Indian Institute of Management Ranchi.

Reading Material
For
Course titled " Labour Law & Industrial Relations "
For
IPM (2023-24)
Term IX

18th December 2023 to 03rd March 2024

Visiting Faculty

Dr. Rajen Mehrotra

Mumbai -400021
Email: rajenmehrotra@gmail.com
 Index

Sr.
Description Page
No
1 ILO History 1

2 Working Together –Trade Union & Management Getting Close To Each Other 8
Without Losing Their Identity
3 Impact of New Labour Codes on Industrial Relations (IR) 19
4 Industrial Relations (IR) – Essential for Business Sustainability 31

5 The Changing Employer – Employee Relationships 40

Work, Worker, Workplace Redefined
6 The New Trends of Engaging Blue-Collar Workforce – 50
Implications for the Industry and the Trade Unions
7 Industrial Relations (IR) World – 58
Before Liberalization & After Liberalization
8 Developing an Efficient and Credible Grievance Redressal Mechanism 66

9 Salient Relevant Points of The Occupational Safety, Health and Working 74

Conditions Code, 2019
10 Engaging Contract Labour in Enterprises 88
11 Staffing Companies in India 97
12 ‘Apple’ Falls on the Head of Wistron 105
13 The Code on Wages 2019 - Impact on Cost to Company 111
15 Right to Organize and Bargain Collectively—Negotiating Settlements 118

16 Outstanding Industrial Relations (IR) Practices of National Award-Winning 129

Enterprises 2020- 21 -- The All-India Organization of Employers (AIOE)
17 Zero Tolerance of Sexual Harassment at the Workplace 141

18 CV - Dr Rajen Mehrotra 151

 ILO History

The ILO a tripartite organization representing Government, Employers and

Trade Unions was created in 1919, as part of the Treaty of Versailles that
ended World War I, to reflect the belief that universal and lasting peace can be
achieved only if it is based on social justice.

There was keen appreciation of the importance of social justice in securing

peace, against a background of exploitation of workers in the industrializing
nations of that time. There was also increasing understanding of the world's
economic interdependence and the need for cooperation to obtain similarity
of working conditions in countries competing for markets. Hence the Preamble
of the organization states:
(i) Whereas universal and lasting peace can be established only if it is
based upon social justice.
(ii) And whereas conditions of labour exist involving such injustice
hardship and privation to large numbers of people as to produce
unrest so great that the peace and harmony of the world are
imperilled; and an improvement of those conditions is urgently
required.
(iii) Whereas also the failure of any nation to adopt humane conditions of
labour is an obstacle in the way of other nations which desire to
improve the conditions in their own countries.

The areas of improvement listed in the Preamble remain relevant today, for
example:
(i) Regulation of the hours of work including the establishment of a
maximum working day and week.
(ii) Regulation of labour supply, prevention of unemployment and
provision of an adequate living wage.
(iii) Protection of the worker against sickness, disease and injury arising
out of his employment.
(iv) Protection of children, young persons, and women.
(v) Provision for old age and injury, protection of the interests of workers
when employed in countries other than their own.
(vi) Recognition of the principle of equal remuneration for work of equal
value.

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 (vii) Recognition of the principle of freedom of association.
(viii) Organization of vocational and technical education, and other
measures.

The ILO has made signal contributions to the world of work from its early days.
The first International Labour Conference held in Washington in October 1919
adopted six International Labour Conventions, which dealt with hours of
work in industry, unemployment, maternity protection, night work for
women, minimum age and night work for young persons in industry.

The ILO was in Geneva in the summer of 1920 with France's Albert Thomas as
the first Director of the International Labour Office, which is the Organization's
permanent Secretariat. Under his strong impetus, 16 International Labour
Conventions and 18 Recommendations were adopted in the first two years.

This early zeal was quickly toned down because some governments felt there
were too many Conventions, the budget too high and the reports too critical.
Yet, the International Court of Justice declared that the ILO's domain extended
also to international regulation of conditions of work in the agricultural sector.

A Committee of Experts was set up in 1926 as a supervisory system on the

application of ILO standards. The Committee, which exists today, is composed
of independent jurists responsible for examining government reports and
presenting its own report each year to the Conference.

Depression and War

The Great Depression with its resulting massive unemployment soon

confronted Britain's Harold Butler, who succeeded Albert Thomas in 1932.
Realizing that handling labour issues also requires international cooperation,
the United States became a Member of the ILO in 1934 although it continued
to stay out of the League of Nations.

American John Winant took over in 1939 just as the Second World War
became imminent. He moved the ILO's headquarters temporarily to Montreal,
Canada, in May 1940 for reasons of safety but left in 1941 when he was named
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US Ambassador to Britain.

His successor, Ireland's Edward Phelan, had helped to write the 1919
Constitution and played an important role once again during the Philadelphia
meeting of the International Labour Conference, in the midst of the Second
World War, attended by representatives of governments, employers and
workers from 41 countries. The delegates adopted the Declaration of
Philadelphia, annexed to the Constitution, still constitutes the Charter of the
aims and objectives of the ILO. In 1946, the ILO became a specialized agency of
the newly formed United Nations. And, in 1948, still during the period of
Phelan's leadership, the International Labour Conference adopted Convention
No. 87 on freedom of association and the right to organize.

The Post-War Years

America's David Morse was Director General from 1948-1970 when the
number of Member States doubled, the Organization took on its universal
character, industrialized countries became a minority among developing
countries, the budget grew five-fold and the number of officials quadrupled.
The ILO established the Geneva-based International Institute for Labour
Studies in 1960 and the International Training Centre in Turin in 1965. The
Organization won the Nobel Peace Prize on its 50th anniversary in 1969.

Under Britain's Wilfred Jenks, Director-General from 1970-73, the ILO made
advanced further in the development of standards and mechanisms for
supervising their application, particularly the promotion of freedom of
association and the right to organize. His successor Francis Blanchard of France
expanded ILO's technical cooperation with developing countries and averted
damage to the Organization, despite the loss of one quarter of its budget
following US withdrawal from 1977-1980. The ILO also played a major role in
the emancipation of Poland from dictatorship, by giving its full support to the
legitimacy of the Solidarnosc Union based on respect for Convention No. 87 on
freedom of association, which Poland had ratified in 1957.
Belgium's Michel Hansenne succeeded him in 1989 and guided the ILO into the
post-Cold War period, emphasizing the importance of placing social justice at

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the heart of international economic and social policies. He also set the ILO on a
course of decentralization of activities and resources away from the Geneva
headquarters. In 1999, Juan Somavia of Chile took over as Director General. He
emphasized the importance of making decent work a strategic international
goal and promoting a fair globalization. He also underlined work as an
instrument of poverty alleviation and ILO's role in helping to achieve the
Millennium Development Goals, including cutting world poverty in half by
2015.In May 2012 English's Guy Ryder was elected as the tenth Director-
General of the ILO. He began his five-year term in October 2012 which has
been renewed for another five years in 2017.

The main organs of the ILO are:

• International Labour Conference -- The broad policies of the ILO are set
by the International Labour Conference, which meets each year in June
in Geneva. The Conference adopts international labour standards
called Conventions and Recommendations and is a forum for discussion
of key social and labor issues. The Conference also adopts the ILO
budget and elects the Governing Body. In the Conference each member
state is represented by a delegation consisting of two government
delegates, an employer delegate, and a worker delegate. The work of
the Conference is published in the Record of Proceedings of the
International Labour Conference, which are available in PDF on the ILO
website from 1919 to the present.

• Governing Body -- The Governing Body is the executive council of the

ILO. It makes decisions on ILO policy, sets the agenda of the
International Labour Conference, adopts the draft Programme and
Budget for submission to the Conference, and elects the Director-
General of the International Labour Office. The Governing Body has 56
members (28 governments, 14 employer representatives, and 14
worker representatives). Ten of the government seats are held
permanently by states of chief industrial importance (Brazil, China,
France, Germany, India, Italy, Japan, Russian Federation, United
Kingdom, and United States). The work of the Governing Body is

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 recorded in the Minutes of the Governing Body, which are available in
PDF on the ILO website from 1919 to the present.

• International Labour Office -- The International Labour Office is the ILO's

permanent secretariat, headed by the Director-General. The Office
employs some 2,700 officials from over 150 nations at its headquarters
in Geneva and in about 40 field offices around the world.

Tripartism -- A unique feature of the ILO, as indicated above, is the principle of

tripartism, which means that employers' and workers' representatives have an
equal voice with governments in shaping the ILO's policies and programs.

(Source- ILO website)

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 Working Together –Trade Union & Management Getting Close To
Each Other Without Losing Their Identity

Dr. Rajen Mehrotra*

--------------------------------------------------------------------------------------------

1. Introduction:

1.1) Trade Unions are organizations set up to protect the rights, safeguard
the interest and promote the growth and welfare of their members
(i.e., working class) and similarly Employer Organizations are set up
to protect the rights, safeguard the interest and promote the growth
and welfare of their members (i.e., employers / enterprises). While
both these organizations are set up independently, they have to deal
with each other, and this historical structure is respected and
recognized by the International Labour Organization (ILO). At the
international level the Trade Unions have International Trade Union
Confederation (ITUC) as their representative body and the Employers
have International Organization of Employers’ (IOE) as their
representative body with respect to identifying the most
representative organization for each country to be a member of the
ILO. Both these organization independently elect 14 persons each
from their member organizations who then form the Governing Body
of the International Labour Organization (ILO). Similarly, 28 country
Governments amongst the 185 Member Countries of ILO elect their
representatives who then become Members of the Governing Body
of the ILO.

1.2) At the International level trade unions, employers and governments

of all the 185 countries meet annually at the International Labour
Conference (ILC) of the ILO and debate on a preplanned agenda
coupled with passing of new ILO Conventions and Recommendations.
The ILO recognizes that each member country of the ILO is sovereign
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 and it is for the member country to decide which of the ILO
conventions and recommendations it desires to ratify. It is only when
the member country ratifies a particular ILO convention; it becomes
applicable to that country. While serving with the ILO from 2000 to
2007, I have seen that representative of trade unions and employers
are friendly and close to each other, but during the International
Labour Conference (ILC) at Geneva they take an approach to ensure
safeguarding the interest of their members. Opposing / not agreeing
with each other does not in any way mean that one cannot be close
to each other and work together. We need to recognize that
individuals are representing constituencies and there will be
situations when they may collaborate or oppose each other and still
be close as they are opponents and not enemies.

1.3) Member countries of the ILO follow the tripartite structure of

representation on Boards / Advisory Councils for representatives of
trade unions, employer organizations and governments to discuss
and sort out issues which are mostly at macro level. This structure is
also followed in India with reference to the Indian Labour Conference
held every year in New Delhi and with reference to provisions under
certain labour laws. However, at the enterprise level in India the
trade union leaders have to deal directly with the representatives of
the management of the enterprise as employer organizations in India
normally do not deal enterprise level issues. It is at the enterprise
level there is need on either side to be close to each other without
losing identity, as this does help in a better understanding of each
other’s point of view, so as to facilitate the process of resolving issues
in an amiable manner.

2. ILO convention 144 on Social Dialogue:

2.1) The ILO has been propagating “Social Dialogue” at the international,
national and enterprise level with an objective of finding solution to
problems and hence developed Convention 144 on “Social
Dialogue” which has been ratified by India in 1978. The ILO
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 definition on Social Dialogue is “All types of negotiations,
consultation or simply exchange of information between or
amongst representatives of governments, employers and workers
on issues of common interest to economic and social policy”.

2.2) Some of the salient features of the convention are given in Article
One and Three which are as follows:

Article One – Representative organizations means the most representative

organization of employers and workers enjoying the “Right of Freedom of
Association”.

Article Three – Representatives of employers and workers for the purpose of

procedures shall be freely chosen by their representative organizations where
such organizations exist.

Employers and Workers shall be represented on an equal footing on any

bodies through which consultations are undertaken.

2.3) It is essential to understand this ILO convention, as quite often,

both trade unions and employer organizations refer to this
convention. We need to understand, that, the convention in Article
Three clearly mentions that representatives must be freely chosen
by the representative organization. We do find that there are
organizations both in trade unions and employer organizations
where representatives are nominated and not necessarily freely
chosen. We also find certain trade unions and employer
organizations wherein membership is mandatory, thus denying the
members their right on “Freedom of Association” which also has an
interpretation that that they have a right not to join a particular
organization.

2.4) One of the common problems faced at the enterprise level in India
is the multiplicity of representative organizations (trade unions) of
workers with the close rivals claiming to be the most

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 representative. Most trade unions not only in India but in South
Asia are affiliated to national / regional political parties and this is
an inherited legacy of the freedom movement of each of the
countries in South Asia. Most enterprises in India have found their
own solutions in dealing with situation of multiplicity of trade
unions. The Second National Commission on Labour in its report
published in 2002 had suggested check off system, which to some
extent is a solution to this problem, because details of the
membership number of each of the trade unions would be known
to all. However, the present law does not make check off system
mandatory except in the case of enterprises covered under the
Bombay Industrial Relations Act.

3. Role of a Trade Union in Enterprises:

3.1 A Trade Union has a multiplicity of roles; however, its major roles
while operating at an enterprise are towards the members and
their families (existing / prospective) and towards the management
of the enterprise. These can be broadly divided in three areas i.e.,
membership service, dealing with the management in the area of
industrial relations and also carrying out social service involving its
members.

3.2 The present generation of industrial workers are educated (at least
matriculates plus also those who have acquired certain skills by
studying at the Industrial Training Institutes) and are better
exposed, compared to their fathers, who were by and large less
literate and were the first-generation workers. This is both a
challenge, as well as an opportunity for the trade union and the
management of an enterprise.

3.3 Most enterprises presently are recognizing the value of highly

skilled artisan and are prepared to compensate this category of
employees higher compared to the lesser skilled / unskilled
employees. In green field sites the category of highly skilled artisans
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 is presently being engaged as executives and hence are not
members of trade unions, but in brown field sites this category of
highly skilled artisans are members of the trade unions and in
certain enterprises, some of them are being promoted as
executives, if they agree. Traditionally trade unions have been too
socialistic while bargaining wage increases for their constituents,
thus tending to sacrifice the interest of the highly skilled artisans.
This approach results in extending more or less the same benefits to
all the work force whether highly skilled, skilled, less skilled and
unskilled. Trade unions need to factor in this change before the
constituencies of highly skilled artisan which are its members start
challenging the legitimacy of bargaining by the existing trade
unions. Trade unions in India are enterprise-based unions and not
guild-based unions as in the Western Countries, hence their pattern
of wage negotiations covers all the permanent workers of the
enterprise. Also trade unions in enterprises are seen to by and large
safeguard the interest of the permanent workmen who are their
members and tend to ignore the employees engaged by the
companies through contractors / service providers. This is presently
encouraging emergence of parallel trade unions in the enterprise,
separately fighting for the interest of the contract labour. These
varying expectations need to be harmonized in the best interest of
the trade unions, permanent workmen, contract workmen and the
enterprise.

3.4 In India a representative trade union in an enterprise may be well

anchored in an enterprise, but has to guard itself against threat /
competition from other trade unions that desire to dislodge / oust
it. To prevent this, the concerned trade union needs to understand
the expectations and aspirations of its members and their family
and also educate the members on the changes in the external
environment and how it is affecting the company in which the trade
union operates. Also, the representative trade union needs strong
internal and external leaders, who can realistically handle the
expectations and aspirations of their members and have the

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 courage to lead the members rather than being led by the
members. It is also a reality that employees who are members of a
trade union, evaluate the performance of the trade union on what
it obtained from the management for its members; hence most
trade unions are in a race to get improved benefits compared to
past performance in terms of wages, bonus, leave, retirement
benefits for its members. This approach works well in enterprises
that are able to generate a higher value added in the business and
absorb these incremental expenses. In the present environment,
managements of enterprises also put-up counter demand for
improvement in specified areas of productivity, reduction /
elimination of restrictive work practices, reduction in number of
employees and ask for an improvement in the existing operating
efficiency and also increase in output from existing fixed assets.
There are also enterprises that do not have the capacity to meet the
expectations and aspirations of the workers, as the business is not
in a position to sustain the increase in wages and benefits and this
does lead to a situation which is not very pleasant. At the same
time there is a need on part of the trade union to find a solution
jointly with the management by partially meeting the aspirations of
the workers and ensuring that the existing trade union is not ousted
/ dislodged by another trade union purely because the present
situation of the business is not favorable to meet increased
expenses. Reality is that trade unions deal with the constituency of
management and workers as stake holders, but for managements
there are multiple stake holders and if the existing and / or future
demand for the product and services is not favorable, then the
management has a tough time finding a solution on demand /
expectations for monetary increases to all the employees which
includes executives, workers and employees engaged through
contractors / service providers.

3.5 Trade unions have a major role in dealing with the management of
the enterprise and the way they deal differs widely in India based
on whether the office bearers of the trade union are outsiders or

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 insiders to the organization. Most trade unions in India are
affiliated to political parties and the leadership / office bearer post
of the trade unions is held by individuals who are not full-time
employees of the enterprise. Most of these external trade union
leaders have limited time and mainly get involved in the
negotiations of the Long-Term Settlement (LTS) with the
management of the enterprise which is an exercise at periodic time
intervals varying from 3 to 5 years in private sector and 5 to 10
years in the public sectors. Under this structure the external
leadership has a major role confined to Long Term Settlement (LTS)
and most managements under this structure have built up various
activities leading to work place cooperation between management
and workers, which presently are practiced in a large number of
enterprises in India. Such an approach does help workers and
internal trade union leaders getting close to the management and
vice versa without each one of them losing their identity.

4. Training Internal Trade Union Leaders:

4.1) Internal Trade Union leaders need to go through leadership

development programmes to understand how unions need to be
run for the benefit of members and how to handle the relationship
with the management, so that even when there are differences,
which at times call for a confrontation do not become violent. In
India, experience indicates that in situations where violence
occurred, which resulted in injury / death of an employee, there are
implications where certain employees finally became ex-employees.
Resorting to violence in any conflict / dispute by the mob or
individuals is an unlawful act and the same needs to be understood
by the internal trade union leaders and the members, so that it is
avoided as far as possible, and this is best explained in a training
programme. There are internal trade union leaders who know how
to get into a conflict by starting an agitation but seldom know the
way out. A good and effective internal trade union leader knows
when and how to start a conflict and how to lead the trade union
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 out of the conflict. Internal trade union leaders need to understand
the Conflict Chakravyu and build competencies on handling it in
totality. Leadership development programmes can help in
developing the competencies of the internal trade union leaders.
These programmes should also cover basics of understanding a
balance sheet, costing and salient features of the labour laws
covering The Industrial Employment (Standing Orders) Act, 1946,
The Industrial Disputes Act, 1947 and The Contract Labour
(Regulation and Abolition) Act, 1970. These programmes can be
conducted by academic institutes / trade unions / employer
organizations / professional bodies / professionals in the field of
industrial relations. My experience has been that these types of
leadership development programmes are also useful for the shop
floor executives who are technically competent, but quite often
abrogate the responsibility of building relationship with internal
trade union leaders and handling of conflicts to the executives
working in the Personnel / Human Resource Department.

5. Financially Strong Trade Unions:

5.1Trade Unions need to be financially strong and hence they need to

charge adequate membership fees which could be a percentage of the
monthly wage of the members and not just nominal amounts ranging
from Rs 5/- to Rs 50/- per month. Most trade unions in India have been
collecting 10 % of the arrears of the Long-Term Settlement (LTS) from
their members and these settlements are invariably delayed from six
to eighteen months which helps the trade unions in getting a
substantial amount from each member when the Long-Term
Settlement (LTS) is signed. In certain enterprises the members have
decided on a ceiling of Rs 1,000/- to Rs 2,000/- while collection of 10 %
of the arrears of the Long-Term Settlement (LTS) by the trade union.
Normally this amount is deducted by the management from the
arrears payable to the workmen for the Long-Term Settlement (LTS)
and sent to the concerned trade union. In India the trade unions need
to be financially strong like the German trade unions. In Germany, if a
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 trade union decides that its members are to go on a strike, then the
trade union pays wages to the striking workers for the duration of the
strike. The well-known trade union leader Mr. K Gurumurthy of
Simpson Group union in Madras had gradually raised the trade union
membership subscription to 5 % of the monthly wage, thus creating a
financially strong trade union, which even to this day continues to give
many services to its members. Similarly, the National Union of
Seafarers of India (NUSI) started by Mr. Mohammad Ibrahim Sarai and
later nurtured by Dr Leo Barnes is a trade union that has very well
utilized its membership subscription to look after its members from
employment to tomb by setting up an excellent holiday resort and old
home for its members to live in the beautiful surrounding at the hill
station Lonavla in Maharashtra in their retired life, if they choose to do
so. These two are only indicative examples and there will also be more
examples of the excellent services being rendered by trade unions to
their members and these need to be publicized, so as to have a
multiplier effect. However, by and large, most trade unions render
limited services to their members, such as negotiating and signing of
the Long-Term Settlement (LTS) with the management, attending and
defending the interest of workers in conciliation proceedings with the
labour department, litigations with the management and defending
disciplinary cases / litigations involving the members. When
individuals pay high membership subscription to the trade union, then
they expect services which will help improve their quality of life. This
also improves accountability of trade unions and their leaders towards
their members and helps in establishing a strong trade union.

6. Getting Close To Each Other Without Losing Individual

Identity:

6.1 Getting close to each other for the trade union leaders and the
management personnel without losing individual identity is possible
and this needs to be developed in each enterprise. This approach helps
in building a healthy climate for social dialogue and facilitates the
process of finding solutions to problems. We need to realize, at times
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 there are situations in enterprises when both parties agree to disagree,
as presently there is no easy solutions to certain problems. Opposing /
not agreeing with each other does not in any way mean that one
cannot be close to each other and work together. We need to
recognize that individuals are representing constituencies and there
can be situations when they may collaborate or oppose each other,
and still be close as they are opponents and not enemies.

7. Conclusion:

7.1The labour market in India post 1991 has gone through major
transformation, wherein the growths of employment in the
service sector in the period 1991 to 2011 was high. During the
same period (1991 to 2011) increase in engagement of contract
labour and restructuring of work in the formal sector both in
manufacturing and services was high. Also, the years of 2011 to 13
have been bad in terms of generation of new jobs, because of the
low growth rates in the economy coupled with high inflation.

7.2The next decade (2013 – 2023) based on our present

demographics will see an entry of approximately 120 million youth
in the labour market but large number of this youth will have to
work in the informal sector and be subjected to casualization of
work compared to the qualified and skilled youth that may find
employment in manufacturing and service sectors. The next
decade (2013-2023) is likely to see more turbulence from the
white and gold collared employees in service sector who are well
qualified, have high aspirations, desire immediate results
compared to the turbulences one saw from the earlier blue
collared employees in the last two decades. The representatives
of trade unions and representatives of management have a major
role to play in finding solutions to these turbulences by seeing that
these do not become tsunamis and this can best be achieved
when trade unions and managements are not only close to each

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 other, but are equally strong and, at the same time maintain their
individual identity.

7.3Building positive relationship between both trade union leaders

and management helps in building mutual acceptability and
dependability which eventually leads to respectability by both the
parties for each other. This approach brings both parties close to
each other, without losing their identity and this is best achieved
through actions.

---------------------------------------------------------------------------------------------------------
* President, Industrial Relations Institute of India (IRII), Former Sr. Specialist on Employers’ Activities
for South Asia with International Labour Organization (ILO) and Former Head of Corporate HR of
Novartis India Ltd. and ACC Ltd. E-mail: rajenmehrotra@gmail.com

Published in Current Labour Reports May 2013.

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 Impact of New Labor Codes on Industrial Relations (IR) **
Dr. Rajen Mehrotra*
--------------------------------------------------------------------------------------------
Background
The Second National Commission on Labor was set up by the Bharatiya Janta
Party (BJP) led National Democratic Alliance (NDA) Government on 15th
October 1999 under the chairmanship of Mr. Ravindra Varma. The Commission
was assigned two tasks: (a) to suggest rationalization of existing laws relating
to labor in the organized sector, and (b) to suggest an umbrella legislation for
ensuring a minimum level of protection to the workers in the unorganized
sector. The Commission submitted its report on 29th June 2002.
The main recommendation of the Commission was the classification of all the
existing labor laws into five categories: (a) Wages, (b) Social security, (c) Safety,
(d) Welfare and Working Conditions and (e) Industrial Relations. The
Commission has also made several other recommendations about the laws
relating to the organized sector.
However, the report of the Commission was not implemented either by the
BJP led NDA Government (1999 to 2004), or by the Congress Party led United
Progressive Alliance (UPA) Government (2004 to 2014). Both the Governments
were coalition Governments. Reaching a consensus by the coalition partners
must have posed a problem.

Introduction
The present BJP led NDA Government has implemented one of the main
recommendations of the Commission by consolidating 29 different labor
legislations into four Labor Codes, viz: (a) Wages (b) Industrial Relations (c)
Social Security and (d) Occupational Safety Health and Working Conditions
along with commonality of definitions. Parliament had passed three out of the
four Labor Codes in 2020 while the Code on Wages was passed earlier in 2019.
The Labor Codes were to be made operational from 1st April 2021, as indicated
by the then Labor Minister Mr. Santosh Gangwar. The draft rules for the four
Labor Codes have already been framed by the Central Government, but they

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have not been released as yet because the State Governments have not come
out with their own draft rules.
The Labor Codes would probably be made operational after the State Assembly
elections in Punjab and Uttar Pradesh, scheduled to be held in the beginning of
2022. The Central Trade Unions including Bhartiya Mazdoor Sangh (BMS)
which is the labor wing of the Rastriya Swayamsevak Sangh (RSS), are opposed
to some of the changes in the existing laws. They are specially against the
revision of the threshold limit from 100 to 300 in the Industrial Relations Code
for organizations requiring Government permission for layoff, retrenchment
and closure.
Organizations in India move through six phases: viz (a) Startup, Young Phase
(green field) (b) Growth, Expansion Phase (c) Stagnation Phase (d) Decline
Phase (e) Sickness Phase and (f) Comatose, Death Phase. The impact of the
New Labor Codes on business, trade unions and IR will depend on the phase in
which an enterprise finds itself when the Codes become operational.
Industrial Relations (IR) issues in an organization are situation-specific and
would depend on, the phase apart, the approach of the Management and the
Trade Unions in dealing with their challenges. Industrial Relations will also be
considerably affected by the following labor laws which are being integrated
into the four Labor Codes.
• The Trade Union Act, 1926,
• The Industrial Employment (Standing Orders) Act, 1946,
• The Payment of Wages Act, 1936,
• The Minimum Wages Act, 1948,
• The Industrial Disputes (ID) Act, 1947,
• The Contract Labor (Regulation & Abolition) Act, 1970,
The Labor Codes, when implemented, will certainly have an impact, both
positive and negative, on the Industrial Relations (IR) situation in the country.
Present Business and Work Force Composition Model
Maintaining minimum required fixed assets while striving to maximize revenue
and profitability within the framework of the existing laws has been the
business model of most organizations.
Similar is the model adopted about work force composition. The strategy is to
engage less of workers and more of executives, even for jobs generally done by

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workers. The balance requirements are met by Contract Workers (through
Contractors), Trainees under National Employability Enhancement Mission
(NEEM) (post 2013 phenomena), Apprentices under the provision for ‘Optional
Trade’ (post 2014 phenomena), and Trainees (up to 15 % of the workforce
including contract labor) under the specified National Apprenticeship
Promotion Scheme (NAPS) (post August 2016 phenomena). Consequently,
most of the “workforce” do not fall within the ambit of the Industrial Disputes
Act, 1947.
The ‘phase’ of the organization will determine the structure of these models.
A company at the start-up phase enjoys the highest flexibility.
IR Issues in an Enterprise
IR issues which are likely to be affected by the changes in the Labor Codes are
the following:
1. Recognition of Trade Unions, and Trade union rivalry
2. Types of Employment,
3. Notice of Change,
4. Dispute Settlement Mechanism,
5. Strikes and Lockouts,
6. Lay off, Retrenchment and Closure,
7. Compensation and Welfare Measures,
8. Engagement of Contract Labor,
9. Gig Worker, Platform Worker.

1. Recognition of Trade Unions and Trade Union Rivalry

The Trade Union Act, 1926 deals with the registration of Trade Unions but is
silent about their recognition. But the Industrial Disputes (ID) Act, 1947
decrees that Management should negotiate with the recognized union.
The issue of recognition of Trade Union has given rise to several controversies
in the past. Appropriately, the IR Code - Section 14 - makes it a point to deal
with this matter specifically.
In case of a single Trade Union, the Company has to accord it recognition
irrespective of the size of its membership. If there is more than one Trade
Union, the one enjoying the support of more than 51% of the workers on the

Page | 21
rolls of the establishment, will be recognized as the sole negotiating union by
the Employer otherwise there will be a negotiating council.
The IR Code, however, is silent about the method of identifying the negotiating
union or the negotiating council. The procedure can be the checkoff system or
the membership verification or the secret ballot. This will have to be specified
in the Rules. In this regard, the Rules of the State Governments can be
different from the Rules of the Central Government. Presently some of the
states like Kerala, Maharashtra, Rajasthan and West Bengal have already state
level legislations which specify the method for recognition.
With regard to disputes among unions, the IR Code - Section 22 - stipulates
that the disputes should be adjudicated by the Industrial Tribunal. This is a
clear departure from the past practice of referring them to the Civil Court. Past
experience has shown that the litigation process in labor matters is a long-
drawn-out affair. Industrial Tribunal is not likely to be any different. Hence,
organizations will do well to strive to resolve inter union rivalry disputes at the
organization level itself.
The Second National Commission on Labor had recommended adoption of
compulsory check-off system in establishments with a strength of more than
300 workers. The Commission had suggested the same system for the selection
of the negotiating union or the negotiating council. Further, recognition of the
Trade Union should be held valid for a period of 4 years as at present and be
coterminous with the period of settlement (Section 6.66, 6.73 and 6.76 of the
Report). Strangely these recommendations of the Commission were not found
worthy of inclusion in the IR Code.

2. Types of Employment
The threshold limit for the applicability of Industrial Employment Standing
Orders Act has been revised from 100 to 300 workers as stated in the IR Code -
Section 28. However, in the case of organizations which have already adopted
the Certified Standing Orders, the provisions of the Act will apply even if they
have less than 300 workers on their rolls. Organizations which are affected by
this change will have to frame their own rules and inform their employees
accordingly.

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“Fixed Term Employment (FTE) " is a new addition to the existing forms of
employment, namely, permanent, temporary, casual, badli and apprentice.
FTE engagement of a worker is on the basis of a written contract of
employment for a fixed period (Section 2(o) of IR Code). However, the time
period of the contract is not specified in the IR Code.
The engagement of FTE workers is necessitated by some sudden increase in
the demand for products and the consequent requirement of additional
manpower to meet the contingency. This is similar to the provision of engaging
temporary workers, permissible under the Industrial Employment (Standing
Orders) Act.
However, the following actions (a) Hiring FTE workers in a disproportionate
manner, (b) Hiring FTE workers against permanent positions, (c) Extending the
period of FTE workers more than 3-4 times d) Hiring FTE workers on a
permanent nature of work can create problems. Such actions may amount to
unfair labor practices and can escalate into disputes and litigations.
The point to note is that Fixed Term is not related to the person but to the job.
Fixed Term Employment is not permissible in respect of a permanent job or job
of a permanent nature. Most Employers prefer to engage FTE workers, and
therefore IR problems and litigations would become inevitable.
FTE is not a new concept. It was incorporated in the Industrial Employment
(Standing Orders) Central Rules, during 1999-2004, when the BJP led NDA
Government was in power. This provision was withdrawn from the Central
Rules by the Congress Party led UPA Government in October 2007. However, in
Gujarat, the Industrial Employment (Standing Orders) State Rules, in force from
3rd August 2006, permit engagement of FTE workers in all sectors.
The present BJP led NDA Government introduced FTE in Apparel
Manufacturing sector under The Industrial Employment (Standing Order)
Central Rules, on 7th October 2016. Subsequently FTE was extended to all the
sectors through the Central Rules from 16th March 2018. Hence presently, till
the IR Code becomes operational, engaging FTE workers is permissible only in
organizations where the appropriate Government is the Central Government.

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3. Notice of Change
There is no change about “Notice of Change” and the relevant schedules in the
IR Code (Section 40, 41 and Third Schedule of IR Code). They are identical to
the provisions laid down in the Industrial Disputes (ID) Act, 1947 (Section 9A).
The Second National Commission on Labor had recommended (Section 6.82 of
the Report) dropping the clause about “increase in the number of persons to
be employed” (Item 11 of the Fourth Schedule, Section 9A of the ID Act). The
Item 11 states: “Any increase or reduction (other than casual) in the number of
persons employed or to be employed in any occupation or process or
department or shift, not occasioned by circumstances over which the employer
has no control”.
Strictly speaking if an organization desires to engage additional persons it
attracts “notice of change”. But this is irrelevant, as it technically hinders
generation of employment.
Item 10 of the Fourth Schedule of ID Act states: “Rationalization,
standardization or improvement of plant or technique which is likely to lead to
retrenchment of workers”. This item poses problems to improvement of plant
or processes which is essential for any organization to stay competitive in the
current business environment and rapid technological developments.
To overcome this problem, most organizations negotiate with their Trade
Unions in their long-term settlements some innovative terms which provide for
upgradation and induction of new machinery and process changes.

4. Dispute Settlement Mechanism

The IR Code retains the Works Committee (Section 3 of IR Code). The role of
the Works Committee, consisting of representatives of Employer and
Employees, is to discuss and to resolve issues pertaining to working conditions
like ventilation, sanitation, drinking water, restroom, cleanliness, seating
facilities etc. Generally, disputes are not raised in this forum. The Works
Committee has been in existence for a long time but has hardly solved any IR
problems.
The IR Code retains the Grievance Redressal Committee as well (Section 4 of IR
Code). The number of members, though, has been increased from 6 to 10.
However, the term “grievance” itself is not defined in the IR Code.
Page | 24
Any grievance can be brought up to the Committee by a worker or even a
group of workers. The verdict of the Committee would be based on majority
votes. In case the verdict is not acceptable, the worker or the group of workers
can approach the Conciliation Officer, by raising an Industrial Dispute through
the Union. Grievance Committee has been in existence under the ID Act from
2010. Its record of preventing or solving disputes is poor. It has at best helped
in resolving some individual grievances, but not any serious IR issues.
The process of referring disputes to the Conciliation Officer has also been
retained (Section 43 of IR Code). An Industrial Tribunal at the state and central
levels has been instituted in place of the existing Labor Court and Industrial
Tribunal, thus inducting an Administrative Member from the bureaucracy in
addition to a Judicial Member (Section 46 of IR Code).
Past experience has shown that the conciliation process and the subsequent
adjudication in the Labor Court and the Industrial Tribunal, tend to drag on
endlessly. Hence Trade Unions have generally opted for other forms of
settlement such as ‘go slow’, ‘work to rule’ or ‘a strike’ to resolve their
disputes, especially concerning their “charter of demands”.
Hopefully the posts of Judicial Member and Administrative Member of the
Industrial Tribunal would not be left vacant for lengthy periods as this results in
further delay, because of the absence of the members of the bench.

5. Strikes and Lockouts

Notice of 14 days is mandatary for a Strike or a Lockout. Once the notice is
served, the dispute will be taken up for conciliation. While conciliation is in
progress, any Strike or Lockout will be regarded as illegal (Section 62 & 63 of IR
Code). This ruling under the ID Act, which applied only to the essential services,
is now extended to all the organizations.
Since decisions of the Conciliation Officer are not binding, failures in
conciliation result in the disputes getting referred to the Labor Court and the
Industrial Tribunal. More time gets consumed in the process. Therefore, we
are likely to experience several of the strikes and lockouts being declared as
illegal. The practicality of this modification in the Code will be tested when it is
implemented. My own guess is that this would lead to litigations both by the
Employers and the Trade Unions.

Page | 25
Strikes and Lockouts are a lawful method of settling disputes when dialogue
fails. However, under the IR Code, the possibility of a legal strike or a legal
lockout is almost ruled out. As a consequence, parties on either side are likely
to take recourse to other methods. Unions could engage in slogan shouting, go
slow, work to rule, mass absence of persons at critical work stations, sabotage,
and other such agitational approaches. Managements could resort to transfers
of key workmen to other departments or to distant locations, suspension of
operations, insistence on individual workers signing a good conduct bond, and
disciplinary actions like suspension and dismissal.
The Second National Commission on Labor had recommended that a strike call
by a Trade Union could be given only after a strike ballot, supported by 51% of
members. Similarly, a lockout too would require approval at the highest levels.
It had also suggested that an Illegal strike & illegal lockout to result in loss /
payment of three days wages for every day of strike / lockout. Also, a Union
leading an illegal strike should be derecognized and debarred from applying for
registration or recognition for 2-3 years (Section 6.101 of Report). However,
none of these recommendations has found a place in the IR Code.

6. Layoff, Retrenchment and Closure

The threshold limit has been revised from 100 to 300 workers for organizations
requiring prior government approval for enforcing Layoff or Retrenchment or
Closure (Section 77 of IR Code). The Trade Unions have opposed this change,
though the change has already been adopted by certain State Governments
like Assam, Chhattisgarh and Rajasthan, even before its inclusion in the IR
Code.
The Second National Commission on Labor had recommended the following
compensation for retrenchment:
(a) @45 days wages per year of service for a sick company or a body or
agency engaged in making it viable
(b) @60 days wages per year of service for a profit-making organization
For establishments employing less than 100 workers the compensation for
retrenchment would be @50% of the amounts specified in clauses (a) and (b)
above. However, there is no change about the notice pay.

Page | 26
In case of closure, compensation recommended by the Commission was:
(Section 6.91 ,6.88 of the Commission’s Report).
(a) @30 days wages per year of service for a sick company, NGOs,
charitable institutions
(b) @45 days wages per year of service for profit-making organizations
However, under the IR Code the compensation amount for retrenchment and
closure remains what it was in the past, @15 days average pay, for every
completed year of continuous service or any part thereof, in excess of six
months.
To do justice to the departing workers, the IR Code should have revised the
compensation amounts for both retrenchment and closure, at least in line with
the recommendations of the Second National Commission on Labor. In fact,
compensation presently paid to workers under Voluntary Retirement Schemes
(VRS) by enterprises is higher in most cases than what had been suggested by
the Commission.

7. Compensation and Welfare Measures

Presently, State Governments stipulate the “Minimum Wage” payable in their
States. Under the Code on Wages, 2019, the Central Government will fix the
“Minimum Wage", known as the Floor Wage, for all the regions in the Country.
The State Governments are free to fix the Minimum Wage higher than the
Floor Wage prescribed by the Central Government (Section 9 of the Code on
Wages).
In the Wage Code - Section 2 (y), Monthly Wage is defined as consisting of
Basic Salary, Dearness Allowance and Retention Allowance. If the Monthly
Wage amounts to less than 50% of the items included under Remuneration,
then 50% of the Remuneration will be deemed as Monthly Wage for the
purposes of payments towards Over Time, Employees State Insurance Scheme,
Annual Bonus, Provident Fund, Gratuity and Leave Encashment.
Organizations have to ensure that Monthly Wage amounts to at least 50% of
the Remuneration. If the Wage works out to be less than 50% of the
Remuneration, Employers and Trade Unions have to discuss ways to remove
this anomaly before the Code on Wages becomes operational. The ideal time
to do this will be when wage increases are negotiated next.
Page | 27
8. Contract Labor
For engaging contract labor, Organizations require Registration and
Contractors require License from the Government. The threshold limit has
been raised from 20 to 50 workers. No permission is required for engaging
fewer than 50 contract laborers.
Engagement of contract labor is prohibited in the core activity of an
organization under OSH and WC Code - Section 57 (1). However, in the
following situations, the principal Employer may engage contract labor through
a contractor: (a) In the normal course, the activity is generally done through a
contractor. (b) The activities do not require full time workers for the major
portion of the working day or for a major portion of the year, as the case may
be. (c) A sudden increase in the volume of work in the core activity, needing to
be completed within a specified time. Obviously, this provision is liable to be
misused by the Employers.
Presently many companies are engaging contract labor in huge numbers
through a contractor for various purposes, including core activities. This
practice will be regarded as violative of the OSH&WC Code when the Labor
Code becomes operational. Organizations will have to develop other lawful
alternatives.
The Second National Commission on Labour had recommended (i) that
Contract labour not to be engaged for core production/service activities and
(ii) Contract labour to be remunerated at the rate of regular labour.
(6.109). The first part of the suggestion has been incorporated in the OSH and
WC Code which was already prevalent in the state of Andhra Pradesh &
Telangana, while the second part of the recommendation has not found place
in OSH&WC Code.

9. Gig Worker and Platform Worker

Social Security Code - Section 2 (35) - defines "gig worker" as a person who
performs work or participates in a work arrangement and earns from such
activities outside of conventional employer-employee relationship.
Social Security Code - Section 2(60) - defines "platform work" as a work
arrangement outside of conventional employer - employee relationship in
which organizations or individuals use an online platform to access other
Page | 28
organizations or individuals to solve specific problems or to provide specific
services or any such other activities, which may be notified by the Central
Government, in exchange for payment. Social Security Code - Section 2(61) -
defines "platform worker" as a person engaged in or undertaking platform
work.
Social Security Code clarifies through its definition that there is no employer-
employee relationship between the “gig worker” and the “platform worker”
and the Aggregator or any such agency. This definition is included in the
context of Section 114 of the Social Security Code dealing with social benefits
for the “gig worker” and the “platform worker”. The benefits may be funded
by the contributions of the aggregators, the Central Government, the State
Government, CSR funds and contributions from the beneficiaries.
In reality the relationship between the “gig worker” and “platform worker” and
the Aggregator is a fuzzy relationship. We have had instances of Trade Unions
of “gig workers” and “platform workers” going on strike to negotiate for
enhanced earnings and benefits and to safeguard existing terms.
We need to remember that the French Court of Cassation - France's top Court
– in its order of 04 March 2020, recognizes the right of an Uber Business
Partner to be considered, not as a vehicle owner cum driver, but as an
employee. The French Court has laid down three conditions to be met if
someone is not to be regarded as an employee of the online platform Uber.
The conditions are: (a) The business partner should be managing the clients
himself or herself. (b) The business partner should be in a position to fix the
price. (c) The business partner chooses how to execute the task. This is the
decision of the French Court, but the criteria laid down could be used by the
Trade Unions in India as arguments in their litigations to establish the
employer-employee relationship of the “gig workers” and “platform workers”
with the online platform.
There are several organizations who procure additional workforce in the form
of “gig workers” and “platform workers”. Such attempts are sure to give rise to
IR problems in the future, in spite the fact that the Social Security Code clarifies
that there is no employer-employee relationship between the “gig worker”
and /or “platform worker” with the Aggregator or any such agency.

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Conclusion
The four Labor Codes - along with the Rules - are likely to be made operational
in 2022 soon after the assembly elections in Punjab and Uttar Pradesh.
The Labor Code does offer benefits to both the Employers and the Trade
Unions. However, the Code also deprives both the parties of some of their
existing advantages. This is bound to create disaffection in our organizations.
Managements and Trade Unions must learn to develop amicable solutions to
their IR problems through Social Dialogue. After all, nobody wants to see
violence and destruction such as what was witnessed at Wistron Infocomm
Manufacturing (India) Pvt. Ltd. at the company’s facility at Narasapura in Kolar,
Karnataka on Saturday, 12th December 2020.
________________________________________________________________
* Past President of Industrial Relations Institute of India (IRII), Former Senior Employers’ Specialist
for South Asian Region with International Labour Organization (ILO) and Former Corporate Head of
HR with ACC Ltd. and Former Corporate Head of Manufacturing and HR with Novartis India Ltd.
Continues to maintain close links with the academic world as a visiting faculty with some of the IIMs.
E-Mail: rajenmehrotra@gmail.com

**Based on a virtual talk delivered by the author on 17th August 2021 at “Third Industrial Relations
(IR) Conference “: The Future Is Faster Than You Think organized by Gujarat Employers’ Organisation
(GEO), Vadodara and on 27th August 2021 at “Industrial Relations (IR) Conference “: Impact of New
Labour Codes on Business & IR – Organizational & Business Perspective organized by Karnataka
Employers ‘Association (KEA), Bengaluru as part of their Diamond Jubilee Celebration.

Published in the October 2021 issue of Current Labour Reports.

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 Industrial Relations (IR) – Essential for Business Sustainability

Dr. Rajen Mehrotra*

Introduction

Every business aspires not merely to survive, but to grow and to prosper.
However, all businesses, during their life span, have to face numerous
challenges on account of the changes in the Political, Economic, Social and
Technological (PEST) spheres in the external environment.
Business organizations have also to deal with several other challenges arising
from other sources: the approaches and the strategies employed by the
competitors and the suppliers; the expectations of customers, of the
shareholders and of the civil society at large; and the enactments and the
interpretations of laws and rules by the Government of the day, the Bankers
and other such agencies. All of these phenomena constitute what we generally
refer to as the company’s external environment.
The plain truth is that organizations have little or no control whatsoever on
these external forces though they are deeply affected by them. To be
sustainable, organizations have to develop effective strategies for successfully
adapting to these changes.

Deploying People Wisely

Businesses, desiring to be successful and sustainable, have to deploy all their
internal resources to meet the challenges posed by the external environment.
Only a sustainable business can help an economy to grow by generating wealth
for itself and the stake holders, and by creating opportunities for employment,
both direct and indirect.
People working for an organization are the essential part of the company’s
internal resources and assets. It is they who ensure the successful execution of
the strategies to meet the challenges thrown up by the external environment.
The business, and the resultant employment, model of every organization is
unique. It is entirely dependent upon the vision and the business philosophy of
the company’s Top Management.

Page | 31
In India, the employment pattern of most organizations has undergone a sea
change over the years beginning from 1991. The current trend is to employ
maximum number of executives and contract labourers (through Contractors),
and minimum number of workers, whether permanent or temporary. Again,
from 2013, many organizations are also engaging National Employability
Enhancement Mission (NEEM) trainees to augment the number of their “blue-
collar workers”. Besides, from around 2014, following the introduction of
section 2(iii) (LL) under “The Apprentices (Amendment) Act, 2014, many
organizations have substantially increased the intake of apprentices under the
provision for ‘Optional Trade’, thus adding to the much-needed supply of
“blue-collar workers”. As a result, organizations have to increasingly deal with
Industrial Relations (IR) issues involving conflicts and differences, relating to
people who may not be employees of the company but are engaged by the
organization through contractors.
There is another interesting trend that can be noticed in the business world
from the year 2005. While the number of blue-collar workers in the
organizations is on the decline as they are substituted by contract labourers, at
the same time the number of women amongst the “blue-collar workers” is
showing a steady increase. This is particularly noticeable in the Automobile
Industry – in the assembly line sections of the leading car manufacturers.
Needless to say, that this change is bound to have its own impact on the IR
situation in a company, and the Trade Unions will do well to take note of this
new development.

Theoretical Approaches to Industrial Relations (IR)

There are numerous theoretical constructs and approaches to IR, some of
which are listed below: --
John T Dunlop (1958) considered IR as a subsystem of society, distinct from,
but overlapping with other subsystems. Dunlop suggested that IR system could
be divided into four interrelated elements comprising of certain Actors, a
particular Context, an Ideology which binds the IR system together and a Body
of Rules created to govern the Actors at the workplace.
Fox (1966) argued that IR is about maintaining equilibrium in relationships
where the state strives towards maintaining the relationships.
Dale Yoder (1970) looked at IR necessitating collaboration of men and women
in the employment process of an industry.
Page | 32
Hugh Clegg (1979) focuses on the clashing of rules and regulations that are
administered and interpreted differently by the participating organizations at
the workplaces in IR.
Kaufman (2004) defined IR as the study of the employment relationship and all
the behaviors, outcomes, practices, and institutions that emanate from or
impinge on the relationships.
While all of these authors have provided a useful framework to understanding
IR, the definition of IR by John T. Dunlop has withstood the test of time and is
still regarded as a valid model. The actors traditionally included in John T.
Dunlop’s model are the Appropriate Government, the Trade Unions (Workers)
and the Employer Organizations (Employers). However, in the recent past,
especially after COVID 19 pandemic outbreak, Technology Platforms and the
Media seem to have become yet another actor, to be added to the traditional
list of actors in the John T. Dunlop Model.
We hold this view because, on 26 May 2020, a three-member bench of the
Supreme Court of India, suo moto, acted on the plight of the interstate migrant
workers, purely on the basis of how their plight had been projected by the
Technology Platforms and the Media. The Apex Court ordered the Central and
the State Governments in India to provide immediately, free of cost, transport,
food and shelter to the stranded migrant workers desiring to return to their
home states due to the pandemic.

Industrial Relations in an Enterprise

We are all conversant with the notion of IR, but the way IR is practiced differs
widely amongst the organizations in the country. We have real life examples of
situations varying from being regarded as ‘peaceful’ to being classified as
‘turbulent’. Industrial unrest witnessed in our businesses in India during the
period 1960 to 2000 has reduced considerably in the recent past. However, no
one can deny that IR continues to be a very important aspect in the life of any
business.

An effective IR situation contributes to the continued success and the

sustainability of any business, while ensuring, at the same time, a fair deal for
the people who work for the organization. In this regard, it is important to

Page | 33
emphasize that compliance of the applicable laws by all the parties is a must
for maintaining a healthy IR situation.

The state of IR in an organization depends upon several different factors: the

organisation's culture, the governance practices, the style of management of
the owners and the top management, the approach and the style of
functioning of the leaders of the trade unions, and the methods employed by
them in handling the IR issues in the organisation. The IR situation is also
influenced by the labour legislations in force, the contract of employment, the
rules and the regulations of the enterprise, and the past agreements between
the Management and the Trade Union.

IR issues in an enterprise can be about items such as recognition of trade

unions, trade union rivalry, aspects of work, quantum of output, quality of
output, terms and conditions of employment, type of employment, number of
employees, engagement of contract labour, compensation, welfare measures,
promotion policy, rewards, punishments arising out of disciplinary proceedings
and other related matters.

In any organization, there will be situations where disputes may arise between
the Management and the Trade Unions. Avoidance is never the best option to
resolving differences. Any measure aimed at enabling each side to understand
the other’s point of view will be a better alternative. While working out
solutions, we are not to lose sight of other important aspects such as
maintaining discipline and improving quality and productivity. We have also to
ensure uninterrupted operations, growth and profitability of the enterprise.

In addition, we need to take care of the growth and the development of the
workers and payment of adequate, fair remuneration. This calls for
transparency from both the parties and clear, open, continuous
communication. For achieving a robust IR situation, both sides need to invest
time and energy to build a relationship based on trust. Trust begets trust. Any
trace of mistrust will damage the relationship.

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The IR Climate

The IR climate is organization-specific. The IR climate will differ from one

company to another. The IR climate will depend on the attitudes and the
behavior of the Management towards the Trade Union and of the Trade Union
towards the Management. Where there is more than one Trade Union in a
Unit, the IR climate will also be influenced by the quality of the relationships
amongst the trade unions of the company.

There may be situations when trade unions and workers resort to

confrontational measures and indulge in agitations of some kind. The protests
may take different forms such as putting up posters / banners, wearing of
black badges, shouting slogans, go-slow, work to rule, stoppage of work, illegal
strikes and, in some extreme cases, violence and sabotage. These actions by
trade unions may invite retaliations from the management and in extreme
cases leading to suspension of operations and declaration of a lockout.

In some instances, managements may also behave in a high-handed fashion by

victimizing the workers who are seen as trouble makers. The workers who are
likely to incur the wrath of the management are those who are in the fore
front of leading the agitations or of forming a trade union or of taking active
part in trade union activities or of questioning the Management about their
decisions and actions. These actions of the management may lead to counter
retaliation by the trade unions and the workers. It is important for both the
Trade Unions and Management to realize that whosoever starts a fight, should
also know how to end it. They have to learn to work together for the larger
good of the company, for the business to be sustainable.

Besides, organizations need to educate their internal trade union leaders about
the complexities of running a business and about competition and
competitors. The internal trade union leaders need to know how to read and
understand a company’s balance sheet. They also need to acquire knowledge
of the relevant portions of labour laws and the process of negotiation. These
knowledge and skills help internal trade union leaders in resolving disputes, to
manage differences and to work collaboratively.

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Restructuring and Downsizing

During the decade 1991 to 2000, many organizations in the manufacturing as

well as in the services sectors had, in phases, restructured their business and
employment model. This led to most manufacturing companies getting
various components, subassemblies and, in some cases, even finished
products, manufactured by third parties. In the services sector too, various
activities were outsourced to service providers.

To achieve their purposes, these organizations had to downsize their

workforce, both bargainable and non-bargainable, through Voluntary
Retirement Schemes (VRS). The trade unions, though, alleged that these VRS
were actually Compulsory Retirement Schemes (CRS), resulting in a change in
the employment structure itself. Inevitably, these schemes also led to a lot of
uneasiness and industrial unrest in the organizations.

The greenfield businesses set up after 1991, had the option of choosing a
different business and employment model. These businesses to begin with
outsourced quite many activities and adopted a minimum adequate manning
model. Though in some cases they also had to restructure their work force at a
later date.

Industrial Relations in the Future

The four Labor Codes passed by the Parliament in 2019 and 2020 repeal the 29
existing labor laws. These Codes along with the rules are likely to become
operational in the current year, i.e., 2021. While the Labor Code is, by and
large, a continuation of the existing labor laws that are being repealed, some
provisions of the Code, though, could impact the IR in a significant way. Some
areas which can escalate into a critical issue are:

(i) Engagement of contract labor in the organization will get restricted to

activities which are defined as non-core activities of the specific
business. Presently organizations are able to obtain approvals to
engage contract labor in any sort of activities, and not restricted
to the non-core areas, except in the states of Andhra Pradesh and
Telangana.
Page | 36
 (ii) It is mandatory for Trade Unions and Employers to give 14 days’ notice
for a strike or a lockout. This applies to all the establishments, and
not just the public utility services. Violation of this provision will
render a strike or a lockout illegal. Disputes, if any, would have to
be referred to conciliation. All this is likely to give rise to
numerous cases of illegal strikes and illegal lockouts in the future.
(iii) For the first time, the criteria for recognition of a Trade Union in
an organization have been clearly spelled out in the Code. This
will directly impact the IR situation in the organizations, especially
of those which do not have a Trade Union thus far or where the
Management had refused to grant recognition to a Trade Union in
the past.
There is no gainsaying the fact that social media facilitates speedy flow of
information across people and organizations. Everyone, including
Managements, are using social media to put across their points of view. With
more than a billion mobile subscribers in the country, the workers and trade
union leaders will certainly consider using the social media for their purposes,
particularly to communicate on issues of IR. They can, for example, circulate
videos highlighting violations of labor laws or other such unfair labor practices,
or the type of work being done by contract labor compared to what has been
approved by the appropriate Government. This is going to be a new, big
challenge to the Employers.

Yet another likely challenge can be dealing with the third and fourth
generation industrial workers who harbour high expectations and aspirations.
Most of all, this generation of workers expect clarity about their career paths
in the Company. Managements will be compelled to draw up career plans for
their employees.

Conclusion

Over the last three decades beginning from 1991, many organizations have
been using fashionable jargons and terminologies in the arena of Human
Resource Management (HRM), while forgetting that IR is an integral part of
HRM. Indeed, most of the leading Management Institutes in India have also
suspended teaching of subjects like IR and Labor Laws, in their Post Graduate

Page | 37
Programmes in Management, assuming, perhaps, that IR was no more
essential.

However, a couple of serious incidents of violence in the recent past woke up

the Businesses to the reality that IR is very critical for the smooth and
successful functioning of any organization. We are referring to the mayhem at
Manesar, Haryana in August 2012 leading to the death of Awinash Kumar Dev,
General Manager (HR) of Maruti Suzuki India Ltd and the vandalism unleashed
by the contract laborers of Wistron Infocomm Manufacturing (India) Pvt. Ltd.
at Narasapura in Kolar, Karnataka on 12 December 2020 resulting in massive
losses of property amounting to several hundred crores of rupees.

All Management Institutes in India need to recognize that IR is the backbone of

sustainable business and the subject needs to be an essential part of the
syllabus for their postgraduate students. Omission of IR in the curriculum will
be gravely detrimental to the students, who are the future professionals and
leaders of our industries.

From 1991 onwards, organizations are increasingly resorting to outsourcing in

the supply and distribution chain and are engaging more and more of contract
workers through contractors. Also, since 2000, there has been increased
employment in the Gig economy. This business model is bound to give rise to
serious conflicts between the Management and the Workforce, the Trade
Unions, if any. The main areas of contention center around earnings, working
conditions, terminal benefits, continuity of employment and related issues.

Organizations require competent professionals who can analyze and

understand the complex work situations of the modern-day industries. We
need managers who can build relationships, not only with the permanent
workers but with the contract workers as well. We need leaders who can
skillfully manage disputes and conflicts by developing situation-specific IR
strategies and innovative solutions. It is imperative that all the disputes are
negotiated and settled amicably so that the interests of the organization and of
the employees associated with the enterprise are safeguarded.

Page | 38
References

Clegg, H. (1979). The Changing System of Industrial Relations in Great Britain.

Great Britain: Blackwell Publishers.
Dunlop, John T. (1958). Industrial Relations Systems. New York: Henry Holt and
Company.
Fox, A. (1966). Industrial Sociology and Industrial Relations. London.
Kaufman, Bruce E. (2004). The Global Evolution of Industrial Relations: Ideas,
events and IIRA. Geneva, Britain: International Labour Organization.
Yoder, D. (1970). Personnel Management and Industrial Relations. Britain:
Prentice Hall.
* Fellow member of National Institute of Personnel Management (NIPM) & Past Chairman of NIPM,
Mumbai Chapter. Former ILO official. Held top management posts with ACC Ltd. and Novartis India
Ltd. Continues to maintain close links with the academic world as a visiting faculty with some of the
IIMs.

** Published in Research Compendium NIPM – Personal Today, Issue III - April 2021 – ISSN (Print):
0970-8405

Page | 39
 The Changing Employer – Employee Relationships
Work, Worker, Workplace
Redefined
Dr. Rajen Mehrotra*
-------------------------------------------------------------------------------------------
Introduction

Covid-19 surfaced visibly in early 2020. During its peak phase lasting about 24-
30 months, Covid-19 drove both the employers and the employees the world
over to work out remedies, individual and collective, to the trials and
tribulations they faced because of the pandemic itself. As can be expected,
during this period, certain sectors of the economy suffered a great deal while
some others prospered appreciably.

During Covid-19, all organizations toiled hard to minimise its adverse impact on
businesses. Employees too resorted to using personal protective masks,
maintaining social distance and getting themselves vaccinated as a safeguard
against the pandemic. Some even went to the extent of staying away from the
work place altogether.

Employees, infected by Covid-19, took necessary medication, and, where

required, got themselves hospitalized. It is heartening to note that most were
cured. Employers also helped their employees and their families in several
different ways to deal with the pandemic. The company operations were
maintained, to whatever extent possible, within the restrictions imposed by
the Government.

It was unfortunate that a few employees lost their lives to the pandemic.
However, some of the Employers extended various financial and welfare
benefits to the members of the bereaved families, including, in some cases,
employment to at least one member of the family. All this was in addition to
paying the statutory dues payable to the nominees. Thanks to the pandemic,
the Employer–Employee Relationships have undergone a radical change in
many organizations. The positive change is particularly noticeable in

Page | 40
organizations having their own township as living in proximity brings
employers and employees closer to each other and more so in a pandemic.

More than three years have gone by since the pandemic first broke out. Most
organizations in the country have restored normalcy. Majority of the
employees have returned back to their offices and establishments, though in
quite many cases employees are continuing to enjoy the option of work from
home. However, it is important to note that in many parts of the globe
including India, there has been a profound change in respect of ‘Work, Worker
and Workplace’. It is time that we recognized the change and began planning
the future accordingly. Significantly, the pandemic has altered the nature of
the Employer – Employee relationship to an unrecognizable extent.

Work

Work was traditionally carried out in a factory or an office, owned by the

Employer. However, Covid-19 has forced many organizations to restructure
work in a radical way. For example, wherever possible, Teleworking has been
introduced, allowing employees to carry out their assigned work from an
offsite location, which may be home or “any place desired by the employee”.
This provides flexibility to employees and they are able to work from locations
they find convenient, the sole requirement being stable internet connectivity
and absence of deficiencies in bandwidth plus appropriate teleconferencing
facility, as and when required. This change has been adopted by organizations
mainly in the service sector.

Most organizations have had prior exposure to Teleworking and therefore

transition to Teleworking has been smooth and the level of its adoption larger
and broader than expected. The immediate benefit to the employees is that
they save on commuting time and travel expenses to the place of work.
Besides, supervision by the Employer has reduced markedly, and is in fact
limited and negligible at present. The Employer has also benefitted in a big
way, because of the savings achieved due to reduced office space and furniture
requirements, reduction in electricity consumption and in subsidies provided
for tea, snacks and meals served to employees and visitors at the workplace.
Page | 41
A large number of employees, especially those with children and /or having
aged parents and / or having pets at home, at the same time were working
from home, were subjected to severe pressures as their homes are not
designed to provide much of “quiet” workspace. Problems became more
acute when video conferences had to be held from home in the limited space.
In case both the spouses worked from home, they lacked separate, individual
workspace.

Matters got further complicated for those with school going children, when
schools also started holding online teaching sessions. Parents had to make
video facilities available to the children while attending to their own work
requirements. It has to be borne in mind that most apartments, in which
employees live, have space constraints. Often it is the dining table which is
converted into a work station.

In most of the manufacturing organizations in the country, the level of

automation is low, or at best medium. Availability of robots is limited, unless
the organization is capital-intensive, technologically advanced, has specialised
processes and deals with high volumes. Therefore, for an organization to
function, physical presence of the workforce is essential, to carry out tasks
related to feeding, processing, moving, storing and transportation of raw
materials, components, sub assembles, assemblies, and finished goods.

Incidentally, during Covid-19, most manufacturing organizations had to

promote practices such as maintaining social distance among the workforce,
sanitising the work place, taking precautions against the spread of the
pandemic and limiting the intake of workers for manning the factory. This has
resulted in a new conception of work, with employees undertaking multi-tasks
and organizations limiting the number of employees at the workplace to the
bare minimum.

What has emerged is a hybrid model of work. This is bound to continue in its
new form and may possibly undergo further modifications in the future.
Wherever possible, digitization is likely to escalate in the days to come.

Page | 42
Worker

‘Worker’, in an organization of the changed work environment post Covid-19,

is not just the traditional “workman” as generally understood based on section
2 (s) of The Industrial Dispute Act, 1947, which is largely used when protection
is sought under the Act. We have now a large number of persons performing
the work of a worker in an organization, who may fall into any of the following
categories:
• Contract workers hired through a contractor
• Trainees engaged under National Employability Enhancement Mission
(NEEM) scheme of 2013
• Apprentices selected under the provision for “Optional Trade “as
permitted under “The Apprentices (Amendment) Act, 2014
• Trainees (up to 15 % of the workforce including contract labour)
appointed under the specified National Apprenticeship Promotion
Scheme (NAPS) of 2016
• Temps supplied by temping companies
• Gig and platform workers employed through various App based
Platforms.

In addition to the above-listed worker categories, we also have other persons

who work from home. Though they are designated as executives, they can
easily get classified as workmen, because the work they do, in majority of the
cases, would not qualify as employment “mainly in a managerial or
administrative capacity”, or merit exemption from the definition of workman
based on section 2 (s) of The Industrial Dispute Act, 1947.

Workers engaged by most organizations as contract labourers through

contractors are predominantly interstate migrant labourers, hailing from Bihar,
Jharkhand, Odisha and Uttar Pradesh. This category of workers was also
affected negatively during the Covid-19 pandemic, as most organizations
discontinued their services at the very onset of the disease. Most of these
labourers chose to go back to their home towns and, as a result, had to suffer
tremendous hardships. The reason was that the public transport system, rail
Page | 43
and bus services, had been suspended by the Government during the initial
period of Covid-19, following the declaration of the lockdown.

As per law, the interstate migrant labour is covered under The Inter-state
Migrant Workmen (Regulation of Employment and Conditions of Service) Act,
1979. However, the situation was such that in many cases, these workmen had
not been registered under the Act. Even if registered, the labour department
was not in a position to provide any meaningful information about interstate
migrants.

But now the Government, under The Occupational Safety, Health and Working
Conditions Code, 2020 passed during Covid-19 pandemic, but still to be made
operational, has introduced certain changes. It has become mandatory for all
establishments in which ten or more interstate migrant workers are employed,
to comply with the requirements specified in the Code. Most of these
interstate migrant labourers have re-joined their organizations as contract
labourers, because they get paid far higher remuneration than what they can
earn in their home states.

Also, over the years, the business model of most organizations has undergone
a drastic change whereby work carried out internally by the organization has
been shifted to certain specialized agencies in the supply and distribution
chain. Workers engaged in the supply and distribution chain are no doubt an
extended workforce of the main organization, but they operate as part of a
separate agency. Any disruptions of work in this dedicated supply and
distribution chain would impact the smooth functioning of the organization as
the operations are totally dependent on this chain.

Organizations in India can learn a lot about effective supply and distribution
chain model in the milk business from Anand Milk Union Limited (AMUL).
AMUL, which commenced operations in December 1946, is a state
government-owned dairy-based cooperative society officially named the
Gujarat Milk Marketing Federation, based in Anand, Gujarat. It has such a fool-
proof system that there has not been any disruption whatsoever since its birth
including during COVID 19.

Page | 44
During Covid-19 people sought to have all their goods and purchases, ordered
online through their mobile phone and internet facility, delivered at their
doorstep. This resulted in the gig economy witnessing an unprecedented
growth, through various size App-based Platforms. The trend is, in fact,
continuing at an accelerated pace. This is generating jobs for millions of self-
employed youths, mainly in our metropolitan and A class cities. The jobs are
strenuous, demanding, and involve harsh working conditions. Most of all, the
job-holders face an uncertain future because their continuance in the jobs will
entirely depend on the feedback received from the customers to the App-
based Platforms, which monitor and evaluate performance.

The jobs involve, in most cases, putting in 12-15 hours of work every day and,
that too, on all the seven days of the week. Besides, the self-employed worker
is expected to have a two-wheeler or a four-wheeler vehicle, either his own or
hired, and bear the fuel cost. Not seldom will he / she have to face harassment
from the traffic police on one ground or other.

There is, however, an unexpected fallout from these new developments. With
the customers getting educated in online shopping for groceries, garments and
other personal goods, and the resultant exponential growth in e-commerce,
many leading brands and retailers are forced to shut shop, leading to loss of
jobs. Malls are also feeling the impact as customer footfall has dropped
considerably in the retail stores. This has also led to job losses in some sectors.
Luckily, there is a silver lining amidst the developing chaos. In a few cases there
has been an increase in jobs as malls are re-orienting their business model by
adding more eateries and by creating entertainment facilities.

Gautam Bhatia writes in Hindustan Times, 19 March 2023, Mumbai edition:

“Last month as part of its budget for 2023-24, Rajasthan Government
announced the state will enact a law for the protection of gig workers,
establish a welfare board and devote a sum of Rs 200 crores for this purpose.
At the core of the proposed law is the idea that platform companies - such as
Uber, Ola, Swiggy, and others will be responsible to pay a certain levy, that is a
fixed percentage of the cost of each piece of gig work (a ride or a delivery). This

Page | 45
money will be used for the welfare provisions, such as accident insurance,
pensions and provident fund for gig workers. It will be administered by a
welfare board, which if labour demands are fulfilled will have representatives
of the government, platform companies and gig workers”.

The approach of the Rajasthan Government is in tune with clause 199 of The
Code on Social Security-2020 which calls upon the State Governments to
formulate and notify, from time to time, suitable welfare schemes for the
unorganised workers, the gig workers and the platform workers. Though The
Code on Social Security-2020 has not been operationalized by the Government
of India, certain states are taking steps towards its implementation.

We hope the State Governments will ensure that the money collected is spent
for the benefit of the gig and platform workers and does not just remain with
the Government, as has been the case with The Building and Other
Construction Workers’ (Regulation of Employment and Conditions of Service)
Act, 1996.

Workplace

Traditionally, workplace belonged to the Employer, as all the employees

reported to the factory or the office for work. However, with the new
arrangement of work through Teleworking wherever possible, the place of
work has shifted from the Employer’s premises to the employee’s home or
“any place desired by the employee”. This change gives rise to questions
whether the employee needs to be compensated additionally by the Employer
for the expenses incurred in carrying out the company’s work away from the
normal workplace. Also, most employees would require bigger homes to
provide for a separate work place.

In the system of work-from-home, the employee is not governed by any

prescribed office timings. This has unwittingly placed, on the employee
himself, the onus of deciding when to commence work and when to complete
it, and when to take breaks and how long they should be. As a result, the
obligation to ensure that the specified work is completed within the specified
Page | 46
time schedule, has fallen on the employee. This may not, however, be an
unwelcome development as it inculcates in the employee attitudes of self-
management and self-motivation.

Some Employers have, during this period, decided to open additional offices in
Tier 2 and Tier 3 cities, to enable new employees to work from sites, which are
located within comfortable distance from their home-towns.

Field force personnel, responsible for the sales and the marketing of
company’s products and services, operate in designated geographical areas,
where the organizations do not have a branch office. This is a normal
phenomenon in the country over the past several decades. As a consequence,
the field force personnel work in the field, prepare reports of the work they
performed and send them, either physically or electronically, to their
superiors, generally based in a different city or town.

There are a few other vexing issues requiring elucidation. For example, should
an employee, working from home or “any place desired by the employee”,
meet with an accident in the course of his work, will the person be entitled for
leave, medical expenses and compensation for injury by accident under The
Employee Compensation Act, 1923? These issues are likely to arise in the days
to come and may get referred to courts for litigation by the employees or the
Trade Unions. Existing legislation is not clear about the process to be followed
if any accident were to occur in a work-from-home situation.

Since workers are not concentrated in a single location but are scattered in
different places, Trade Unions have been employing innovative methods to
communicate with them. In particular, they have been availing of the mobile
phone connectivity to contact the workforce for representing their concerns to
the Employers.

Conclusion

Post Covid-19, organizations have returned to normalcy although with a hybrid

workplace model, wherein Work, Worker and Workplace have been redefined.
Page | 47
It has been realized that the traditional face-to-face communication to
promote effective Industrial Relations has a limited reach. Therefore,
organizations are experimenting with new, innovative tools to keep
communication simple and transparent, as well as to promote positive
relationship and trust between employers and employees.

Social media, digital communication modes, virtual meetings and webinars are
becoming the new forms and norms of communication. They will be
increasingly used for communication between employers and employees,
including Trade Unions. Use of Artificial Intelligence (AI) like ChatGPT is going
to gain momentum. We have to welcome, and not resist, these new
developments. However, my own belief is that the Long-Term Wage
Settlements will continue to be carried out in the traditional way, with the
Management Team and the Worker Representatives engaging in face-to-face
negotiations to arrive at a settlement.

Organizations need to make all-out efforts to upgrade the skills and the
capabilities of their employees. Towards this end, they need to conduct
specially designed training programmes. Alongside, employers have to
encourage and support employees financially to acquire higher skills and
qualifications. The younger work force is seeking career growth, both in their
current jobs and in the world at large. Employees are to be provided with
facilities for distant learning to upgrade their skills and knowledge base.

For an improved Employer – Employee relationship, organizations must, during

normal times, make efforts to reach out to the families of the employees,
through programmes and activities. Such initiatives will help the employees’
families to understand the operations of the company, the efforts
Management is making to run the organization meaningfully and profitably,
and the source of the generation of employment which is benefitting the
families directly.

Clearly, reaching out to employees’ families is somewhat easy in the case of

organizations having their own township because families of both workers and
executives live in the same housing colony and are likely to know each other

Page | 48
closely on a personal level. However, establishing rapport with workers in the
case of companies without their own township, is bound to be quite
challenging. In the post Covid-19 phase, the number of strikes and lockouts
has reduced considerably, possibly because both employees and employers
had fought together the hardships thrown at them by the pandemic. The
goodwill generated should be used to strengthen the bonds among the
employees.
________________________________________________________________
* Past President of Industrial Relations Institute of India (IRII), Former Senior Employers’ Specialist
for South Asian Region with International Labour Organization (ILO) and Former Corporate Head of
HR with ACC Ltd. and Former Corporate Head of Manufacturing and HR with Novartis India Ltd.
Continues to maintain close links with the academic world as a visiting faculty with some of the IIMs.
E-Mail: rajenmehrotra@gmail.com

Published in April 2023 issue of Current Labour Reports.

Page | 49
 The New Trends of Engaging Blue-Collar Workforce –
Implications for the Industry and the Trade Unions

Dr. Rajen Mehrotra*

--------------------------------------------------------------------------------------------
Introduction
In the beginning of the 20th century, when employees were hired to do jobs
which might result in their clothes getting dirty, the workforce chose to wear
dark color clothes. Expectedly, the terminology “blue-collar jobs” came into
existence. However, the skill required for such jobs was never specified. What
was only made clear was that blue-collar jobs involved a certain amount of
manual work.
I can recollect that, years back, as students pursuing Bachelor’s degree in
Engineering at Victoria Jubilee Technical Institute (now called Veermata Jijabai
Technological Institute), Mumbai, we had to wear a blue color boiler suit during
practical sessions, irrespective of the discipline of engineering we specialized
in.
In most of today’s large size state-of-the-art manufacturing organizations,
employees are unlikely to get their clothes dirty. A classic example is the TVS
Motor Company Ltd, the ‘World’s First Two-Wheeler Company’ in India to win
the coveted Deming Award in 2002.
In keeping with its 5S culture - 5S: Sort, Set in Order, Shine, Standardize,
Sustain - which is a system for organizing space for performing work efficiently,
effectively and safely, TVS Motor Company Ltd switched from prescribing, for
all their employees, Dark-Blue color uniform to Light Sky-Blue color uniform,
and eventually, to White color uniform. For an Engineering Manufacturing
company, adoption of White color uniform in their manufacturing facility
represents a powerful assertion of their 5S Culture and of the high level of
cleanliness they could claim to have maintained at their workplace.

Page | 50
Composition of Blue-Collar Workforce
Green field companies in India, set up after 2013, are mostly adopting the
following blue-collar workforce composition model. Organizations established
before 2013 have been restructuring blue-collar workforce to achieve a
desirable mix, wherein permanent blue-collar workers are just a minimum or
none altogether.
a) Designated executive doing a permanent worker’s job
b) Minimum or negligible number of permanent workers.
c) National Employment Enhancement Mission (NEEM) Scheme trainees.
This scheme, started in 2013, has been discontinued by
Government of India (GOI) from December 22, 2022. However,
organizations are continuing to utilize the services of the trainees
till the completion of the training period specified in their
contract.
d) Following the introduction of section 2(iii) (LL) under “The Apprentices
(Amendment) Act, 2014, certain organizations, relying on the
provision for ‘Optional Trade’, have, from 2014, engaged company
apprentices and set up company apprenticeship schemes.
e) Organizations engaging NATS (National Apprentice Training Scheme) and
NAPS (National Apprentice Promotion Scheme) workforce. NATS is
meant for Engineering and Technical apprentices, while NAPS is
intended for all other trades under The Apprentices Act, 1961 and
Apprenticeship Rules 1992.

Companies are presently mandated to undertake apprenticeship programs,

ranging from 2.5% to 15%, which can be stretched to 18% of the workforce
(including contractual employees) every year. In the state of Maharashtra,
however, this limit can be extended up to 25 %.

In addition, as of October 11, 2022, the right to engage NATS and NAPS is
provided to 133 Third Party Aggregators by the Ministry of Skill Development &
Entrepreneurship, GOI, in connection with deploying apprentices in the
industry. However, the total number of apprentices under various schemes will
have to be maintained below 18% of the workforce, except in the state of
Maharashtra where the limit can be extended up to 25 %.

Page | 51
 f) Degree Apprentices are put through industry-specific training. There is a
contract between the Employer and the apprentices. Engagement
of apprentices is now mandatory for organizations with over 30
employees on the rolls. When NATS and NAPS personnel complete
their assigned training, they are engaged as Degree Apprentices.
This is facilitated by staffing companies and Third-Party
Aggregators of the country.
g) Contract Labor recruited under The Contract Labor (Regulation and
Abolition) Act, 1970 and also contract workers engaged for core
activities in certain organizations.
Recent Trend
Organizations do require blue-collar workforce for getting their work done.
Towards this end, some organizations have presently adopted the following
strategy:
a) Engage blue-collar workforce on a temporary basis, which is best
achieved through hiring trainees under various schemes permitted
by law at present.
b) At times, an entire batch from some leading Industrial Training Institute
(ITI) get placed in certain reputed organizations. This constitutes a
major portion of the Blue-Collar workers in the company. Entry of
women as Blue-Collar workers is also a growing trend. Certain
auto production units have an all-women workforce. This is the
case with Piaggio Vehicles Private Limited (PVPL) at their Baramati
plant in Maharashtra, where the women workforce assembles the
Apé Electrik range of electric three-wheelers.
c) Yet another strategy is to engage blue-collar contract labor through a
contractor or a service provider. Blue-collar contract labor is
supplied by staffing companies who rotate this workforce in
various client companies at periodic intervals.
d) Designated executive doing the work of a permanent blue-collar worker.
e) Engage negligible or minimum number of permanent blue-collar
workers.
This model works well in businesses where the duration of training for the
acquisition of the skill-set by the temporary blue-collar workforce is not too
long, say less than 2 - 4 weeks duration, and the skill-sets required are also not
very intricate. However, overlapping of teams of newly recruited apprentices or

Page | 52
contract workers is helpful, in fact may even be necessary, so that exit and
entry of teams happen simultaneously and the quantum and the quality of
output are not affected adversely.
Organizations with this blue-collar workforce model, comprising of a large
number of apprentices and contract laborers, who are rotated at periodic
intervals, need to strictly adhere to the following safety norms, primarily in the
interests of the workforce and the management.
a) Workforce are to be thoroughly trained and educated during the
training period with regard to the operations. Further, it has to be
ensured that they do not violate any of the Standard Operating
Procedures (SOP) or the specified safety norms and permits.
b) Ensuring proper use of Personal Protective Equipment (PPE) by the
workforce.
c) All mishaps including near-miss incidents are to be reported promptly.
Immediate remedial and preventive measures are to be initiated, so as
to avoid their recurrence in the future.
The blue-collar workforce model is clearly a cost arbitrage scheme, because
most companies pay to trainees either the stipend prescribed by the
Government or an amount slightly higher. Likewise, they pay to the contract
laborers the minimum wage prescribed by the Government or an amount
slightly higher.
I have deliberately not included, in the recent trends, “Fixed Term
Employment” (FTE) blue collar workers, though it is a valid form of
employment from March 16, 2018 under the Central Rules of The Industrial
Employment [Standing Orders] Act, 1946 for the Public Sector Units (PSUs). As
of now, hardly any of the PSUs has engaged this workforce. They have
preferred to continue with the contract labor.
Private sector companies will be permitted to hire FTE blue-collar workers,
once The Industrial Relations Code, 2020 becomes operational. However,
already from August 3, 2006, private sector companies in the state of Gujarat
have been engaging FTE blue-collar workers, because of an amendment in the
state rules of The Industrial Employment [Standing Orders] Act, 1946. In the
future, FTE blue-collar workers will be an additional option for organizations to
populate their blue-collar workforce. It is too early to predict whether the

Page | 53
option will be exercised when engagement of FTE blue-collar workers is thrown
open to organizations.

Caution with respect to not having Permanent Blue-Collar Workers

There are organizations whose manufacturing process is such that there is a
need to “maintain high skill-sets with the blue-collar workforce, especially
operators”, so as to do the job well consistently and meet six sigma standards
of quality. Maintaining and improving current levels of quality are assured. This
calls for a systematic framework of long duration training, which could range
from four to six months.
There are organizations in India who have a DOJO center. 'DOJO' is a Japanese
word. The word 'do' means 'the way' or 'the pursuit' and the word 'jo' means 'a
place'. Thus, DOJO in Japanese means 'a place of the pursuit'. Originally it
represented a room in a place of worship, a temple. Later the term was used to
represent martial arts - Japanese fighting skill - training rooms.
Presently DOJO focuses mainly on imparting practical training and simulated
training for a specific process in manufacturing, before the workforce assumes
responsibility on the shopfloor. Digital Training - class room training - for a few
days and, on successful completion of the digital training, the person is moved
to Physical Training, which is nothing but on-the-job training. On completion of
the two layered training, the employee is assigned to production work.
Also, after developing high-level skill-sets in the blue-collar workforce, to lose
them to competition can be a very painful experience. When such intense
training is imparted, no company will be willing to lose the services of the
trained workforce. Rather the organization desires their continuance with the
company in one form or other, either as permanent workers or at least as
employees under a bond to serve the company for a certain minimum period.
It is also possible that these permanent workers are designated as executives,
even if they do not have a diploma or a degree in engineering or in science.

Challenges for Trade Unions

The new practice of engaging blue-collar workforce by organizations is a big
challenge to the Trade Unions in enrolling new members.

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Designated executives doing the work of permanent workers are indeed
“workman” as per the definition of The Industrial Disputes Act, 1947. However,
generally this category of blue-collar workers has a diploma or a degree in
engineering or science. They are given good designations and enjoy certain
benefits like superannuation. They are, therefore, very reluctant to be
perceived as members of a Trade Union. Even so, a few Trade Unions in some
parts of the country have succeeded in enrolling this category of blue-collar
workforce as their members.
An apprentice, part of the blue-collar workforce, is at present not inclined to
join a Trade Union. The apprentice is keen on completing the apprenticeship
program and becoming gainfully employed, either in the unit where he / she is
undergoing apprenticeship or in some other firm. Securing a job and the
resultant security of employment are his / her immediate priorities. Unless
Trade Unions work towards this objective, they are unlikely to succeed in
enrolling this category of workforce as their members.
With a view to attract and to retain green field companies, the Central
Government and Governments of most States in India, have been liberal in
granting or renewing permission to companies to engage blue-collar contract
labor under The Contract Labor (Regulation and Abolition) Act, 1970. The Trade
Unions have not been able to do much in restraining the Central or the State
Governments from doing so, despite the fact some of the Trade Unions form
part of the tri-partite committee of the Central Advisory Board and State
Advisory Board under The Contract Labor (Regulation and Abolition) Act, 1970.
Trade unions have been making continual efforts at unionizing the contract
labor. They have been highly successful in this regard in the Public Sector
undertakings, but not so in the Private Sector organizations.
The Occupational Safety, Health and Working Conditions Code – 2020, which
has already received the President’s assent, but has not yet been made
operational, prohibits engagement of contract labor in core activities. This will
pose a challenge to organizations who engage contract labor in their core
activities.
Trade Unions will have a lot of scope to act by raising disputes and making
complaints against organizations, if this provision of the Code with regard to

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engaging contract labor in core activities were to be violated. However, there is
a silver lining in the otherwise dark cloud. Principal employers are authorized
to engage contract labor in certain core activities on a selective basis.
Trade Unions will have to concentrate on persuading blue-collar contract labor
to become members and espouse their cause both with the Government and
the Management of the company.

Conclusion
The National Employability Enhancement Mission (NEEM) trainee scheme was
launched by GOI in 2013 with the avowed purpose of upgrading the skills of
the laborers and generating employment. However, the indiscreet manner with
which organizations went about engaging NEEM trainees forced the GOI to
discontinue the scheme effective December 22, 2022.
Exercising the option of engaging blue-collar workforce for a company is a top
management decision. Quite often this decision is taken with two main
objectives: (i) Cost arbitrage and (ii) Not to have the blue-collar workforce as
company employees. Paradoxically, blue-collar workforce is required for
carrying out the normal activities of the organization.
The goal is simply to avoid Industrial Relations (IR) issues and, if they cannot be
avoided, to delay them to whatever extent possible. This strategy is also
influenced by the attitudes of employers who think that taking action or
removal of a non-performing blue-collar permanent worker is a thorny issue
which is likely to result in a protracted legal process and would implicate the
Trade Unions.
Once the “Wage Code, 2019” is made operational by GOI, the principle of
“same work or work of a similar nature” done by any employee would become
prominent, either immediately or over a period of time, and may become a
basis for demanding higher remuneration. Thus, employers may perhaps enjoy
flexibility, but at a higher cost.
Trade Unions in India are well aware of this new trend of engaging blue-collar
workforce by organizations. Trade Unions have no doubt a huge role to play
with regard to safeguarding the interests of the blue-collar workers. They are
not here to close shop by any stretch of imagination. Trade Unions will act

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depending on the strategy they adopt to serve the cause of the blue-collar
workers and the platform workers, particularly drivers of two wheelers and
four wheelers, who are their members or potential members. The strategies
adopted in the past by the Trade Unions in India have varied depending upon
the approach of the particular Trade Union and the issue involved.
We will have to see how Trade Unions respond, but I am certain they will,
despite the fact they have a tough task in their hands because the blue-collar
workforce consists mainly of apprentices and contract workers. Challenging
times are ahead for the key players in the industrial world, the Trade Unions
and the Management of organizations.
__________________________________________________________________________________

* Past President of Industrial Relations Institute of India (IRII), Former Senior Employers’ Specialist
for South Asian Region with International Labour Organization (ILO) and Former Corporate Head of
HR with ACC Ltd. and Former Corporate Head of Manufacturing and HR with Novartis India Ltd.
Continues to maintain close links with the academic world as a visiting faculty with some of the IIMs.
E-Mail: rajenmehrotra@gmail.com
Published in the September 2023 issue of “Current Labour Reports”.

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 Industrial Relations (IR) World –
Before Liberalization & After Liberalization
Dr. Rajen Mehrotra*

Introduction
The year 1989 witnessed the fall of the Berlin Wall, the collapse of the
Communist regimes in Eastern Europe and also the close of the Union of Soviet
Socialist Republics (USSR). This is generally referred to as the end of the Cold
War.

These developments led to various countries in the world, which were either
closed or mixed economies, to open up their economies. Prior to 1991, we in
India had an economic policy model, set up after 1947, for Central and State
Public Sector Undertakings (PSUs). Later on, towards the end of 1960’s and the
beginning of 1970’s, banks, insurance companies, oil & natural gas companies
and coal industry were nationalised by the Central Government at different
time periods. Also, a large number of textile mills and some engineering
companies which became sick were also brought under the control of the
Central Government through nationalization. This was done primarily to
safeguard the jobs of employees.

The period prior to 1991 was also referred to as the License Raj, wherein
organizations had to operate within their licensed capacity. However, they
enjoyed the benefit of a sellers’ market. Choice was limited to the consumers
who accepted the quality of products and services provided by the
organizations, along with an unsatisfactory after sales service, though there
were some exceptions. Also, imported items were not available at all. If
available by chance, the prizes were prohibitively high.

It is in 1991, that India moved on from a mixed economy to an open economy

and this period is referred to as ‘After Liberalization in India’. The major steps
taken by the Government of India during this period involved:

1) Devaluation of Currency
2) Reduction and rationalization of Import Duty
3) Doing away with license capacity limitations

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 4) Ease of Imports
5) Privatization of certain Public Sector Units
6) Easy entry of Multinationals in various sectors
7) Ease of permission for foreigners to work in India
8) Permitting flow of foreign direct investment plus foreign institutional
investment
9) Setting up of Special Economic Zones (SEZ) from 2006
The impact of opening of the Indian economy was that a large number of
domestic organizations restructured, after 1991, their product portfolios,
business strategy as well as their other resources such as land. One of the key
elements of the restructuring exercise by organizations was the substantial
reduction of permanent workforce through Voluntary Retirement Scheme
(VRS). The labour laws did not go through any change. However, the income
tax law was tweaked, whereby for private sector employee’s compensation
amount of up to Rs five lakhs in the hands of the beneficiary of VRS was
exempt from income tax.

The restructuring exercises led to organizations outsourcing and

subcontracting various activities which were earlier done inhouse. This also
resulted in the growth of ancillaries and of supply and distribution chain. This
also led to shifting employment to enterprises offering lower wages. After
1991, certain organizations changed hands to new owners, some went through
mergers and in certain cases, where noncompetitive, they were closed down.

Most organizations, in order to remain competitive in the market, resorted to

unprecedented actions and initiatives, such as upgrading the processes,
rationalizing the workforce along with skill upgradation, productivity
improvements with emphasis on cost, and finally quality optimization. These
measures did aggravate, between the trade union and the management,
industrial relations and litigation problems. However, the issues got resolved
amicably, as it was a matter of survival of organizations and safeguarding of
jobs. Generally, trade unions tended to toe the line drawn by the management
for restoring normalcy. Incidentally, during this period, most managements
had an upper hand in controlling matters.

Much water has flowed under the bridge since 1991. There has been a huge
growth of the service sector, which at present accounts for more than 53% of
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India's Gross Value Added (GVA). Presently there is a wide choice of goods and
services, belonging to international and national brands, available to the
consumers. At the same time, organizations have to compete aggressively for
retaining and increasing market share and ensuring that they continue to be
viable and meet customers’ expectations.

Besides, the fourth industrial revolution (2011), involving digitalization,

automation and artificial intelligence (AI), is being undertaken by certain
organizations in India, thus changing the pattern of work and the skill sets
required for the workforce. These changes have been easier to implement in
greenfield sites with the younger workforce compared to brownfield sites
where older workforce is the normal pattern.

Also, the number of Gig and Platform Workers is growing exponentially in the
country. NITI Aayog report of 2022 states that over 7.7 million people were
engaged in Gig and Platform work in 2020-21. The figures are expected to
reach 23.5 million by 2029-30.

However, growth of this new type of work is not without its share of
challenges for the workers, the trade unions and the platforms who are
referring to the Gig and Platform Workers as partners and claim that there is
no employer – employee relationship. Also, there are questions about the
secrecy of the algorithm used by the platforms in giving business to their
partners, based on certain criteria, for example, Gig and Platform Workers.
With the unionization of partners, this sector of the economy will face IR issues
in the near future. Reality is that platforms and partners are dependent upon
each other, but the relationship itself continues to be fuzzy.

In March 2020, the Government of India launched the Production Linked

Incentive (PLI) Scheme. This was initially targeting three sectors but was
subsequently extended to cover a total of fourteen sectors:

1) Mobile Manufacturing and Specified Electronic Components,

2) Critical Key Starting Materials/Drug Intermediaries & Active
Pharmaceutical Ingredients,
3) Manufacturing of Medical Devices
4) Automobiles and Auto Components,
5) Pharmaceuticals Drugs,
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 6) Specialty Steel,
7) Telecom & Networking Products,
8) Electronic/Technology Products,
9) White Goods [Air Conditioners (Acs) and Light Emitting Diodes (LEDs)],
10) Food Products,
11) Textile Products: Man Made Fibre (MMF) segment and technical
textiles,
12) High efficiency solar Photo Voltaic (PV) modules,
13) Advanced Chemistry Cell (ACC) Battery, and
14) Drones and Drone Components.
Primarily this Scheme is aimed at creating 60 lakh new job opportunities and
increasing Indian exports.

Industrial Relations – Labour Laws

I got my first job in 1970 and continued to work till 2012. As will be obvious, I
worked for 21 years before liberalization (pre-1991) and 21 years after
liberalization (post 1991). During these two time periods, the business models
and the employment models were different, hence the Industrial Relations
scenes were also different. However, the Labour Laws remained unchanged
before liberalization and after liberalization. In fact, they continued as they
were, except for:

1) the introduction of The Building and Other Construction Workers’

(Regulation of Employment and Conditions of Service) Act, 1996, and the
Cess.,
2) the introduction of The Sexual Harassment of Women at Workplace
(Prevention, Prohibition and Redressal) Act, 2013, and
3) an amendment by way of Maternity Benefit (Amendment) Act, 2017.
Hence, it is clear that the labour laws dealing with Industrial Relations have
remained unchanged during the ‘After Liberalization phase’.

The second National Commission on Labour submitted its report on 29 June

2002. The Four Labour Codes were passed by Parliament in 2019 and 2020,
and received the President’s assent immediately thereafter. The Four Labour
Codes have not been made operational to date and also the rules for these
Codes have not been released by the Central Government. Practically all trade
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unions in the country are opposed to the implementation of these four Labour
Codes for one reason or other.

At the same time, after 2015, certain State Governments have made
amendments in the state rules of certain labour laws:

1) raising the threshold limits from 100 to 300 on layoff and retrenchment
of workers and closure of enterprise under The Industrial Disputes Act,
1947
2) amending the threshold limit on the applicability of The Factories Act,
1948, and
3) amending the threshold limit from 20 to 50 on the applicability of The
Contract Labour (Regulation and Abolition) Act, 1970.
Also, practically all the State Governments in India are presently very liberal in
granting permission to organizations for engaging contract labour through a
Contractor or a Service Provider under The Contract Labour (Regulation and
Abolition) Act, 1970.

Transition of Personnel Function in India

In India, organized activity commenced with the setting up of factories and this
also led to the birth of the trade union movement. As a result, a personnel
department with dedicated persons came into being in every organization.
Prior to 1942, the role of the personnel function centred mainly on policing
and administration.

It was during 1942 - 1960 that the personnel function moved to include social
welfare, wherein cooperative societies were set up in most organizations with
employees as the members. The members were extended the benefit of
financial loans at a reasonable interest rate. They could also purchase food
grains and house hold consumption items at rates lower than the market price.
In most of the old organizations, the facility of financial loans at reasonable
interest rate continues to be available even to this day, while cooperative
societies dealing with food grains and house hold consumption items are
almost extinct.

During 1960 – 1970, in most organizations the personnel function was making
efforts to try to solve disputes by dialogue and adjudication. Hence, knowledge
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and understanding of Labour Law became an essential part of the personnel
function.

The phase 1970 - 1991 was a turbulent industrial relations period characterized
by militancy, gherao’s and, in certain cases, long drawn-out strikes. I was
employed during this phase and could see for myself how the personnel
function had to reorient itself to deal with the sudden confrontations by the
workforce, such as flash strikes, militancy and litigation.

The period 1991 - 2012 witnessed practically every organization in the country
restructuring their workforce. The exercise by the personnel function involved
reducing the number of permanent employees by retrenchment or through
voluntary retirement schemes, whichever was possible. The restructuring
exercise led to the fall in membership of trade unions.

Being employed, I could witness how organizations restructured their

workforce through new forms of employment. The new forms essentially
involved having higher number of executives, reduced number of permanent
workers, trainees and a large number of contract workforce supplied by
contractors and service providers. This period also witnessed the growth of the
service sector.

During the period 2012 to date, personnel function has evolved to make
people available for work in the organization. The interesting part is that the
hired are not always employees of the company. If they are, then they are
mostly executives, who are not covered under the ambit of The Industrial
Disputes Act, 1947.

The Industrial Relations climate has by and large been peaceful during this
period except for a few sporadic violent incidents like the killing of Awinash
Kumar Dev, General Manager (HR) of Maruti Suzuki India Ltd at Manesar Plant,
Haryana sometime in August 2012. This period also includes the COVID-19
phase March 2020 - March 2022 when operations of various organizations
were impacted, except those which functioned in the green zone or were
permitted to function, as they were regarded as an essential service. The
COVID-19 period also resulted, wherever possible, in an era of work from
home, which, though, was largely in the service sector.

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There are two eras of Industrial Relations that one perceives. The first era -
before 1991 - was when the trade unions dominated the relations and dictated
the terms. The second era - after 1991 – was when the economic conditions
changed drastically. There was substantial employment in the service sector
but the trade unions were not in a position to expand their membership or to
dictate terms, as in the past.

Conclusion
Every organization has its own history of Industrial Relations (IR) and as such
the IR climate is always organization specific. Both managements and trade
unions are required to work together to maintain harmonious industrial
relations, by discussing and evolving solutions to problems and differences in
an amicable fashion.

The IR climate in the country is, at present, by and large peaceful. Most
organizations, whether in the Private Sector or in the Public Sector, have a
workforce model of engaging a large number of contract workforce through
Contractors and Service Providers at the prescribed minimum wage. This
approach enables organizations to reduce and to eliminate permanent and
temporary workers on the rolls of the company. However, this strategy, widely
adopted by most organizations, is likely to result in a turbulent IR situation at a
future date.

Organizations are required to find ways to meet the aspirations of the contract
workforce. They can consider approaches to remunerate the contract workers
at a rate much higher than at the prescribed minimum wage. They can also
find ways of giving annual increment to this workforce. Just waiting for the
Government to prescribe revisions in minimum wage is not laudatory. This
exercise by the Government is done, not annually, but at varying time periods.
Organizations should also facilitate contract workers to acquire higher skills so
that they can aspire for career progression and achieve the same.

All the Trade Unions in the country are making efforts at unionising the
contract workers, gig workers, platform workers and also workers in the
informal sector. Trade unions are finding it difficult to unionise this workforce.
Quite a few of them are presently using innovative methods including social

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media to attract people to become members. Women are entering the labour
market and hence trade unions also need to make a conscious effort to induct
them in the executive committee or as office bearers in their trade union.
Happily, some have already done this in their spheres of influence.

Managements need to remember that trade unions have a role in safeguarding

the interests of their members. Closing the shop is not their immediate
priority. If the contract workers, gig workers and platform workers perceive
that they are being exploited by the management, then this workforce is likely
to retaliate even without assistance or support from any trade union.

On 12th December 2020, we all witnessed the violent reaction of some of the
8490 contract workers engaged at Wistron Infocom Manufacturing (India) in
Kolar, Karnataka (a Production Linked Incentive Scheme company). The
agitation was about the delayed payment of wages and overtime arrears to the
contract workers. The violence resulted in an estimated loss of a whopping Rs
500 million or so to the company, mainly because of the damages caused to
the machinery and property.

Managements of organizations need to be fair and just to the persons who

work for their company. They have to administer justice even to those who
may not be employees, if they wish to avoid turbulent Industrial Relations
situations in the future. It is not clear how long the uncertainties surrounding
the Industrial World will continue. They are likely to persist for quite some time
in the foreseeable future.

* Past President of Industrial Relations Institute of India (IRII), Former Senior Employers’ Specialist for
South Asian Region with International Labour Organization (ILO) and Former Corporate Head of HR
with ACC Ltd. and Former Corporate Head of Manufacturing and HR with Novartis India Ltd.
Continues to maintain close links with the academic world as a visiting faculty with some of the IIMs.
E-Mail: rajenmehrotra@gmail.com

** Article based on the keynote address “Brave New Industrial Relation (IR) World Before
Liberalization & After Liberalization” delivered by the author on 07th October 2023 at the Fifth
Industrial Relations (IR) Conference on “Navigating the Future of Industrial Relations (IR) in India”
organized by Gujarat Employers’ Organisation (GEO) in Vadodara.

Published in the November 2023 issue of “Current Labour Reports”.

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 Developing an Efficient and Credible Grievance Redressal
Mechanism

Dr. Rajen Mehrotra*

-------------------------------------------------------------------------------------------

Introduction

Most progressive organizations have a grievance redressal procedure for

handling employee grievances within the broader context of employee
engagement to address employees’ concerns, so as to prevent them
culminating into disputes. Grievance procedures do help in identifying areas
for improvements, so as to improve employee morale and satisfaction.

Organizations need to recognize that employees may wish to seek redressal of

grievances relating to their employment. However, there could also be
grievances relating to disciplinary actions taken. The organization needs to lay
down the internal procedure of appeal by the aggrieved employee on decisions
involving disciplinary action.

Most grievances of employees are on issues relating to their workplace and /

or on the behavior of their co-employees and this need to be addressed. There
are three broad approaches by which organizations tackle grievances i.e. (i)
appointment of ombudsman (ii) having a grievance redressal process with only
management personnel in it (iii) having a grievance redressal committee with
participation from both management and union.

Handling Grievances

In all organization employees of diverse backgrounds have to interact and

perform their specified roles to achieve the organizations desired objectives
within the rules and regulations of the organization. This interaction of
employees at the work place, at times does lead to certain tensions, conflicts
and problems that can be individual and / or collective. What is important is
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not to wish that such tensions, problems and conflicts would not arise, but to
devise an efficient processing system to continuously process these tensions,
conflicts and grievances by acknowledging them, handling them and trying to
resolve them, as far as possible and also putting a proactive system in place to
pre-empt and avoid recurrence of the grievance and not evading / avoiding the
grievance. Hence, organizations need to put in place a “Grievance Redressal
Mechanism” to resolve grievances fairly, responsibly, and expeditiously for all
employees. The mechanism should not only be fair, but it should also seem to
be fair, to inspire confidence in the system. Organizations need to
communicate the procedures laid down for redressal of grievance to all the
employees. The communication to employees must not only be in English but
also in the regional language which the employees understand.

It is essential to define Grievance under the “Grievance Redressal Mechanism”

of the organization. The grievance must relate only to an individual's problem
and not a collective question, as collective questions would be handled at
bargaining levels with trade unions. Grievances, if not attended to, become
disputes which can be Rights Disputes and Interest Disputes. There is need to
recognize and take cognizance of grievances. Collective grievance is normally
taken up by the trade unions and does lead to “Collective Bargaining” and the
forum for dealing with them are different and not the “Grievance Redressal
Mechanism”.

Grievance is “any discontent or dissatisfaction or suffering or grief or wrong or

hardship that an employee thinks, believes, perceives or feels to be unfair,
unjust or inequitable, whether valid or not, arising out of anything connected
with the company and through a communication brings it to the notice of the
company management “. Grievance must be preferably communicated in
writing, as writing compels the individual to be specific and tangible. Writing
does reduce the imaginary grievances as documentation is different from
verbalization.

Types of Grievances

Grievances in organizations can be categorized under the following types.

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 • Data Grievances (Lack of Information, Misinformation, Interpretation).
For handling such grievance there is need to collect and respond through
information.
• Interest Grievances (Substantive, Procedural, Psychological). This is a
common grievance where in the complainant desires to be heard and is
also expecting redressal keeping her / his interest in mind.
• Structural Grievances (Role Definition, Time Constraints, Unequal
Power/Resource). Every organization has an existing structure based on
which it operates and changes / modification in the same take time.
Resolving these grievances is not easy.
• Value Grievances (Culture, Group, Individual). These arise when people
from various ethnic groups / nationality work together. The organization
does try and specify certain values expecting all employees to comply
with the same, however differences do crop up.
• Relationship Grievances (Strong Emotion, Communication Problems,
Prejudices). This is a common grievance and there are organizations that
use counsellors / psychologists to facilitate in solving these.

Methods of resolving Grievances

Most grievances of employees are on issues relating to their workplace and /

or on behavior of their co-employees and these needs to be addressed.

Appointment of Ombudsman

Quite often the employee in an organization desire that the grievance is kept
confidential and the employee is not victimized for bringing up the grievance.
The United Nations various agencies like ILO, UNDP, UNFPA, UNHCR, UNOPS,
UN Secretariat, have appointed an ombudsman and mediation service to
whom individual employees can send their grievance for being investigated
and assistance in finding a solution. In all the interactions, an ombudsman acts
with strict confidentiality and impartiality. She/he does not serve as an
advocate for any person in a dispute within an organization, nor for the
organization; rather, she/he advocates for due process and procedural fairness
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and works to facilitate a solution that is acceptable to all parties. The
ombudsman will neither impose a solution nor make a managerial decision
that will lead to an outcome. The process is entirely controlled by the UN
employee who contacts an ombudsman. All communications with an
ombudsman are considered privileged. An ombudsman will never mention
individual names without express permission and cannot be obligated to
testify in any formal proceedings. The details of how this operates in the UN
System are available on www.un.org.ombudsman.

Most of the Multi-National Corporations (MNC’s), as well as Indian companies

have a well laid out grievance redressal system, but not necessarily have an
ombudsman. Many of these organizations have a whistle blower policy, where
individuals can send the communication to a specified person, which is
investigated and acted upon. There is need for the large companies in India to
also look at appointment of an ombudsman. This would really help executives,
as they find it tough raising grievances related to their bosses, for fear of
victimization.

Grievance Redressal System

Every employee must have a right to present her / his grievance to the
employer to obtain a redressal within a specified time period with a provision
to appeal, when not satisfied with the first stage of decision. While handling
grievances the individual dealing with the grievance must differentiate facts
from perceptions. Also, the individual processing the grievance should not
promise what cannot be delivered. While analyzing a grievance and before
communicating the decision, it is worthwhile finding out how old the grievance
is. It is important that the grievance procedure is communicated to line
supervisors / managers in a sustained manner so that it is practiced, and a
small grievance does not become a problem. Generally, it happens that line
supervisors / managers neglect small issues that could become major issues in
the future. The grievance procedure developed by most organizations is such
that the immediate superior / manager first deal with the grievance and if not
resolved provides for an appellate authority. If the grievance cannot be

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handled to the satisfaction of the aggrieved person, the reason must be cogent
and explained to the concerned person.

All grievances need to be heard with empathy and not sympathy. There is a
prevailing false belief amongst certain people that grievance must be resolved
to the satisfaction of the individual complainant. Experience indicates that few
of the grievances can be resolved immediately and some of the grievances can
be resolved in the near future and the balance large number of grievances
cannot be resolved and the person would have to live with it. Experience
indicates that grievances are of three shades i.e., Factual, Partially Factual, and
Perceived Misplaced, it is only when the grievance is addressed, that the
decision maker realizes the type of grievance and how to resolve them.

In the case of unresolved grievance / perceived injustice / perceived

discrimination / victimization a worker employee, at times does approach the
trade union to champion her / his cause. The trade unions to resolve the case
take various approaches i.e., neglect / request / appeal / dialogue/ negotiation
/ bargaining / demand with the management to get a redressal of the
unresolved grievance as desired by the worker employee. Trade Unions being
partisan organization do get involved in such cases involving their members,
which at times can become collective bargaining issues.

Grievance Redressal Committee

Under the Industrial Employment (Standing Orders) Act 1946 there is a

provision under Rules Section 28 (1) & (2) for any workmen desiring to redress
a grievance arising out of employment or relating to unfair treatment or
wrongful execution on the part of superior to file a complaint himself / herself
or through the union and the same to be investigated by the manager or any
officer and the decision taken to be intimated to the complainant.

However, in 2010 there was an amendment to the Industrial Disputes Act 1947
whereby a new chapter i.e., Chapter II B called Grievance Redressal Machinery
was incorporated in the Act. As per the amendment, it is mandatory that
every employer who employs 20 or more workmen must have one or more
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Grievance Redressal Committee. It is conceived as a committee having equal
representatives of workmen and the employer, and the chairperson of the
committee will be on a rotation basis, every year alternating between the
employer and the workmen. Total number of persons on the committee
should not exceed six and preferably one of the members should be a woman,
if the committee has two members. If the numbers are more than two, the
number of women members is raised proportionately. This Committee has to
resolve the grievance within one month, and if a workman is not satisfied with
the committee, she / he may appeal to the employer, who has another month
to decide the matter pursuant to which she / he can raise an industrial dispute.
This amendment shall not apply to the workmen for whom there is an
established Grievance Redressal Mechanism in the concerned establishment.

There are quite many organizations in India employing 20 or more workmen

who neither have a Grievance Redressal System nor the Grievance Redressal
Committee. There is need for enterprises to ensure that they comply with
this mandatory provision under the Industrial Disputes Act, as this is the
present law and avoid taking an escape route under the Industrial
Employment (Standing Orders) Act.

Role of Employer Organizations & Professional Bodies

National Employer Organizations in India like All India Organization of

Employers’ (AIOE), Employers’ Federation of India (EFI) , and Standing
Conference of Public Enterprises (SCOPE), as well as Professional bodies like
National Institute of Personnel Management (NIPM) and NHRD Network
(earlier known as National HRD Network) , who champion the cause of
improving employee relationship, as a service to their members, can develop
an efficient and credible grievance redressal mechanism for the benefit of their
member enterprises.

The Singapore National Employers’ Federation (SNEF) has done this, wherein
they urge all Employers in Singapore to put in place an employee grievance
handling procedure to resolve grievances fairly, responsibly and expeditiously.

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SNEF recommends that employee grievance handling procedures must be easy
to understand and include the following:

a. Easily accessible contact points to lodge grievances.

b. Timelines to ensure that grievances are dealt with quickly, but which can
be extended if both parties agree.
c. Avenues and time limits for appeals to senior management.
d. Alternative third-party channels that can be approached for advice,
conciliation, mediation or arbitration.

As per SNEF, grievances in enterprises by and large fall under four categories.
These are:
a. Company policies such as leave management and work practices.
b. Wages such as salary, bonus and overtime pay.
c. Working conditions such as hygiene, safety and health issues.
d. Interpersonal relations such as conflict with co-workers or supervisors.

Conclusion

Grievance redressal is best achieved by not having grievances, but reality is

that interactions by and of individuals at the work place does lead to both
individual and collective grievances, and what is needed is a mechanism for
resolution. However, the methodology of gauging these grievances could be
formal or informal. Various forums are there in organizations, such as exit
interviews, opinion surveys, gripe boxes, open houses, informal get together,
open door policy, where there is a system of having periodic interactions
where all required communications and feedback are received and given,
which does helps in reducing grievances. The same is then shared horizontally
and vertically. There are organizations that have employee Portals, through
which an employee having a grievance can send the grievance in a specified
template / format to a specified e-mail and the grievance is attended to in a
specified time frame.

Large number of organizations in India has developed their efficient and

credible grievance redressal mechanism. For example, Tata Chemicals Ltd.
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have a Grievance Handling System at their factory called “We Care @TCL”
wherein workers, contract workers, nearby farmers and community stake
holders can communicate their grievance in writing through drop box / e-mail /
form or communicate orally to the Personnel Department wherein the
grievance is recorded, investigated and replied within specified time limits.
There are organizations that also have a closed drop box, where one can write
down her / his grievances anonymously and the same is opened to gauge
things. This at times does help for grievances to be redressed before they
surface with any serious dimension. Presently many manufacturing and service
sector companies are regularly and continuously employing large number of
contract workers through contractors / service providers at their premises,
hence there is a need to evolve a system to understand the grievances of this
category of workers, as has been done by Tata Chemicals Ltd.

Presently in most organizations, there is an existing established Grievance

Redressal System, and the persons investigating and replying to the grievance
are from Management and not a committee consisting of equal representation
of representative of management and workmen, as per the amendment of
2010 to the Industrial Disputes Act 1947. There is need for Employers’
Organization like AIOE, EFI, and SCOPE as well as professional bodies like NIPM,
NHRD Network to undertake studies and bring out the difference under the
three approaches given above, as timely resolution of grievances does help in
preventing disputes. Also after the amendment of 2010 to the Industrial
Disputes Act 1947, it is mandatory for organizations to form Grievance
Redressal Committee with equal representatives of the workers.
--------------------------------------------------------------------------------------------------------
* President, Industrial Relations Institute of India (IRII), Former Sr. Specialist on Employers’ Activities
for South Asia with International Labour Organization (ILO) and Former Corporate Head of HR of
Novartis India Ltd. and ACC Ltd. E-mail: rajenmehrotra@gmail.com

Published in Current Labour Reports & Arbiter issue of September 2013.

Page | 73
 Salient Relevant Points of The Occupational Safety, Health and
Working Conditions Code, 2019
Dr. Rajen Mehrotra*
Introduction
Ensuring occupational safety, no harm to existing health and proper working
condition for all the workforce in every enterprise is a necessary and essential
requirement for running any business,

In India we have four main legislations that cover Occupational Safety and
Health at workplace. (i) The Factories Act, 1948 , covering factories wherein
the enforcement of safety at workplace is by the Chief Inspector of Factories in
the respective states, (ii) The Mines Act, 1952 and Mines Rules, 1955 for
mining industry where the enforcement is by Directorate General of Mines
Safety (DGMS) under Ministry of Labour & Employment , Government of India,
(iii) The Dock Workers (Safety, Health and Welfare) Act, 1986 followed by
notification of the Dock Workers (Safety, Health and Welfare) Regulations,
1990 dealing with the major ports of India and the enforcement is by Director
General, Directorate General of Factory Advice Service & Labour Institutes
(DGFASLI), under Ministry of Labour & Employment , Government of India, and
(iv) The Building & Other Construction Workers (Regulations of Employment
and Conditions of Service) Act, 1996 , covering construction workers at
construction sites wherein the enforcement is by the State Government.

The Second National Commission on Labour submitted its Report on

“Occupational Safety, Health and Working Conditions of the Workers” in June,
2002 and made certain recommendations including the need to consolidate
various laws. In pursuance of the recommendations of the said Commission,
the National Democratic Alliance Government has introduced Bill Number 186
of 2019 on 23 July 2019 called “The Occupational Safety, Health and Working
Conditions Code, 2019” in the Lok Sabha, which has 134 clauses and three
schedules. While the schedule one and three are identical to the schedules in
The Factories Act ,1948, but the schedule two covers many items relevant to
occupational safety, health and working conditions. The Code will subsume 13
labour laws and would apply to all establishments employing 10 or more

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workers. These include (a)The Factories Act, 1948; (b) The Mines Act, 1952; (c)
The Dock Workers (Safety, Health and Welfare) Act, 1986; (d) The Building and
Other Construction Workers (Regulation of Employment and Conditions of
Service) Act, 1996; (e) The Plantations Labour Act, 1951; (f) The Contract
Labour (Regulation and Abolition) Act, 1970; (g) The Inter-State Migrant
Workmen (Regulation of Employment and Conditions of Service) Act, 1979; (h)
The Working Journalist and other News Paper Employees (Conditions of
Service and Miscellaneous Provision) Act, 1955; (i) The Working Journalist
(Fixation of rates of wages) Act, 1958; (j) The Motor Transport Workers Act,
1961; (k) The Sales Promotion Employees (Conditions of Service) Act, 1976; (l)
The Beedi and Cigar Workers Act, 1966; (m) The Cine Workers and Cinema
Theatre Workers Act, 1981. (Details refer section 134). Presently each of these
13 labour laws have Rules and we still have to await the Rules that the Central
Government frames for this code, which can be the same or modified by the
State Governments.

This Code is one of the four labour codes and is currently referred to The
Parliamentary Standing Committee for consideration, and hence will take some
time, before it gets passed by the Lok Sabha and becomes an Act. The rules
with reference to the Code have still to be framed and made public.

Certain Relevant Sections in the Code- Details in the attached

Annexure

Given below are summary analysis of certain relevant sections in

the code
Section 2 of every labour legislation deals with definitions. Since, this code is
to replace 13 labour legislations which deal with various aspects apart from the
area of Occupational Safety, Health and Working Conditions the definition of
the words in section 2 needs to be understood and analysed, to realize the
modification where they are taking place through the code. In most cases, the
word as defined in the code is a continuation of the definition in one of the 13
Acts, but in certain cases the same has been modified and hence has
implications of applicability.

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Section 2 (g). In “building or other construction work” the definition specifies
that it does not include any building or other construction work of any factory
or mine or any building or other construction work employing less than ten
workers.

Section 2 (u). The term “establishment” has been defined as a place where any
industry, trade, business, manufacture or occupation is carried on in which ten
or more workers are employed; or a factory, motor transport undertaking,
newspaper establishment, audio-video production, building and other
construction work or plantation, in which ten or more workers are employed;
or a mine or dock work. The word “establishment” is used in many of the
sections

Section 2(zb)(b). The term “Industry” does not include domestic service.

Section 2(zo). The term Occupier has been modified compared to The
Factories Act ,1948 and an independent director cannot be an occupier.

Section 2(zz). The term “sales promotion employees “definition does not
include apprentices as specified in The Sales Promotion Employees (Conditions
of Service) Act, 1976;

Section 8 specifies duties of manufacturers, designer, importers or suppliers

and holds them responsible for the safety of the equipment and material
designed, imported, supplied, erected, installed as to be safe and without risk
to the health of the workers when properly used. There are details specified
which were not covered in the existing legislations.

Section 9 in detail specifies the duties of architects, project engineers and

designers and holds them responsible for ensuring that they have considered
all aspects of safety and health for the workers that are carrying out the
construction, but to also take into account the safety aspects associated with
the maintenance and upkeep of the structures and buildings where
maintenance and upkeep may involve special hazards.

Section 12. (1) and 12(2) deal with notice of certain diseases and these
sections are identical to section 89 and 90 of The Factories Act ,1948 except
the word factory has been replaced by the word establishment. Also, the

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Schedule Three specifying list of notifiable diseases is identical to the schedule
three in The Factories Act ,1948.

Section 16 and 17 deal with constituting a National Occupational Safety and

Health Advisory Board and State Occupational Safety and Health Advisory
Board which is something new compared to the present legislation.

Section 18 deals with occupational safety and health standards and the second
schedule are a very exhaustive list covering list of matters to be covered in
factories, mines, ports, construction, offices, plantation and others. The second
schedule under section 41-F of The Factories Act, 1948 which dealt with
permissible limits of 116 chemical substances is not to be found in the second
schedule of the code and since the schedule mentions that “The Central
Government shall declare, by notification, standards on occupational safety
and health for work places relating to factories, mines, dock work, building and
other construction work and other establishments “probably these will be
specified later.

Section 21 deals with an effective programme of collection, compilation and

analysis of occupational safety and health statistics.

Section 22 deals with Safety Committee and safety officers in establishments.

Section 24 deals with welfare facilities in the establishment and in subsection

(2) specifies bathing places and locker rooms for male, female and transgender
employees separately. This is a recognition of accepting the employment of
transgender employees at the work place.

Section 25 deals with weekly and daily working hours, leave, etc. and since the
Code also covers sales promotion employees. It is silent on the working hours
of sales promotion employees but specifically in sub - section (3) in details
specifies the leave benefits. It has to be seen how this will get interpreted, as
sales promotion employees have to work when they can meet the doctors and
the eight hours working per day cannot be from 9 am to 5 pm like the general
shift of establishments.

Section 37 provides for a third-party audit and certification for start-up

establishments and class of other establishments to get the same done and
submit their reports to the concerned employer and Inspector-cum-Facilitator
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separately for the purpose of ensuring compliance of the provisions of this
Code

Section 43 provides for women to work in with her consent, to be employed in

an establishment before 6 a.m. and beyond 7 p.m.

Section 45 to 62 deal with Contract Labour and Inter State Migrant worker, as
both these Acts have been merged with this Code.

Section 50 (1) states that when a contractor receives work order from an
establishment, he has to intimate the same to the appropriate Government.

Section 60(1) the contractor to every inter-State migrant worker at the time of
recruitment, has to pay a displacement allowance equal to fifty per cent of the
monthly wages payable to him which was already there in the existing act.

Section 73 states that a person who is deaf or has a defective vision or has a
tendency to giddiness be not employed in building or other construction work
which is likely to involve a risk of any accident either to the building worker
himself or to any other person. This is keeping safety in mind.

Section 75 deals with premises or buildings leased to different occupiers for

use as separate factories, the owner of the premises and occupiers of the
factories utilising such common facilities include safety and fire prevention and
protection, shall jointly be responsible for providing maintenance of common
facilities and services as may be prescribed.

Section 83 deals with maximum limit of exposure of chemical and toxic

substances in manufacturing process in any factory. Earlier these limits were
specified in Schedule Two of The Factories 1947. Act, Under the code these are
not specified and it is mentioned that the limits of exposure of chemical and
toxic substances in manufacturing process in any factory will be decided by the
State Government.

Section 87 deals with general penalty which shall not be less than Rs two lakhs
to the employer of any establishment for the contravention of the code.

Section 96 (1) deals with a dangerous occurrence resulting in (a) death, then
the person responsible shall be punishable with an imprisonment for a term

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which may extend to two years or with a fine which shall not be less than Rs.
five lakh or with both.

Section 107 (1) deals with compounding of offences and its procedure.
However, this compounding is only applicable for offences in which the
punishment does not involve imprisonment.

Conclusion
The Code is an effort by the Ministry of Labour & Employment, Government of
India at combining 13 labour laws which not only dealt with safety, health and
working conditions plus other areas relevant to the workers employed in
factories, mines, docks, building & construction, plantation, motor transport,
beedi & cigar, cine & cinema theatre, journalism, field force, plus the contract
workers and interstate migrant workers.

Presently a large number of enterprises are engaging contract labour through

contractors / service providers under the existing Contract Labour (Regulation
and Abolition) Act, 1970. It is to be seen how the proposed code will impact
the employers, contractors and contract workers once the Rules to the
Occupational Safety, Health and Working Conditions Code, 2019 are released.

There are techniques such as “Controlled Implosion” which can be used for
swift demolition of structures and there was need that these from the point of
occupational safety and health should have been included in the Code, also
new forms of employment based on App Platforms that have entered the
business area have not been dealt with, as we need to also look at their
occupational safety, health and working conditions

Since the code subsumes 13 labour laws the terminology of enterprise is used
in most sections. Since this Code is going to replace legislations of 1948 and
later, it is too early to predict how this legislation will help the workers, trade
unions and employers associated with enterprises in India in ensuring
occupational safety and improved health. The acid test on the clarity of a
legislation comes with judicial interpretations.
________________________________________________________________

* Past President of Industrial Relations Institute of India (IRII), Former Senior Employers’ Specialist
for South Asian Region with Internation.al Labour Organization (ILO) and Former Corporate Head of
Page | 79
HR with ACC Ltd. and Former Corporate Head of Manufacturing and HR with Novartis India Ltd. E-
Mail: rajenmehrotra@gmail.com

** Based on the talk delivered by the author at Industrial Relations Institute of India (IRII)
Conference on “Labour Codes – Paradigm Shift or Perpetuating Status Quo? “Held on 17 January
2020 in Mumbai.

Published in the March 2020 issue of Current Labour Reports and Arbiter.

ANNEXURE
As Introduced in Lok Sabha - Bill No. 186 of 2019
The Occupational Safety, Health and Working Conditions Code,
2019
Some Salient Relevant Sections
1(4) It shall not apply to the offices of the Central Government, offices of the
State Government and any ship of war of any nationality. (Short title, extent,
commencement and application.)
2(g) “building or other construction work” does not include any building or
other construction work of any factory or mine or any building or other
construction work employing less than ten workers or any building or other
construction work related to residential property not employing the workers
more than such number as may be notified by the Central Government from
time to time; (Definitions.)
2(u) “establishment” means— (i) a place where any industry, trade, business,
manufacture or occupation is carried on in which ten or more workers are
employed; or (ii) a factory, motor transport undertaking, newspaper
establishment, audio-video production, building and other construction work
or plantation, in which ten or more workers are employed; or (iii) a mine or
dock work; (Definitions.)
2(zb) (b) “industry” does not include any domestic service; (Definitions.)
Section 2(zo) “occupier” of a factory means the person who has ultimate
control over the affairs of the factory: however, under (ii) in the case of a
company, any one of the directors, except any independent director within

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the meaning of sub-section (6) of section 149 of the Companies Act, 2013.
(Definitions.)
2(zz) “sales promotion employees” means any person by whatever name called
employed or engaged in any establishment for hire or reward to do any work
relating to promotion of sales or business, or both. (Definitions.)
8. Specifies the duties of manufacturers, designer, importers or suppliers
wherein states (1) Every person who designs, manufactures, imports or
supplies any article for use in any establishment shall— (a) ensure so far as is
reasonably practicable, that the article is so designed and constructed in the
establishment as to be safe and without risk to the health of the workers when
properly used; (b) carry out or arrange for the carrying out of such tests and
examination in the establishment as may be considered necessary for the
effective implementation of the provisions of clause (a); (c) take out steps as
may be necessary to ensure that adequate information will be available— (i) in
connection with the use of the article in any establishment; (ii) about the use
for which such article is designed and tested; and (iii) about any conditions
necessary to ensure that the article, when put to such use, shall be safe, and
without risk to the health of the workers: Provided that where an article is
designed or manufactured outside India, then it shall be obligatory on the part
of the importer to see— (A) that the article conforms to the same standards of
such article manufactured in India; or (B) that, if the standards adopted in the
country outside India for the manufacture of such article is above the
standards adopted in India, then the article conforms to such standards in such
country; or (C) that, if there is no standard of such article in India, then, the
article conforms to the standard adopted in the country from where it is
imported at its national level. (2) The designer, manufacturer, importer or
supplier shall also comply with such duties as the Central Government may, in
consultation with the National Occupational Safety and Health Advisory Board,
by regulations specify. (3) Every person, who undertakes to design or
manufacture any article and substance for use in any factory, may carry out or
arrange for the carrying out of necessary research with a view to the discovery
and, so far as is reasonably, practicable, the elimination or minimisation of any
risks to the health or safety of the workers to which the design or manufacture
of article and substance may give rise to such risk (Duties of manufacturers,
designer, importers or suppliers.)

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9. (1) It shall be the duty of the architect, project engineer or designer
responsible for any building or other construction work or the design of any
project or part thereof relating to such building or other construction work to
ensure that, at the planning stage, due consideration is given to the safety and
health aspects of the building workers and employees who are employed in
the erection, operation and execution of such projects and structures, as the
case may be. (2) Adequate care shall be taken by the architect, project
engineer and other professionals involved in the project referred to in sub-
section (1), not to include anything in the design which would involve the use
of dangerous structures or other processes or materials, hazardous to health
or safety of building workers and employees during the course of erection,
operation and execution, as the case may be. (3) It shall also be the duty of the
professionals, involved in designing the buildings structures or other
construction projects, to take into account the safety aspects associated with
the maintenance and upkeep of the structures and buildings where
maintenance and upkeep may involve special hazards. (Specifies the duties of
architects, project engineers and designers.)
12. (1) Where any worker in an establishment contracts any disease specified
in the Third Schedule, the employer of the establishment shall send notice
thereof to such authorities, and in such form and within such time, as may be
prescribed by the appropriate Government. (Notice of certain diseases.)
12. (2) If any qualified medical practitioner attends on a person, who is or has
been employed in an establishment, and who is, or is believed by the qualified
medical practitioner, to be suffering from any disease specified in the Third
Schedule, the medical practitioner shall without delay send a report in writing
to the office of the Chief Inspector-cum-Facilitator in such form and manner
and within such time as may be prescribed by the appropriate Government.
(Notice of certain diseases.)
16. (Constituting a National Occupational Safety and Health Advisory Board.)
17. (Constituting State Occupational Safety and Health Advisory Board.)
18. (1) The Central Government shall declare, by notification, standards on
occupational safety and health for work places relating to factories, mines,
dock work, building and other construction work and other establishments. (2)
In particular and without prejudice to the generality of the power to declare
standards to be followed under sub-section (1), such standards shall relate

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to— (a) physical, chemical, biological and any other hazards to be dealt with
for the period of 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; (b) the norms— (i)
appraising the hazards to employees and users to which they are exposed; (ii)
relating to relevant symptoms and appropriate energy treatment and proper
conditions and precautions of safe use or exposure; (iii) for monitoring and
measuring exposure of employees to hazards; (iv) 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 (v) for hazard evaluation procedures like
safety audit, hazard and operability study, fault-free analysis, event-free
analysis and such other requirements; (c) the 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; (d) such aspects of occupational safety and health relating to
work places which the Central Government considers necessary on the report
of the authority designated by such Government for such purpose; (e) 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
establishment notified; and (f) matters specified in the Second
Schedule.(Occupational safety and health standards)
21. For the purposes of this Code, the Central Government and the State
Government shall develop and maintain an effective programme of collection,
compilation and analysis of occupational safety and health statistics and for
that purpose appropriate Government may promote, encourage or directly
engage in programme of studies, information and communication concerning
occupational safety and health statistics. (Statistics.)
22. (Deals with Safety Committee and safety officers.)
24. (ii) bathing places and locker rooms for male, female and transgender
employees separately; (Welfare facilities in the establishment, etc.)
25. This section deals with hours of work and in Section 25 sub - section (3)
states: Notwithstanding anything contained in sub-sections (1) and (2), a sales
promotion employee, — (i) in addition to such holidays, casual leave or other
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kinds of leave as may be prescribed by the Central Government, shall be
granted, if requested for(a) earned leave on full wages for not less than one-
eleventh of the period spent on duty; (b) leave on medical certificate on one-
half of the wages for not less than one-eighteenth of the period of service; (ii)
may accumulate earned leave up to such maximum limit as may be prescribed
by the Central Government; (iii) may limit up to which the earned leave may be
availed of at a time by him and the reasons for which such limit may be
exceeded, shall be such as may be prescribed by the Central Government; (iv)
shall,— (a) when he voluntarily relinquishes his post or retires from service; or
(b) when his services are terminated for any reason whatsoever (not being
termination as punishment), be entitled to cash compensation, subject to such
conditions and restrictions as may be prescribed by the Central Government
(including conditions by way of specifying the maximum period for which such
cash compensation shall be payable), in respect of the earned leave earned by
him and not availed of; (v) dies while in service, his heirs shall be entitled to
cash compensation for the earned leave earned by him and not availed of; (vi)
or his heirs shall be paid the cash compensation in respect of any period of
earned leave for which he or his heirs, is or are entitled to cash compensation
under clause (iv) or clause (v), as the case may be, shall be an amount equal to
the wages due to such sales promotion employee for such period. (Weekly and
daily working hours, leave,etc.)
37. The appropriate Government may, by notification, empanel experts
possessing such specialized qualifications and experience as may be
prescribed, and authorise the employers of such start up establishments and
class of other establishments to choose any of such experts as are specified in
the notification for third party certification in respect of such start up
establishments and class of other establishments who shall perform such
duties and hold such responsibilities as may be prescribed and submit their
reports to the concerned employer and Inspector-cum-Facilitator separately
for the purpose of ensuring compliance of the provisions of this Code. (Third
Party audit and certification)
43. Notwithstanding any prohibition in any other law for the time being in
force in this behalf and subject to such conditions relating to safety, holidays
and working hours or any other condition to be observed by the employer as
may be prescribed by the appropriate Government, the women workers may,
with her consent, be employed in an establishment before 6 a.m. and beyond
7 p.m. (Employment of women in night).
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Chapter XI covers contract labour
50. (1) When a contractor receives work order from an establishment either to
supply contract labour in the establishment or to execute the contract through
contract labour in the establishment he shall, within such time and in such
manner as may be prescribed, intimate to the appropriate Government
(Information regarding work order to be given to the appropriate
Government.)
60. (1) There shall be paid by the contractor to every inter-State migrant
worker at the time of recruitment, a displacement allowance equal to fifty per
cent. of the monthly wages payable to him. (Displacement allowance.)
73. No person about whom the employer knows or has reasons to believe that
he is a deaf or he has a defective vision or he has a tendency to giddiness shall
be required or allowed to work in any such operation of building or other
construction work which is likely to involve a risk of any accident either to the
building worker himself or to any other person. (Chapter XI Part V Building
and Other Construction Workers)
75. Where any premises or separate buildings are leased to different occupiers
for use as separate factories, the owner of the premises and occupiers of the
factories utilising such common facilities which include safety and fire
prevention and protection, access, hygiene, occupational health, ventilation,
temperature, emergency preparedness and response, canteens, shelter, rest
rooms and crèches shall jointly and severally be responsible for providing
maintenance of such common facilities and services as may be prescribed by
the appropriate Government. (Chapter XI Part VI Factories)
83. The maximum permissible limits of exposure of chemical and toxic
substances in manufacturing process in any factory shall be of the value as may
be prescribed by the State Government.
87. Save as is otherwise expressly provided in this Code, if in, or in respect of,
any establishment, there is any contravention of the provisions of this Code or
rules or regulations or bye-laws or any of standards, made thereunder or of
any order in writing given under the Code or such rules or regulations or bye-
laws or standards, the employer of the establishment shall be liable to penalty
which shall not be less than two lakhs but which may extend up to three lakh
rupees, and if the contravention is continued after the conviction, then, with

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further fine which may extend to two thousand rupees for each day till the
contravention is so continued.( General penalty for offences.)
96. (1) If a person fails to comply with or contravenes any duties under this
Code or the rules, regulations, or bye-laws or orders made thereunder and
such non-compliance or contravention has resulted in an accident or
dangerous occurrences causing,— (a) death, he shall be punishable with an
imprisonment for a term which may extend to two years or with a fine which
shall not be less than five lakh rupees or with both; or (b) serious bodily injury
to any person within the establishment, he shall be punishable with an
imprisonment for a term which may extend to one year or with a fine which
shall not be less than two lakh rupees but not exceeding four lakh rupees or
both: Provided that while imposing the fine under this section, the court may
direct that a portion of the fine, which shall not be less than fifty per cent.
thereof, shall be given as compensation to the victim or to the legal heirs of
the victim, in the case of his death. (2) Where a person having been convicted
under sub-section (1) is again convicted thereunder, shall be punishable with
double the punishment provided under those sub-sections for first conviction.
(Penalty for contravention of provisions of duties relating to safety provisions
resulting in an accident.)
107. (1) Notwithstanding anything contained in the Code of Criminal
Procedure, 1973, any offence punishable under this Code, not being an offence
punishable with imprisonment only, or with imprisonment and also with fine,
may, on an application of the accused, either before or after the holding of the
enquiry under section 104, be compoundable for a sum of fifty per cent. of the
maximum fine provided for such offence in such manner as may be prescribed
by the appropriate Government, by such Gazetted Officer, as the said
Government may, by notification, specify in this behalf: Provided that the
composition of an offence under this section shall have the effect of an
acquittal of the accused with whom the offence has been compounded:
Provided further that where the composition of any offence is made after
commencement of the inquiry under section 104 such composition shall be
brought by the officer in writing, to the notice of the Officers referred to in
section 104 before whom the inquiry is pending and on such notice of the
composition of the offence being given, the person against whom the offence
is so compounded shall be discharged. (2) Nothing contained in sub-section (1)
shall apply to an offence committed by a person for the second or subsequent
time within a period of five years from the date of commission of such
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offence— (a) which was earlier compounded; or (b) for which such person was
earlier convicted. (3) Any person who fails to comply with an order made by
the officer referred to in sub-section (1), shall be liable to pay a sum equivalent
to twenty per cent. of the maximum fine provided for the offence, in addition
to such fine. (Compounding of offences.)
134. (1) The following Acts shall stand repealed with effect from such date as
may be notified in this behalf, namely:— (a) The Factories Act, 1948; (b) The
Mines Act, 1952; (c) The Dock Workers (Safety, Health and Welfare) Act, 1986;
(d) The Building and Other Construction Workers (Regulation of Employment
and Conditions of Service) Act, 1996; (e) The Plantations Labour Act, 1951; (f)
The Contract Labour (Regulation and Abolition) Act, 1970; (g) The Inter-State
Migrant workmen (Regulation of Employment and Conditions of Service) Act,
1979; (h) The Working Journalist and other News Paper Employees (Conditions
of Service and Miscellaneous Provision) Act, 1955; (i) The Working Journalist
(Fixation of rates of wages) Act, 1958; (j) The Motor Transport Workers Act,
1961; (k) The Sales Promotion Employees (Conditions of Service) Act, 1976; (l)
The Beedi and Cigar Workers Act, 1966; (m) The Cine Workers and Cinema
Theatre Workers Act, 1981. (Conditions of Employment)

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 Engaging Contract Labour in Enterprises

Dr. Rajen Mehrotra*

-------------------------------------------------------------------------------------------

INTRODUCTION:

The International Labour Organization (ILO) a tripartite United Nations

organization has been known for its contribution towards labour by coming
forward with conventions, so that the same when ratified by a country become
applicable to that country. The International Labour Conference of the ILO held
in Geneva in 1997 and in 1998 debated the issue of Contract Labour, but there
was no agreement amongst the members of the tripartite constituents. The
reason for this was that Contract Labour and Subcontracting are used variously
in different countries to refer to different kinds of arrangements between
enterprises and workers (often through intermediaries) where by one or both
parties seek to give the arrangement a different character from that of normal
employment relationship. Further a meeting of experts in May 2000 brought
out the deficiencies affecting the scope of the provisions governing such an
employment relationship. Hence, finally the International Labour Conference
of the ILO in the 95th Session held in 2006 in Geneva adopted Resolution 109
on Employment Relationship. Hence, there is no ILO convention on engaging of
Contract Labour. India is the only country in the Asia – Pacific region that has a
specific legislation on regulating Contract Labour in enterprises.

TYPES of CONTRACTING:

Internationally there are two types of contracting (i.e., Job Contracting and
Labour Contracting). In Job Contracting: The enterprise contracts with an
established firm for the supply of goods and services, and the later undertakes
to carry out this work at its own risk and with its own financial, material and
human resources. The workers employed to provide the services remain
under the control and supervision of the second firm (called contractor or sub-
contractor) which is also responsible for paying the wages and fulfilling the

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other obligations of an employer. Job contracting is a simple commercial
activity governed by the general principles of commercial contract law. Also,
there are two patterns (i.e., contracting in when the work or service is on the
premises of user enterprise and contracting out when the work or service is
not on the premises of user enterprise). In Labour Contracting: The dominant
objective of the contractual relationship is the supply of labour (rather than
goods or services) by the contractor or subcontractor to the user enterprise.
The user enterprise may bring the contract workers into its premises to work
alongside with its own employees or it may have the work performed
elsewhere. Both Job & Labour Contracting are followed in various countries of
the world.

INDIAN LABOUR CONFERENCE:

In India engagement of Contract Labour in an enterprise is governed by the

Contract Labour (Regulation and Abolition) Act, 1970 and there have been
various case laws on this legislation. The landmark Supreme Court judgement
in the case of Steel Authority of India Limited (SAIL) v/s National Union Water
Front Workers delivered on 30th August 2001 has clarified (i) appropriate
government under the Act and (ii) there is no automatic absorption of contract
labour working in the establishment of the principal employer as regular
employees under section 10 of the Act. This judgment has given relief to
employers and it has also led to increase in engagement of contract labour in
many enterprises thereafter. After this Supreme Court landmark judgment
trade unions in India have continuously desired that the Contract Labour
(Regulation and Abolition) Act, 1970 be amended and hence the 42nd Indian
Labour Conference constituted a tripartite group to suggest amendments to
the act. At the 43rd Indian Labour Conference held on 23rd and 24th November
2010 in New Delhi there were differing views between the employers and
trade union representatives on the amendments to the Act, so only the
following resolutions in the conference were passed unanimously

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 • All efforts should be made to ensure that the existing provisions of the
Contract Labour (Regulation & Abolition) Act, 1970 and Rules made
there under are implemented in letter and spirit.
• The labour enforcement machinery in the Centre and the State should
be strengthened by providing requisite manpower and other logistic
facilities to ensure effective implementation of labour related
legislations.
• States are mandated to constitute Tripartite State Advisory Boards
under the Act.
• Payments should be made to the contract workers through banks.
Necessary amendments should be made in the Act/Rules.

Also, the workers representatives as well as the representatives from the state
governments supported the following three proposals at the 43rd Indian Labour
Conference. However, the representatives of the Employers did not agree
with the same, as these were against the existing law.

• In case where the contact labour performs the same or similar kind of
work as the workmen, directly appointed by the Principal Employer, the
wage rates, holidays, hours of work, social security and other conditions
of service of contract labour shall be the same as are available to the
workmen on the rolls of the Principal Employer. This provision exists
substantially under the existing Rules. This needs to be incorporated in
the principal Act.
• In the event of abolition of contract labour under section 10 (2) of the
Act, the workers should be absorbed / regularised.
• The threshold limit of 20 workers for applicability of the Act should be
dispensed with.

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PERSPECTIVE of the TRPARTITE CONSTITUENTS on CONTRACT
LABOUR:

Employers’ Perspective on Contract Labour:

Most employers’ desire engagement of contract labour as they see the
following benefits at the same time, they also see some limitations
• Flexibility on utilization of workforce.
• Optimize work force composition by balancing “Core” and “Peripheral”
component and between higher and lower skill.
• Reducing the long-term wage bill liability.
• Higher productivity of this workforce and reduced administrative costs.
• Labour market flexibility.
• In a globalized economy, enterprises undergo restructuring, hence it is
easier to restructure with contract labour.
• Skill acquisition by contract labour takes time, hence mostly engaged in
unskilled and lower skill jobs.
• Line Managers under continuous pressure to train the contract
workforce, hence quite many desires permanent workforce.

Trade Unions’ Perspective on Contract Labour

Most trade unions are opposed to the engagement of contract labour, though
they recognise that contract labour is a reality because of the existing law

• Lower wages.
• Uncertainty of work.
• Hardly any benefits of social protection, annual leave and fringe benefits
while in employment.
• Deprived of protection provided by labour legislation.
• Low employment security.
• Under the garb of self-employment statutory benefits are denied.
• Employment status is by and large ill defined, and hence the contract
labour receives remuneration and benefits lower than regular worker.

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 • Hours of work are frequently longer as remuneration are linked to
output and task completion.
• Higher risk of occupational accidents and diseases.
• Unionization rate among contract labour is low.

Government Perspective on Contract Labour

The Governments in each of the states in India have been permitting contract
labour as per the act for the following reasons.
• Desire to have economic growth and generate employment.
• State Governments competing to attract investment
• Gujarat & Goa State Governments most flexible on engagement of
contract labour in enterprises.
• Pressure from Employers’ that the industry needs to be competitive and
survive in the globalized environment, where outsourcing is an accepted
thing and enterprises desiring to perform only core jobs. Andhra Pradesh
State Government has defined noncore activity and contract labour can
only be engaged in noncore activity.
• Pressure from unions that the macroeconomic figures indicate
increasing employment of contract labour at the cost of permanent
employment.
• The Contract Labour (Regulation & Employment) Act 1970 has rules
under which individual state government have a provision to ensure that
same or similar work gets the same wage rate. By and large the same is
not enforced by the state government unless litigated by aggrieved
workmen / trade unions.

CONTRACT LABOUR SITUATION IN INDIA:

The International Labour Organization in India carried out a study of Contract

Labour in India in 2012 covering 25 manufacturing enterprises and the study
revealed that every enterprise in the study has contract labour as per The
Contract Labour (Regulation & Abolition) Act, 1970. The minimum percentage
of contract labour as a ratio of permanent labour was 5% and the maximum in

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an enterprise was 222 %. The study indicates wide variation in the number of
contract workers and this was because of the type of business, as there were
businesses which had low automation, large requirement of low skill jobs and
the same facilitated engagement of Contract Labour. Hence, it is really difficult
to formulate an ideal percentage of contract labour, as a ratio of permanent
labour, as a guideline for running a manufacturing enterprise, unless bench
marking studies are carried out amongst the enterprises of each type of
industry.

Many enterprises in India engage contract labour through contractors / service

providers under The Contract Labour (Regulation & Abolition) Act 1970, which
is permitted as per law. Engaging contract labour compared to permanent
labour has been on the rise by many enterprises post economic reforms of
1991, as most employers have looked at this approach for improving flexibility,
productivity and also reducing cost. However, engaging contract labour in
enterprises has led to industrial relations issues and litigations not only in the
past, but will also continue to have implications in the future, though in the
recent past the apex court has given judgments that have favoured enterprises
engaging contract labour.

As per the Act there are two items on which enterprises need to ensure
compliance as majority of them do not strictly follow this and hence are
vulnerable
• Contract labour to be supervised by the contractor.
• If the contract labour is performing same or similar work, like the
permanent labour, then they are eligible for same wages, as per Rule
25(v) (a) of The Contract Labour (Regulation & Abolition) Act 1970.

In keeping with compliance of the act, enterprises need to ensure that the
contract workforce is primarily supervised by the contractor’s supervisors and
the secondary supervision be carried out by the supervisor of the principal
employer. In quite many cases this is violated by the enterprise and hence the
principal employer becomes vulnerable when there are litigations. Also, the
principal employer needs to ensure that the contract labour is not performing
same or similar work as performed by permanent labour, otherwise they are
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eligible to be paid the same wages. In certain cases, this provision is also
violated by enterprises. At times there are cases, where work performed by
the contract labour and permanent labour is same or similar, but the
designation given to each of them is different based on knowledge, skill and
experience, in such a case the principal employer does becomes vulnerable
when there are litigations.

In small size enterprises, even though the number of workers is less than 100,
still these enterprises engage many workers through contractors / service
providers along with few skilled permanent company workers. When I
discussed with some of the entrepreneurs on this practice, their response was
that there is a lot of uncertainty of demand for the products produced and
services offered; hence they did not desire to increase their long-term liability
by engaging permanent workers. Also, the entrepreneurs mentioned that the
contract workers are locals that are brought in by the local contractor, who in
many cases is a powerful local political heavyweight and if they are not
engaged then there are problems in running the small size enterprise. They
further mentioned that if they do not give work to the local contractor then
there are problems / trouble, which the local community creates on the
functioning of the small size enterprise in the locality. Entrepreneurs
mentioned that the local contractors are politically very resourceful, and it
becomes increasingly tough to get any support from the relevant government
department and the local police if the entrepreneur decides to deny engaging
the local contractors.

Engagement of Contract Labour is prevalent both in private sector and public

sector manufacturing enterprises and in many cases these workers are
engaged on regular and perennial jobs where permanent workers are also
working. Most enterprises engage these persons by issuing annual
maintenance contracts and / or on contracts dealing with cleaning, loading,
unloading, and material handling and also work which are claimed to be
peripheral to the core manufacturing activity. Also, the contract labour in
quite many cases in enterprises is paid minimum wages which are much lower
than the wages paid to the permanent workers of the enterprise. This does
create problems, as the contract workers desire permanency in employment

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and also do not expect to receive a much lower wage while doing identical
work compared to the permanent workmen. There are also enterprises who
engage contract labour to take care of the high absenteeism prevalent
amongst the unionized permanent workers of the enterprise.

There are large enterprises in India that have addressed the concerns of the
contract workers and some of them have taken steps which are given below
and facilitated having a positive industrial relations climate while engaging
contract labour.
• Contract Labour wages revised, when wages of permanent workers
revised because of the Long-Term Settlement.
• An agreement with the Trade Union that certain job in the enterprise
will be carried out by contract labour.
• An agreement with the Trade Union on engaging contract labour and the
contract labour to be given preference when permanent vacancies arise.
• Individual contract worker interviewed, and background check
undertaken by the contractor along with the principal employer before
the contract worker is placed by the contractor in the plant / facility of
the principal employer.
• Paying contract workers, a higher wage than the minimum wages
through innovative methods of attendance bonus, output linked
incentive, certain medical benefits and in some cases also leave travel
benefits.
• Facilitating contract labour to acquire higher skills, so that their
employability improves.
• Welfare amenities for contract workmen, but lesser than those provided
to permanent workers.
• Contract workers included in participation of annual get together; can
avail of company daily bus facility; can eat food in canteen at the same
time and at the same tariff as permanent workers.
• Positioning of a dedicated Social Worker / Welfare Officer to look after
the interest of the contract workers.
• Provision of a mobile crèche / school for children of contract
construction workers at the construction site.

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CONCLUSION:

Enterprises in India can engage Contract Labour provided they obtain the
necessary permission from the appropriate Government labour department
and the work practices of the contract labour is as per The Contract Labour
(Regulation & Abolition) Act 1970. Engagement of contract labour in many
enterprises is by and large labour contracting as defined earlier. However, the
contract labour in enterprises is quite often engaged through contracts that try
to project these engagements as job contracting. The engagement of contract
labour does leads to problems of industrial relations at the enterprise level,
because of the high disparity in wages and benefits between the permanent
workers and the contract workers. Each enterprise will have to find its own
solution on engaging contract labour and maintaining industrial peace, as
contract labour also desires to have job security and get a decent wage rather
than just a statutory minimum wage. It is worthwhile for the management of
enterprises to negotiate with the trade unions and have settlements on
engaging contract labour in the enterprise, to ensure industrial peace.
Presently quite a few enterprises have been getting their process and practice
on engagement of Contract Labour audited, to ensure that they are complying
with the law of the land.
-----------------------------------------------------------------------------------------------------------------------------------
* President, Industrial Relations Institute of India (IRII), Former Senior Specialist on Employers’
Activities for South Asia with International Labour Organization (ILO) and Former Corporate Head of
ACC Ltd. and Former Corporate Head of Manufacturing and HR of Novartis India Ltd. and E-mail:
rajenmehrotra@gmail.com

Published in Current Labour Reports and Industrial Relations Institute of India (IRII) Journal Arbiter –
July 2013 issue

Page | 96
 Staffing Companies in India
Dr. Rajen Mehrotra*
--------------------------------------------------------------------------------------------
Introduction
The growing trend of people wanting to work for an organization without
becoming its employees, has given rise to Staffing Companies around the
world, whose raison d’etre is to supply temporary contractual employees,
called temps, to organizations. This concept originated in the United States of
America (USA), but has now spread to several other countries around the
globe, including India.
One such Staffing Company is Kelly Services which started its operations in USA
in 1946. Kelly Services supplies temps and permanent workforce to many of
the Fortune 500 companies belonging to different sectors. It has also
established its branches in other parts of the world, including India. At its peak,
in 2018, the Company generated a turnover of USD 5.51 billion. However, in
2020, the figure came down to USD 4.52 billion possibly because of Covid-19
related factors.
The Staffing Companies are hugely popular in India too, though the reasons for
their popularity are somewhat different from those of other nations. Indian
Organizations strive to restrict the number of their permanent workforce to
the minimum as these employees are covered under the provisions of The
Industrial Disputes Act, 1947. This is a legislation which imposes certain
restrictions on the Employers. Hence, organizations in India prefer to engage as
much of contract workers as possible. Contract workers are covered under a
different legislation called The Contract Labour (Regulation and Abolition) Act,
1970, whereby in the eyes of the Law they are regarded as employees of the
Contractor organizations.
The preference for engaging contract laborers is likely to continue even after
the four Labour Codes come into force.
The Labour Codes are:
1) The Code on Wages, 2019,
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 2) The Industrial Relations Code, 2020,
3) The Occupational Safety, Health and Working Conditions Code, 2020,
4) The Code on Social Security, 2020.
The Labour Codes have incorporated the existing 29 labour legislations which
include The Industrial Disputes Act, 1947 and The Contract Labour (Regulation
and Abolition) Act, 1970.

Present Situation of Staffing Companies in India

It is said that, at present, there are more than 7000 staffing companies in India.
Their combined turnover in 2020 amounted to INR 368.7 billion. The larger
staffing companies are members of the Indian Staffing Federation (ISF) which
mentions that they have more than 110 members. They supply temporary and
permanent contract workforce to about 60,000 user organizations located
both in India and abroad. The revenue generated in 2020 by them was
approximately INR 71 billion.
Practically all the staffing companies in India came into being after 2000. The
five leading companies are the following who supply 400,000 – 50, 000
workforce to their user organizations.:
1) Quess Corp Limited
2) Team Lease Services Limited
3) Innovsource Solutions Private Limited
4) Randstad India Limited
5) Genius Consultant Limited
The other known staffing companies include:
1) Adecco India Private Limited
2) Kelly Services India Private Limited
3) GI Staffing Service Private Limited
4) CIEL HR Services Private Limited.
With the rapid growth in the industry, the demand for workers, and contract
workers in particular, is bound to go up significantly in the coming years.
Presently, staffing companies supply temporary contractual workers, gig
contractual workers, platform contractual workers, contractual field force,
contractual staff and contractual executives, based on the requirements of the
customer organizations in the country. They ensure that the workforce is paid
the stipulated wages, largely the minimum wages fixed by law, and the
statutory benefits such as annual bonus, coverage under Provident Fund and
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Employees State Insurance Scheme. They are also eligible for statutory leave
and welfare benefits.

National Employability Enhancement Mission (NEEM) Trainee

Scheme
National Employability Enhancement Mission (NEEM) Trainee Scheme was
launched by Government of India in 2013 under the auspices of All-India
Council for Technical Education (AICTE) with the purpose of upgrading the skills
of the young workforce to enable them secure gainful employment more
easily.
Many organizations have availed of this Scheme and have inducted trainees
through the NEEM facilitators for a period of 3 - 36 months, primarily to man
their workforce. So far 43 Agencies, which include wings of most of the large
staffing companies, have been granted approval as NEEM Facilitators by AICTE.
Incidentally, even an academic institute like Tata Institute of Social Sciences
(TISS) finds a place in the list.

National Apprenticeship Promotion Scheme

National Apprenticeship Promotion Scheme (NAPS) was launched by
Government of India in 2016 to provide financial support to establishments
imparting apprenticeship training. Organizations having a workforce - regular
and contract employees of 30 or more are mandated to enrol apprentices for
training, numbering 2.5% to 15% of its workforce, including contractual
employees, every year.
Staffing companies are presently facilitating identification and placement of
the candidates for apprenticeship training under NAPS. The staffing companies
are providing end to end services, right from sourcing the candidates to liaising
with the Government to get the monetary benefits to the organization under
NAPS. They take care of registering the candidates in the portal, managing
their attendance, engaging them under basic training, stipend calculation,
stipend disbursement, and uploading the documents for audits.
Staffing companies are generally getting empanelled, for the purposes of
providing service to organizations, as Basic Training Providers (BTP) and Third-
Party Agencies (TPA) by the Ministry of Skill Development and
Entrepreneurship as well as by the National Skill Development Corporation.
There are also companies which start as TPAs with client organizations and
later grow into staffing companies for the very same organizations.

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The Fees
The amount of fees charged by the staffing companies is dependent upon the
volume and the type of workforce supplied to the organization.
a) For a workforce of less than 500: @ 7% to 12% for high profile jobs and
IT jobs, and @4 % to 8% for low profile jobs.
b) For a workforce of more than 500: generally, the fee is worked out as a
fixed amount per month per person, which varies from INR 500 to 750.
The staffing companies strive hard to ensure compliance of all applicable
labour laws. Organizations have to bear an additional 18% cost towards Goods
& Service Tax (GST) on the bills of the staffing companies. This can, of course,
be offset against the GST applicable for goods and services sold /serviced by
the organization.
The growth of the staffing companies in India has resulted in creating a
platform for formal employment to millions of workers, skilled, semi-skilled
and unskilled, who were otherwise languishing in the labour market. The
employment contract is for a specified period with wages and benefits as per
the minimum applicable rates. This pattern of employment has become an
attractive, economical option for organizations and is presently used by many
in the manufacturing, the app-based platforms and the service sectors, large,
medium or small.

Advantages of Hiring Workforce through Staffing Companies

The advantages are as follows:
a) Limiting the number of Full Time Employees (FTE) especially in
Multinational Corporations (MNCs).
b) Employing only executives as company employees. All non-executive
workforce will be on the payroll of the staffing company, with the result
that the provisions of The Industrial Disputes Act, 1947 do not apply to
the enterprise. (NB. This is the employment model of most start-ups and
many enterprises in the service sector).
c) Liability for the compliance of labour laws rests with the staffing
company.
d) Cost arbitrage. Workforce from staffing company is mostly paid just the
minimum statutory wage, which is far lower than what is payable to
regular employees of the enterprise.

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Safeguards for Engaging Workforce from Staffing Companies
While all staffing companies claim that they comply with the labour laws of the
land in carrying out their business of supplying workforce to organizations, in
reality they may not do so. We need to bear in mind that the supply of workers
is governed by The Contract Labour (Regulation and Abolition) Act, 1970 and
the hiring organization as the principal Employer will be held accountable,
should there be any violations by the staffing company in its compliance with
the labour laws.
Here are, therefore, a few safeguards that the HR department of the user
organization will do well to take care of, while engaging workforce through
staffing companies.
a) User organization is not to get involved in the selection and the salary/wage
fixation of the workers supplied by the staffing company.
b) User organization is not to be involved in the sanctioning of leave or in
initiating disciplinary action against the contracted workers.
c) User organization to avoid getting involved in the direct supervision of the
contracted workers.
d) The employment of the workforce supplied by the staffing company is for a
specified period and work. Upon completion of the specified period and
work, the workforce supplied by the staffing company, is not to be allowed
to report for work at the user organization, unless the contract between the
organization and the staffing company has been extended.
e) User organization is to ensure that each of the workforce supplied by the
staffing company has been given a letter of appointment.
f) User organization has to ensure that the workforce supplied by the staffing
company are covered under the following legislations:
• The Employees' Provident Funds and Miscellaneous Provisions Act,
1952
• The Employees' State Insurance Act, 1948
• The Payment of Bonus Act, 1965
• The Payment of Gratuity Act, 1972
• The Employee's Compensation Act, 1923
• The Inter-State Migrant Workmen (Regulation of Employment and
Conditions of Service) Act, 1979
• The Maternity Benefit Act, 1961
• Labour Welfare Fund as per state law
• Professional Tax as per state law, etc.

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g) User organization is to ensure that, on completion of the contract period,
the departing workers are paid all the dues by the staffing company, such as
wages, leave wages, bonus and gratuity and notice pay if applicable. It may
also be worthwhile to persuade the staffing company to obtain a “No Dues
Declaration” from the departing worker especially if he / she is going to
sever his / her association with the staffing company as well.
h) It is also suggested that the staffing company’s monthly invoices are
processed, after ensuring that the monthly HR documents are in order, and
that they have been checked, verified and certified by the designated
representatives of both the parties.
It is noticed that at times these matters are not verified by either of the two
parties or, worse, by both the parties, and then the user organization, as the
principal Employer, gets sucked into needless complications relating to labour
law compliance.

Impact of Covid 19 on Indian Staffing Companies and on Wages of

Workers during 2020 - 2021.
The intensity of the impact of COVID-19 on an organization depends on four
factors:
a) The sector the organization belongs to
b) Cash liquidity
c) Profitability
d) Location (i.e., zone).
When the pandemic struck the country, the Indian economy witnessed an
immediate slowdown, followed by postponement of all new projects in most
sectors of the economy barring healthcare, pharmaceutical, Information
Technology (IT), Information Technology Enabled services (ITE’s) and essential
services.
This situation led to freeze in hiring, reduction of existing workforce, pay cuts,
and employees being asked to proceed on leave. All the sectors were affected
by these measures. The shrinking job market reduced the negotiating power of
the job seekers. The staffing industry, particularly small and mid-sized
companies, witnessed layoffs and pay cuts, while the bigger players simply
avoided hiring any new workforce. Also, wherever feasible, remote working
became the new norm for ensuring continuity of business operations.
According to Flexi Staffing Employment Research Report “Annual Flexi Staffing
Employment Trends: 2021” In 2021, there was a growth of 31% in flexi- work
practices in India compared to other forms of employment.
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The staffing companies are presently witnessing 10 - 37% growth in workforce
requirements from their Indian clients across various domains. The table below
shows the hiring trends for the period 2019-2021, with 2022 appearing to be a
year of significant growth and revival.
India - Industry Wise Hiring Trend
% Change from 2019 % Change from 2020
to 2020 Industry to 2021
-54% Automotive 10%
Banking, Financial Services, and
-31% Insurance sector (BFSI) 27%
-45% Core & Energy 30%
-35% Engineering and Manufacturing 33%
-11% Internet Business 25%
-62% Others and diversified 32%
-7% Pharma and Healthcare 37%
-13% Software/Hardware/IT 25%
-24% Retail 21%
-13% Logistics 29%
-30% Overall 19%

(Source – India Industry Wise Trend - https://indiaeducationforum.org/pdf/ISR-

2021.pdf) )
IT/ITES and similar Employers are working on strategies to reduce expenses on
rentals of office premises. They are also open to hiring persons prepared to
work from remote locations. This gives them access to a nationwide pool of
skilled manpower, who are seeking growth and empowerment along with a
flexible work environment.
On the other hand, smarter candidates, especially those who are aware of
their special skills and of the changing nature of the job market, have been
able to locate opportunities to improve their income levels substantially, even
to the extent of 20-50%. The business landscape has become a job seeker’s
dream in certain sectors with candidates being able to negotiate salaries
unheard of till the recent past. Companies are faced with the challenges of
attracting and retaining talent, and they are left with no other option but to
offer high salaries, permit work from home options and extend several other
benefits.

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Conclusion
We have all been witnesses to an extensive country-wide vaccination drive
during the last one and a half years. Also, the third wave of the pandemic
appears to be tapering down. Things do look bright for the Indian economy for
the coming financial year, 2022-23.
Working from Home is becoming a preferred option in certain sectors of the
economy, because of the enormous savings it brings in travel time and travel
costs. The practice is likely to continue in the future at least in a modified form.
There are several indications to conclude that a brighter future awaits all
staffing companies in India. As the saying goes, ‘After every low tide there is
bound to be a high tide’.

Acknowledgement
The author is grateful to Mr. Ashish Jain and Mr. Vineet Kumar, students of
the Advanced Human Resource Management Programme for HR Leaders -
Batch 01 (AHRMPHRL 01) at Indian Institute of Management (IIM) Indore
Online Learning Programme (OLP) (2021-22). A few points have been included
in the article from their projects on "Analysis of Staffing Companies
Recruitment - Conversion of Informal to Formal Employment - A Case Study "
and “Recruitment Trends & Wages pre and post pandemic” respectively, which
were submitted to the Author as part of the course requirements on "Labour
Laws and HR Compliance – New Age Policies ".
* Past President of Industrial Relations Institute of India (IRII), Former Senior Employers’ Specialist
for South Asian Region with International Labour Organization (ILO) and Former Corporate Head of
HR with ACC Ltd. and Former Corporate Head of Manufacturing and HR with Novartis India Ltd. E-
Mail: rajenmehrotra@gmail.com

Published in April 2022 issue of Current Labour Reports.

Page | 104
 ‘Apple’ Falls on the Head of Wistron

Dr. Rajen Mehrotra*

--------------------------------------------------------------------------------------------

The Rampage at Wistron

So, it is claimed by the print, electronic and social media in the country that
violence and vandalism was unleashed by the workers of Wistron Infocomm
Manufacturing (India) Pvt. Ltd. at the company’s facility at Narasapura in Kolar,
Karnataka on Saturday, 12th December 2020. The estimated loss to the
company on account of the damages caused to the machinery and property
ran into astronomical figures, a whopping Rs 500 million or so.

According to reports, the mayhem occurred mainly due to issues related to

wages and overtime payments. The payment was delayed and there were
allegations also of underpayment.

Wistron is contracted by Apple Inc.

Wistron is a Taiwanese Company operating in our country and has been

contracted by Apple Inc. to produce its i-phones in India. Apple Inc.,
headquartered in Cupertino, California, is an American multinational
technology company which designs, develops, and sells consumer electronics,
computer software, and online services worldwide which is well known.

Wistron has recorded rapid growth in the recent past. The company has more
than 9,800 employees on its rolls, of whom 1344 are permanent staff and the
rest, numbering almost 8490, are contract workers. The contract workers have
been hired through six contractors, namely Creative Engineers, Quess

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Corporation, Innovsource, Adeco Group, Needs Manpower Support Services
& Randstand. [Source: Economic Times, 15 December 2020]

When the news of the unrest at their contract manufacturer Wistron reached
their ears, Apple Inc. acted swiftly. Wistron was put on probation and was
instructed to take immediate action to rectify the wrongdoings. It was made
clear that all the lapses of the past with regard to implementation of the
legitimate working hour norms and timely payment of wages to certain
sections of workers were to be attended to promptly.

As a first step, Wistron sacked its Vice President who looked after the business
in India. The contractors supplying the manpower to Wistron got into a
damage control mode and settled all the payments due to their employees
without any further delay.

While the complete details of the investigation have not emerged in the public
domain, it is apparent that the responsibility and accountability for the
incident lies in the lap of all parties involved. All the parties involved in the
unsavory events at Wistron are prima facie guilty of violating the existent laws
and, deserve severe condemnation.

Lessons to Learn

The incident at Wistron Plant carries big lessons for all, for the Principal
Employer Companies and the Contractor Agencies as well. Principal Employer
Companies need to ensure that the contract workers serving in their plants
and elsewhere are paid their dues in time, especially the wages and overtime
payments according to the agreed terms. If the contractor fails to do so, then
the onus fully rests on the Principal Employer Company to make the payment

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themselves to the contract workers and thereafter have them adjusted against
the bills payable to the contractors.

The contractors also have a lot to learn from the Wistron fiasco. The contract
workers engaged by any organization are presently governed by the Contract
Labor (Regulation & Abolition) Act 1970, apart from other labour laws. Very
soon they will be governed by The Occupational Safety, Health and Working
Conditions Code – 2020 the day the Code becomes applicable. Contractors as
well as Principal Employer Companies should ensure that all the applicable
provisions of law are strictly adhered to, if they are not to face the wrath of the
aggrieved workers as in the Wistron case and also action by the Government
plus risk disqualification for future engagements by their buyer.

Corporate Ethics

Despite the existence of clear statutes governing labor including contract

workers, violations of the law by some Principal Employer Companies and
Contractors are prevalent. They do not always get highlighted as in the case of
the Wistron episode. The laws apart, we need to be fair to the working class by
ensuring that all the persons working for the enterprise, irrespective of their
employment status, whether permanent, temporary, casual or contract are
paid their wages on the due date in accordance with the agreed norms. If there
are any problems / differences on computation the same needs to be
immediately sorted out or an advance can be paid and then adjusted against
the wages due. This is just pure decency and part of corporate ethics. Failures
in this regard would certainly fall into the category of an unfair labor practice.

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Outsourcing

With the advent of globalization, outsourcing has become an accepted practice

over the last three decades in both the Indian and Multinational companies.
This has led to the growth of small, medium and large enterprises which supply
the required components, subassemblies and finished products to customer
organizations. Unwittingly these developments at times have resulted in
practices which are not always fair to the working class.

The ILO

The International Labor Organization (ILO) has identified seven areas of

concern with regard to the engagement of labor by Corporates. They are Child
Labor, Forced Labor, Discrimination, Freedom of Association, Minimum Wages,
Overtime and Social Security. Through Responsible Business Conduct (RBC)
interventions advocated by the Employers’ wing of ILO, it urges organizations
the world over to focus on all the seven aspects in their entire supply chain to
ensure compliance to all the provisions contained therein.

The ILO’s intervention is meant to call upon the Corporates to act fairly even
beyond the legal provisions. The emphasis is on extending the reach of
Corporates to all the agencies in their supply chain even though, legally
speaking, the responsibility for compliance rests with the respective
managements of the companies in the supply chain. The principles outlined in
the Responsible Business Conduct (RBC) code aims at inculcating a moral and
ethical outlook in the Corporates towards the welfare of their workforce.

The Apple Moment at Wistron

We all know that Isaac Newton chanced upon discovering the law of gravity
when an apple fell on his head on that momentous day way back in 1666.
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Similarly, it seems as though a disastrous ‘apple’ fell on the Head of Wistron in
India on 12th December 2020.This is a wakeup call for all organizations in our
country to address the urgent need for adherence to the principles of
Responsible Business Conduct (RBC).

It is no secret that a large number of companies in India over the last three
decades have changed their work force employment pattern completely. Most
of them engage predominantly contract workers through contractors and
service providers instead of hiring them directly either as permanent or
temporary or casual workers.

Whenever there are lapses in any link, the ‘apple’ is bound to fall. In the
Wistron case the lapse was timely Payment of Wages and the ‘apple’ fell. The
lapse may be concerning one or the other of the seven aspects of Responsible
Business Conduct (RBC) or some related issues. Companies at times choose to
close their eyes to the seven aspects highlighted by the ILO to achieve certain
short-term gains. In the process, they risk jeopardizing their long-term
interests.

The current times demand that our professionals’ function as the champions of
Responsible Business Conduct (RBC) towards all the individuals, whether
permanent employees or contract workers, serving in an organization or in any
of the agencies in the supply chain.

Role of the Industry Associations

The National Chambers of Commerce and Industries (NCCI) and The Employer
Organizations (EO) in India - a) Associated Chamber of Commerce & Industry
(ASSOCHAM), b) CII, c) The Federation of Indian Chamber of Commerce &
Industry (FICCI), d) The All-India Organization of Employers’ (AIOE), e) The

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Employers’ Federation of India (EFI) and f) The Standing Conference of Public
Enterprises (SCOPE) and others can play a vital role in ensuring their member
companies as well as the companies in their supply chain follow the principles
of Responsible Business Conduct (RBC). This will enable our economy to grow
rapidly while at the same time guaranteeing fairness to our working class in
the country.

The NCCIs and EOs can evolve a system of first educating their members on
Responsible Business Conduct (RBC) and then ensuring that they pursue the
principles advocated by carrying out regular audits of the practices followed in
the organizations. The NCCIs and EOs can also institute awards for
organizations who implement the global best practices on "Responsible
Business Conduct". Of course, the awards need to be open to all companies
including suppliers, service providers and contractors.

________________________________________________________________

*Past President of Industrial Relations Institute of India (IRII), Former Senior Employers’ Specialist for
South Asian Region with International Labour Organization (ILO) and Former Corporate Head of HR
with ACC Ltd. and Former Corporate Head of Manufacturing and HR with Novartis India Ltd. E-Mail:
rajenmdehrotra@gmail.com

Published in March 2021 issue of Current Labour Reports.

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 The Code on Wages 2019 - Impact on Cost to Company
Dr. Rajen Mehrotra*
--------------------------------------------------------------------------------------------
Introduction
The Code on Wages, 2019 has defined “Wages” in great detail. The same
definition is quoted in the subsequent three Labour Codes passed by
Parliament in 2020.
According to Section 2 (y) of the Code, “Wages" mean the entire remuneration
paid to an employee while in employment and include:
(i) basic pay;
(ii) dearness allowance; and
(iii) retaining allowance, if any.
However, “Wages” do not include:
(a) any bonus payable under any law for the time being in force, which does
not form part of the remuneration payable under the terms of employment;
(b) the value of any house-accommodation, or of the supply of light, water,
medical attendance or other amenity or of any service excluded from the
computation of wages by a general or special order of the appropriate
Government;
(c) any contribution paid by the employer to any pension or provident fund,
and the interest which may have accrued thereon;
(d) any conveyance allowance or the value of any travelling concession;
(e) any sum paid to the employed person to defray special expenses entailed
on him by the nature of his employment;
(f) house rent allowance;
(g) remuneration payable under any award or settlement between the parties
or order of a court or Tribunal;
(h) any overtime allowance;
(i) any commission payable to the employee;
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(j) any gratuity payable on the termination of employment;
(k) any retrenchment compensation or other retirement benefit payable to the
employee or any ex-gratia payment made to him on the termination of
employment.
However again, for calculating the “wages” under this clause, if payments
made by the employer to the employee under clauses (a) to (i) exceed one-
half, or such other per cent as may be notified by the Central Government, of
all the remuneration calculated under this clause, the amount which exceeds
such one-half, or the per cent so notified, shall be deemed as remuneration
and shall accordingly be added to the “wages” under this clause.
This clause defines “wages” as consisting of the basic pay, the dearness
allowance and the retaining allowance if any. However, if these three
components were to add up to less than 50 % of the total defined
remuneration, then the 50% figure arrived at will be regarded as “wages”.
Following the enactment of The Code on Wages, 2019, four existing Acts stand
repealed. The concerned Acts are: The Payment of Wages Act, 1936, The
Minimum Wages Act, 1948, The Payment of Bonus Act, 1965 and The Equal
Remuneration Act, 1976.
The Code on Wages, 2019 is applicable to all the employees of every
establishment. This means the Code applies not only to workers but to the
supervisors and executives as well. The new definition of “wages” will ensure
that the minimum wages as prescribed by the Government from time to time
would strictly be complied with, while eliminating the scope for reducing the
contribution to terminal benefits, because of the bifurcation method applied
by Employers in the past.
Admittedly, once the Code becomes operational, the new definition of
“wages” is likely to add to the financial burdens of several companies.
Evolution of Wage Structure with Allowances
When I commenced my corporate career in 1970 as an Assistant Engineer with
Mukand Iron & Steel Works Ltd (now called Mukand Ltd.), there was nothing
like the concept of Cost to Company (CTC). The Appointment Letter given to
me merely carried details of the monthly Basic Pay, the Grade in which I was
placed, and the annual increment applicable to that Grade. There was also
mention about the monthly Dearness Allowance that I would receive based on
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the consumer price index. In my first pay-slip, the total of these two items –
Basic Pay and Dearness Allowance - amounted to a princely sum of Rs.1,050/-
per month.
No other allowances were payable to me, either monthly or annually, during
the first two years of my service, except the annual bonus declared by the
company before Diwali based on the earnings for the previous year. This
pattern of monthly wages continued largely in the same manner as I moved up
the organizational hierarchy by way of promotion, as well as movement from
one organization to another in my corporate career. Just to reiterate, the Basic
Pay and for certain years the Dearness Allowance continued to be the most
important components of my monthly remuneration.
In India the concept of CTC had its origins in the Information Technology (IT)
companies from around mid-1980’s. Alongside, Consulting Firms began to
undertake surveys of executive remuneration for providing a comparative
picture of a company’s standing in respect of its Compensation levels and for
determination of industry wise benchmarks. Some select companies formed
Remuneration Clubs for similar purposes, primarily for exchange of salary
details and compensation practices. These new developments necessitated
having to assign cash value to perquisites extended to executives especially in
multinational companies. Later, when the income tax rates were rationalized
and the tax-free perquisites came up for scrutiny, Companies began to treat all
items of compensation as taxable. This automatically led to the legitimization
of the concept of CTC.
Simultaneously, there were other developments. The practice of including
dearness allowance in the monthly salary of executives was abandoned by
most companies.
Also, in negotiations of Long-Term Wage Settlements with Trade Unions,
organizations tried to introduce new allowances. This was done mainly to limit
the rise in basic pay and monthly dearness allowance, as these two items had
an impact on several other payments such as overtime rate, annual bonus,
leave encashment, contribution to provident fund and gratuity. In enterprises
which have field force for supporting the sales and marketing effort, there has
been a practice of negotiated tax-free daily allowance for local and out station
working of the field force as the job entails travel, boarding and at times
lodging expense. Here the tax-free daily allowance is normally paid without
any supporting vouchers and at times higher than the normal expense. The
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eligible tax-free daily allowance is quite often part of a negotiated Long-Term
Wage Settlement.

Cost to Company (CTC)

Cost to the Company (CTC) is the nomenclature presently used by Employers
while making an offer of employment to show case total remuneration. The
final figure shared can be misleading as in some cases it includes items such as
performance bonus payable at its maximum (for which amount limited number
of persons qualify), monetary value of subsidized snacks and meals, and
gratuity (which again is payable only when an employee completes a minimum
of five years of service). Many new employees get at first impressed with the
CTC figures shown on the paper, but later feel disappointed when they realize
that the monthly take home pay is very much lower, and not one twelfth of the
CTC amount, as they had assumed that it would be.
Some companies offer an à la carte system where employees can opt for
allowances of their choice within the negotiated CTC limits. This is done for
two purposes: 1) cash now as against deferred payment and 2) reduction of tax
liability.
The CTC represents a company’s total annual expenditure on an employee.
CTC computation includes all the payments, in cash and in kind, the direct
payments and the money value of the welfare benefits and perquisites
extended to an employee. Hence, to avoid any misunderstanding or
subsequent disappointment, the CTC components should be explained clearly
and carefully to a new entrant.

Elements of Cost to Company (CTC)

The items defined under Section 2 (y) of the Code fall into three categories of
the CTC format in vogue among the companies. They are as follows: --
A) Direct Benefits to an employee – (i) basic pay, (ii) dearness allowance, (iii)
retaining allowance, (a) bonus, (d) conveyance allowance, (e) special expenses,
(f) house rent allowance or reimbursement, (g) amount payable under an
award, (h) over time allowance, (i) commission.
Allowances such as shift allowance, education allowance, dress allowance, and
any other allowance which form part of the direct benefits but have not been

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defined anywhere in the Code, will have to be considered as elements of item
(e) special expenses and be regarded as part of remuneration.
However, medical allowance or reimbursement, medical insurance premium
and leave travel reimbursement, which are shown as part of CTC, may not have
to be included in calculating the remuneration under the Code.
B) Indirect Benefits to an employee include the item value of house
accommodation. Which under Section 2 (y) (b) of the Code is defined as: “the
value of any house-accommodation, or of the supply of light, water, medical
attendance or other amenity or of any service excluded from the computation
of wages by a general or special order of the appropriate Government”. House
accommodation to employees plus supply of electricity, water is generally
provided in the company’s township. In some cases, accommodation is
provided to essential staff or persons in top management cadre. There is a
method of computing the value of accommodation, if provided free, as per
existing income tax laws.
There are organizations which provide also the following benefits: interest free
loans for buying assets, food coupons in lieu of subsidized meals, payment of
medical insurance premium, free transport to office and free uniform. All these
items form part of indirect benefits, but they have not been defined anywhere
in the Code. On the other hand, they are being shown as part of CTC by the
organizations. These items stay as grey areas and there is a danger that they
may become objects of arbitrary interpretation by the Labour & Employment
Department.
C) Saving Contribution to an employee refers to item 2 (y) (c) of the Code
contribution paid by the employer to any pension or provident fund, and the
interest which may have accrued thereon. Organizations were including the
contributions made by the Employer to the employee’s Pension and Provident
Fund accounts under the existing law, in the employee’s CTC. However, the
interest which may have accrued to the contribution in the year was never
considered as part of CTC, as this is not paid by the Employer. Be that as it
may, for the first time ever, the interest accruing to the contribution has been
made a part of remuneration under the new Code. This is clearly a new
development.
Many companies operate Superannuation Fund for their executives. The
contribution to the Superannuation Fund, amounting to 15 % of an employee’s

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basic salary (plus dearness allowance, if any), is solely made by the Employer.
The Government of India has presently set an aggregate limit of Rs. 7.5 lakh for
employer contributions to the Provident Fund (PF), National Pension System
(NPS) and Superannuation Fund (SF), any contribution beyond which is taxable
for the beneficiary, otherwise this amount does not at present attract any
liability. In fact, the Code seems silent about Superannuation Fund. The
Superannuation Fund is, no doubt, a pension fund, and the Code does make a
mention of pension fund. But the pension fund referred to under item 2 (y) (c)
in the Code is about the pension scheme which forms part of the Provident
Fund. Superannuation Fund does not get discussed at all in the Code. This is
yet another grey area. It would, therefore, be advisable to include the
employer’s contribution to the Superannuation Scheme as part of
remuneration. There are companies that have stock options for certain
category of employees and this could be a grey area for it to be considered as
remuneration based on the Income Tax Act.

Impact on Companies
The two items, that pose a problem in computing an employee’s remuneration
for a financial year, are overtime and annual bonus. In the case of workers,
over time earnings are a part of remuneration. However, the payments are
likely to vary from month to month and the exact amount will only be known
at the end of the year. Similarly, the annual bonus payable to employees could
vary from year to year as the final amount is based on the available allocable
surplus. Of course, it is entirely a different matter that in quite a few
companies, the quantum of bonus is negotiated and settled with the Trade
Union and is in no way related to the allocable surplus.
All organizations have to calculate the “wages” as defined under the Code and
see whether the existing basic pay, dearness allowance and retaining
allowance together amount to more than 50% of the remuneration for every
one of their employees, whether they are executives, supervisors, workers or
even contract workers. If it does, there would not be any additional financial
liability to the Company when the Code becomes operational.
But in organizations where the “wages” do not add up to 50% of the
remuneration, extra provision will have to be made for leave encashment and
gratuity payments. As for the employer’s contribution towards Provident
Fund, as long as the present limits are in force - @12% of the wages subject to
a present wage ceiling of Rs 15,000 pm - the additional financial impact is likely
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to be marginal. If, however, the wage ceiling of Rs. 15,000/- were to be
enhanced or removed, then there is bound to be additional liability, once the
Code becomes operational.

Conclusion
In cases where the wages paid amount to less than 50% of the total
remuneration, organizations need to take corrective measures to remove the
anomaly forthwith. The easiest way is to enhance the basic pay gradually
while granting annual increments.
Organizations should also institute reasonable limits to leave accumulation and
urge their employees to avail of their annual leave regularly. This will reduce a
company’s liability considerably when it comes to leave encashment.
There is a provision in the Code that the full and final settlement of a departing
employee will have to be completed within two working days. This may not
pose a problem in the cases of retirement, retrenchment or dismissal of an
employee. However, in the cases of resignation without advance notice,
making full and final settlement of the dues within two working days can be a
big challenge, as processing of the monthly payroll in most enterprises is
outsourced. Hopefully, this issue can be resolved by ensuring that the
departing employee has to serve the notice period.
Confusion still persists among the professionals of most companies as to which
components of the CTC are to be included in computing the remuneration, to
determine the quantum of “wages”. It would hugely benefit organizations,
trade unions and employees, if the Ministry of Labor & Employment,
Government of India can release Question and Answers by sharing real life
examples to explain how the “wages” are to be calculated. This will help the
organizations to duly comply with all the provisions of the new Code and spare
them from being harassed at a later date by Government Agencies for non-
compliance, which, in many cases, could be merely due to ignorance or
misunderstandings.

*Past President of Industrial Relations Institute of India (IRII), Former Senior Employers’ Specialist for
South Asian Region with Internation.al Labor Organization (ILO) and Former Corporate Head of HR
with ACC Ltd. and Former Corporate Head of Manufacturing and HR with Novartis India Ltd. E-Mail:
rajenmehrotra@gmail.com

Published in April 2021 issue of Current Labour Reports.

Page | 117
 Right to Organize and Bargain Collectively—Negotiating
Settlements

Dr. Rajen Mehrotra*

________________________________________________________

Introduction

The General Conference of International Labour Organization (ILO) in 1949

adopted the Convention concerning the application of the principles of the
“Right to organize and Bargain Collectively (Also called Convention No. 98)”.
This Convention in Article 4 lays down that “Measures appropriate to national
conditions shall be taken, where necessary, to encourage and provide the full
development and utilization of machinery for voluntary negotiation between
employers or employers’ organization and workers’ organization, with a view
to the regulation of terms and conditions of employment by means of
collective agreement”.

The Convention “Concerning the Promotion of Collective Bargaining (Also

called Convention No. 154)” and its accompanying Recommendation (Also
called Recommendation No. 163) were adopted by ILO in 1981 to facilitate the
implementation of Convention No. 98 and show how it can be implemented in
a practical way.

Collective Bargaining also takes place within the framework of conciliation and
/ or arbitration when the parties to the collective bargaining process
voluntarily participate as per Article 6 of Convention No. 154.

Collective Bargaining is a part of Industrial Relations systems when the

employers or employers’ organization deals with the workers represented by
workers’ organization and the ILO has been propagating the same through
“Social Dialogue”.

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The ILO defines “Social Dialogue” to include “All types of negotiation,
consultation or simply exchange of information between representatives of
governments, employers and workers, involving issues of common interest
relating to economic and social policy.” There is further modification on the
definition of “Social Dialogue to “Social Dialogue Plus”, where the definition
apart from representatives of Governments, Employers and Workers, is also to
include representatives of civil society i.e. Non-Government Organizations
(NGO’s) when it involves the workers in the informal sector of the economy,
though certain tripartite stake holders of ILO are opposed to the inclusion of
NGO’s, as they are not part of ILO tripartite structure.

India has not ratified ILO’s Convention No. 98 and Convention No. 154, but
employers or employers’ organization as well as workers organizations are well
conversant with collective bargaining and negotiating settlements relating to
terms and conditions of employment and signing the same for workers
covered under the Industrial Disputes Act, 1947.

In this article I have shared my own experience, as well as the experiences of

some of my professional colleagues in other organizations, as narrated to me
by them in effectively negotiating Long Term Settlements (LTS) dealing with
terms and conditions of employment by means of collective agreement with
workers’ organization and workers in India.

Background Information for LTS

Every enterprise needs to compile the following background information, as

these are useful inputs for the company management to assess how the
business is performing in comparison to its competitors before the
management enters into any collective bargaining discussions for long term
settlements.
• Details of workers engaged (permanent, temporary, casuals, trainees,
apprentices, fixed term contract, contract), absenteeism percentage,
overtime hours and overtime percentage, welfare cost, personnel cost.
• Production figures with respect to each of the resources (i.e. work-days,
machine hours, energy consumed, capital employed in plant and
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 machinery), capacity utilization, plant availability, process yield, rework
percentage, rejection percentage, productivity ratio, conversion cost of
each product, unit cost of the product.
• Sales figures (quantity & revenue) with resources spent on each territory
(i.e. field force, call average, sales targets, classification of township,
advertising & sales promotion expenses).
• Trend of employee cost as a ratio of value added in the business and
also of competitors (value added = total employee cost + interest
charges + profit before tax and depreciation). This is a concept used by
enterprises in Japan to determine employer’s ability to pay.
• Competitors’ data (competitive bench marking), as far as possible, in
each of the areas mentioned above, including the wages and benefits in
each of the comparable grades.
• Industry cum region wage pattern with allowances, leave entitlements,
weekly hours of work and details of long-term wage settlements signed
with benefits reaped by each of the parties in these settlements.
• Background details and profile of the external trade union leader
including the settlements signed and details of the same.

Management Charter Including Restrictive Work Practices for LTS

There are enterprises that have an excellent relationship with the workers’
organization and the workers in the enterprise, and hence see no need to have
a management charter compiled and negotiated at the time of negotiating the
Long-Term Settlement by means of collective agreement. There are
enterprises that prefer to use the terminology “Management Imperatives for
Implementation” rather than calling it “Management Charter of Demand”.

Every enterprise has a different approach on this; however, the older

enterprises over the years have restrictive work practices, which have crept in,
may be by the collective strength of the work force, or the failure of the
management when the restrictive work practice commenced, which presently
does affect the smooth functioning of the enterprise.

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These restrictive work practices quite often involve, refusal of workers to move
from one work station to another similar work station, or from one
department to another department, including limiting the output through a
quota system, in spite the fact that the employment contract is time rated and
not piece rated.

There are existing rules and regulations that are specified in the contract of
employment between the enterprise and the worker, these deal with
vocational mobility, including mobility from one department to another, but
since these were not regularly practiced by the management or / and opposed
by the workers, any enforcement of the same presently is opposed by the
concerned workers and becomes a collective bargaining issue.

Individual enterprise managements need to decide whether they desire to

enforce the contract of employment and in certain cases face turbulence by
confronting the issue or desire to raise it as a “Management Charter of
Demand” / “Management Imperatives for Implementation” to negotiate along
with the LTS. However, the problem of restrictive work practice is
comparatively far less in new manufacturing sites and in-service sector.

Every enterprise needs to undertake the following exercise which would help
in deciding its strategy.

• Identify all restrictive work practices in the enterprise.

• Identify when the restrictive work practiced started and if possible, by
whom.
• Identify workmen’s / union’s interest in continuing the restrictive work
practice.
• Identify management’s interest / benefit in eliminating the restrictive
work practice.
• Identify areas for productivity improvement, including areas of low
output norm, scope and method for improvement.
• Identify systems and procedures that the management desires to
implement.

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 • Identify all areas of operations where improvements are desired and
feasible.
• Identify areas of resistance by workmen for any of the improvements,
changes desired including the restrictive work practice and why.
• Identify the various items including use of safety gear and safe work
practices and prioritize the same. The management can decide if it
desires to include these in “Management Charter of Demand” or
“Management Imperatives for Implementation”.
• Share and discuss within the management team the “Management
Charter of Demand” or “Management Imperatives for Implementation”
before handing over to the Union.

There are also enterprises which have been making losses and are either sick
or on the verge of sickness, because of various reasons, though at one time
they were profitable. There could be various reasons for the present situation
which may be transitory or of a long duration and the viability and survival of
the enterprise is at stake. Here the management demand / approach is to limit
/ reduce the existing wage bill, as far as possible, and this is the major issue
while negotiating the Long-Term Settlement. It is not easy negotiating such
settlements for both sides, as the cake is shrinking and the future prospects
dull.

Workers Charter of Demand for LTS

Most trade unions submit a charter of demand to improve terms and

conditions of employment which could cover many items, some of these are
listed below. Most trade unions set up a small committee that prepares this
document, but rarely work out the cost implications of these demands.
Managements do evaluate each of these demands with existing and future
cost implications. In a multi union situation, there can be more than one
charter, unless the unions have reached an understanding amongst them.
However, the settlement on this is on an average financial increase per month
for the duration of the settlement: --
• Revision and increase in grades (higher rates of increment, removal of
efficiency bar, removal of trade test, no upper limit).
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• Revision in Dearness Allowance (higher neutralization rate)
• Revision in Service increments.
• Increase in various monthly allowances plus some new allowances.
• Higher rate of overtime, from the statutory norm.
• Wage advance.
• Canteen subsidy.
• Free / Subsidised transport facility.
• Increase in leave benefit entitlement (Privilege, Casual, Sick, Festival
Holidays) plus increased facility of accumulation / encashment.
• Increase in annual benefits covering leave travel allowance, domiciliary
and hospitalization benefits, annual bonus including ex-gratia.
• Reimbursement of fees / time off for acquiring higher qualification / skill.
• Loan (interest free / subsidised interest).
• Interest free festival advance.
• Celebration of festivals, company day / Founder’s Day.
• Gifts / Sweets at festivals / special occasion.
• Long service awards.
• Increase in uniform, winter wear, monsoon protection, shoes, socks,
towel, and soap.
• Time bound promotion.
• Job Evaluation.
• Indoor / outdoor sports facility.
• Recreation club.
• Holiday homes.
• Financial compensation to individuals desiring to resign on health
ground.
• Financial benefit to family of deceased employee, including employment
to a family member.
• Increase in retirement age.
• Improvement in benefits on retirement covering, provident fund,
gratuity, superannuation, medical.
• Training for employees’ children.
• Recruitment of employee’s children.
• Limiting the numbers of temporary, casuals, trainees, apprentices, fixed
term contract, contract workers and absorption as permanent.

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 • Time off for union office bearers and committee members.
• Separate transport facility for union office bearers.
• Deduction of membership fees through check off system.
• Reduction in duration of the period of the long-term settlement.

Interests of Parties in Negotiations

Once both sides i.e., Management and Unions have received each other’s
Charter of Demand, both sides need to understand each other’s interests and
expectations in the negotiations. The interest of the workers represented by
workers’ organization in negotiations is to try and improve the terms and
conditions of employment of the workers by bargaining increase in wages;
benefits which are higher compared to the last settlement and are preferably
higher than what others in the region have achieved, at the same time
ensuring uninterrupted continuity of employment. As for the Management the
interest is to ensure that the improvement in the terms and conditions of
employment conceded to the workers by agreeing to increase in wages can be
offset against improvements in productivity, quality and delivery and the
benefits can be sustained without in any way adversely affecting the
operations of the company and there are uninterrupted improvements not
only during the period of negotiations, but also during the currency of the
agreement and after.

Perception of Parties in Negotiations

The perception of the parties in negotiations for each other will differ from
organization to organization and is dependent on the following
(i) Past history of management - union / worker relationship,
(ii) History / background / attitude and approach of external and internal
union leaders,
(iii) History / background / attitude and approach of management
personnel in past negotiations.

There are enterprises where the perceptions on either side for each other are
positive and they trust each other, while there are also organizations where
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perceptions on either side for each other are negative and they do not trust
each other. It is desirable for both sides to build a positive climate while
undertaking negotiations, but quite often this is not the situation, hence the
strategies in negotiation will differ depending upon the perceptions. To
effectively work out the strategies in negotiating Long Term Settlements, it is
worthwhile assessing the following: -
• Anticipate union & managements perception on the two charters.
• Anticipate the positions that union & managements are likely to take on
the two charters.
• Each side needs to have a plan to handle the situation, if the other side
adopts deliberate deception, psychological warfare, and positional
pressure tactics. (N.B. This also happens in Negotiations when either
party uses power play as a strategy to achieve its end goals).
• Union and management team must be clear on its terms of reference
and boundaries.
• Have a best alternative/fall back by each side if there is no agreement.
• Identify who communicates to the rank and file if the enterprise is not
doing well and also areas and issues which unions avoid communicating.
• Cost implications of increase in wages/benefits conceded need to be
viewed in terms of capital cost and how will they benefit the enterprise.
• Each side needs to be clear on intentions and expectations on the
charter of demands.
• Both sides have interest and perception on their charter of demands.
• Have an approach of finding solution, through dialogue rather than
through confrontation as far as possible.

Process of Negotiations

There are enterprises where there are multiple unions, and there are instances
of inter union rivalry amongst the office bearers of the unions. It is worthwhile
talking to the unions and finalizing along with all of them which unions will be
involved in the negotiations. If there is no agreement amongst the unions, it is
advisable to use the office of the labour department of the state or central
government, as applicable and finalize the negotiations in conciliation. There
are situations in enterprises wherein the membership of the unrecognized /
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rival union is such that it can adversely affect the smooth functioning of the
settlement. Management needs to evaluate the situation and work out a
strategy of negotiations in a multi union situation; ideally management should
try and get all the unions on one platform, but sometime this is tough because
of high inter union rivalry, hence signing the settlement in conciliation or / and
getting each beneficiary to sign the settlement is one of the options.

There are enterprises who regularly i.e., every quarter communicate the
business results of the organization to all the employees and also keep the
employees informed of the competition in the market including the enterprises
plans for the future. This regular communication does help in all the
employees being aware of how the enterprise and the industry are performing.
Most enterprises, at times of commencing negotiations for the LTS, do try and
communicate to the worker representatives how the enterprise and its
competitors are performing, and what is the present wage structure of the
employees in comparison to the industry cum region practice. If this
communication has been preceded by regular quarterly communication, then
the communication has higher acceptability by the workers and their
representatives.

There are enterprises where both parties before commencing negotiations for
the Long-Term Settlement sign a Code of Conduct for smoothly and speedily
carrying out the discussions / negotiations and agree to the following
• All discussions will be done across the table keeping in view that the
harmonious industrial relations are not disturbed.
• Union and Management will not go for any stoppage of work or any
pressure tactics during the course of discussion till the final signing of
the settlement.
• No person will make any personal comments / allegations during the
discussion.
• In the interest of smooth negotiations, the discussions shall be kept
confidential and shall not be revealed to any outsider/ employees till the
final settlement is reached. However, in case there is breakdown of
discussions or just before signing the final agreement the parties may
discuss the matter with their colleagues.

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 • Both the parties shall nominate their spoke persons, so that the
statements of their spokesperson only shall be treated as authentic.
• Both the parties shall carryout and finalize the settlement in expeditious
manner.
• The terms and conditions of the Final Settlement signed between the
parties will only be the valid and bounded document for both the
parties.

The process of Collective Bargaining “is a democratic process for

institutionalized interaction between the union as representatives of the
constituency of employees in the organization and the management team
authorized to negotiate and settle on behalf of the owners of the organization,
for the continuous resolution and settlement of issues”. It is a give and take
approach. It is worthwhile setting certain deadlines by which negotiations
need to be completed and festivals help in setting these deadlines. There are
certain demands on either side, where there are no easy solutions. In such a
case it is advisable to “agree to disagree and proceed further” rather than
dragging the negotiations. Sometimes certain disagreements are referred to
adjudication or voluntary arbitration. Some Dos’ that need to be complied in
negotiating Long Term Settlement is given below.

• Before sitting for negotiations, information and data compilation needs

to be done on either side.
• Copy of charter to be available and read by both sides.
• Firming up of negotiating team with specific names.
• Negotiating team representing management should have line personnel
besides HR and Finance personnel.
• Understand what you desire to achieve and pursue it.
• Check progress and agenda, coverage of all the points.
• Listen and understand.
• Be in control – take breaks if you think the outcomes are becoming
confused.
• Have discussions on facts.
• Keep notes on areas of agreement, disagreement, points kept pending,
points dropped (memory is short).

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 • Need for one-to-one meeting, at times to resolve deadlock.

Some Don’ts that needs to be complied in negotiating Long Term Settlement

are given below

• Don’t get into an ego conflict.

• Don’t lose focus on the larger issues and get side-tracked.
• Don’t hesitate to ask questions and clarify issues.
• Don’t lie or abuse trust (speak facts fully).
• Don’t hesitate to change and revising stance if it is needed to get an
agreement

Conclusion

In negotiations, everybody mentions that try to achieve a win-win situation by

trying to enlarge the cake. There are a large number of enterprises where the
market for the product / services is under tremendous competition and the
margin of profit diminishing, the challenging situation in negotiations in this
case is that the cake is shrinking and how to negotiate to achieve a turn-
around for the enterprise, which also at times involves reduction of the total
workforce.

* President, Industrial Relations Institute of India (IRII), Former Sr. Specialist on Employers’ Activities
for South Asia with International Labour Organization (ILO) and Former Corporate Head of HR of
Novartis India Ltd. and ACC Ltd. E-mail: rajenmehrotra@gmail.com

(Published in Current Labour Reports and Industrial Relations Institute of India (IRII) Journal Arbiter –
October 2013 issue.)

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 Outstanding Industrial Relations (IR) Practices
of National Award-Winning Enterprises 2020- 21
The All-India Organization of Employers (AIOE)
Dr. Rajen Mehrotra*
--------------------------------------------------------------------------------------------
Introduction

The All-India Organization of Employers’ (AIOE), set up in 1932, is an allied

body of the Federation of Indian Chambers of Commerce and Industry (FICCI),
Delhi. With a view to promote effective Industrial Relations practices in India,
AIOE offers National Awards for Outstanding Industrial Relations (IR) Practices
every year to the deserving organizations, a tradition it has been following
since 1982.

AIOE invites applications, to be submitted in a specified format, from

organizations operating in India, in any sector. This year the applications were
invited under four categories:

a) Large Enterprises – Manufacturing Sector

b) Medium Enterprises – Manufacturing Sector
c) Large Enterprises – Service Sector
d) Medium, Small & Micro Enterprises (MSME) Sector.

The participating organizations compete regionally at first and nationally later

on. Organizations, who make the grade in the region-wise rounds, qualify to
compete for the National Award. In 2020 and 2021, due to COVID-19
pandemic, both the regional and the national competitions were held online.
In 2022, however, the competition was held offline, as per the normal practice,
and the final round was completed at New Delhi on 27 December 2022.

Fourteen organizations qualified under the four categories to compete at the

national level for the 2020 - 21 Award:

a) Large Enterprises – Manufacturing Sector

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 • Ashok Leyland Limited
• Hindustan Petroleum Corporation Limited
• Hindustan Unilever Limited
• ITC Limited -- Agro Business Division
• Larsen & Toubro Limited – Vadodara Plant
• PGP Glass Private Limited
• TVS Motor Company Ltd

b) Medium Enterprises – Manufacturing Sector

• Harrisons Malayalam Limited
• J.K. Lakshmi Cement Limited
• Toyota Industries Engine India Private Limited

c) Large Enterprises –Service Sector

• Balmer Lawrie & Company Limited

d) Medium, Small & Micro Enterprises (MSME) Sector.

• Cosmos Impex Private Limited
• MIVIN Engineering Technologies Private Limited
• K Industries Private Limited

All the fourteen organizations had submitted their write-ups in the prescribed
format. The Teams, representing the fourteen organizations, which, in some
cases, included even Trade Union office-bearers, made presentations to the
three-member jury in New Delhi on 27 December 2022. As could be expected,
all the fourteen organizations could boast of several achievements in respect
of effective Industrial Relations practices. The achievements were highlighted
both in their writeups and in their presentations to the jury members.
Clarifications sought by the jury members were duly provided by the Teams.

The following organizations were declared as ‘Winners’:

a) Large Enterprises – Manufacturing Sector -- TVS Motor Company
Limited
b) Medium Enterprises – Manufacturing Sector -- Harrisons Malayalam
Limited
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 c) Large Enterprises – Service Sector – Nil
d) Medium, Small & Micro Enterprises (MSME) -- MIVIN Engineering
Technologies Private Limited

Winners were chosen based on the challenges the organizations had handled,
the write-ups they had submitted and the presentations they had made to the
jury members on 27 December 2021.

The Winning Teams received their Awards from Ms. Arti Ahuja, Secretary,
Ministry of Labour & Employment, Government of India during the Annual
General Meeting of AIOE held in New Delhi on Tuesday 27 December 2022.

The attached Annexure contains details of the unique Industrial Relations

Practices of the three Winners.

Conclusion

General Observations
• All the three organizations are located in South India, and they belong to
the Automobile, Automotive Component Manufacturing and Plantation
Sectors of the Indian economy.
• All the three organizations largely engage local workforce.
• All the three organizations have their own manufacturing Plants. The
company in the Plantation Sector is more than 150 years old.
• What is particularly characteristic of all the three organizations is their
sincere endeavour to involve workers and their unions, through ongoing
communication, to create a climate of peace and harmony, indeed a
positive contribution to Industrial Relations. Obviously, this calls for
presenting company’s point of view on one hand and understanding
workers’ point of view on the other.

Outstanding Practices

Here is a brief account of the innovative practices adopted by the three

organizations:
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a) TVS Motor Company Ltd, Winner under the Large Enterprises –
Manufacturing Sector, has clearly spelled out its IR policy and has done
pioneering work in Employee Engagement through quality movement. TVS
Motor Company Ltd was the ‘World’s First Two-Wheeler Company’ to win
the coveted Deming Award in 2002. In keeping with its 5S culture, the
company has moved from using Dark Blue Uniform to Light Sky Blue, and
has presently adopted White Uniform for all its employees. For an
Engineering Manufacturing company, White Uniform is indeed a powerful
display of its 5S Culture.

b) Harrisons Malayalam Limited, Winner under the Medium Enterprises –

Manufacturing Sector, can boast of 24 Estates, in the States of Kerala and
Tamil Nadu, which are plantations for Tea, Rubber, Cocoa, Coffee, and a
wide variety of Spices. The Company has eight rubber factories and twelve
tea factories, operating in the estates, to process the harvested crop.

The Company has to deal with 32 Trade Unions, whose members comprise
of 290 Staff personnel, 8000 Permanent workers, and 12OO Temporary and
Casual workers. Most of the workers reside in the estates themselves. The
company has a Joint Labour Management Committee and an effective
Grievance Redressal Forum to promote healthy Industrial Relations
practices. Also, the Company follows an Open Door Policy and provides
direct access even to the company’s Chief Executive to redress grievances
of any kind.

c) MIVIN Engineering Technologies Private Limited, Winner under the

Medium, Small & Micro Enterprises (MSME), provides opportunities for
transfer within Bosch to employees with more than 3 years of service with
the company. This facility is in keeping with the growth aspirations of the
present generation of employees and has helped in building a positive IR
climate in the Company.

Additional Insights

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Our analysis of the three organizations has thrown up several other useful
insights. All the three organizations operate welfare schemes and have viable
operations and effective communication channels, open to all their employees.

Needless to say, that a study of the IR practices of the three award winning
companies should prove to be very valuable to IR practitioners and students
alike, especially to executives entrusted with the task of improving Industrial
Relations in their organizations. The study is bound to evoke several newer
ideas for application in future situations, which are likely to be far more
challenging. Old ideas and past solutions won’t do any more. We require bold
new thinking and fresh, advanced strategies. Exchange of views and
experiences, which is the primary aim of this article, is sure to yield the results
we seek.

* Past President of Industrial Relations Institute of India (IRII), Former Senior Employers’ Specialist
for South Asian Region with Internation.al Labour Organization (ILO) and Former Corporate Head of
HR with ACC Ltd. and Former Corporate Head of Manufacturing and HR with Novartis India Ltd. E-
Mail: rajenmehrotra@gmail.com
Published in February 2023 issue of Current Labour Reports & Arbiter.

Annexure
Industrial Relations Practices of the Award-Winning Enterprises

I. Industrial Relations at TVS Motor Company Ltd

TVS Motor Company Ltd, which was set up in 1980, has a total of seven Plants
in two different countries, India: Hosur - Tamil Nadu (4), Mysuru – Karnataka,
Nalagarh – Himachal Pradesh and Indonesia: Karawang – Jakarta. The Plants
manufacture both two-wheelers and three-wheelers.

TVS Motor Company Ltd Employee Relations Policy:

“We believe that good Employee Relations (ER) is fundamental to the company
in achieving its business goals and that ER extends beyond just compliance
management and collective bargaining.

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We shall uphold the tradition of TVS by being an equal opportunity employer,
nurturing harmonious and productive Employee Relations. Fostering enduring
industrial peace, a sense of belonging as one family and a culture of high
quality and productivity are the three pillars on which this policy shall stand.

We shall achieve these by:

• Strengthening mutual trust between the Management and the Union and
employees, through open and free communication with shared goals
• Caring for the wellbeing of the employees and their families
• Developing the capabilities of each employee by harnessing the potential
• Commitment to Corporate Social responsibility for the community”.

Salient tenets for congenial and peaceful Industrial Relations:

• Right selection with effective Induction and Onboarding practices. This
involves (i) Heterogeneous groups – Region, Religion, Language and
Demography, (ii) Arduous tests - Written, Dexterity, Interview, (iii) Pre-
Employment Medical Assessment, (iv) Psychiatric/ Psychometric Evaluation
and (v) Antecedent Verification Dossier.

• Conducive work environment involves (i) Green Environment with Advance

5S Standards, (ii) Good work place ambience, (iii) Simplification and
improvement of jobs to make them user-friendly, (iv) Ergonomically designed
layout, (v) Fatigue removal and (vi) Safe work environment.

• Fair & Firm Treatment involves (i) Wage increases and Benefits through
periodic long-term settlements, (ii) Payment of Plant Performance Incentive,
(iii) Payment of Bonus/Ex-gratia, (iv) Performance Evaluation and (v) Career
Progression and beyond

• Sound Union Leadership, through (i) One Union–One Industry’ Concept,

Affiliation to INTUC, (ii) Internal Leadership involving Leadership Training
programs, (iii) Union Committees – OBs and CMs and (iv) Participation in
Management through these committees on matters relating to Canteen,
Welfare, Works, Safety, Literary, Transport, Sports & Recreation

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• Good Shopfloor Interface by (i) Training Supervisors in People Management
and (ii) Training Workmen in Interacting with Supervisors.

• Extended Enterprises Support by (i) Support during Crisis Situation, (ii) Visit
suppliers and service providers for Guidance, (iii) Share best practices for
Mutual Benefit, (iv) Facilitate ‘collective bargaining’ Culture

• Influence Group Management through (i) Enhancing competency of

members of ER team and nurturing professional skills, (ii) Group companies’
Participation provides broader platform, (iii) Sharing best practices to
Synergize thoughts and actions on ER, (iv) Eminent speakers from Academia
and Industry, (v) Coverage of contemporary and dynamic Topics in ER and (vi)
Implementation of learnings of Gemba Kaizen.

• Role of Line Managers in Grievance Redressal by (i) First touch point being
near to source, (ii) Lead by Example in walking the talk, (iii) ‘Learn to Lead’
Program for Line Managers, (iv) Motivators for better performance, (v)
Facilitator for Kaizen activities, (vi) Trainer, Counsellor, Mentor, (vi) Empathy –
Wearer only knows where the shoe pinches, (vii) Promote Values and Culture

Skill Development
Company places a very high emphasis on skill development. To achieve skill
enhancement, six man-days training per workman per year is mandated.
Employees are also sponsored for external training programs.

Company runs an Institute for Quality & Leadership (IQL), set up on a Lush
Green Campus of 72 acres, where 250 employees are imparted training every
day. The programmes include (i) Skill enhancement training for employees, (ii)
Competency enhancement training for Executives & Managers, (iii)
Experiential Learning, (iv) Leadership Program for Senior Management and (v)
Training for Service Providers and Suppliers.

Employee Engagement Initiatives

To assist people to imbibe Company’s values and culture, the Company
organizes: (i) Parents Contact Program (PCP), (ii) Employees Contact Program

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(ECP), (iii) Newly Married Employees Program (NMEP), (iv) ‘Together We Can’
Diploma Holders Engagement Program (DHEP) and (v) Periodical Counselling.

Total Employee Involvement (TEI)

TEI is a philosophy which upholds that all employees are responsible for what
they do and that everyone is to pursue excellence in their individual jobs. TEI
promotes Employees’ voluntary participation in improvement activities across
the organization. Company’s work environment encourages employees to
participate actively in the day-to-day operations towards realizing the goals
and the mission of the organization

All these measures have resulted in (i) Continuous improvement in Quality,

Productivity, Waste Elimination and Cost Reduction at the Shop Floor, (ii)
Submission of 1.7 million Suggestions by Shop Floor Employees Year to Date
(YTD), (ii) New Products Innovation through’ Research & Development and (iii)
Filing of more than 1,000 patents by company Engineers.

Family Concept and Sense of Belonging

This Scheme involves (i) Companywide celebrations on Republic Day, Sports
Day, Founder’s Day, Environment Day, Independence Day, Pooja Day, etc., (ii)
Career Guidance Camps for children, (iii) Visiting ailing employees, (iv)
Importance of regular attendance and counselling, (v) Assistance in school
admissions, (vi) Help in crisis, and (vii) Organizing Ambulance in an emergency.

Diversity and Inclusivity

Company has promoted employment of Women in all sections of the plant.
Towards this end, Company has ensured (i) A conducive and friendly work
environment, (ii) ‘Home Away from Home’ – Enclave facility, (iii) Pick up and
drop at doorstep facility, (iv) Women Resource Group, and (v) Women
Leadership Development programs.

Company has also consciously inducted Persons with Disability (PwD), and has
worked out Framework on Engagement. A mapping exercise is undertaken in
reference to Persons with Disability.

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Multi-directional Communication Channels
Upward Channels include (i) Monthly Union meeting with the
Director & CEO, (ii) Monthly Plant level Union Committee meetings, (iii)
Canteen Committee, (iv) Safety Committee, (v) Open door policy and (vi)
Suggestion Scheme.
Downward Channels include (i) Monthly Address by the Director & CEO, and
by the Union President, (ii) Daily Sunrise Meetings, (iii) Circulars/Notices, (iv)
Quarterly In-house Journals and (v) Chairman’s Address to employees and
families.
Horizontal Channels include (i) Employees’ Contact Program (ECP), (ii) Parents’
Contact Program (PCP), (iii) Newly Married Employees’ Contact Program
(NMEP), (iv) Together We Can – Program for Diploma Engineers, and (v)
Connect with the Leader Program.

2. Industrial Relations at Harrisons Malayalam Limited

Harrisons Malayalam Limited (HML), an organization more than 150 years old,
has 24 Estates of Tea and Rubber plantations, spread across the States of
Kerala and Tamil Nādu. Eight rubber factories and twelve tea factories have
also been set up at the Estates to process the harvested crops. Company’s
workforce consists of 170 Executives, 290 Staff personnel, 8000 Permanent
workers, and 12OO Temporary and Casual workers. But for the Executives, all
the employees are members of one or the other of the 32 Trade Unions.

Innovative Measures taken by the Company with regard to IR:

a) A Joint Labour Management committee
b) Setting up of a Grievance Redressal Forum to prevent industrial disputes
c) Open Door Policy, including direct access to the Chief Executive of the
Company, to resolve grievances of any kind.

Initiatives taken by the Company for Employees' Training and Skill

Development:
a) Technical Training under Pradhan Mantri Kaushal Vikas Yojana (PMKVY)
and Soft Skills Training by Dattopant Thengadi National Board for
Workers Education and Development (DTNBWED) and External Trainers.
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 b) Training on Mechanical Harvesting and Tapping Standard Improvement
Training by Rubber Skill Development Council etc.
c) Technical Training by Tea Board and Rubber Board for improvements in
Productivity.
d) Health and Hygiene Training by the Medical Team.

Details of Grievance Machinery at various levels for Redressal of Grievances

of Workers:
a) A Joint Labour Management Committee - at Estate Level.
b) Open Door Policy. Employees, having any grievances with regard to their
work, estate management etc., can raise such issues under this policy.
The Management Committee shall address their concerns.
c) Unlimited Access of all women to the ICC set up by the Company.
d) Direct access to Top Management for raising any grievance or concern.

Works Committees/Sub Committees:

a) The primary committee in the Estate at division level is the Joint Labour
Management Committee (JLMC). It consists of nominated members
representing workers and management.
b) Internal Committee - Formed under Sexual Harassment of Women at
Work Place (Prevention, Prohibition and Redressal) Act, 2013. The
committee has been formed to redress complaints of employees with
regard to sexual harassment.
c) Safety Committee - This committee is formed to address the concerns of
safety at workplace and to prevent accidents. Periodic training is given
to the members of the Committee and workers.

Initiatives taken by the Company to promote Workers’ Participation in

Decision Making Process:
A Joint Labour Management Committee (JLMC), consisting of nominated
members from workers and management. The Committee will jointly discuss
matters concerning production, employee wellbeing and grievances, if any.

Systems adopted for Effective Communication and Creating Awareness

regarding Goals, Targets and Company Performance:

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JLMC, TQM, Face-to-face Communication and Weighment shed Meetings are
effective communication forums in the Company to reach out to all employees.
This method of communication is effective, as it is one-to-one communication.

3.Industrial Relations at MIVIN Engineering Technologies Pvt Ltd.

MIVIN Engineering Technologies Private Limited is engaged in manufacturing

and selling of Hydraulic Gear Pumps and Motors, involving hydraulic
applications in tractors, industrial power packs, scissor lifts, earth-moving
vehicles, etc., for domestic and export market. The company has 394
employees (Executives – 77, Direct Permanent Workmen – 104, Contractual –
46, NEEM Trainees – 92, Fixed Term – 75). The company has one recognized
Trade Union (i.e., Karnataka Workers’ Union affiliated to CITU with 97
Unionized workforce).

Welfare and other Measures undertaken by the Company to Improve

Industrial Relations:

a) Flexible Web-Based Training on Mandatory Topics

b) Patents and Trademarks for Innovations in Bosch
c) Transfer Opportunities within Bosch after 3 years of service
d) Company-provided SIM for official purposes
e) Online Leave Management through a Connected Platform
f) Free Transport Facility for all employees
g) Canteen Facility at subsidized costs
h) Safety Shoes for all Employees every year
i) Leave Encashment – 100% of Gross Pay
j) Term Insurance over & above CTC.

At the outbreak of COVID-19, Company upgraded the Insurance Coverage for

all employees:
a) Insurance Coverage was enhanced from INR 2 Lakhs to INR 5 Lakhs, to
cover all expenses related to COVID-19.
b) Term Insurance in case of death of an employee – 60 times the Basic
Salary.
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 c) The entire premium was fully paid by the Company.

Workers’ Participation in Decision Making Process:

a) Creation of Committees comprising of Executives and Blue-collared
Employees to take decisions with regard to daily operational
requirements, Safety Committee and Canteen Committee matters.
b) In addition, active participation of all the Blue-collared Employees in the
Technical Project Implementations in the manufacturing process, such as
cycle time study, Man-Machine chart, Ergonomic and other Industrial
Engineering studies, etc.
c) All the Union office-bearers are kept informed of the happenings in the
Company and are encouraged to provide suggestions for any major
process changes, modifications, etc.

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 Zero Tolerance of Sexual Harassment at the Workplace

Dr. Rajen Mehrotra*

--------------------------------------------------------------------------------------------
Sexual harassment has been a societal issue, and this also has a repercussion
on organizations where women and men work. When one interacts at the
work place with women and men to gather information about their experience
on this topic, it is mostly the women who mention that they had some
unpleasant experience, at certain stage in life, which could have also involved
eve teasing by some persons not necessarily at the workplace. With increasing
number of women entering the labour market in the organized sector, sexual
harassment cases are increasingly coming to light, with some cases being
reported by the media and also presently the younger age women being bold
in bringing forward the cases to the management of the organization and not
remaining silent. The media in India has played a major role in highlighting
certain cases of sexual harassment involving high ranking individuals in
organizations / society. Organizations need to ensure building a work culture
where there is respect and dignity of every individual, female or male that
comes to work and hence the need to ensure not only prohibition but
prevention including an effective method of redressal of sexual harassment at
the workplace, hence the need to have a policy on zero tolerance. There are
enterprises which presently specify a formal dress and behaviour code for all
the employees at workplace, so as to prevent occurrences of sexual
harassment cases. Also, organizations presently have much more social
evenings so that women and men employees can have fellowship, at the same
time there is need to draw the fine line between fun and compliance of zero
tolerance of sexual harassment even at the fun place.

Since there was no specific law on Sexual Harassment in India, The Vishaka v/s
State of Rajasthan Supreme Court Judgment of 13 Aug. 1997 which defined
sexual harassment and laid down guidelines of setting up a complaints
committee in the enterprise on handling cases of sexual harassment, became
the law, till a law on Sexual Harassment was enacted by the country’s
parliament. Practically all Public Sector Undertakings had set up the complaints
committee after this judgment, but many Private Sector enterprises had not
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set up the complaints committee, as mentioned in the Vishaka judgment. The
Lok Sabha in India on 09 Sept. 2012 passed the bill on The Sexual Harassment
of Women at Workplace (Prevention, Prohibition and Redressal) which became
an Act on 22 April 2013. The notification of the Rules on 09 Dec 2013 by the
Ministry of Women and Child Welfare, Government of India on “The Sexual
Harassment of Women at Workplace (Prevention, Prohibition and Redressal)
Act, 2013” has attracted maximum attention by professional bodies, employer
organizations, chambers of commerce, academic institutes and consulting
firms by organizing training programmes / conferences on this topic in various
cities of the country for the benefit of enterprises and their members. In the
last four months (i.e., Dec 2013 to March 2014), I had opportunity to
participate in quite a few of them in the country as a speaker.

The definition of employee under The Sexual Harassment of Women at

Workplace (Prevention, Prohibition and Redressal) Act, 2013 is wide and
covers all persons working at the workplace whether, paid / unpaid / honorary
and engaged for work directly or indirectly and includes contract employees,
contractors, and consultants. As for definition of aggrieved woman under the
said act it is not only an employee, but also covers visitor, customer to the
workplace. Also, the definition of workplace under the said act is wide and also
includes places visited by the employee arising out of or during the course of
employment, including transportation provided by the employer for
undertaking the journey.

The present said Act is applicable to all enterprises in the formal and the
informal sector and to domestic women worker. Enterprises having more than
ten employees must constitute the Internal Complaints Committee (ICC) as laid
down in the said Act for the complaints to be filed by the aggrieved woman
employee. As for enterprises having less than ten employees and also in the
case of domestic women worker the complaint is to be filed by the aggrieved
woman with the Local Complaints Committee (LCC) which is to be set up by the
District Officer in each District. Every enterprise employing more than ten
persons needs to immediately set up the Internal Complaints Committee (ICC).
Under the present Act, the appropriate Government can crack the whip on
establishments not having Internal Complaints Committee (ICC) by prosecuting

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the employer wherein the employer can be fined up to Rs 50,000/- for the first
occasion and on the subsequent occasion fined twice the amount, including
cancellation of the license. The rules framed under the Act provide for an
appeal against punishment to the appellate authority by the aggrieved person,
as defined under the Industrial Employment (Standing Order) Act, 1946. Hence
the labour department of the appropriate Government will get involved when
it comes to the implementation of the Act, though the Act has been framed by
the Ministry of Women and Child Welfare.

We have seen some high-profile cases of sexual harassment at workplace

which have been reported extensively in the electronic and print media
recently. There is a provision under the Act on prohibition of publication or on
making known the contents of complaint and enquiry proceedings known to
anybody and also the contents cannot be obtained under Right to Information
Act, 2005, except details on justice secured by the aggrieved woman without
disclosure of name. Enterprises, including the Internal Complaints Committee
(ICC) members need to follow this because failure to comply can lead to a
recovery of Rs. 5,000/- as penalty from the individual by the enterprise as per
the rules of the Act.

The present Act is not gender neutral; it only deals with complaints of sexual
harassment of women at workplace, hence the complaints to be entertained
under the Act are of an aggrieved woman against a respondent. It does not
cover cases of sexual harassment of man at workplace, where the respondent
can be man or woman. Most enterprises desire to have a gender-neutral policy
on sexual harassment at workplace. Also, enterprises need to ensure that the
members of the Internal Complaints Committee are appointed as per the Act.
Also, as per the Act the Internal Complaints Committee has the same powers
as are vested in a civil court under the Code of Civil Procedures, 1908 (5 of
1908) with reference to summoning attendance of any person and examining
the person under oath and production of documents. Also, the Internal
Complaints Committee needs to ensure that the enquiry is completed within
three months.

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Attached is a model draft of a company policy i.e., “Zero Tolerance of Sexual
Harassment at the Workplace” which is gender neutral. This model draft is
based on some of the drafts presently prepared and being circulated by some
of the law journals and some lawyers and is in line with The Sexual Harassment
of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and
the Rules made there under which are in force from 9 December 2013 and will
be helpful for enterprises. Every enterprise needs to have a policy on zero
tolerance of sexual harassment at the workplace, ensure that the policy is
made available to each employee, and an acknowledgement obtained, if there
are any amendments to the policy, all the employee be kept informed about
the same.

Model Draft

COMPANY POLICY ON ZERO TOLERANCE TO SEXUAL

HARARASSMENT AT THE WORKPLACE

1. TITLE AND COMMENCEMENT:

This Policy will be called (X Y Z company) on zero tolerance to sexual
harassment at the workplace and shall come into force with immediate effect.

2. SCOPE:
This Policy shall apply to all persons employed at the workplace for any work of
regular, temporary, ad hoc or daily wage basis, directly or through an agent /
contractor, including persons working on a voluntary basis and also
apprentices, trainees, probationers, agent, including consultants of the
Company.

3. OBJECTIVE:
The Company firmly believes that every employee has a right to work in an
environment free from harassment, intimidation or offensive behaviour and
issues of harassment will be resolved without fear of reprisal. The Policy is
designed to take effective measure to prevent, prohibit, sexual harassment
and have the mechanism to redress cases of sexual harassment and impose
punishment for those responsible for sexual harassment.
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4.POLICY:
Harassment in any form will not be permitted or tolerated or condoned by the
Company whether it is based on a person’s race, colour, ethnic or national
origin, gender, real or suspected sexual orientation., religion or perceived
religious affiliation, disability or other personal characteristics.
The use of Company property including e-mail, Bulletin Boards or any
document as a vehicle for harassment is prohibited.

5. PROHIBITION OF SEXUAL HARASSMENT:

No employee shall engage in Sexual Harassment.

6. MEANING OF SEXUAL HARASSMENT AND SEXUALLY ORIENTED

BEHAVIOUR:
‘Sexual Harassment’, includes any unwelcome sexually determined behaviour,
direct or by implication, and includes physical contact and advances, a demand
or request for sexual favours, sexually coloured remarks, showing
pornography, any other unwelcome physical, verbal or nonverbal conduct of a
sexual nature. Sexually Oriented behaviour shall mean and include but not
limited to the following:
Material that is sexual in nature, sexist, sexually explicit and so on and is
displayed in the workplace, circulated, or put in someone’s workspace or
belongings, or on a computer, i-pad, mobile phone, i-phone, blackberry or on
any other machine or on the internet or any other public display system or
public place in the work premises.
Verbal abuse or comments that put down people because of their sex.
Comments about people’s (women/men) bodies.
Tales of sexual exploits
Graphic descriptions pornography
Pressure for dates
Sexually explicit gestures
Unwelcome touching and hugging
Sexist and insulting remarks
Sexist jokes and cartoons
Displaying pornography in the workplace
Insisting that workers wear revealing clothing

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 Inappropriate gifts
Discussion of one’s partner’s sexual life
Lewd and threatening letters
“Accidentally” brushing sexual parts of the body
Pressing or rubbing up against an aggrieved person
Indecent exposure
Subtle or overt pressure for sexual favours
Soliciting sexual services
Demanding sexual services
Sexual or physical contact, such as kissing or touching
Intrusive questions about sexual activity
Sexual assault
Repeated sexual invitations when the person invited has
refused/ignored similar invitations
Coerced sexual intercourse (e.g., as a condition of employment or
academic status)
“Sexual Harassment” should not be confused with simple friendly behaviour if
these are mutually desired and accepted. The difference between friendly
behaviour and sexual harassment is that sexual harassment is an unwelcome
act.

7. PREVENTION OF SEXUAL HARASSMENT

No person shall be subjected to sexual harassment at any workplace
The following circumstances among other circumstances if it occurs or is
present in relation to or connected with any act or behaviour of sexual
harassment may amount to sexual harassment.
• (i) implied or explicit promise of preferential treatment in the persons
employment/promotion; or
• (ii) implied or explicit threat of detrimental treatment in the persons
employment/promotion; or
• (iii) implied or explicit threat about the persons present or future
employment/promotion status; or
• (iv) interferes with work or creating an intimidating or offensive or
hostile work environment for the persons; or
• (v) humiliating treatment likely to affect the persons health or safety.

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8. RIGHTS AND RESPONSIBILITIES OF EMPLOYEES
(1) Every Employee shall be entitled to a work environment with dignity and
free from sexual harassment.
(2) Every Employee shall be entitled to complain against Sexually Oriented
Behaviour to which he/she was subject to or which was targeted at him/her, to
the Internal Complaints Committee or to the Chairperson or any other
Member of the Internal Complaints Committee established under this policy,
as the case may be.
(3) Every Employee shall promptly report any incident of Sexual Harassment
that comes to his/her knowledge to the Internal Complaints Committee or to
the Chairperson of the Internal Complaints Committee or to the Official, if
designated by the Chairperson of the Internal Complaints Committee as the
case may be.

9. THE INTERNAL COMPLAINTS COMMITTEE

The names and contact details of the members of the Internal Complaints
Committee (ICC) is given in Annexure One. The term of office of the Internal
Complaints Committee is for a period of 3 years from today. On the expiry of
the three-year period, the existing members of the Internal Complaints
Committee (ICC) will continue to hold office, till the new Internal Complaints
Committee is constituted. If a member of the Internal Complaints Committee
who is an employee of the company and when she / he cease to be an
employee of the company then she/he will also cease to be a member of the
Internal Complaints Committee.
The Internal Complaints Committee will cover all the factories and offices of
the company in India.

10. POWERS AND DUTIES OF THE INTERNAL COMPLAINTS COMMITTEE

The Internal Complaints Committee will receive the complaints on sexual
harassment; enquire into the complaints, conduct the enquiry and submit the
findings on the complaint

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11. COMPLAINTS PROCEDURE
Any employee will have a right to lodge a complaint concerning sexual
harassment against an employee.
Such a complaint needs to be in writing.
If the complaint is oral, the same needs to be in writing. The
complainant, if desires could be facilitated in writing the complaint by an
Internal Complaints Committee member.
The Complainant will be afforded confidentiality on the complaint by the
Internal Complaints Committee members.
Immediately upon receipt of the Complaint, the Member of the Internal
Complaints Committee to whom the Complaint is made shall communicate the
same to the Chairperson of the Internal Complaints Committee
Within a period of 5 working days from the date of such communication,
the Chairperson shall convene a meeting of the Internal Complaints
Committee.
The Internal Complaints Committee shall examine the complaint and
shall undertake investigation of the complaint after giving opportunities to the
complainant to present his /her case and the respondent to give his /her
version. The Internal Complaints Committee may examine witness from both
the sides and also give opportunity of cross-examining of the witness.
Documents if any produced by the parties may be taken on record. Neither the
complainant nor the respondent is allowed to bring in any legal practitioner to
represent them in their case at any stage before the Internal Complaints
Committee. The Internal Complaints Committee on completion of the inquiry
will submit its report to the complainant, respondent and the company
management. The Internal Complaints Committee shall enquire into the
complaint as prescribed under The Sexual Harassment of Women at Workplace
(Prevention, Prohibition and Redressal) Act, 2013 and the Rules made there
under as in force from 9.12.2013.

12. PROTECTION AGAINST VICTIMISATION:

In the event complainant being an employee and the respondent being his/her
manager, during the pendency of investigation and even after such
investigation if the manager is found to be guilty, the respondent shall not act
as Manager of the Complainant.

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13. CONSEQUENCE OF COMPLAINT BEING PROVED:
In the event allegations made in the complaint are proved against the
respondent, it will be taken as proved misconduct and the competent
authority may impose any of the punishment as envisaged in the policy on
disciplinary process including dismissal.

14. CONSEQUENCE OF FALSE COMPLAINT:

In the event allegations made by the complaint are proved to be false then the
competent authority may impose any of the punishment as envisaged in the
policy on disciplinary process including dismissal.

15. OBLIGATIONS OF THE MANAGEMENT:

The Management of the Company shall provide all necessary assistance for the
purpose of ensuring full effective and speedy implementation of this Internal
Complaints Committee constituted as above and shall implement the decisions
in an expeditious manner.

16. THIRD PARTY HARASSMENT:

In case of third-party Sexual Harassment, the Internal Complaints Committee
will actively assist and provide all its resources to the complainant in pursuing
the complaint.

17. SAVINGS:
The proceedings under this policy shall not be stalled or postponed merely
because the complainant is proceeding against the respondent under any
other provision of civil or criminal law.

Dated ________
Signature________________________

Place__________
Name__________________________
Designation: Managing Director /CEO

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 Annexure One
Name and Details of the Internal Complaints Committee Members

Srl.No Name Designation Company

Employee / External Person Contact Address & E-Mail Tel. Number &
Mobile Number
1 Ms Presiding Officer Company
Employee
2 Ms Member Company
Employee
3 Mr./Ms. Member Company
Employee
4 Mr./Ms. Member External Person

Dated ________
Signature________________________

Place__________
Name__________________________
Designation: Managing Director / CEO

N.B. The policy is in line with The Sexual Harassment of Women at Workplace
(Prevention, Prohibition and Redressal) Act, 2013 and the Rules made there
under as in force from 9.12.2013.
________________________________________________________________

* President, Industrial Relations Institute of India (IRII), Former Sr. Specialist on Employers’ Activities
for South Asia with International Labour Organization (ILO) and Former Corporate Head of HR of
Novartis India Ltd. and ACC Ltd. E-mail: rajenmehrotra@gmail.com

Published in Current Labour Reports & Arbiter April 2014 issue.

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 CV – Dr. Rajendra Nath Mehrotra
Dr.Mehrotra was Non – Executive Independant
Director on the Board of Swiss Multinational -
Novartis India Ltd. from 2000 to 2020 (i.e.20 years) .
He was the Employers’ nominee on the Board of
Governors of National Safety Council (2013 to 2018).

Dr. Mehrotra’s last assignment was Human Resource

(HR) Consultant with Ministry of Health, Government
of Timor – Leste from 2011 to 12. (NB Timor Leste
was a country born in 2002)

Dr. Mehrotra has over five decades of industrial , academic , international civil
service and consulting experience . He has worked in various management
positions with Swiss Multinational Holcim’s Indian Cement Company ACC
Ltd.(2007-11) , Swiss Pharma Multinational Novartis India Ltd. (1985-2000)
and Indian Mini Steel Plant & Engineering Company Mukand Ltd. (1970 -76
and 1982-85) . In his corporate career he has experience of working in the
functions of Industrial Engineering, Industrial Relations, Human Resource
Development, Maintenance, Manufacturing, Projects, Supply Chain,
Occupational Safety Health & Environment and General Management . He has
been a member of the Top Management Team of both Novartis India Ltd. &
ACC Ltd. which took policy decisions.

Prior to joining ACC Ltd. Dr Mehrotra was an International Civil Servant for
seven years (2000-07) with the United Nations International Labour
Organization (ILO) as Senior Employers’ Specialist for South Asian Region
covering seven countries (i.e. Afghanistan, Bangladesh, India, Iran, Nepal,
Pakistan and Sri Lanka).

Dr Mehrotra sandwiched his corporate career for 6 years (1976-1982) as a full

time faculty member with National Institute of Industrial Engineering (NITIE),
Mumbai (now called Indian Institute of Management, Mumbai ) . He was
Professor and Head of Production Management and Dean of the Post
Graduate Diploma in Industrial Engineering (PGDIM) at the time of leaving .

Dr Mehrotra was a visiting faculty for the Post Graduate Programme of

Management teaching Quantitative Methods, Operations Research,
Perspective Management , Production Management, Materials Management
at Jamnalal Bajaj Institute of Management Studies (JBIMS) , Mumbai for 24
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years (1972 to 1996) . In 2008 , 2009 & 2010 he was a visiting faculty at S P Jain
Center of Management Dubai & Singapore on “Employee Relations &
Legislation” for their Global MBA Programme. From 2007 to 2019 & 2021-24
he was a visiting faculty at Tata Institute of Social Sciences (TISS) Mumbai
teaching “Corporate Governance and Ethics ” for their Masters Programme in
Human Resource Management & Labour Relations . He was a visiting faculty
teaching the subject of “Industrial Relations & Labour Laws ” as part of
compulsory / elective subject for the Post Graduate programme at IIM Udaipur
(2016 to 24 ) , IIM Shillong (2017 to 23) , IIM Indore (2018 & 2022), IIM
Sirmaur (2019 to 22), IIM Kozhikode (2020), IIM Sambalpur ( 2022-23) and IIM
Tiruchirappalli (2022 – 24). He was a visiting faculty teaching the subject of
“Business Ethics, Corporate Governance & Environment” to the MBA
programme at IIM Sirmaur in 2020 , 2021 & 2022 and at IIM Jammu in 2021.

Dr Mehrotra from July 2011 every month writes on the topic of Industrial
Relations & Human Resource Management in the monthly publication Current
Labour Reports (Publication dealing with latest Supreme Court & High Court
Judgements on Labour Laws). From 2013 he has been a retainer consultant on
Industrial Relations and Corporate Governance to some leading companies in
India and has been conducting training programmes for various companies .

Dr. Mehrotra, holds a Dual Honours Degree in Electrical and Mechanical

Engineering from Victoria Jubilee Technical Institute (now called Veermata
Jijabai Technological Institute) , University of Mumbai and holds a Masters in
Management Studies (MMS) and a Ph.D Degree from Jamnalal Bajaj Institute
of Management Studies (JBIMS) , University of Mumbai. He also holds a Post
Graduate Diploma in Industrial Management from Research Institute of
Management Science ( RVB) , University of Delft, The Netherlands (now called
Maastricht School of Management ) . He had advance training in Industrial
Engineering & Quality Management in Japan & in General Management at the
Hass School of Business, University of California, Berkeley, USA.

Dr. Mehrotra is a winner of several awards. He received the “Best Teacher

Award – Outstanding Contribution to Teaching & Education” – Lifetime
Achievement Award from Higher Education Forum (HEF) in 2014.

Contact Details: Full Name: Dr. Rajendra Nath Mehrotra,

Address: 8, Horizon View (First Floor), 138 General J. Bhonsle Marg, Nariman
Point, Mumbai 400021, India. Mobile Number + 91 9004476302
E-Mail : rajenmehrotra@gmail.com

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