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Xaviers Institute of Business Management Studies

 

 

Industrial relations and Labour Law

 

 

Note: (i) There are two Sections A and B.
(ii) Attempt any five  questions from Section A. Each question carries 8 marks each
(iii) Section B is compulsory and carries 15 marks each case study.

SECTION A

1. What are the constitutional directives in the field of labour laws? The labour laws have reached new dimensions with the advent of the doctrine of welfare state. Discuss.

2. Attempt any two of the following:

(a) What are the safety measures under the Factories Act, 1948?

(b) What are the obligations of the principal employer and contractor under the Contract labour (Regulation and Abolition) Act, 1970?

(c) What are the occupations and processes where child labour is prohibited under Child Labour Act, 1986?

3. What is a "trade union" under the Trade Unions Act, 1926? What is the procedure for registration of a trade union under the Act?

4. Discuss the various provisions laid down under the Industrial Disputes Act, 1947 for settlement of Industrial disputes.

5. Examine the main features of the Payment of Wages Act, 1936. What are the provisions for deduction from wages? Are they sufficient?

6. (a) What are the benefits payable under the ESI Act, 1948? Give details.

(b) What are the provisions regarding payment of gratuity to employees under the Payment of Gratuity Act, 1972? Explain.

7. Write short notes on any three of the following:

(a) Main features of the Maternity Benefit Act, 1961
(b) Salient features of the Provident Fund Scheme, 1952
(c) Notice of change (Section 9-A)
(d) Special features of labour laws
(e) Principles of natural justice

8. Discuss the role of Indian Constitution in evolving labour policy. Identify the impact of ILO on industrial relations.

9. Briefly explain how internal affairs of the union are managed. Describe the new roles of trade unions.

10. Define collective bargaining. Describe the types of collective bargaining citing suitable organization examples.

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SECTION B

1. Theft or Ignorance

 

Read the case given below and answer the questions given at the end.

CASE

On March 25, 1996 at about 6.45 PM, the Duty Officer (Security), Kumar, at the Work gate informed Rathod, Electrical Engineer on telephone that one Narayan, supervisor of his department has been caught red-handed at the Works gate while attempting to steal one small electric motor and certain other spare parts used in the Electrical Dept. Rathod was requested to come to the Security Control Room, where a preliminary enquiry was to be held.

During the preliminary enquiry, it came to light that Narayan, Personnel No. 5824, Foreman, came to the Works gate at 6.15 PM on his Suvega auto cycle bearing registration no. BRX 1421 (the number was not clearly visible). The works guard on duty, Krishna Bahadur asked Narayan to stop and open the tool-box that was hanging on the right side of the rear wheel. When it was opened, only one empty Tiffin-box was found. Since the driver's seat appeared to be thicker and of unusual size, the works guard enquired about the same from Narayan, and not being satisfied with the reply, gave it a jerk. It was found that Narayan had constructed one box under the seat where a 0.50 hp motor and eight 5 amps switches belonging to the company were concealed.

On being asked, Narayan replied that he had attended a break-down after 5 PM in the Mill and replaced one 0.50 hp motor. The motor that was recovered was the defective one but he could not return it as the store-issuer had already left for home after his duty which ended at 5 PM. He thought he would return the motor next day, as he had done many times in the past. He, however, could not explain why he was carrying the 5 amps switches. Nor did he give any satisfactory reason for not keeping the materials in the tool-box that was visible from outside, rather than where these were kept. On checking up at the Security Control Room, it was found in the presence of Narayan that the electric motor recovered was in working condition.

As per the Company's Certified Standing Order No. 23 (iii), 'theft, fraud, or dishonesty in connection with company's business or property' is misconduct.

Questions:

(a) Does this case deserve suspension, pending enquiry?

(b) Advise the Works Manager on the steps for handling the above case.

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2. Norman (I) Limited

Read the case carefully and answer the questions given at the end:

Norman (I) Limited

THE COMPANY

The first wall tile manufacturing plant in India was established by Kay Pee in 1963 at Thane in Mumbai under the name Norman Tiles. The company was using the brand name 'Norman', a leading international tile manufacturer, Norman International Limited and was paying royalty for the same. The Norman International Limited owned 49% equity in this venture since its inception. With growth in sight the company set up another manufacturing unit at Rampur in the state of Uttar Pradesh with an investment of Rs. 85 million in the year 1981. Initially, at Rampur unit the company was carrying out only partial operations with semi-finished products being supplied by Thane unit. It was only in 1984, that the company started carrying out full operations at the Rampur unit. Since the market for ceramic tiles started expanding, the company expanded its operations accordingly. The process of manufacturing wall tiles was such that it needed unskilled manpower barring few fitters and electricians. Accordingly, the company hired 400 workers mostly uneducated and unskilled from nearby villages. Few of them were taken for the fitter and mechanic positions. Apart from these, there were sixty staff members looking after the other support functions. The workers were paid low wages and were employed on temporary basis at the beginning and till 1986 most of them were not made permanent. The human resource department was headed by R.C. Jain, who was an experienced professional and was with the firm since its inception.

THE GENESIS

In 1986 the company ventured into floor tile manufacturing and set up another facility at Rampur unit. This plant was semi-automatic as compared to the wall tile plant which needed manual operations. The machinery of floor tiles unit was bought from Italy and due to the nature of process some experienced workers were shifted from wall tile facility. Slowly, two distinct groups of workers emerged based on the nature of their job and subsequent skills required. First group was that of unskilled workers mostly associated with manual operations and the second group was that of skilled workers looking after technical operations. The second group was paid higher wages than the first group. This disparity led to discontentment among workers but in the absence of union, it never came out as an organized reaction. The first such organized attempt was made by workers in 1988, but a prompt and harsh action from management aborted the workers bid to form union. However, this event drew management's attention towards workers grievances and management helped workers to form a union in 1989. The union was named "Bhartiya Crystallization Mazdur Sangh". However, since most of the workers barring few technical ones were uneducated, they were unaware of roles and responsibilities of union

The management started negotiations with the newly formed union and the first wage settlement agreement was signed on January 19, 1990. In this agreement, though the management agreed to increase wages to the extent of Rs. 250 per month, it linked wages to production targets. After three months of this agreement, the union leader left the organization to join government service. The union was left leaderless. After some time the workers started voicing their concern about the target-linked wages, but in the absence of a leader their concerns could not get a voice. It was at this point that some external labour leaders started inciting the workers. A gate meeting was organized to exploit the situation on September 21, 1990. After this incident the industrial relations situation further worsened and led to a go-slow movement by workers in January 1991. This affected the productivity of the plant severely. Due to the absence of union leadership, management too found it difficult to control the situation, since external leaders influence was very much visible and company's HR manager R.C. Jain refused to talk to the outsiders. He remained adamant and left the job in March 1991 and the go-slow by the workers continued. In another development the incumbent HR manager Arun Joshi, who took over after Jain left converted variable DA to a fixed DA rate. Since, at that time inflation was spiraling and the rate of DA, elsewhere, was high, the workers refused to accept this provision. Ultimately, under pressure from external leaders as well as workers of the firm, Joshi withdrew the fixed DA and accepted the variable DA provision.

In the meantime, K.N. Trivedi took over as the unit head on May 5, 1991. Before joining this plant, he had served the Indian Air Force for seventeen years and was a strict disciplinarian. The organizational situation demanded quick action to stop go-slow because the company had market share of forty per cent in both the tile categories and the demand for tiles was still going up. The management did not want to lose a single day's production. In a calculated move the management suspended thirty five workers who were on a go-slow. This was for the first time that any worker was suspended from the plant which instilled a sense of fear in the minds of the workers. As a result of this, workers started working and the productivity of the plant started showing Meanwhile, the management had terminated some of the suspended employees who later on moved to the labour court against management's action on the presumption that labour courts are generally sympathetic to the workers. At the same time, Trivedi started dialogue with the external leaders to end the stalemate. The external leaders put pressure on the management to reinstate the suspended workers. Management agreed to make permanent those employees who were working with the company since its inception and did it with immediate effect. Suspension of some of the workers was also cancelled. Though these efforts helped management in streamlining the production, the attitude of the workers could not be changed totally. The ownership spirit amongst workers could not be developed.

The situation took another ugly turn in February, 1992 when the workers who were suspended earlier tried to create disturbances in the plant. The discontent was further fuelled by bad food provided to the workers in the unit’s canteen in March, 1992. Ultimately, this led to formation of a new union "Bhartiya Yuva Sanitary and Crystallization Mazdur Sangh". This union was not affiliated to any national labour union. However, the leaders were under the influence of Bhartiya Mazdur Sangh (BMS). This union submitted a charter of demands to the management. The demands included grain loan which was a contentious issue because the company had never given any grain loan to the workers. The demands were not accepted by the management. The workers gheraoed Trivedi but the management did not accede to the demands and called the police to intervene.

On March 17, 1992 the workers went on strike on the call of the union without giving any prior notice. The management terminated seventeen workers during the strike. The strike continued till May 5, 1992. The workers were not paid any wages during the strike period. Since the workers were low wage earners, they were unable to continue the strike for a longer period. The management used the situation to their advantage and accepted only minor demands of sanctioning an advance of Rs. 500 to the workers. The workers accepted the management decision and were willing to restart production. Management re-employed the suspended workforce gradually over a period of fifteen-twenty days. Since, the workers did not receive wage. For the strike period. they had realized the importance of their employment.

In October, 1993 the second agreement was signed between management and the union. Between October, 1993 and December, 1996 the productivity and industrial relations were improved. In 1996 the organization started receiving export orders for its products. The quality requirements for the export orders were stringent. Therefore, the organization decided to go in for ISO 9000 certification for their Rampur plant. The management realizing the importance of workers involvement in ISO 9000 certification process started training workers on a continuous basis in June, 1996. The in-house training emphasized on housekeeping, general hygiene of the workers, standard operation procedure and awareness about all kinds of losses. As a result of continued efforts, ISO 9002 certification was received by the plant in January, 1997. Meanwhile, the third wage agreement was signed between the management and the union for a period of three years in January, 1997. To reinforce the training process, HRD cell with well-equipped in-house training tools was developed in January, 1998. Training programmes focused on shop-floor excellence and total Productive maintenance (TPM). Quality manual for internal use was also developed. The goals for 2000-2001 for the plant were devised as under:

• Laying of natural gas pipeline

• ISO 14000 certification

• Control of losses

• Reduction in personnel expenditure

• Team building training

The Rampur plant of Norman had come a long way since its inception. In the words of Trivedi "despite all the bottlenecks we have achieved a satisfactory level of productivity. We still intend to continue doing so by various means. However, I want to build this plant as a community where each member's commitment with the plant remains high. This can only be achieved by inculcating the ownership value. We sincerely believe that this can only be developed by creating a community of Norman in which every member is ensured of a minimum standard of living with all basic amenities and worry free life away from work. We intend to do so by providing medical, educational and vocational training facilities for their families, thereby developing trust between the management and the workers".

Questions:

(a) Does formation of trade unions help organizations improve industrial relations?

(b) Was it a right strategy to nurture pro-management union leaders?

(c) The strategy to instill fear in the minds of workers to improve their productivity was in the interest of the organization, Discuss.

(d) In your view, what action should have been taken by the management at various stages to improve labour-management relations?

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3. Geetha Laboratories

 

Read the case carefully and answer the questions given at the end.

Geetha Laboratories Private Limited was established by Mohan Ramnath in 1988 at Chennai. He, a soft spoken gentleman, was Ph.D. in chemistry, who did not believe in working under pressure. The company was a small scale unit manufacturing non-patented antimalarial medicines. The company had 6 days per week working making 26 working days per month and was running smoothly. In 1978, CITU supported union came into existence. The industrial relations started deteriorating making it difficult for the company to survive. In 1988 Ramnath decided to enter into partnership with three other partners, Chandan Keshav, Bharat Pathak and Veenu Ramachandran to overcome the difficulties faced by him. The company came to be known as Geetha Laboratories Limited. Even after this the industrial relations did not improve till 1990 and it was during this period that 14 workers were sacked. In 1990 Ramnath decided to sell his shares to Emission Pharmaceuticals, a multinational, though other partners continued. Now, the company was called German Drug House (GDH). During this period CITU withdrew support to the union and Bhartiya Mazdoor Sangh (BMS) came into the picture. An average increment of Rs. 225 was given to all workers and industrial relations improved to some extent.

IMPLA Pharmaceuticals Limited was another non-patented antimalarial bulk drug manufacturing giant having units at Pune, Mysore, Hyderabad, Coimbatore and Corporate office at Baroda. It wanted to have monopoly in the ant malarial drug manufacturing by taking over GDH. But before taking such a step. They wanted to assess the internal condition of the company. Therefore, in January 1994 Vishal Shrivastava, qualified chartered accountant was inducted as Director by purchasing a requisite number of shares of the company. In September, 1994 after IMPLA was convinced about the favorable conditions of GDH it formally took over the company. At that time the manpower strength of the plant was 210 in which 130 were workers and 80 were executives and staff members. After taking over, IMPLA made many changes and the major ones were:

(i) They increased the salaries of executives and staff of the unit to reduce the gap in the pay structure of the executives and staff of this unit and their other units.

(ii) They invested Rs. 3-4 crores for up gradation of the plant.

(iii) They shifted from 6 days working per week to 7 days working per week to improve the productivity and enhance cost-effectiveness of the unit.

The shift from 6 days to 7 days working without any financial gains made workers resist the change. At this juncture, Sumeet Joshi, Corporate Manager (lR) intervened and promised the workers that they would be paid for 30 days instead of 26 days, but Ravi Shriman, Director (Personnel) and Vishal Shrivastav, CM (Operations) refused to agree to this since they were not involved when Sumeet Joshi made the commitment. The promise was not fulfilled which further complicated the problems. The issues kept on Lingering for 6 months. No decision could be taken because of the difference of opinion among senior executives. In June, 1995 the workers gheraoed Vishal Shrivastav to pressurize the management to take the decision. They were successful to some extent as it led to the agreement of management with workers that financial benefits would be given with retrospective effect of 4 years making it one additional year over and above 3 years of normal agreement. They were asked to give a notice of change which the workers could not give till December, 1995 because of disagreement among themselves It was felt at this point of time by Shrivastav that plant should have an Assistant Manager (personnel) instead of having Personnel Officer. Ajit Dubey, Assistant Manager (personnel) was appointed in October, 1995 but even this appointment took 3-4 months because of discord in opinions of Shrivastav and Shriman.

In December, 1995 the workers gave a notice of change demanding an increase of Rs. 2200 per month. In January, 1996 a notice of change was given by management. In February, 1996 the negotiations started and continued till July, 1996. Shrivastav, Rajkumar, the new Corporate Manager (IR), Ajit Dubey and Kishore were to represent the management side and nine members of the union were to represent the Workers, besides V.D. Agarwal the General Secretary of BMS.

The first two rounds of meeting did not lead to any outcome as none of the parties were ready to budge. This made V.D. Agarwal withdraw as he was fed up with the rigid stand of the union leaders.

The third meeting was held without Agarwal wherein the union leaders came down to Rs. 1, 200 from Rs. 2, 200 p.m. The minutes of the meeting were jotted down but the union leaders refused to sign. Taking advantage of the occasion, Dubey and Shrivastav had a secret meeting with Agarwal in a hotel. Agarwal advised the representatives of the management to maintain a low key for a few months to crack down the workers aspirations as they had very high expectations. It was observed by Dubey that there were perceptual differences between senior and junior union leaders. Taking cue from this, Dubey adopted a policy of divide and rule and took into confidence Devilal, the senior union leader and had a secret meeting with him to explore the last settlement amount and apprised him that the management could go only up to Rs.450. He also took Janak Singh, the junior union leader into confidence and convinced him that management was not going to bend before their demands and as such the workers were going to be the ultimate sufferers. Besides this, Dubey spread the message that no wages would be given retrospectively.

The next day meeting resumed in which union representatives came down to Rs. 750 (because of the pressure from the workers) beyond which they were not ready to come down. It was decided that instead of having meeting with all the members, only two members, one senior union leader, Devilal and one junior union leader, Janak Singh would sit in the negotiations. Immediately a meeting among Shrivastav, Rajkumar, Devilal and Janak Singh was held and it was resolved that Rs. 575 average per month would be given for 4 years retrospectively. An MOU was drafted by the legal consultant at the corporate office and was duly signed by Shrivastav, Rajkumar, Dubey and all the union representatives. In the evening a dinner was hosted in which all the negotiators were invited. When the papers were sent to R. Shriman, he objected to the MOU on two points.

First, the other plants were having 30 days pay system leading to less average pay per day and in Chennai plant it was to be given for 26 days leading to higher average per day. Second the milk allowance given for overtime at Chennai unit was higher than other units. It look Shrivastav and Rajkumar two months to convince Shriman about the agreement and thereafter, implementing the same. A total amount of Rs. 14 to 15 lakhs was given to all the 160 workers within a week as arrears and the issue was settled.

Questions:

(a) Was it right for V.D. Agarwal to withdraw half way during the negotiations?

(b) Identify the tactics used by management in the case. Are they justified?

(c) Should Director (Personnel) have raised objections after MOU (Memorandum of Understanding) was signed? Give reasons.

(d) In view of the information given in the case, suggest the strategies that could have made IMPLA Pharmaceuticals a more progressive organization.

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4. V. J. Textiles

Read the case carefully and answer the questions given at the end.

V.J. Textiles is a leading industry having a workforce of more than 1200 employees, engaged in the manufacture of cotton yarn of different counts. The company has a well-established distribution network in different parts of the country. It has modernized all its plants, with a view to improve the productivity and maintain quality. To maintain good human relations in the plants and the organization as a whole, it has extended all possible facilities to the employees. Compared to other mills, the employees of V.J. Industries are enjoying higher wages and other benefits.

The company has a chief executive, followed by executives in-charge of different functional areas. The Industrial Relations Department is headed by the Industrial Relations Manager. The employees are represented by five trade unions - A, B, C, D and E (unions are alphabetically presented based on membership) - out of which the top three unions are recognized by the management for purposes of negotiations. All the unions have maintained good relations with the management individually and collectively.

For the past ten years, the company has been distributing bonus to the workers at rates more than the statutory minimum prescribed under the Bonus Act. Last year, for declaration of rate of bonus, the management had a series of discussions with all recognized unions and finally announced a bonus. This was in turn agreed upon by all the recognized unions. The very next day when the management prepared the settlement and presented it before the union representatives, while Unions A and C signed the same, the leader of Union B refused to do so and walked out, stating that the rate of bonus declared was not sufficient. The next day Union B issued a strike notice to the management asking for higher bonus. The management tried its level best to avoid the unpleasant situation, but in vain. As a result, the members of Union B went on strike. They were joined by the members of Union D.

During the strike, the management could probe the reason for the deviant behavior of Union B leader; it was found that leader of Union A, soon after the first meeting, had stated in the presence of a group of workers, "lt is because of me that the management has agreed to declare this much amount of bonus to the employees; Union B has miserably failed in its talks with the management for want of initiative and involvement". This observation somehow reached the leader of Union B as a result of which he felt insulted.

Soon after identifying the reason for Union B's strike call, the Industrial Relations Manager brought about a compromise between the leaders of Unions A and B. Immediately after this meeting the strikers (members of Unions B and D) resumed work and the settlement was signed for the same rate of bonus as was originally agreed upon.

Questions

(a) Was the leader of Union A justified in making remarks which made the leader of Union B feel offended?

(b) What should be management's long term strategy for avoiding recurrence of inter-union differences on such issues?

(c) If you were the Industrial Relations Manager what would you have done had the Union B resorted to strike for a reason other than that mentioned in the case

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