parties.
▪ Awareness: The underlying advantage of collective bargaining is that both parties get
to know what they are expecting from each other and are also aware of the rights. It is
helpful to decline the number of conflicts that may happen later and also make all the
business operations more efficient.
▪ Protection: After going through the process of collective bargaining, the workers know
that they have some sort of protection from the employer’s exploitation.
▪ No deaf ears: When the employer is dealing with workers, then they have to listen to
the queries of the employees and fulfill them as it is possible.
▪ Fight for rights: The employees can fight back for their rights and collective bargaining
allows them to stand for their betterment.
▪ No strikes: It reduces the strikes as if the employees are not happy with the decisions
of their management, and then they have the option of go on strike. Further, this will
hinder the business operations and the business suffers a loss. Thus, collective
bargaining helps businesses to arrive at a mutual understanding of their labor.
▪ Security and stability: The employees do not have any fear of losing the job or get
terminated but if they will be, then they have a labor union who can support them
through collective bargaining.
26
Some of the advantages of collective bargaining are as follows: –
1. Enhance worker’s quality of life: It helps workers in improving their quality life of
life. The main focus is on improving safety and working conditions of employees.
Collective bargaining leads to increase in pay level of workers and other types of
benefits. Hence the workers enjoy higher quality of life. The collective bargaining
agreement will lead the workers to enjoy a higher overall quality of life.
2. Offer security and stability: It provides employees security of work tenure and they
need not worry about their wrongful termination. They have a team of representatives
and strong support system who represent them and fight for the rights of employees.
3. Creates a binding result: Due to the collective bargaining agreement both the parties
are bound together to follow the rules. It provides for extra security for employers and
employees for defending their positions. Both the parties need to follow the contract
and if either of them don’t follow then may be held liable by the injured party.
4. Give workers a larger voice: In case of an individual worker, he is unable to negotiate
with the employer and fulfil his demands regarding work conditions. Whereas,
collective bargaining provides strength to workers by binding them together into a large
group. They are able to create a big impact and leads to mutually beneficial outcome.
The recognised trade unions are able to create a louder voice. The workers who do not
have their unions are faced with lot of problems.
5. Prevent employees strike: Another advantage of Collective bargaining is it helps to
resolve the dispute between employer and employees. It avoids the disputes between
the employer and employees which often leads to strike. The representatives of the
workers help them in solving their problems and work for their benefit and indulge
in mutual settlement during disputes.
6. It is a transparent process: All the discussions are kept in written form and are open
to all for reference. Whatever is decided between the parties can be easily known. Such
type of flexibility may not be available at other workplaces.
7. Collective bargaining also promotes welfare of workers. It is a flexible and quick and
efficient process. Speedy decisions are taken by both the parties.

27
5. LIST THE DISADVANTAGES OF COLLECTIVE BARGAINING.
The drawbacks of collective bargaining have been stated below.
1. Higher labor costs for employers. Wages and benefits negotiated by unions can increase
firm costs and reduce profitability. This can affect prices for buyers and competitive
positioning.
2. Loss of management flexibility. Collective deals with clear work rules and job
protections can reduce employers' flexibility to adjust forces in reply to varying market
conditions.
3. Conflict and disruptions. Grudges, arbitration hearings, and strikes triggered by union
contracts can create upsets, uncertainty, and costly firm delays.
4. An overly adversarial relationship. Collective bargaining can foster an adversarial "us
vs. them" dynamic between unions and control, stressing positions over interests and
compromise.
5. Reduction in individual incentives and incentive. Union work rules and seniority
systems can reduce unique stimuli for high performance and creation. However, unions
say they boost morale and motivation through higher pay and job security.
6. Lower productivity growth. Some research points unionization is associated with
slower productivity growth over time due to work rule rigidities and high costs passed
on to clients. However, this is debated.
7. Reduction in firm startup and growth. Enhanced job protections from union contracts
can crush entrepreneurship and risk-taking. Economies with weaker union rights tend
to have higher firm startup and growth rates.
8. Lower global competitiveness. Strict union work rules and high labor costs can put
companies at a disadvantage vs. non-union competitors, especially in global markets.
9. Higher consumer prices. Higher labor costs negotiated by unions tend to get passed on
to clients through higher prices for goods and services. This disproportionately impacts
lower-income clients.
10. Misallocation of labor and talent. Seniority systems and strict job classifications in
union work rules can lead to the less optimal matching of workers to jobs and
underutilization of talent.
11. Reduced creation and asset. High union costs can reduce firms' incentives and abilities
to innovate and make productivity-enhancing assets. However, unions argue they
promote creation through worker input.
12. Widening geographic inequalities. Areas with high unionization, like Rust Belt cities
28
 in the U.S., have struggled economically, while right-to-work states with weaker unions
have grown faster. This widens regional economic disparities.
13. Inflexible wage scales. Union pay scales based on seniority rather than merit can fail to
nicely reward top entertainers and high-demand skills. But unions argue this promotes
greater pay equity.
14. Bureaucratic grudge systems. Complex union grievance procedures designed to protect
fellows can create needless bureaucracy, delays, and costs for firms. Yet, unions see
them as ensuring due process.
In summary, while collective bargaining benefits union members through higher pay and job
protections, it also poses faults for firms through higher costs, rigidity, and conflict.
Economically, collective bargaining entails trade-offs between equity and efficiency that
different stakeholders experience differently. Both perspectives have merit and must be
weighed.

Collective bargaining creates many problems.. Other disadvantages of collective bargaining

are-
1. No representation of consumers: There is no representation of consumers in the
process of collective bargaining.
2. Prone to inequality: Collective bargaining may lead to inequality among the parties
and either of them may suffer and get less of what they deserve. There is no fair
representation in collective bargaining process. Both parties suffer. The workers may
not get enough employment benefits which they deserve if their representation is weak.
On the other hand, if the representation of employers is weak, then business may get
into loss due to over-compensation and excessive benefit.
3. Can be a financial burden: The persons who become the member of the union, are
required to pay various dues. So, the paying members have to pay for those dues. Hence,
in this process there is lot of financial burden to member as well as union. There is the
cost of lost productivity as both parties sit and discuss out a deal. Many collective
bargaining agreements are lengthy and require time to read, which further reduces
worker availability. All this involves lot of cost. Employer representatives become less
productive and they are part of this process.
4. Influence relationship between members: Collective bargaining may not always
result in grouping of workers. There may be conflict among workers due to
disagreement of some issue. The divisions and differences may surface among workers
29
 due to grouping or because of union which were not present before making an
agreement. It can be biased to employers.
5. Consumer gets affected by this process– Consumer has to bear the burden of
settlement, as when wages of workers are raised by employers, they raise the price of
goods which affects the consumer.
6. It creates tension in workplace– The union workers complain often that their
managers act as boss instead of partner. The representation of unions results in reducing
openness and trust found in a workplace.
7. If the transaction of collective bargaining fails, strikes and lockouts may take place.

30
6. EXPLAIN THE REASONS FOR FAILURE OF COLLECTIVE BARGAINING IN
INDIA.

Though it is argued that collective bargaining has grown in India due to the statutory provisions
and voluntary measures, its success is limited. Collective bargaining has not made much
headway in India when compared to other industrial nations. Collective bargaining machinery
essentially is a reflection of a particular social and political climate. The Indian trade unions
are weak in collective bargaining. This is because of various political, economical and social
factors prevailing in India.The reasons are:

i. Weak unions

Collective bargaining process mainly depends on the strength of unions. Indian unions are
marked with multiplicity, inter and intra-union rivalry, weak financial

position and non-recognition. Weak trade unions cannot initiate strong arguments during
negotiations. All in all, the lack of unified and strong trade union movement represents a
missing link in the existing industrial relations framework.

ii. Problems from Government

The Government has not been making any strong efforts for the development of collective
bargaining. The regulatory framework covering the industrial relations

scene is quite tight, leaving very little room for bargaining to flourish on a voluntary basis.

iii. Legal problems

Now adjudication is easily accessible. No attempt has been made by the Government to
rationalise or simplify the multifarious laws covering labour management relations.

iv. Attitude of Management

Employers have failed to read the writing on the wall, they do not appreciate the fact that unions
have come to stay with almost equal bargaining strength. Such negative

attitudes have come in the way of negotiating with unions voluntarily.

v. Employers‟ uncertainty about who is the recognised bargaining agent

Employers quite often are not very sure who the recognised bargaining agent is. When there
are multiple unions, bargaining with one union may prove to be a tough battle.

vi. Statutory fixation of conditions of work

31
Areas of collective bargaining have not grown in view of the encouragement given to wage
boards, pay commissions, statutory fixation of other conditions of work and social security
measures.

vii. Political interference

Almost all unions are associated with some political party or the other. The political parties
interfere in the smooth functioning of the union. Some of the politically affiliated Central trade
unions in India are:

(a) BMS- Bharatiya Mazdoor Sangh (linked with far right political party BJP)- members: 6
million

(b) INTUC- Indian National Trade Union Congress (linked with centrist Congress party)-
members: 3.8 million

(c) AITUC- All India Trade Union Congress (linked with Communist party of India)-
members: 3.3 million

(d) CITU- Centre of Indian Trade Unions [linked with the Communist Party of India
(Marxist)]- members: 2.6 million

(e) UTUC(LS)- United Trade Union Congress (Lenin Sarani) (linked with the party named
Socialist Unity Center of India)

(f) UTUC United Trade Union Congress (linked with political party- Revolutionary Socialist
Party)

(g) TUCC- Trade Union Co-ordination Centre (linked with political party- All India Forward
Bloc)

(h) LPF- Labour Progressive Front (linked with political party- Dravida Munnetra Kazhagam)

(i) ICCTU- All India Central Council of Trade Unions (linked with Communist Party of India
(MarxistLeninist)- Liberation group)

(j) INTTUC- Indian National Trinamool Trade Union Congress (linked to the political party-
All India Trinamool Congress)

Justice Gupta in his “Our Industrial Jurisprudence” made the observation: “If our experience
is any guide, it reveals that level of increase in wages etc., (in public sector undertaking) is now
decided by the Bureau of Public Enterprises which takes into consideration only the Political
impact and „Consumer resistance‟ as two dominant factors. This is the reason why the prices

32
of almost all products of necessity like coal, iron and steel, cement, sugar etc., have been
constantly increasing. A survey of the last ten years reveals that there was no industrial dispute
regarding wage structure or bonus in any industry of some significance.”

viii. Outsiders in the process of collective bargaining

The Trade Unions Act, 1926, permits outsiders to be the office bearers of a union to the extent
of half the total number of office bearers. So, it permits one to be the leader of the union who
does not actually work in the industry. Sometimes a dismissed employee working as a

union leader may create difficulties in the relationship between the union and the employer.
Nevertheless, experience shows that outsiders who have little knowledge of the background
of labour problems, history of labour movement, fundamentals of trade unionism and the

technique of the industry and with even little general education assume the charge of labour
union and become the self-appointed custodian of the welfare of the workers. The employers,
therefore, have been reluctant to discuss and negotiate industrial matters with outsiders, who
have no personal or direct knowledge of day to day affairs of the industry. Accordingly,
employers refuse recognition to the unions which are either controlled by the politicians or
affiliated to a particular political party or controlled by a particular individual. Government
cannot morally compel employers to accord recognition to unions without driving out the
politicians from them. The State must outright ban “outsiders” from the trade union body.
Further, provision for political funds by trade unions should be eliminated, since it invariably
encourages the politicians to prey upon them. The National Commission on Labour has
overlooked this aspect. The Commission does not favour a legal ban on non-employees for
holding the union office. It says that without crating conditions for building up the internal
leadership would develop through their education and training. Accordingly the Commission
suggests proportion of the outsiders and the workers in a union

executive. On realising the problems of outsiders in the Union, the Industrial Relations Bill,
1988 proposes to reduce the number of outsiders to two only.29 Critic says that the presence
of outsiders is one of the important reasons for the failure of collective bargaining in India.

ix. Industrial relations framework

Collective bargaining is a voluntary process. It presupposes an appropriate industrial relations

framework which provides scope for effective interaction of the

parties within the parameters set by the requirement of peaceful existence of civilisation. It has

33
been opined that in India, the conditions necessary for such interaction are either non-existent
or not feasible thus making the industrial relations framework less hospitable for the
development of a collective bargaining relationship in machinery.

x. Other factors

The unorganised trade unions in India are also the root cause of inefficient collective bargaining
of trade unions. In India the Government policies are not conducive to the trade unions. This
leads to in weakness on part of trade unions to negotiate effectively with management. There
is no apex body of trade unions in India. This further lowers the chances of proper collective
bargaining.

Unfortunately in India, due to certain factors such as interunion and intra-union rivalry,
multiplicity of trade unions, self-seeking politicians dabbling in trade unions, encouragement
to the workers for indulging in coercion measures, intimidation, violence, etc. collective
bargaining has mainly been distributive bargaining. However, instances of two-way traffic are
available. There have been agreements when there is noticeable shift towards integrative
bargaining. Shri M.K. Verma32 has emphasized that the Management’s charter of demands is
not a matter of confronting the union with the counter-irritant; nor is it merely a matter of
making a cheap attempt at counterbalancing the impact of union’s demands. It goes much
deeper than that. It springs from the fact that in any industrial or commercial undertaking,
growing competition and even increasing costs have no alternative for the

organisation but to internally generate sufficient efficiencies and cost reductions so as to enable
it to retain its business position while meeting numerous demands, including those of the union.

STEPS TO BE TAKEN TO MAKE COLLECTIVE BARGAINING EFFECTIVE IN

INDIA: The following steps may be taken to make collective bargaining in India more
effective:
1. Trade unions should be made more strong and responsible, so that they are able to honour
the collective agreements. For this purpose it is essential to build internal leadership and to
free unions from political control. Minority unions should be excluded from the right to
bargain, and right to concilliation. Majority union should be determined by secret ballet
rather than check off system, the idea of one union for plant/industry should be popularised.
2. Each party should develop the skill to understand the viewpoint of the other. Positive
attitudes should he accepted by both employer and employees towards each other.

34
3. Collective bargaining should be restricted to matters concerning interests. Disputes
concerning rights should be better settled through grievance machinery.
4. When negotiations fail, both the parties should have equal right and freedom to strike work
or to declare a lockout.
5. Statutory provisions should be created to make the agreement binding on all the workers.
Under Sec. 18(1) of the Industrial Disputes Act, a collective agreement is binding only on
workers who were not a party to it. It does not automatically extend to workers who were
not party to it even though they might have obtained certain benefits under the agreement.
6. A collective bargaining authority may be created. Its functions may include advising the
parties on various aspects of collective bargaining, helping them in resolving jurisdictional
disputes and register in the agreement made by the parties.
7. Legal provision should be made for (a) compulsory registration of trade unions and their
certification as bargaining agents. (b) prohibition and penalisation of unfair labour practices
(c) legal recognition of collective agreements.
8. Compulsory adjudication of disputes should be used only as a matter of last resort.
9. Workers education should be intensified to build up internal union leadership and to
improve knowledge of workers.
10. The Governments should declare its policy of encouraging the parties to settle their disputes
through bipartite consultation and negotiation consistent with public safety and social
interest.

35
7. LIST OUT THE DIFFERENT ACTS INCLUDED IN THE CODE ON SOCIAL
SECURITY, 2020.
The Code on Social Security, 2020 is a code to amend and consolidate the laws relating
to social security with the goal to extend social security to all employees and workers either in
the organised or unorganised or any other sectors.
• Social security refers to protection measures provided to workers to ensure healthcare
and income security in case of certain contingencies such as old age, maternity, or
accidents.
The act amalgamates nine central labour enactments relating to social security.
1. Employees’ Provident Funds and Miscellaneous Provisions Act, 1952;
2. Employees’ State Insurance Act, 1948;
3. Employees’ Compensation Act, 1923;
4. Employment Exchanges (Compulsory Notification of Vacancies) Act, 1959;
5. Maternity Benefit Act, 1961;
6. Payment of Gratuity Act, 1972;
7. Cine-workers Welfare Fund Act, 1981;
8. Building and Other Construction Worker’s Welfare Cess Act, 1996; and
9. Unorganised Workers Social Security Act, 2008

Key Provisions of the Social Security Code, 2020

The definition of employees has been widened to include inter-state migrant workers,
construction workers, film industry workers and platform workers. It has provisions for the
registration of all three categories of workers – unorganised workers, gig workers and platform
workers.
• Gig workers refer to workers outside the “traditional employer-employee relationship”.
• Platform workers are those who are outside the “traditional employer-employee
relationship” and access organisations or individuals through an online platform
and provide services for payment. Read more on gig and platform workers.
• An unorganised worker is defined as one who works in the unorganised sector,
and includes workers not covered by the Industrial Disputes Act, 1947, or other
provisions of the Bill (such as provident fund or gratuity). It also includes self-
employed workers.
• A social security fund will be created for paying these benefits to workers and
it will be funded by central and state governments and also through CSR
36
 funding. Aggregators who are digital intermediaries employing gig workers will
have to set aside at least around 1-2 per cent of their annual turnover (amount
not exceeding 5 per cent of the amount payable to the workers) for the purpose
of this social security fund.
• The government could notify schemes for unorganised sector workers (such as home-
based and self-employed workers), gig workers, and platform workers.
• The Code also provides for the setting up of a ‘National Social Security Board’. The
functions of the Board include recommending schemes to the central government and
also monitoring the schemes for the different types of workers, advising the
Government on matters relating to the administration of the Code amongst others.
Social Security Code Significance
This Code is far from being a mere consolidation of previous legislations. It has enhanced the
coverage, extended the benefit to all workers in the organised/unorganised sectors, introduced
concepts of providing maximum benefits under minimum governance and reflects uniformity
in approach across the four labour codes.
Enhanced coverage:
• New-age businesses that thrive on e-commerce have created new types of jobs. Some
of the workers in these new businesses were not covered under any of the existing laws.
The new Social Security Code expands the scope of social security by providing for the
registration of all types of workers including gig workers and platform workers. Its
recognition of non-conventional forms of work outside the scope of the traditional
employer-employee arrangement is encouraging as there is a global shift towards self-
employment, gig, and platform work.
• Gig workers will now become eligible for life and disability coverage, maternity
benefits, pension, etc.
• The Code has widened coverage by including the unorganised sector, fixed-term
employees, inter-state migrant workers, etc., in addition to contract employees.
• Therefore, in terms of coverage, the scope has been expanded.
• The Social Security Code, 2020 brings these workers under the ambit of social security
schemes, including life insurance and disability insurance, health and maternity
benefits, provident fund and skill up-gradation, etc.
Taking care of the fixed-term employees:
• The code expands the scope to cover fixed-term contract workers who will now be
eligible for gratuity; whereas earlier only employees that were permanent were covered.
37
 • The events giving rise to gratuity are superannuation, retirement, resignation, death or
disablement due to accident or disease or termination of a contract under fixed-term
employment or on the happening of any event notified by the central government.
• With the inclusion of ‘expiration of fixed-term employment’, fixed-term contract
workers will become eligible for gratuity and this is a welcome move.
Penal provisions:
• The strength of implementing a legislation lies in the ease of compliances as well as in
the penalties that deter non-compliance. The Code captures it all.
• The Code contains penal provisions in the case of failure to pay gratuity to employees
or a failure to pay the contributions.
Digitisation:
• As per the Act, all records and returns have to be maintained electronically. Digitisation
of data will help in the exchange of information among various stakeholders/funds set
up by the Government, will ensure compliance and also facilitate governance.
Uniform definitions:
• Uniformity in determining wages for the purpose of social security benefits is another
highlight of the code given the ambiguity in the current regulations.
• This has provided a wide definition for wage. Specific exclusions with ceilings have
been provided for discouraging inappropriate structuring of salaries to minimise social
security benefits.
Consultative approach:
• The Code has brought in a facilitating approach by the authorities. Unlike the existing
role of inspectors, the Code provides for an enhanced role of inspector-cum-facilitator
whereby employers can look for support and advice to enhance compliances.
Important recommendations of the NCL neglected:
National Commission on Labour recommendations
• The National Commission on Labour (2002) (NCL) had emphasised the need for
universal and comprehensive social security coverage to avoid deprivation of basic
needs of workers, and recommended the simplification and consolidation of existing
laws towards this end.
• The NCL recommended that: (i) the social security system should apply to all
establishments, (ii) the existing wage ceilings for coverage should be removed, and (iii)
there should be a functional integration of the administration of existing
schemes. Further, every employer and employee may make a single contribution for
38
 the provision of all the benefits, with a ceiling prescribed for such contributions.

The code largely retains the existing setup and does not fully implement the NCL
recommendations.
• The code continues to retain thresholds based on the size of the establishment for
making certain benefits mandatory. Benefits, such as pension and medical insurance,
continue to be mandatory only for establishments with a minimum number of
employees (such as 10 or 20 employees). All other categories of workers (i.e.,
unorganised workers), such as those working in establishments with less than 10
employees and self-employed workers may be covered by discretionary schemes
notified by the government. Thus, a large number of workers may continue to be
excluded.
• The code continues to treat employees within the same establishment differently based
on the amount of wages earned. For instance, provident fund, pension and medical
insurance benefits are only mandatory to employees earning above a certain threshold
(as may be notified by the government) in eligible establishments.
• The code continues to retain the existing fragmented set up for the delivery of social
security benefits. These include: (i) a Central Board of Trustees to administer the EPF,
EPS and EDLI Schemes, (ii) an Employees State Insurance Corporation to administer
the ESI Scheme, (iii) national and state-level Social Security Boards to administer
schemes for unorganised workers, and (iv) cess-based labour welfare boards for
construction workers.
Know more about the Labour Sector in India at the inked article and also know the
classification of the labour force in the country.
Provisions on gig workers and platform workers are unclear:
• The code introduces definitions for gig worker, platform worker and mandates different
schemes for all these categories of workers. However, there may be some overlap
between their definitions. With such overlap across definitions, it is unclear how
schemes specific to these categories of workers will apply.
Provisions on gratuity for fixed-term workers unclear:
• The code on social security and the Industrial Relations code, 2020 have different
provisions on gratuity for fixed-term workers and it is not clear whether a fixed-term
employee with a contract of lesser than one year will be entitled to gratuity under the
Code on Social Security, 2020.
39
Mandatory linking with Aadhaar may violate Supreme Court judgement:
• The code mandates an employee or a worker (including an unorganised worker) to
provide his Aadhaar number to receive social security benefits. This may violate the
Supreme Court’s judgement in the Puttaswamy case.
• In its judgement, the Court had ruled that the Aadhaar card/number may only be made
mandatory for expenditure on a subsidy, benefit or service incurred from the
Consolidated Fund of India. Since certain entitlements such as gratuity and provident
fund (PF) are funded by employers and employees and not by the Consolidated Fund
of India, making Aadhaar mandatory for availing such entitlements may violate the
judgement.
Conclusion
The Code on Social Security, 2020 is clearly a step in the right direction from an ease of
compliance and universality perspective as it covers a large portion of our working population.
A regulatory authority to separately administer the code would be beneficial to monitor the
welfare of workers and it can better track the efficacy of schemes.

40
8. POINT OUT THE DIFFERENCES BETWEEN COLLECTIVE BARGAINING
AND COMPULSORY ADJUDICATION SYSTEM.
Collective Bargaining
1. Voluntary process used to determine terms and conditions of work and regulate relations
between employers, workers, and their organizations, leading to the conclusion of a
collective agreement
2. Carried out voluntarily, freely, and in good faith
3. Settles issues through dialogue and consensus rather than through conflict and
confrontation
4. Improves the labor relations climate by providing an institutionalized and agreed way of
managing conflict.
5. Gives legitimacy to the rules regulating labor relations.
6. Allows the parties to tailor a collective agreement governing the employment relationship
to their particular industry or enterprise.
7. Allows parties to solve problems that may be specific to their industry or workplace.
8. Parties are free to engage in bargaining, and there should be no interference from the
authorities in their decisions to do so.
9. Collective bargaining should be carried out voluntarily, freely, and in good faith.
10. Collective bargaining has the advantage that it settles issues through dialogue and
consensus rather than through conflict and confrontation.
Compulsory Adjudication
1. System where labor disputes are resolved through the intervention of a third party, such as
a government-appointed arbitrator or a court.
2. Not voluntary, and the parties involved have no choice but to accept the decision of the
third party
3. Can lead to the juridification of industrial relations, where labor disputes are treated as legal
issues rather than workplace issues
4. Can be seen as a last resort when collective bargaining fails to resolve a dispute
5. Parties involved have no control over the outcome of the dispute
6. The third party may not have the same level of knowledge or understanding of the industry
or workplace as the parties involved
7. Can be a lengthy and costly process
8. The third party may not be able to take into account the specific needs and circumstances
of the parties involved
41
9. The third party may not be able to provide a solution that is acceptable to both parties
10. The third party's decision may not be binding, and the parties may still need to negotiate a
settlement
In summary, collective bargaining is a voluntary process that allows the parties involved to
negotiate and reach a mutually agreed-upon solution, while compulsory adjudication is a
system where a third party intervenes to resolve a dispute when the parties involved cannot
reach an agreement.

The Supreme Court has held that though social and economic justice is the ultimate ideal of
industrial dispute settlement, the immediate objective is to settle the dispute by constituting a
wage structure which would be acceptable to both labour and capital and lead to genuine
cooperation in the task of production. Therefore, to achieve this objective, industrial
adjudication takes into account several principles such as, the principle of comparable wages,
productivity in the trade or industry, the cost of living and the ability of the industry to pay.
There is however one principle, also laid down by the Courts for which there is no exception.
No industry has the right to exist if it is unable to pay the workmen at least the bare minimum
wages. On the other hand through the system of collective bargaining the workmen are able to
voice their demands regarding wages, hours of working and other conditions of employment.
For the success of collective bargaining, the process should begin with proposals rather than
demands and the parties should be willing to go with some compromises otherwise the whole
process will be a failure.
According to the Supreme Court, the Industrial Disputes Act, 1947 seeks to achieve social
justice on the basis of collective bargaining. In an earlier judgment in Titagarh Jute Co. Ltd. v.
Sriram Tiwari(1982), the Calcutta High Court clarified that this policy of the legislature is also
implicit in the definition of ‘industrial dispute’,
“As trade unions developed in the country and Collective bargaining became the rule, the
employers found it necessary and convenient to deal with the representatives of workmen,
instead of individual workmen, not only for the making or modification of contracts but in the
matter of taking disciplinary action against one or more workmen and as regards of other
disputes.”
Supporters of adjudication contend that, though the process is coercive in nature, is superior to
the collective bargaining. A dispute on principal of trial by combat can be settled by collective
bargaining. Any strong union in the industry may take a weak case and can still win the case
& vice versa. On the other hand, adjudication, though imperfect, introduces an element of law
42
and justice in the procedure of industrial relations. The judicial standards available to the judges
in the process of adjudication in the area of industrial disputes may be imperfect. But they are
still better than the “might is right” principle which underlies collective bargaining. As
theinstitution of adjudication grows, so will the industrial jurisprudence. So, we can say that
the adjudication is based upon the coercive power of the state, but the institution of collective
bargaining is fully on the coercive power of the parties themselves. The authority of the state
should be used to prevent any strong group of employers or workers from any ransom activities
in the organization. The adoption of collective bargaining as one of the main instrument in the
economic growth demands that in order to maintain the achieving targets on economic
development, industrial peace should be maintained. So, adjudication should be adopted for
the purpose of resolving industrial disputes. In India, adjudication does not suppress the
collective bargaining. Adjudications acts as a supplement for the collective bargaining process.
In spite of arguments of heavy expenses & delays are concerned, the adjudication mechanism
can be improved and improving gradually.
One of the strong arguments against the adjudication procedure is that it leads to an
authorization imposition of different terms and conditions of employment and suppresses the
possibilities of self-governance in the organization/industries based on the democratic freedom
of people to solve their problems through collective bargaining. It should be noted that people
should have their own democratic right in the industry to settle their disputes by themselves
without any intervention of third party. Another argument against adjudication relates to the
absence of any absolute standards to resolve divergence interests and to judge the fairness
which can results a healthy work environment. While a Civil Judge can locate the facts and
apply them on the known land of law, the adjudicator of an industrial dispute does not have
such laws or clear guidelines which can guide him in resolving differences of opinion relating
to economic interests.An adjudicator is just a law-giver whereas the civil judge is an interpreter
of law.Finally, adjudications can sometimes lead to vitiate industrial relations by creating a
controversial atmosphere. Under this method, the labour unions can demand anything which is
unreasonable in nature. Because they know, this demand will not require to be backed by any
industrial or organizational strength to make it logically approved. If the demands are not
fulfilled, they can be easily shifted to the courts of adjudication. So, the adjudication can create
any artificial atmosphere because in both end the parties are trying to evade the real issues as
long as possible. This can create a huge stress on the legalism which may satisfy the legal
parameters but may not solve the actual problem.

43
9. EXPLAIN THE PROCESS OF COLLECTIVE BARGAINING. WHAT ARE THE
LIMITATIONS OF COLLECTIVE BARGAINING?

Collective bargaining is a two-edged sword; what is won may also be lost. Today’s collective
bargaining process is based upon statutory law. What makes collective bargaining possible in
this context is that both labour and management have an ultimate harmony of interest; that is,
the desire to assure that the firm for which they work – and from which they are both paid –
will remain in business. In order to stay in business, it must be competitive with other firms.

The bargaining process includes preparation of initial demands, negotiations, and settlement.
Adequate preparation for bargaining is often the key to success – preparation for negotiations
is a comprehensive on-going job for both the management and the union.

Preparation allows each bargaining team to determine their bargaining objectives; a negotiating
team to defend its proposals; and to anticipate the opponent’s demands. Among the more
important steps to pre-negotiation preparations are the following:

1) Coordinating preparations among persons responsible for gathering and analysing

information relevant to the bargaining process.

2) Selection of a chief negotiator and bargaining team members.

3) Reviewing previous negotiations because it provides insights into the opponent’s bargaining
tactics and probable demands.

4) Gathering data on internal operations and policies of comparable firms through wage and
salary surveys.

5) Formulate proposals and priorities.

6) Select a suitable site for negotiations.

7) Organise the relevant information in a bargaining book for easy access at the bargaining
table.

8) Notify the opponent the intent to bargain by serving required notice.

One of the most difficult aspects of the collective bargaining process is to determine
appropriate bargaining units. The principle to be followed is that there should exist a
community of interest among the employees to be represented. Otherwise, a single bargaining
agent would find it impossible to represent all of their interests equally well.

44
The first step in the collective bargaining process is establishing a relationship for ongoing
negotiations and the formulation of agreements covering conditions in the workplace. It is
obvious that a great deal of effort can go into the process of establishing a collective bargaining
relationship. It is an anxiety producing process and that each step may involve bitter conflict
between the parties. Sometimes, this conflict escalates to litigation; and sometimes it even spills
over to violence. Hence, one of its objectives should be promotion of rational and harmonious
relations between employers and unions.

The second step in the bargaining process relates to the scope of bargaining, i.e., the matters
on which to bargain. It consists of three broad categories of items – subjects over which
bargaining is mandatory, subjects considered illegal or prohibited, and subjects on which
bargaining is permitted but not required. In case of subjects, which are mandatory, the relevant
statute or common law makes it unfair labour practice or breach of good faith to refuse to
bargain over them. The second category of items in the scope of bargaining is practices
considered illegal or prohibited. These are the matters that cannot be bargained under law.
Falling between these two categories are items upon which bargaining is permitted, but not
required. Either side may refuse to discuss such a matter. To do so is not considered a breach
of fair labour practice or good faith.

The third step in the bargaining process is careful structuring. Many observers agree that some
structural aspects are crucial in facilitating the ability to reach agreements. The personnel
department should take the initiative of forming a negotiating team consisting of two or three
members, besides the industrial relations expert. The management team should include
representatives of the departments, a personnel specialist, and some one competent to assess
the various proposals and counter proposals. The bargaining teams should also be balanced in
terms of number of individuals present. Both the sides should agree in advance on the timing,
location, and length of bargaining sessions. An agenda should be prepared indicating which
items are to be taken up first – economic or non-economic. A decision must be made as to
whether to treat each item separately, or to seek to bargain an entire package at once. The task
of management team should range from formulation of management’s charter of demands to
the full participation in the actual bargaining sessions; and above all, the preparation of the
draft of the settlement and, then, the readiness to negotiate.

An absence of good faith bargaining has been found to include:

1) An unwillingness to make counter proposals.

45
2) Constantly changing positions in bargaining.

3) The use of delaying tactics.

4) Withdrawal of concessions after they have been made.

5) Unilateral actions over topics of bargaining.

6) Refusal to furnish necessary data for negotiations.

Steps to improve the process of collective bargaining are:

• Begin the process of negotiations with proposals, not demands.

• Avoid taking public positions for or against certain proposals in advance of negotiations.

• Avoid taking strike votes before the process of negotiation begins.

• Give negotiators proper authority to bargain.

• Avoid unnecessary delays in beginning negotiations and in conducting them.

• Insist on offering facts and arguments.

• Make plenty of proposals to enhance the opportunities to find compromises.

• Be prepared to compromise.

• Be prepared to get results gradually.

• Preserve good manners and keep discussion focused on relevant issues.

• Be prepared to stand for a long and hard strike or lockout (as the case may be) in

• order to force a settlement justified by facts and arguments.

PROCEDURE FOR COLLECTIVE BARGAINING

a) A charter of demands

The trade union will notify the employer for initiating collective bargaining negotiations. The
representatives of the trade union draft a charter of demands which contains issues related to
terms of employment and the working conditions namely wages and allowances, bonuses,

working hours, benefits, holidays. In some cases, an employer may also notify the trade union
and initiate collective bargaining negotiations.

a) Negotiations

46
Negotiation is the next step after the submission of the charter of demands by the trade union.
Both the employer

and the employee seek opportunities to suggest compromise solutions I their favour until an
agreement is reached. If it possible to reach out to an agreement, a third party (mediator /
arbitrator) may be brought in from outside. If, even with the assistance of the third party, no
viable solution can be found to resolve the parties‟ differences, the trade union may decide to
engage in strikes.

b) Collective bargaining agreement

Pursuant to the negotiations between the parties, a collective bargaining agreement will be
executed between the employer and workmen represented by trade unions, setting out the terms
of employment and working conditions of labour. Section 18(1) of the Industrial Disputes Act,
1947 impliedly speaks about collective bargaining agreement: “13[Settlement arrived at
otherwise than in the course of conciliation proceedings i.e., without aid of statutory agency.”

Ludwig Teller defines collective bargaining agreement as: “An agreement between a single
employer or an association of employers on the one hand and a labour union upon the other,
which regulates terms and conditions of employment.”

Types of collective bargaining agreements:

i. Procedure agreements

Procedure agreements spell out the steps by which the industrial relations process are carried
out. Procedure agreements are collective agreements which relate to:

Machinery for consultation, negotiation or arbitration on terms and conditions of

employment or for any other matters which arise between trade unions and employers;

Negotiating rights;

Facilities for trade union officials; and

Disciplinary matters and individual workers‟ grievances.

ii. Substantive agreements

These contain the „substance‟ of any agreement on terms and conditions of employment. They
cover payments of all kinds, i.e. wage rates, shift allowances, incentive payments, also holidays
and fringe benefits such as pensions and sick pay and various other allowances.

47
c) Strikes

If both parties fail to reach an agreement because of mutual consensus, the union may go on a
strike, which shall be in accordance with the provisions of the Industrial Disputes Act, 1947.

d) Conciliation

Once the conciliation officer receives a notice of strike or lockout, the conciliation proceedings
shall commence. The State Government may appoint a conciliation officer or a Board of
Conciliation to investigate disputes, mediate and promote a settlement. Workers are prohibited
from goingon strike during the pendency of such conciliation proceedings. Conciliation
proceeding may have one of the three outcomes, namely:

(i) A settlement; or

(ii) No settlement; or

(iii) Reference being made to the appropriate labour court or any other industrial tribunal.

ROYAL CALCUTTA GOLF CLUB MAZDDO UNION v. STATE OF WEST BENGAL

The main task of the Conciliation Officer is to go from one camp to the other and find out the
greatest measure of agreement…to investigate the dispute and do all such things as he thinks
fit to arrive at a fair and amicable settlement of the dispute.

e) Compulsory arbitration or adjudication

When conciliation and mediation fail, parties may either resort to compulsory or voluntary
arbitration. Arbitration and the recommendations of the arbitrator may be binding to the parties.
Section 7A of the Industrial Disputes Act, 1947 provides for a labour court or industrial tribunal
within a state to adjudicate protracted industrial disputes such as strikes and lockouts. Section
7B of the Industrial Disputes Act, 1947 provides for constitution of national tribunals involving
questions of national interest or issues concerning more than two states. In the event, a labour
dispute is not resolved by conciliation and mediation, the employer, and the workers may refer
the case by a written agreement to a labour court, industrial tribunal or national tribunal for
adjudication or compulsory arbitration.

LEGAL BOUNDARIES FOR COLLECTIVE BARGAINING

i. India has not ratified convention- 87 (convention on Freedom of Association and Protection
of the Right to Organize, 1948) and convention- 98 (Right to Organize and Collective
Bargaining Convention, 1949) of International Labour Organisation.

48
ii. There is only a limited scope and coverage of collective bargaining within legal boundaries
of Trade Union Act, 1926 and Industrial Disputes Act, 1947 . The Trade Union Act, 1926 was
amended in 2001 and after the amendment it became more difficult to form trade unions. In
the Act of 1926, only seven members were required to register a trade union, but after
amendment at least 10% or 100, whichever is less, subject to a minimum of seven workmen
engaged or employed in the establishment are required to be the members of the union before
its registration. The amendment also introduces a limitation on the number of outsiders among
the office bearers.

iii. Trade Union Act, 1926 and Industrial Disputes Act, 1947 remains silent regarding the
recognition of trade unions. Only when the unions are recognised by the management then only
they have the fullfledged right as bargaining agent on behalf of workers. But there is no legal
obligation on employers to recognise a union or engage in collective bargaining. The statutes
of only few states of India like Maharashtra, Gujarat, Madhya Pradesh and Rajasthan have
made some provisions for recognition of unions with a specific percentage of the workforce.
iv. In India, right to protest is a fundamental right under Article 19 of the Constitution; but right
to strike is not a fundamental right under Part III of the Constitution but a legal right governed
by Industrial Disputes Act, 1947.

• Section 22 (1) : No person employed in a public utility service, shall go on strike in breach
of contract-

(a) Without giving to the employer notice of strike, as hereinafter provided, within six weeks
before striking; or

(b) Within fourteen days of giving such notice; or

(c) Before the expiry of the date of strike specified in any such notice as aforesaid; or

(d) During the pendency of any conciliation proceedings before a conciliation officer and seven
days after the conclusion of such proceedings

• Section 23 : No workman who is employed in any industrial establishment shall go on strike

in breach of contract and no employer of any such workman shall declare a lock-out-

(a) During the pendency of conciliation proceedings before a Board and seven days after the
conclusion of such proceedings;

(b) During the pendency of proceedings before [a Labour Court, Tribunal or National Tribunal]
and two months after the conclusion of such proceedings; [(bb) during the pendency of

49
arbitration proceedings before an arbitrator and two months after the conclusion of such
proceedings, where a notification has been issued under sub-section (3A) of section 10A; or]
(c) During any period in which a settlement or award is in operation, in respect of any of the
matters covered by the settlement or award.

TAMIL NADU ELECTRICITY WORKERS FEDERATION v. MADRAS STATE

ELECTRICITY BOARD

Collective bargaining is the foundation of the movement and it is in the interest of the labour
that statutory recognition has been accorded to Trade Union and their capacity to represent
workmen, who are members of such bodies. But, of course there are limits to this doctrine, for
otherwise, it may become a tyranny stifling the freedom of an individual worker.

v. Trade Union activities are granted immunity from the applicability of CRPC under section
18 of Trade Unions Act, 1926 and immunity from civil suit in certain cases under section 18
of Trade Unions Act, 1926.

vi. Moreover, in recent decades, a number of judgments came from the Supreme Court setting
precedents against the right to strike. There are two reasons to believe that labour standards
may finally be able to claim a place on the public agenda. The first is that positive evidence is
accumulating that attention to decent labour standards may help to improve economic
performance; the second is that discontent with falling and occasionally exploitive standards
may be emerging as a concern for a broad spectrum of workers and voters. The right of a Trade
Union to speak legitimately on behalf of their members is recognised in Indian Law but it does
not in any way derogate an individual from his right to judge for himself, independently of any
Trade Union, as to offer advantageous to him, concerning his employment.

Main Hindrances for Collective Bargaining:

The main objective of developing collective bargaining technique is to improve the workers-
management relations and thus maintain peace in industries. The technique has developed in
India only after India got independence and got momentum since then.
The success of collective bargaining lies in the attitude of both management and workers which
is actually not consistent with the spirit of collective bargaining in India. There are certain
problems which hinder the growth of collective bargaining in India.
The following factors or activities act as hindrances to effective collective bargaining:
(1) Competitive Process:

50
Collective bargaining is generally becoming a competitive process, i.e., labour and
management compete each other at negotiation table. A situation arises where the attainment
of one party’s goal appears to be in conflict with the basic objectives of the other party.
(2) Not Well-Equipped:
Both the parties—management and workers—come to the negotiation table without doing their
homework. Both the parties start negotiations without being fully equipped with the
information, which can easily be collected from company’s records. To start with, there is often
a kind of ritual, that of charges and counter charges, generally initiated by the trade union
representatives. In the absence of requisite information, nothing concrete is achieved.
(3) Time to Protest:
The immediate objective of the workers’ representatives is always some kind of monetary or
other gains, accrue when the economy is buoyant and the employer has capacity to pay. But in
a period of recession, when demand of the product and the profits are falling, it is very difficult
for the employer to meet the demands of the workers, he might even resort to retrenchment or
even closure collective bargaining is no answer to such a situation.
(4) Where Prices are Fixed by the Government:
In industries, where the prices of products are fixed by the Government, it becomes very
difficult for the employer to meet the demands of workers which would inevitably lead to a
rise in cost of the products produced. Whereas the supply price to the consumers cannot be
increased. It will either reduce the profits of the firm or increase the loss. In other words, it will
lead to closure of the works, which again is not in the interest of the workers.
(5) Outside Leadership:
Most of the Indian trade unions are led by outsiders who are not the employees of the concerned
organisations. Leader’s interests are not necessarily to be identical with that of the workers.
Even when his bonafides are beyond doubt, between him and the workers he leads, there cannot
be the degree of understanding and communication as would enable him to speak on behalf of
the workers with full confidence. Briefly, in the present situation, without strong political
backing, a workers’ organisation cannot often bargain successfully with a strong employer.
(6) Multiplicity of Trade Unions:
One great weakness of collective bargaining is the multiplicity of trade unions. In a multiple
trade union situation, even a well recognised, union with long standing, stable and generally
positive relationship with the management, adopts a militant attitude as its deliberate strategy.
In Indian situation, inter-union rivalries are also present. Even if the unions combine, as at
times they do for the purpose of bargaining with the employer they make conflicting demands,
51
which actually confuse employer and the employees.
(7) Appointment of Low-Status Executive:
One of the weaknesses of collective bargaining in India is that the management deputes a low-
status executive for bargaining with the employees. Such executive has no authority to commit
anything on behalf of the management. It clearly indicates that the management is not at all
serious and the union leaders adopt other ways of settling disputes.
(8) Statutory Provisions:
The constraints are also imposed by the regulatory and participative provisions as contained in
the Payment of Wages Act, the Minimum Wages Act, and Payment of Bonus Act etc. Such
provisions are statutory and are not negotiable.
(9) Fresh Demands at the Time of Fresh Agreement:
At the time when the old agreement is near expiry or well before that, workers representatives
come up with fresh demands. Such demands are pressed even when the industry is running into
loss or even during the period of depression. If management accepts the demand of higher
wages and other benefits, it would prefer to close down the works.
(10) Agreements in Other Industrial Units:
A prosperous industrial unit in the same region may agree with the trade unions to a substantial
increase in wages and other benefits whereas a losing industry cannot do that. There is always
pressure on the losing industries to grant wages and benefits similar to those granted in other
(relatively prosperous) units in the same region.
Scope of Collective Bargaining:
Collective bargaining broadly covers subjects and issues entering into the conditions and terms
of employment. It is also concerned with the development of procedures for settlement of
disputes arising between the workers and management.

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 DETAILED DISCUSSION
10. GIVE OUT THE DETAILED LIST OF THE VARIOUS ACTS WHICH ARE
INCLUDED IN THE FOUR LABOUR CODES IN INDIA.

Labour Code Acts subsumed

• Payment of Wages Act, 1936;

• Minimum Wages Act, 1948;
Code on Wages, 2019
• Payment of Bonus Act, 1965; and
• Equal Remuneration Act, 1976

14. Factories Act, 1948;

15. Mines Act, 1952;
16. Dock Workers (Safety, Health and Welfare) Act, 1986;
17. Building and Other Construction Workers (Regulation
of Employment and Conditions of Service) Act, 1996;
18. Plantations Labour Act, 1951;
19. Contract Labour (Regulation and Abolition) Act, 1970;
20. Inter-State Migrant Workmen (Regulation of
Employment and Conditions of Service) Act, 1979;
21. Working Journalist and other Newspaper Employees
Occupational Safety, Health and
(Conditions of Service and Miscellaneous Provision)
Working Conditions Code, 2020
Act, 1955;
22. Working Journalist (Fixation of Rates of Wages) Act,
1958;
23. Motor Transport Workers Act, 1961;
24. Sales Promotion Employees (Condition of Service) Act,
1976;
25. Beedi and Cigar Workers (Conditions of Employment)
Act, 1966; and
26. Cine-Workers and Cinema Theatre Workers (Regulation
of Employment) Act, 1981

Industrial Relations Code, 2020 • Trade Unions Act, 1926;

53
 • Industrial Employment (Standing Orders) Act, 1946,
and
• Industrial Disputes Act, 1947

• Employees’ Provident Funds and Miscellaneous

Provisions Act, 1952;
• Employees’ State Insurance Act, 1948;
• Employees’ Compensation Act, 1923;
• Employment Exchanges (Compulsory Notification of
Vacancies) Act, 1959;
Code on Social Security, 2020
• Maternity Benefit Act, 1961;
• Payment of Gratuity Act, 1972;
• Cine-workers Welfare Fund Act, 1981;
• Building and Other Construction Worker’s Welfare Cess
Act, 1996; and
• Unorganised Workers Social Security Act, 2008

54
The Parliament authorised 4 labour codes in 2020 to replace 29 sets of employment regulations
and incorporate these many statutes. All four labour laws have previously received the
President’s blessing and approval from the Parliament.

1. Code on Wages, 2019:

• The Code on Wages applies to all establishments and to all employees in both organised
and unorganised sectors.

• This labour code envisages uniform applicability of the provisions of timely payment
of wages and minimum wages to all employees and bonus payments in all employments
where any industry, business, trade or manufacture is carried out.

• It introduces the concept of a floor wage, which is to be determined by the Centre after
taking into account the minimum living standards of workers which may be different
for different geographical areas.

• The state government can, under no circumstance, fix a minimum wage rate lower than
the floor rate determined by the Centre.

• The minimum wages decided by the central or state governments should be above the
floor wages. In case the existing minimum wages are higher than the floor wages, the
central or state governments cannot reduce the minimum wages.

• While fixing the minimum wages, the government should take into account the
difficulty level of the work, and the workers’ skill levels also.

• The Code prohibits gender discrimination in wages and recruitment of people for the
same work or work of similar nature. Work of a similar nature is defined as work for
which the skill, effort, experience, and responsibility required are the same.

• Wages include salary, allowance or any other monetary component. It does not include
bonuses and travelling allowances.

• The number of working hours will be fixed by the central or state governments. In the
case of overtime work, the worker is entitled to overtime compensation which should
be at least twice the standard wages.

• The employer can fix the wage period as either daily, weekly, fortnightly, or monthly.

• Advisory boards will be constituted which will advise the governments on minimum

55
 wage fixing and increasing the employment opportunities for women.

• The Code specifies penalties for offences committed by an employer for Contravention
of any provision of the Code, Paying less than the minimum wage and the maximum
punishment is three-month imprisonment along with a fine of Rs. 1 lakh.

2. Code on Industrial Relations, 2020:

• This labour code amalgamates three existing laws and expands the definition of worker
to include persons employed in a skilled or unskilled, manual, technical, operational
and clerical capacity.

• Besides, persons employed in a supervisory capacity and earning less than Rs. 18,000
per month have been brought under the definition.

• The code introduces a new provision for fixed-term employment, giving employers the
flexibility to engage a worker on the basis of a written contract. Fixed-term employees
will get the same benefits as permanent employees.

• The minimum number of workers employed for an establishment to have standing

orders has been raised to 300. With the increased threshold, it becomes more flexible
and easier to hire and fire thus leading to increased employment according to the
government.

• The new industrial relation code would also improve the ease of doing business by
allowing firms with up to 300 workers to go ahead with lay-offs, retrenchment and
closure without government permission.

• The new Code also proposes the setting up of a re-skilling fund for training retrenched
workers with a contribution from the employer, of an amount equal to 15 days last
drawn by the worker.

• Efforts made by the Government to quickly resolve disputes of the workers include a
Compulsory facility for the Helpline for the redressal of problems of migrant workers.
Making a national database of migrant workers. Provision for the accumulation of one
day of leave for every 20 days worked when work has been done for 180 days instead
of 240 days.

• Equality for women in every sphere: Women have to be permitted to work in every
sector at night, but it has to be ensured that provision for their security is made by the
employer and consent of women is taken before they work at night.

56
 • In the event of the death of a worker or injury to a worker due to an accident at his
workplace, at least 50 % share of the penalty would be given. This amount would be in
addition to the Employee’s Compensation.

• The provision of a “Social Security Fund” for 40 Crore unorganized workers along with
GIG and platform workers will help Universal Social Security coverage.

3. Code on Social Security, 2020:

• The definition of employees has been widened to include inter-state migrant workers,
construction workers, film industry workers and platform workers/ gig workers.

• It subsumes nine laws and empowers the Centre to notify various social security
schemes like the EPF, EPS and ESI for the benefit of workers in all sectors.

• The facility of ESIC would now be provided in all 740 districts. At present, this facility
is being given in 566 districts only.

• It also empowers the Centre to frame any other schemes for the self-employed,
unorganised workers, gig workers and platform workers and the members of their
families.

• EPFO’s coverage would be applicable to all establishments having 20 workers. At

present, it was applicable only to establishments included in the Schedule.

• Firms employing more than 20 workers have to mandatorily report vacancies online
under this code.

• The Code has a provision for the creation of a social security fund for workers in the
unorganized sector.

• The Code proposes the establishment of a National Social Security Board for
recommending to the central government the formulation of schemes for the various
sections of unorganised, gig and platform workers.

• Provision for Gratuity has been made for Fixed Term employees and there would not
be any condition for a minimum service period for this.

• The gratuity period for working journalists has been reduced from 5 years to 3 years.

• With the aim of making a national database for unorganised sector workers, registration

57
 of all these workers would be done on an online portal and this registration would be
done on the basis of Self Certification through a simple procedure.

4. Code on Occupational Safety, Health and Working Conditions, 2020:

• It amalgamates 13 existing labour laws into the labour code and applies to factories (as
the code expands the definition) having at least 20 workers if the manufacturing process
is being carried on with the aid of power and 40 if the manufacturing process is being
done without power.

• Under this code, employers are required to ensure that the workplace is free from
hazards which cause injury or occupational disease to the employees and provide free
annual health examinations or tests, free of cost to certain classes of employees.

• The Code defines an inter-state migrant worker as someone who has come on his/her
own from one state and received employment in another state and earns up to Rs.18000
per month.

• Portability benefits for inter-state migrant workers: They can avail of benefits in the
destination state as regards ration and benefits of building and other construction
worker cess.

• The Code also proposes a Journey Allowance – this is a lump sum fare amount to be
paid by the employer for the journey of the worker from his/her native state to the place
of employment.

• To encourage formalisation in employment, A legal right for getting an Appointment

Letter given to workers for the first time is covered.

• Cine Workers have been designated as Audio Visual workers so that more and more
workers get covered under the OSH code. Earlier, this security was being given to
artists working in films only.

• The Code removes the manpower limit on hazardous working conditions and makes
the application of the Code obligatory for contractors recruiting 50 or more workers
(earlier it was 20).

• The Code fixes the daily work hour limit to a maximum of eight hours.

• The Code empowers women to be employed in all kinds of establishments and at night
(between 7 PM and 6 AM) subject to their consent and safety.

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Conclusion:

• While industries are entitled to make a reasonable profit on investment, workers are
equally entitled to reasonable wages and good and safe working conditions.

• It is an uphill task to enact and codify rules that satisfy both parties and the mid path,
taking care of the interest of both should be the goal of any labour legislation. To that
end, the four labour codes have been rightly grouped together.

• While the labour codes could be called “historic” because they come after nearly a
century, the exuberance of the Union govt terming them as “landmark” and “game-
changer” is an exaggeration.

• The laws have adapted to the prevailing industrial and economic activity, but there is a
long way to go to achieve a fine balance in the interest of workers and the industry.

• The government needs to work more to recognise that focusing on economic growth
without redistribution of wealth leads to jobless growth and socially unaccountable
prosperity.

• Every law has to aim to maintain the best possible balance between competing interests
and should try to give as much comfort to the weaker of the two sides, as much possible
in the larger interest of our nation.

• Ultimately these laws will be as good as their implementation, mere letters of law have
no meaning.

• The government has to ensure that they are implemented with honesty and integrity,
then only the country will be able to achieve the desired goal of speeding up economic
growth and unleashing the untapped potential of thousands and thousands of our
industries, businesses and entrepreneurs to take the nation to new heights

59
60
BENEFITS OF LABOUR CODES

The benefits of the four-labour code have been given below:

1. It is anticipated that litigation will decline as a result of the 2019 Code of Wage Act, which
simplifies the idea of pay. This will ensure that every worker receives a minimum salary
and improve their purchasing power, both of which will spur economic growth.

2. The three Codes (IR, SS, and OSHW) streamline the labour laws by consolidating 25
central labour legislation that have been on the books for at least 17 years.

3. Despite a reduction in the number of definitions and authorities that apply to businesses, it
will result in a considerable rise in employment and industry.

4. The codes specify only one licencing process.

5. The guidelines also streamline out-of-date laws governing workplace disputes and
modernise the adjudication process, promoting early conflict resolution.

6. Industry insiders and some economists anticipate that this legislation will boost investment
and streamline business dealings. It greatly reduces internal complexity and
inconsistencies, increases adaptability, and modernises rules.

7. In any industry, women must be permitted to work at night, but only if the employer has
taken steps to assure their protection and only after receiving their consent.

8. Maternity leave now lasts for 26 weeks instead of the previous 12 weeks. Women are now
able to work in mines because to the Pradhan Mantri Rojgar Protsahan Yojana (PMRPY).

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11. IN DETAIL, DISCUSS THE HISTORICAL BACKGROUND OF LABOUR LAWS
IN INDIA.

Discussion of Indian labour law and industrial relations is often divided into discrete time
periods, reflecting important stages in the evolution of the Indian state as well as stages of
economic development and policy. Writing in 1955, Ornati suggested three key periods in the
evolution of Indian labour law to that point of time. The earliest regulation was largely aimed
towards securing labour supply and control, including Indian versions of the Masters and
Servants provisions of English law, but these were eventually added to by a sequence of
factory-type regulations, providing for some basic levels of protection, between the 1880s and
the 1930s. This legislation essentially reflected an accommodation of sorts between the
interests of British industry, seeking protection for its domestic enterprises against cheap
foreign labour, and Indian social reformers intent on improving what were regarded as
subhuman working conditions in Indian factories. In the view of some commentators, this early
period of labour law reform was largely “formal or unimportant,” constituting only a
“minimum of interference with the working conditions of labour and the relationship between
the employer and the worker.” A second period (1937–47), Ornati suggests, was more creative,
and began with the emergence of “Provincial Autonomy” in the second half of the 1930s, the
focus of the Indian Congress Party on workers’ rights (including such matters as standards of
living, trade union rights, the right to strike, and so on), and the introduction of greater
uniformity through the extension of workplace regulation. The third period in Ornati’s analysis
begins with the critical post-Independence legislation of the late 1940s and early 1950s.
Ornati’s analysis would suggest that there was nothing very eventful about early Indian labour
law, but others have argued that there was important progress made in labour legislation in the
immediate post-World War I period, pointing specifically to the influence of several
International Labour Organisation (ILO) conventions and the Royal Commission on Labour in
the 1920s as major advances. For the purposes of present discussion we propose to examine
the evolution of labour law in India, and the regulatory policy associated with it, across six
main periods.

2.1 Pre-1920s

As we have already noted, in the early period of industrialization and the gradual shift of labour
from rural areas to cities, there was little attention paid to the organization of work by the
colonial authorities beyond various penal provisions aimed at securing labour supply and
discipline for emerging industries. Much of the early British regulation related to workers in

62
the government service, including the military, and “forced labour” for the performance of
public works. In this early legislation, the Workmen’s Breach of Contract Act 1859 was of
pronounced importance, imposing not merely fines for breaches of employment contracts, but
also allowing for orders of specific performance of the service contract. These provisions were
long-standing and extensively used in labour discipline. It is important to note further that at
the same time labour organization was also substantially a matter of family, land, and cultural
regulation, and the relationship of the Masters and Servants laws and other penal provisions,
and the idea of the “contract” of employment, with the traditional patterns of regulation
grounded in these earlier customs and forms, were complex to say the least. However, from the
1880s onwards there was a succession of legislative interventions by the colonial government,
mainly in relation to the employment of women and children, and concerning hours of work,
in factories and mines. Much of this legislation was the result of various government-initiated
enquiries. However, the legislation made only very slight inroads into working practices in
these industries, and was of limited impact insofar as it applied only selectively. Regulation in
the plantation sector was focused principally upon matters relating to labour supply and the
problems of the indentured labour system.

2.2 Post-World War I and the 1920s

As we noted, there is some disagreement about the importance of this period. Several factors
had combined to alter the industrial and political landscape, including the emergence of a strong
nationalist movement, the rapid development of trade unions (most importantly the formation
of the All India Trade Union Congress in 1920), and the emergence of Communist influence
in the labour movement following the successful Bolshevik revolution in Russia in 1917. At
the same time, the newly created International Labour Organization began to have an influence
on labour policy in India. Much of the legislation of this period was a continuation of the
“factory”-style regulation of the pre-war period, dealing with hours of work, rest periods,
female and child protections, health and safety, and so on. Typical protective legislation of the
period includes the Factories Act 1922, the Mines Act 1922, and the Workmen’s Compensation
Act 1923, much of it responding to the ratification of various relevant International Labour
Organization conventions by the colonial Indian government.

However, even if this body of legislation is correctly characterized as “unimportant,” two

further enactments in this period point to what has been described as the emergence of a more
modern approach to the regulation of industrial relations: the Trade Unions Act 1926 and the
Trade Disputes Act 1929. The regulatory framework set down in these two provisions

63
continues formally to underpin the collective labour law system of presentday India. The Trade
Unions Act 1926 provided for the registration of trade unions (though registration was not
made compulsory), gave unions a legal status, and extended some protections against civil and
criminal liability in the course of industrial disputes. The Act was limited in certain respects
(for example unregistered unions were excluded from the Act’s protections), and the legislation
provided no support for a collective bargaining system as such, insofar as there was no
obligation upon employers to bargain with unions (even registered unions) in the course of an
industrial dispute, nor, in the case of such bargaining, was there any legal obligation to bargain
in good faith. The Trade Disputes Act 1929 placed severe limitations upon the right to strike,
and provided for the compulsory reference of industrial disputes to a conciliation board or a
court of enquiry. The outcomes of the reference, however, were not binding upon the parties.
Both pieces of legislation were strongly criticized by sections of the trade union movement,
including the All India Trade Union Congress.

2.3 The 1930s

In the context of world economic depression and the associated rise in unemployment, there
was also in this period continued agitation for Indian independence in which the All India Trade
Union Congress was playing a major role. Mass dismissals were accompanied by a renewed
wave of strikes, especially as the economic depression took hold through 1928 and 1929.
Against this background, the British government established the Royal Commission on Labour
in India on 4 July 1929. The Commission was effectively boycotted by the Indian labour
movement, the All India Trade Union Congress pointing to the British Imperialist
government’s “open and brutal attack upon the trade union movement by means of repressive
legislation” and its lack of “bona fides” in establishing the Commission. The Commission
handed down its Report34 in 1931, still a period of continued job cuts, wage reductions, and
ongoing industrial unrest and strike action. But during the 1930s, two major factors began to
put some further shape on Indian labour law. First, many of the outcomes of the Report of the
Royal Commission made their way into a string of new labour legislation between 1933 and
1939. Menon estimates that of 24 pieces of labour legislation introduced by central and
provincial governments between 1932 and 1937, 19 arose from the Royal Commission’s
recommendations. Virtually all of this new law was in the nature of protective factory and
mines regulation to do with wages, hours of work, and compensation of one sort or another,
similar to earlier periods. One exception was the Payment of Wages Act 1936, which
empowered the employer to deduct wages of employees absent from work in concert, and

64
without reasonable cause. A further example was the Trade Disputes (Amendment) Act 1938,
which authorized provincial governments to appoint conciliation officers to assist in the
settlement of disputes. Second, and potentially more important, were the developments which
followed from the Government of India Act 1935. The heightened profile given to provincial
autonomy made possible under these new constitutional arrangements gave rise to popular
expectation that more “labour”- or “union”-friendly policies would emerge at the provincial
government level, and this in turn gave rise to further concentrated periods of extensive strike
action. Even prior to the 1935 Act, several provincial governments had begun to experiment
with labour law, much of it an important contribution to the development of better working
conditions in workplaces. Not all of this, however, was particularly directed to creating a more
favourable environment for combined labour activity. One important instance was the
introduction of the Trade Disputes (Conciliation) Act 1934 by the provincial government of
Bombay. Whilst novel insofar as it was designed to effect changes to collective labour relations
(by providing for the appointment of a Labour Officer to represent the interests and grievances
of workers in the cotton mills), the 1934 Act seems to have been aimed mainly at heading off
communist influence among the labour movement following many years of decline in the
Bombay-based textile industries and a major strike earlier in that year. However, more
adventurous legislation followed after the election of more popular provincial governments in
the wake of the Government of India Act 1935. The introduction of the Industrial Disputes Act
1938 by the Bombay provincial government, for example, among other things made some
move towards the imposition of a legal obligation on the part of employers to recognize trade
unions. Again, it is necessary to note, however, that these were largely limited measures which
were not greeted with general approval by the Indian trade union movement. The All India
Trade Union Congress described the 1938 Bombay Bill as “uncalled for, reactionary,
prejudicial and harmful to the interest of the workers [and] ‘calculated to create slave unions’.”
In general it appears that the expectations created in the popular election of provincial
governments remained largely unfulfilled.

2.4 World War II and the Pre-Independence Period

Regulation in the World War II period appears against the background of considerable
industrial unrest and strike action against the conditions and effects of the war itself. These
circumstances brought into being several pieces of legislation (at central and state level)
designed to secure labour co-operation in support of the war effort. This legislation included
passage in 1941 of s. 49A of the Bombay Industrial Disputes Act, granting power to the

65
Bombay government to refer industrial disputes to compulsory arbitration by an Industrial
Court, and banning all strikes and lockouts prior to arbitration. Much of this restrictive
legislation in the Bombay province was continued after the war ended in the form of the
Bombay Industrial Relations Act 1946. Other relevant legislation included the central
government’s Essential Services Act 1941, and the Defence of India Rules (Rule 81-A,
introduced in 1942, and Rule 56-A, introduced in 1943). Each of these sets of provisions laid
down severe restrictions against strikes, and other forms of industrial action, in the course of
industrial disputes, including industrial action on the part of employers in some cases. General
and political strikes were also targeted. The provisions of Rule 81-A in particular were
continued after the war as part of the Industrial Disputes Act 1947, and, as is noted in
subsequent sections of this paper, have remained a core part of the legislation governing
industrial disputes and bargaining since that time. To greater or lesser extent, the Trade
Disputes Act 1929, its successor the Trade Disputes Act 1947, and earlier provisions such as
the Bombay Act of 1934, were essentially designed to enable government agencies to
investigate industrial disputes over relevant terms and conditions of employment, and to settle
them in appropriate cases. But generally the terms of this legislation were historically directed
more towards the control of labour than towards the settlement issue. Certainly there was little
or nothing in these various provisions which facilitated the development of collective
bargaining in a British- or American-style model. While strikes and lockouts were strictly
controlled, Indian governments, at both central and state levels, exercised strong controls over
the circumstances in which disputes might be referred to adjudication, the industries to which
the legislation applied, and which unions might be permitted to notify such disputes.The overall
impact of this was, then, one of limitation and exclusion. The Industrial Disputes Act 1947, for
example, applied (and applies) generally to “workmen” in “industries.”

“Workmen” excluded various categories of workers engaged in particular occupations, or in

managerial and administrative capacities, and so on. Whereas the term “industry” has now been
interpreted quite broadly, many types of employment, including workers in government
departments and services, and domestic and agricultural workers, are still excluded. Similarly
the Trade Unions Act 1926 also contained important limitations on its coverage. It has been
said of the system set up under the Industrial Disputes Act 1947 that “the freedom of industrial
action on the part of workers [is] more illusory than real” and that the “provisions of the law
[operate] to restrict the options available to the side represented by the workers.” What
collective bargaining there was, developed without state support and, not surprisingly, evolved

66
almost entirely in the formal (or organized) sectors of the economy. These are largely confined
to the public and large corporate sectors and constitute about 3% or less of the workforce in
each case. Most scholars have noted that the path taken in the evolution of labour law in India
in the post-1945 period basically followed the pattern established earlier in the restrictive
policies of the colonial government and in particular the legislation of the war years. Only in a
few states were there exceptions made to the overall discretionary power of government to
refer or not to refer disputes for adjudication, and in only a few states did laws emerge which
created some sort of obligation upon employers to recognize trade unions. One such provision
was the Bombay Industrial Relations Act 1946 which, building upon the earlier (and much
criticized) attempts in the Bombay Industrial Disputes Act 1938, distinguished several types of
union, and extended to some of those unions the right to represent workers in particular
industries and areas. At the same time, however, there was a continued strengthening of the
protective regulation applying to an individual worker’s rights during this period. One example
is the Industrial Employment (Standing Orders) Act 1946, which required employers to provide
their employees with clear terms and conditions of employment according to the items set down
in a Schedule to the Act and certified by the relevant authority. Other major statutes of this
period included the Factories Act 1948 and the Minimum Wage Act 1948. Much of this body
of regulation, as we have noted also in the case of the Industrial Disputes Act 1947, was (and
remains) limited in its application because it was applied only selectively to certain kinds of
business establishment, and, in respect of some provisions, only to businesses of a certain size
as determined by the number of employees. This is a common theme in Indian labour law, with
obvious implications for the legitimacy of the labour law system as a whole.

2.5 Post-Independence, 1948 Onwards

In the immediate post-war period it was agreed that the Indian central government would be
primarily responsible for labour legislation, and the promotion of labour’s interests, reflecting
a five-year plan of development “dealing with all phases of the worker’s life, of housing,
welfare, work, better working conditions, and fair wages.” Many of these social values were
articulated in the Constitution of India 1950, particularly its commitment to economic, political,
and social justice in the Preamble, and its general egalitarian conception of national
development. Consistent with this socio/political outlook, we have noted the introduction of a
raft of protective legislation in the form of the Factories Act 1948, and the Minimum Wages
Act 1948. Important also to note are the Dock Workers (Regulation of Employment) Act 1948,
which among other things sought to “decasualize” dock labour, the Employees’ State Insurance

67
Act 1948, providing for an insurance system for employees in cases of sickness, maternity,
injury, and death, the Plantations Labour Act 1951, which sought to regulate conditions of work
and provide welfare measures for India’s high-employment industries in tea and rubber
plantations, and the Employees’ Provident Fund and Miscellaneous Provisions Act 1952, one
of the most important pieces of legislation in India’s social security system. It follows from
what we have said earlier, however, that this period did not mark out a completely new
approach to the issue of labour regulation in India. When it came to the regulation of collective
labour relations in particular, the restrictive policies of government control which had
characterized the colonial and immediate post-war period continued to hold sway. As various
authorities have noted, the major influence on the formation of post-independence labour and
economic policy was the priority given to government-directed “nation-building”—in which
the need for trade union co-operation in securing industrial peace and labour support for
industrialization and economic development (economic nationalism) was paramount.
Consequently, the development of labour law in India continued to follow the dual pattern
already identified. In support of the state planned and organized economy, the Indian
government continued its strong interventionist role in industrial relations. The laws regulating
trade unions and industrial disputes remained largely fixed on the model set by the legislation
introduced over the period from 1926 to 1947, and this in turn had certain implications for the
Indian industrial relations system. While trade union organization was legally sanctioned,
collective bargaining (at least nominally) “recognized,” and strikes and lockouts to a degree
legalized and regulated, the level of state intervention in the actual industrial relations process,
and the emphasis given to the maintenance of “industrial peace” effectively circumscribed the
possibility that collective bargaining might develop as the primary form of industrial relations
in India: in effect “[c]ollective bargaining was held to be incompatible with economic
planning.” Overall, the law on bargaining has changed little since these formative days,
although in an important amendment to the Trade Union Act in 2001 it was provided that trade
unions were required to have at least 100 members or to represent at least 10% of the workforce
in order to secure registration under the Act, thereby making the formation and legalization of
unions far more onerous than had previously been the case. As noted earlier, some states did
move to provide unions with a right to recognition, and some subsequent legislation made the
refusal to bargain on the part of an employer an “unfair labour practice,” more or less making
the duty to bargain legally obligatory. Probably the best example of this legislation is the
Maharashtra Recognition of Unions and Prevention of Unfair Labour Practices Act 1971,
which supplemented the Industrial Relations Act 1946 of Bombay, although that legislation
68
was limited in its application to nine industries only. In 1982, the Indian central government
amended the Industrial Disputes Act of 1947, introducing the concept of “unfair labour
practice” into national labour law. This legislation outlawed various practices by employers,
unions, and workers designed to disrupt the legitimate processes of dispute settlement under
the Act. The refusal by an employer to bargain collectively in good faith with the recognized
trade union was listed as an unfair practice. Whilst on the face of it this provision might seem
to have amounted to a major breakthrough in collective bargaining law in India, it does not
appear to be regarded as particularly important by Indian labour law scholars, perhaps
principally because it has had little impact in practice. What collective bargaining there is in
India, and it does exist at all levels and across many industries, has evolved in a de facto sense,
and, as noted earlier, has been largely limited to the public, and corporate, sectors of the
economy. In the mid-1990s, the proportion of Indian workers covered by collective bargaining
agreements was estimated to be lower than 5%. On the other hand, Indian labour law continued
to develop in a second dimension; that is, in respect of the relations between the employer and
the individual worker. Here we can identify two main categories of intervention. The first
concerns the continued regulation for protective labour standards which took place at both
central and state levels. We have already noted the continuation of this pattern in the post-
World War II period, and, as Sundar has pointed out, the ongoing regulation for minimum
wages, equal pay, social security and insurance, maternity benefits, health and safety, leave
and holidays, housing, and so on, occupied much of the regulatory space which was taken up
in the contents of collective agreements in industrialized Western countries. The second area
of development concerns employment security. Originally the termination of, or dismissal
from, employment was not an appropriate subject of an individual “industrial dispute” pursuant
to the Industrial Disputes Act 1947, and there was thus little limitation on the employer’s right
to fire an employee as it saw fit, other than a requirement that appropriate notice be given. Nor
did the legislation place limitations upon the power of the employer to retrench or lay off
redundant workers. However, pursuant to amendments to the Industrial Disputes Act in 1953,
1976, and 1982, the central government began gradually to introduce important new
regulations pertaining to retrenchments, lay-offs, and plant and industry closures. These
regulations, including the all important Chapters VA and VB of the Act required, inter alia,
permission by the appropriate authorities for mass redundancies and firm closures, minimum
notice periods, and further relief in the form of compensation.

As far as individual dismissals are concerned, a 1965 amendment to the Industrial Disputes Act

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created a right in an individual employee to notify an “industrial dispute” over his or her
discharge, dismissal, retrenchment, or other form of termination, whether or not that person
was represented by a trade union. A subsequent amendment, in 1971, empowered the Industrial
Tribunals and the Labour Court to investigate the dismissal of employees, and make
appropriate orders, including reinstatement and compensation, where the dismissal was found
to be unfair. As a consequence of these legal changes, the Labour Court and other tribunals
developed a general broad discretion to review the dismissal of workers and to award relief
according to notions of substantive and procedural justice. In 1976, amendments to the Act
substantially increased (from one month to three months) the amount of notice required to be
given to certain categories of employee who had been in continuous service for at least one
year, and prohibited the dismissal of workers by way of retrenchment, lay-off, or industry
closure in factories, mines, and plantations employing 300 or more persons (later reduced to
100 or more in 1982) without permission of the appropriate government. Other legislation
introduced in the 1970s and into the 1980s consolidated this evolving protective framework of
laws for employees engaged in the regulated (formal) sectors of the economy. Aside from
further strengthening the law on dismissal, major legislation was introduced by the central
government in 1970 which strictly limited and regulated the use of contract and agency labour.
Further, the Industrial Disputes (Amendment) Act of 1982, in addition to declaring certain
collective behaviours by both employers and unions to be “unfair labour practices,” declared
certain hiring practices, such as the continuing employment of workers on casual or temporary
contracts with “the object of depriving them of the status and privileges of permanent
workmen,” also to be unfair. Overall, then, the post-Independence period was, at least at the
level of the individual worker in the regulated sector, clearly a period of important
consolidation in employment protection. Not only the central government, but also several of
the state governments, played an important role in this development. In his study of the impact
of Indian labour regulation on unemployment, Sarkar notes that in the period from 1970 to
2006 there were changes in only nine of 40 variables used in one quantitative study of Indian
labour law. Of those nine changed variables, eight were numerically assessed to have been of
advantage to labour and thus of disadvantage to management. Of those eight, seven pertained
to the individual employment rights (employment status and security) of workers. What this
says about the overall protective strength of Indian labour law is problematic, and we address
this issue in Section 2.6 of this paper. But what it does confirm is that in the long sweep of
post-war evolution in Indian labour law, Indian governments were concerned principally with
the construction and maintenance of a “floor of rights” for certain classes of labour, and at the
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same time restricting the industrial, if not the political, development of collective labour
influence.

2.6 The Struggle for Liberalization: Post-1990

Whatever might be said with accuracy about the protective qualities of the Indian labour law
system, it is certainly the case that there is a widespread perception that both the extent and
content of regulation in the Indian labour market has placed severe restrictions on the capacity
of the Indian economy to develop, particularly in the context of economic globalization.
References are constantly made to the volume and severity of the regulatory framework and
the arcane nature of the rules and institutions constituting Indian labour law. As noted earlier,
India has well in excess of 150 separate laws governing the labour market and the workforce,
many of which overlap, deviate from central principles, or are perceived to be simply out of
date. This perception of “overregulation” has given rise to agitation from many sources for the
various Indian governments to roll back their regulation of labour and workplaces, particularly
those laws which impact upon the capacity of enterprises to hire and fire more easily, and to
engage labour on more flexible arrangements, and those requiring the payment of minimum
wages. At the same time, this pressure for reform has been strongly resisted by the labour
movement generally. In part this comes down to disagreement over evidence, and in part over
ideology. Certainly there are legitimate doubts raised in the literature on the accuracy of the
supposed connection between Indian labour law and the perceived “inflexibility” of the Indian
labour market: at the very least the evidence is considered slight, ambiguous, or both. However,
this question is not a core concern for us here, although we do return to the issue in the Section
3 of this paper. Rather, we are interested in whether, and if so to what extent, labour law in
India has undergone a period of modification in response to liberalization, and what form that
change might have taken. The immediate catalyst for action in labour market reform in India
is grounded in the state of economic crisis which confronted the country in the late 1980s. It is
not necessary for us to detail these problems here, but it is important to note that the government
was obliged to accept a readjustment package proposed by the World Bank and the
International Monetary Fund which required certain steps to be taken to liberalize the economy.
As part of this “New Industrial Policy,” the Indian government was committed to reducing the
number of industry sectors under the monopoly or control of the state, abolishing the need for
government approval for new investment in specific sectors of the economy, and generally
winding back the public sector. Unprofitable state industries were to be wound back or closed

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down, and a more flexible system for the licensing of new businesses introduced. A shift to a
less regulated labour market, particularly in relation to the tight controls exercised (at least in
the organized sector) over dismissals and redundancies and the use of contract labour, was
inevitably part of this policy. Workers were to be disciplined by the market rather than by state
control. Generally, successive governments, through various policy pronouncements, have
continued to espouse support for these policies, including those designed to effect adjustment
in the labour market and employment relations. But the degree to which these policies have
achieved real outcomes, and the manner of their doing so, have remained unclear and
contentious. Consequent neoliberal reform measures, according to one account, have included
policies to “weaken union power, outlaw strikes, individualize labour relations, privatize public
enterprises, dilute labour laws, freedom to hire and fire and close undertakings [sic], removal
of prohibition of contract labour [sic], freedom to introduce technical changes [sic], repeal of
legal provisions relating to bonus [sic] and so on.” But nevertheless, there is considerable
caution, if not to say scepticism, over how much progress has been made in following these
policies through. The main reason for caution seems to be linked with both the political and
legal strategies being adopted in the slow liberalization process. By and large the labour reform
policies have been pursued not through major legislative change, but through a “less direct”
and more piecemeal approach. One critical explanation for this lies in the fact that various
political and labour alliances across different political parties are usually sufficient to block
major labour law reform. Put another way: “Labour law reforms have traditionally worked in
India when approved through the tripartite route.” Traditionally the Indian union movement
was very powerful in political terms by virtue of its incorporation into the party political
process, and although this power had reached its high point by about the mid-1970s, and
membership decline has since impacted upon its capacity to resist change, overall most
authorities still rank the political influence of the union movement as critical. This has led,
then, to what has been described as a gradual approach to liberalization. Although there have
been some labour policy initiatives at the central government level, including, for example,
various proposals and Bills for the protection of workers in the unorganized sector, the most
important and ongoing movements towards liberalization in labour law have taken place at the
state government level. Jenkins has pointed out that India’s federal political structure has lent
itself to a more gradual reform agenda in three specific ways. First, competition between the
various states for investment has led to legal change on a state by state basis, hence avoiding
the need for an all-embracing national reform of labour law. In order to attract investment,
often state governments provide assurances to investors that certain inconvenient labour
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standards will not be enforced. Second, dealing with the issues on a state by state basis also
waters down the degree of political resistance from unions and other opposition forces. Third,
state reforms may act as models for changes in other states, or even to provide some leadership
for reform at the central government level. It is important, therefore, in understanding whatever
limited progress has been achieved in the liberalization of Indian labour law and regulation, to
look closely at the developments in several of the important states. It is first necessary to note
that even here many of the bolder proposals for reform have failed to pass into law. The State
of Maharashtra is a good case in point, with major reform proposals being presented by the
Director of Industries in 2000, and through an Industrial Policy Statement in 2001. Among
these proposals were changes to minimum wage laws, retrenchment laws, laws relating to the
inspection of work premises, and laws pertaining to the size of plants excluded from regulation.
None of these changes were implemented due to opposition from trade union and political
interests. Similarly, attempts by the Maharashtra state government (and other states) to
introduce more flexible “hire and fire” laws into the businesses situated in the state’s Special
Economic Zones has generally been met with a negative response from the central authorities
(although it is necessary to note that in practice labour laws are rarely enforced in these zones,
and thus rarely, if ever, restrict market operations, despite the limitations inherent in the formal
law). On the other hand, there are also examples of successful modifications being made to
central labour laws by some provincial governments, the State of Andhra Pradesh being a case
in point. In general terms, the liberalization process in the labour laws of the Indian states has
included the relaxation of laws against the employment of women at night, greater ease in shift
working, and greater freedom for the use of contract labour. According to one source, the use
of contract labour, and the subcontracting of non-core activities to other firms, increased
substantially during the 1990s, though this increase was more pronounced in some states than
others. On the other hand, despite the general laxity of enforcement in labour law, the laws on
retrenchment continue to be comparatively strictly implemented. Other minor changes include
matters such as the minimization of workplace inspections and technical changes to the
administration of workplaces and keeping of records required under various pieces of factory
legislation and so on. Much of this change has been facilitated through administrative
procedure rather than formal legal repeal and enactment. According to one recent study, while
India’s job security laws have remained fairly stable for regular contracts (i.e. ongoing
contracts in the organized or formal sector), the system is now more flexible in relation to
temporary and fixed-term contracts. This reflects the fact that “the main area of labour law
reform that has come about in recent years, allowing employees to work on temporary work
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agency contracts to carry out a range of ‘non-core’ activities, a concept that is defined in various
ways across states … Standard fixed-term contracts are allowed for white-collar workers as
well as, in principle, for regular workers.” However, despite these shifts in labour law at the
state level, it remains the case that the liberalization process has produced modest outcomes at
best. An Organization for Economic Cooperation and Development (OECD) study reported by
Dougherty examined eight sets of regulatory variables (totaling 50 separate subject areas) for
potential reform lightening the regulatory burden upon businesses across 21 Indian states. In
keeping with our earlier observations, the largest number of reforms related to contract labour,
but even so, there had only been reform in about half of the subject areas pertaining to this form
of employment. No state had a score of much more than 50% in terms of change in possible
reform areas, and in seven of the 50 subject areas no more than two states had made any reforms
at all. Areas of regulation showing little change across the 21 states included collective lay-
offs, the regulation of working hours, union recognition, and reductions in the numbers of
inspections.

QUALITY, PURPOSE, AND IMPACT IN INDIAN LABOUR LAW

There are always difficulties, we suggest, in interpreting the purpose and role of labour law
systems in any given society. Labour law, more than many other areas of regulatory policy,
may have more immediate and fundamental implications for social and economic stability and
progress, and legal formality may not always fully express or capture the kinds of compromise
which inevitably exist in relations between capital and labour, and in the regulation of labour
markets. In our necessarily brief overview of the evolution of labour law in India, we have
pointed to various anomalies and problems which require further elaboration and discussion.
First, though, it is necessary for us to clarify one or two matters going to the legal foundations
of the Indian labour law system. As we have noted, there is a continued relevance of some
nonlegal, sociocultural relations in the organization and practices of Indian labour markets to
the present day.124 However, formal labour law in India is firmly based on Western values
and concepts, much of it derived from International Labour Organization standards. It has
evolved from early penal provisions on labour, through to the extension of protective labour
conditions of work, and the rights of labour to security in a broader social sense. Moreover,
Indian labour law has recognized and legitimated trade unions and their activities and
established procedures for the settlement of industrial disputes. While there may be problems
in accurately categorizing India according to the indicators used in the “legal origins” labour

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law discourse, Indian labour law is Western in conception and (at least nominal) operation.125
This suggests, then, that we are able to evaluate the role and impact of Indian labour law
accordingly. It is necessary, of course, to recognize that social, economic, political, and cultural
contexts will inevitably have a heavy bearing upon how labour laws are received, adapted, and
given effect in particular socioeconomic contexts,126 but it is also important to recognize that
such laws are introduced usually not to replicate or reproduce existing social and economic
relations, but at least in part to replace or alter them. In the Indian case we must suppose that
its labour law values, as articulated in its Constitution and its originating economic policies in
the post-independence period, were constructed and evolved in the supposition that the
country’s socioeconomic path would follow a similar trajectory to the process of
industrialization, urbanization, and formalization that occurred in the developed economies of
Western countries.

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