A wakeup call: HR & LEGAL TEAMS and Employer’s Organisations

K.Vittala Rao
​Labour Law Consultant & Trainer, Bangalore

Draft Rules - Recognition of Negotiating Union or Negotiating Council and Adjudication of Disputes of Trade Unions Rules, 2021.  IR Code 2020 Published on May 4th, 2021 vide Central Government Gazette Notification.

An in-depth study and analysis demonstrates the reversal trend of the Vision of the Central Government in bring “Labour Reforms – Ease to do Business “–Emerging Four Labour Codes.
 
This paper is prepared to highlight the various impacts of the provisions in the Draft Rules on the Employers so that, at least now, the Employer’s Organisations file their objections to appropriately modify/ delete the same before the Draft Rules are finally notified for adoption.

Let us look at:
Sec.14. (1) of the IR Code:
 There shall be a negotiating union or a negotiating council, as the case may be, in an industrial establishment having registered Trade Union for negotiating with the employer of the industrial establishment, on such matters as may be prescribed.

 Sec.14 (7)  of the IR Code :
The facilities to be provided by industrial establishment to a negotiating union or  negotiating council shall be such as may be prescribed
 
The Draft Rules prescribes as under.

Matters in an industrial establishment having registered Trade Union for negotiation with employer for the workers employed in the industrial establishment under sub-section (1) of section 14

1. Classification of grades and categories of workers
2. Order passed by an employer under the standing orders applicable in the industrial establishment
3. Wages of the workers including their wage period, dearness allowance, bonus, increment, customary concession or privileges, compensatory and other allowances;
4. Hours of work of the workers their rest days, number of working days in a week, rest intervals, working of shifts;
5. Leave with wages and holidays;
6. Promotion and transfer policy and disciplinary procedures
7. Quarter allotment policy for workers;
8. Safety, health and working conditions related standards
9. Such other matter pertaining to conditions of service, terms of employment which are not covered in the foregoing clauses; and
10. Any other matter which is agreed between employer of the industrial establishment and negotiating union or council.  

 
Facilities to be provided by industrial establishment to a negotiating union or negotiating councils under subsection (7) of section 14.

1. Notice board for the purpose of displaying the information relating to activities of negotiating union or negotiating council, as the case may be
2. Venue and necessary facilities for holding discussions by the negotiating union or negotiating council, as the case may be, as per schedule and agenda to be settled between employer of the industrial establishment and the negotiating union or constituents of negotiating council, as the case may be;
3. Venue and necessary facilities for holding discussions amongst the members of the  negotiating union or constituents of negotiating council, as the case may be
4. Facility for entrance of the office bearers of the negotiating union or constituents of negotiating council, as the case may be, in the industrial establishment for the purposes of ascertaining the matters which are relating to working conditions of the workers
5. Employer to deduct subscription of the members of the Trade Unions on the basis of the written consent of the worker;
6. Treating on duty of the employed office bearers of the negotiating union or constituents of negotiating council, as the case may be, when the office bearers are holding meetings or discussing with the employer as per agreed schedule between employer and office bearers;
7. Employer of an industrial establishment, having three hundred or more workers, shall provide suitable office accommodation with necessary facilities to the negotiating union or negotiating council, as the case may be.​​

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One can easily conclude that the Draft Rules have exceeded their jurisdiction & gone beyond the IR Code itself by proposing a very liberal privileges and rights to Trade Unions to take up with the Employer.
 
Even the MRTU & PULP Act of Maharashtra has limited itself the privileges & rights of Recognised Trade Unions within the parameters of ILO Conventions 1957 – Code Of Discipline, a tripartite understanding.
 
As we are fully aware, following are the accepted and stabilised legal principles & practices by both the Trade Unions & the Employers over a period of time.

1. The matters pertaining to classification of grades and categorizations, grant of increments and promotions, transfers etc are purely the functions of an Employer depending on Business exigencies. Even the Supreme Court has held that these are all discretionary functions of an Employer and do not call for any disputes
2. Orders are passed under the Standing Orders are always in line with the principles of natural justice. Constitutional remedies are available to both employee & employer and it is a legally settled position.  Disciplinary procedures are laid out in the standing orders and also the Judiciary has laid down the principles of “procedural Reasonableness”. Here, the Union and as a matter of fact, even the Employer cannot deviate from the laid down legal principles.
3. Wages, be it be minimum wages, DA, benefits  including customary practices, bonus , working hours, rest intervals, weekly holidays etc  are predominantly driven by Statutory provisions or through mutual understandings with the Trade Unions, either based on the discretion of the employer or based on mutual agreements with the Union
4. Safety, health and working conditions are being strictly governed by Regulatory legislations like, Factories Act, Mines Act, Plantation Act etc and now the OSH & WC Code.
5. All the Conditions of service are governed by the Standing Orders, policies of the employer, terms of employment based on mutual contracts. Naturally, all agreed terms and conditions under a settlement or an MOU, on any matter are governed by the same.
6. Employers also have permitted facility to put up Notices by the Trade Unions, based on mutual understandings. Trade Union office-bearers are also permitted to attend the meetings with the Representatives of Employer, treating the duration as on duty. Based on the requests of the Trade Unions, Employers also have introduced check off system in regard to subscription of membership.
7. Employers have fully bound by the Tripartite –Code of Discipline, ILO resolution in 1957 and are adhering the same.

 
What are our reasons & justifications in continuing the well settled facilities, privileges to the Trade Unions and why the proposed Rules either be deleted or modified in line with the present status?

1. Classification of grades, categories based on skill competencies, grant of increments & promotions / grade up gradations, transfers, deputations, terms of employments etc are predominantly managerial functions and no interference from the Trade Unions are uncalled for.
2. Discipline Management, strict observance of the Standing Orders, in all stages of passing orders are strictly in line with Principles of Natural Justice which is the primary responsibility of an Employer. Since there are legal options available for Trade Unioins & the Employer, there is no need to confer any privileges to Trade Unions to interfere in the process.
3. It is very clearly laid out by various judgments of Supreme Court of India, that no trade union activities shall take place within the premises of the undertaking.
4. Firstly, Trade Union activities are out of bound of employment contracts. Trade Unions have to carry out the functions outside the premises and not within the premises under any circumstances
5. Workers / Unions have an implied permission to be present in the premises of the employer only with a view to fulfil the terms of employment, namely, to perform the work / jobs. They do not have any right to utilize any part of the premises for their own personal or trade union related works.  Accordingly, they need to get a license or permission from the employer to utilize other than work performance.  Hence, permission to put up a notice and also to ensure that the said notice board shall not be used or taken advantage to communicate anything which is prejudicial or inflammatory or defame the Undertaking or  the employer. In fact, the ILO in its resolution in 1957 has reiterated the same views.
6. Employer of an industrial establishment, having three hundred or more workers, shall provide suitable office accommodation with necessary facilities to the negotiating union or negotiating council, as the case may be, is not warranted due to the reasons & justifications cited above.
7. Hence, the proposed draft Sub-Rules cannot be forced upon the employer since the same is unjustified and unreasonable and is trespass into dominion of Employers.

Further justifications by Employers.
Predominantly, the objective & the intention of the “Labour Reforms- through the Four Labour Codes” which have been approved and enacted as Law, is “EASE OF DOING BUSINESS”. The Business must face least challenges and enthuse the Business to invite huge FDI, large scale industrialization which continues to generate high employment growth, thus contributing to National Economy and high repute in the International circle.

Labour Reforms aimed at this objective of “EASE OF DOING BUSINESS” must be highly balanced one between Capital and Labour.

While adopting this strategy, one cannot miss an important point on the present system of handling all critical and sensitive issues between the Capital & Labour through very well-established & instituted system backed up and strengthened by Judiciary.

Both Capital & Labour have settled themselves by these processes.

Then, why this move towards destabilization?
The proposed Rules under the notification, throws open a large gate for the Labour to confront the Capital on each and every Sub Rule.  If this is allowed to be approved and passed, then the Capital will be questioned and confronted on all the points in the sub-rules by the Trade Unions.

 Thus, it creates total destabilization and results in industrial disturbances, increase in number of litigations etc.
Does this accomplish the vision of the Labour Reforms, namely, “EASE OF DOING BUSINESS’?
 
Once Capital encounters this unexpected downfall on its business accomplishments, naturally, FDI would be a remote possibility.
 
The points proposed in the Sub Rules are beyond the jurisdictional powers envisaged under Sec.14  ( 1)  & ( 7 ) of the Code.
One cannot miss that under “CODE OF DISCIPLINE’ – a tripartite ILO resolution in 1957 is an accepted code.
 
It is an appeal that while drafting, a “Drafting Committee “ consisting experts with practical knowledge of handling Industrial Relations in Industrial Establishments, legal experts in the fled of Industrial Law, as members.   Otherwise, the vision remains unaccomplished. 
 
Here where the Employers with a united voice must submit its objections / modifications in the overall Interest Of Business, Sustenance & Growth, before 4th June,2021.

K. Vittala Rao.
Labour Law Consultant & Trainer.
18th May, 2021