Collective Bargaining and Industrial Relations in the Private Sector in India

Transcription

1 Collective Bargaining and Industrial Relations in the Private Sector in India N. S. CHANDRASEKHARAN* & P. P. PAUL** After the industrial revolution and emergence of industrial democracy, collective bargaining has come to stay as a modality of regulating industrial relations. The master and servant relation gave way to the modern concept of employer-employee relation. The change over was a recognition of the fact that labour is a significant part of the production machinery. The terms and conditions under which labour is to co-operate with capital in the common venture of industrial activity were no more matters for the management to dictate and for the labour to accept. Workers organised themselves into collective units, namely trade unions and began to bargain with employers with a view to achieving better terms and conditions of employment. Collective bargaining, as the term itself signifies, is opposed to individual bargaining. Unionisation increases the bargaining capacity of workers. A process of arriving at an agreement, if to be able to achieve fair results should ensure equality in the bargaining 'strength of the parties. A worker bargaining individnally with his employer does not possess in most circumstances much of a bargaining power. He will have either to agree to the terms and conditions of employment stipulated by the employer or to remain unemployed. A realisation of this predicament prompted workers to adopt measures designed to increase their bargaining power. Acting on the principle that union is strength, workers began to organise themselves and to B.A. (Kerala), B.L. (Kerala), LL.M. (Cochin); Lecturer, Department of Law, University of Cochin. ** B.Sc. (Kerala), LL.B. (Calicut), LL.M. (Cochin); Research Scholar, Department of Law, University of Cochin.

2 N. S. CHANDRASEKHARAN & P. P. PAUL 161 face the employer as a collective body. A process of collective bargaining thus emerged. Labour and mangement sought to arrive at agreements on matters of mutual concern such as wages and other terms and ConditiOns of employment through a process of discussion and negotiation and where necessary by collective action. It is a democratic process. The involved parties themselves formulate the rules which govern them. Viewed in such a theoretical perspective, the system of collective bargaining would appear to be the ideal one to be adopted in any country for regulation of industrial relations. No other method, the protagonists of collective bargaining would canvass, is as quick cheap and effective. Industrial harmony is assured, they would say, by the system of collective bargaining, since the mutual relations of labour and management are governed by the terms agreed upon by the parties themselves. The industrial strife, which may be involved in the process, is according to them, in the final analysis, beneficial as it paves the way for industrial harmony by prompting the parties to come to 'amicable settlement. Compared to a method of adjudication, where!the final 'decision is always that of a third party, or of state regulation by legislation collective bargaining has its advantages. Legislation has its own limits and limitations. Decision by a third party has its own risks. The deciding authority may have no direct and deep knowledge of the full implications of the issues involved. A third party decision may be a rough and ready measure of settling an issue in dispute. There is no guarantee that his decision will be the proper one in the circumstances. Before the third party, the direct parties to the dispute, namely, labour and management stand as opponents. Labour and management are the parties concerned. with the industry. They know the issues in all their details. The advocates of collective bargaining would therefore put forward the proposition that settling of the issues industrial relations has to be left to those parties by recognising collective bargaining as the ideal system for ensuring proper industrial relations. But things are not as simple as that. The process of collective bargaining is not likely 'to succeed unless the threat of strike/lock out is there in the background. The situation in which the labour union and the management meet on the bargaining

3 162 COCHIN UNIVERSITY LAW REVIEW 82 table, discuss, negotiate, come to agreement and disburse, is more of an idealistic visualisation than a reasonable probability, unless the compulsive factor of work stoppage is there always kept ready to be brought into action, if necessary. The possibility of a demand of one party being accepted by the other depends on whether the cost of disagreement will be more than the cost of agreement. The strategy of pressurisation therefore depends in increasing the cost of disagreement. This situation results in work stoppages being used as a measure of increasing the cost of disagreement. Frequent work stoppages affect the consumers' interest and also the general national interest. A developing country, committed itself to a programme of planned development, cannot afford to have too many work stoppages. It has to ensure that industrial activity is carried on smoothly. The question arises, in what manner is it to ensure industrial production? If the policy of permitting collective bargaining is likely to result in driving out capital from the industrial field, in the context of a mixed economy, national progress is difficult to be achieved. Obviously the State has to protect the interest of the employer by ensuring that the general industrial situation is such that he can look forward to the realisation of his reasonable and legitimate expectations. But then, the policy cannot be one of employer biased, for being a democratic nation committed to the ideal of a welfare state, the protection of workers' interest is also a prime concern of the State. Even if it is possible, by adopting proper measures, to ensure existence of strong unions and strong managements, strong enough to make it impossible for either party to exploit the other, and thus render a situation in which collective bargaining can have its full play, the duty of the State to protect the interest of the general public, the consumers, makes it apprehensive of the possible evil consequences of such a measure. When the collective bargaining scene reflects a picture of settlement after an industrial warfare between the strong opponents, the consumer suffers, for his reasonable expectations on regular supply of goods and services are not realised. If the strong opponents avoid industrial strife and come to agreements irrespective of the reasonableness of the demands, there again the consumer suffers, for the heavy increase in the price of goods

4 N. S. CHANDRASEKHARAN & P. P. PAUL 163 and services, resulting from the agreement between the 'big business' and 'big labour' falls on his shoulders. Since the consumers' interest is not represented in the collective bargaining table, the State has an added duty to protect their interest. In a developing country, a system of industrial relations regulated by collective bargaining poses complex problems. Resort can be had to collective bargaining only upto the limit to which it can safely go in our national context. Collective bargaining has its definite advantages. But it has its defects too. The problem then is how to minimise the defects and to increase the merits so that it can be permitted as a reasonable method of regulating industrial relations in the Indian context. This takes us to an examination of the factors affecting collective bargaining, and the role of the various agencies in ensuring a proper atmosphere for collective bargaining and in putting the process within proper limits. Collective bargaining is a democratic process. The success of the process lies in the adoption of a mature and self-disciplined approach to it by the parties concerned. If one of the parties,approaches it in an insincere manner, the belief of the other party in the system declines and an atmosphere of antagonism rather than one of co-operation will ensue. Managemeent may be ready to agree to the proposition that fair wages have to be paid to workers. But fair wage in their view is related to what is generally paid by other employers for!similar work. Management may take the stand that if it makes large profits alter payment of fair wages, it is its business. Labour Union, on the other hand, may take the position that what is fair wage is related also to the profit a particular undertaking is earning; production being the result of joint activity between labour and management, both should be able to share it. From the Union point of view therefore whether a wage is fair in a given undertaking depends on whether the wage.structure ensures to workers a fair share of :the profit. But when it comes to a question of losses the parties change sides. Union may put forward the plea that if losses occur it is the management's concern and that the workers should be given fair wages. Management would be inclined, to take the position that the loss suffered by

5 164 COCHIN UNIVERSITY LAW REVIEW the undertaking is a factor to be taken into consideration. Union may view management as one always inclined to exploit labour. Management may view Union as a body which interferes with the managerial functions, by negotiating with art improper assessment of costs, markets and possible profits. Union may thus be viewed by management as an agency which, by putting forward unrealistic demands and enforcing it Eby collective action, acts to the detriment of the undertaking and against the workers' interest in the final analysis. Management's critical attitude towards trade unions cannot be brushed aside simply as of no substance. In collective bargaining the parties negotiate the terms on which their future relations are to be based. Most of the terms will have an economic content. A realistic and reasonable formulation of demands involves an expert analysis and assessment of various factors, such as the the volume of sales in the coming years, methods of improving production, factors likely to affect production, market potentials, cost of materials and the like. How much expertise can a trade union claim legitimately over these areas? A process of collective bargaining to be effective and successful should ensure a situation in which the parties can have meaningful talks. Lack of requisite expertise on the part of trade union leaders who face the management at the collective bargaining table may result in a situation in which the issues are settled more by might of parties. This points to the need not only of a change in attitudes but also of devising measures for involving labour in management so that a proper atmosphere will be created in which the parties can negotiate meaningfully. Political orientation of the trade unions in India and multiunionism pose zsome problems. Collective bargaining being a system under which workers bargain collectively with management, the importance of the need for the collective strength arising from unionisation cannot be overstated. The system of collective bargaining can operate sucessfully only if the union can act as a representative body Of workers as a collective unit. Unions have to be 'free' and their main concern should be the workers' cause. This is not to say that trade union has no duty towards society at large. Protection of workers' interest in a

6 N. S. CHANDRASEKHARAN & P. P. PAUL 165 way not detrimental to the general social interest should be its duty. But political orientation gives trade unions not the colour of workers' organisations but that of organs of political parties. In trade union activities political interest quite often overweighs workers' interest. If the purpose of trade union is protcetion of workers' interest, how can one justify the usual phenomenon of a split in a political party being reflected, almost always, in a split in the trade union and formation of separate unions? Balitied parties are interested in trade unions for the reason that unions supply the party men, funds and votes. More over a trade union can be used as an effective weapon in political warfare. Strikes may be launched with a view to paralyse the political party or parties in power. The keenness of political parties in forming their own trade union bases paves the way for multiunionism. Trade union activities are then dictated by political considerations. An argument may be raised that political orientation adds to the strength of the union and is not therefore detrimental to workers' interest. A union with the backing of a political party, it may be said, can command more bargaining power than it could if it stood aloof from such connection. But such strength could be commanded only so far as the interests of the union do not clash with the interests of the political party. Party support will be there only so long as it is advantageous to the party to lend such support. If political considerations indicate a different course, the party will make strategic moves to place political interests above workers' interest. Outside leadership of trade unions may render this easy of accomplishment. Political affiliation for a trade union may be appropriate at a stage when trade unionism is not properly developed. When trade unions are not strong enough to improve, acting by themselves, the conditions of labour there may be justification for some political affiliation. At early stages of trade unionism workers may not be able to find proper leaders internally Even if they find an internal leader, the management may deal with him only as a subordinate and not as an equal. The fear of victimisation will always be there in the mind of such leader. Politicians appearing as trade union leaders stand on a different

7 166 COCHIN UNIVERSITY LAW REVIEW plain. They can talk on equal terms with the management without fear of victimisation. But a political man is an outsider, his eyes may always be on the wider political field. To him trade union leadership may only be a stepping stone to political leadership. He being an outsider, may not Abe closely familiar with the various problems, with their full implications, which directly concern the labour in a given undertaking. He may be the leader of many unions and hence may not be in a position to do justice to any one of them. If a leader is prepared to keep his role as a politician and as a trade union leader distinct and separate and to put a reasonable limit on the number of unions of which he will accept leadership, some of the problems may not arise. But the question is how many are prepared for it? When trade unionism has reached a certain stage of development, it would appear to be advantageous to trade unions to free themselves from political affilations. This would add to the progress of trade unionism, since political considerations may not play a decisive role in the process of union formation and functioning. The ideal of one union in one undertaking or even in one industry may Abe rendered possible in such a context. Workers' outlook is also important in this respect. Workers believing in different political ideologies can join together when it comes to a matter of unionisation and try to improve their lot. Political difference does not mean that the difference should be kept at all levels. We have social forums in which persons with different political ideologies join together. Then why not so in trade union? Multi-unionism is not attributable solely to political orientation of trade unions. The conflict of sectional interests among workers results in formation of category unions. Presence of too many unions in pan industry destroys the collective strength of workers. The trade union law in India, which permits formation of a union by a small group of seven workers, is also responsible to some extent for the problem of multi-unionism. The three factors, political orientation, category unions and the backing of the law, have resulted in multi-unionism which affects adversely the collective bargaining process. When there are too many unions with whom should management negotiate?

8 N. S. CHANDRASEKHARAN & P. P. PAUL 167 Each union claims for recognition. Each will formulate its demands in a spirit of rivalry. When conflicting demands are made, it may be impossible to accept them. AcceptanCe of the demands of one union may 'affect adversely the interests of the other. In such a context, unless some voluntary measures are adopted or the State steps in and regulates the process by legislation, collective bargaining will remain a far cry. The present industrial relations law is also put forward as one of the factors affecting detrimentally the system of affective bargaining in India. The Industrial Disputes Act 1947 recognises collective bargaining. It provides that settlements will be 'binding. It recognises the use of strikes and lockouts. But positive provisions ensuring collective bargaining are absent in it. No duty is cast on employers to bargain with trade unions of employees. There is no provision in it for recognition of unions for the purpose of collective bargaining. Legal control measures in India approach the area of industrial relations more from the angle of conciliation, arbitration and adjudication. The presence of the conciliation machinery may pose a possible hurdle to bipartite negotiations. The parties may not play all their cards at the bipartite negotiation. They may reserve some trump cards to be played at the stage of conciliation, thinking that at the conciliation stage they may have to make some more concessions and that it is therefore wiser to reserve some for the purpose. This results in unnecessary protracted proceedings and points to the need of the conciliation officer coming to the scene at a very early stage of the negotiations. The role of conciliation officer in bringing about a settlement is important. At the early stages of negotiations the parties take a stand knowing fully well that they will have to modify their stands as and when negotiations proceed. The conciliator can work as a mediator knowing fully the pulse of both the parties and can formulate acceptable solutions. He can have talks with labour and management separately and can assess the actual extent to which the parties are prepared to go. Reaching of reasonable agreements will be more easy in his presence, if he is one with the necessary tactics, knowledge, character and expertise. Instead of bipartite settlement a system of settlement by conciliation may be more advantageous. The conciliation officer should be one with proper qualifications, high

9 168 COCHIN UNIVERSITY LAW REVIEW official status and requisite experience. He should be assisted by a team of experts, if required. The inherent defect in the system of collective bargaining is that it may fail to take into account consumers' interest. Unless labour unions and management keep consumer interest in their mind while making negotiations, the system will fail as an adequate method of regulating industrial relations. The system cannot work for long, if labour and management come to agreement at the cost of the general public. If the increase in the cost of labour resulting from a collective bargaining agreement is invariably shifted to the consumers, it amounts to a joint exploitation of the unorganised sector by the organised sectors acting jointly. It is in such a context that the plea for effective State regulation of industrial relations assumes importance. The choice then is between state regulation abandoning the system of collective bargaining as such or restricting it severely, and self regulation on the part of trade unions and employers with a realisation that the success of the system will depend in the long rut on to what extent it can safeguard the interest of the public. When the process of collective bargaining goes on in a proper way, without too much detriment to public interest, the question arises to what extent the State should take measures to ensure the working of the system. One union in an undertaking is the ideal arrangement for the success of the collective bargaining system. If the trade union law is amended permitting registration of a union if only it can claim support of more than 50 per cent of the workers in the undertaking this could be ensured. But the question is whether this will be a practicable measure and will receive acceptance of workers in the present day context of too many unions with their political orientation. Most of the existing trade unions will be non-existent under such a law and a new general union will have to emerge. This affects detrimentally the interests of many trade union leaders, who may instigate the workers in their union to agitate against such a measure. What is required in this context is to create an awareness among workers that a single union in an undertaking is a measure advantageous to them and to 6mate conditions favourable to an amendment of the law in that direction, Such a change

10 N. S. CHANDRASEKHARAN & P. P. PAUL 169 may cause some difficulties at the early stages due to the absence of any union. with 50 per cent support in an undertaking. But this difficulty could be overcome. Formation of a union, representative of the workers in general and without commitment to any particular political party will be possible when workers rea- Iise the merit of such a system. A stage may come when labour would oppose strongly any proposal for amending the law permitting multi-unionism as an anti-labour measure designed to reduce their bargaining power. If a settlement is not reached by negotiations to what extent collective 'action is to be permitted.? It is unsafe to leave the issues to be settled solely by industrial conflict by permitting the parties to have resort to the coercive techniques of strike and. lockout, when negotiations. fail. Public interest has to be safeguarded. Hence work stoppages could be permitted only to the extent it will not seriously affect public interest. Strict restrictions have to be, put on the right to strike and lockout. In industries and services where strikes and lockout would immediately paralise public life, resort to strikes and lockouts have to be prohibited. In other areas, it may be permitted but subject to the safeguard that when it is likely to cause too much inconvenience to the public or reaches a stage where it is likely to affect detrimentally the national economy, a machinery exists which can put a stop to it. It is a conceivable solution that the power to refer for adjudication a matter on which the parties are not able to arrive..at a settlement, may be conferred on the conciliation officer himself. Th:e conciliation officer, in the scheme proposed above, being a person actually involved in the process of collective bargaining by acting as a mediator, may be the best judge of the situation to assess whether it is safer to have the matter to be settled by resort to strikes or lockouts or to refer the matter for 'adjudication. But this is not to say that he should be the sole authority to refer a matter for adjudication and to put an end to the process of collective bargaining. A right may also be vested in both the part: es to the dispute Ito approach the adjudicatory authority with a request to take the matter for the Purpose of adjudication. But sucu a course should be permitted only on failure of a bona fide bargaining. If the authority is satisfied that

11 170 COCHIN UNIVERSITY LAW REVIEW 11 2 the circumstances of the case warrant the sanctioning of the request for adjudication it should have the power to prohibit strike/lockout and to compel the other party to submit to its jurisdiction for the purpose of adjudication over the matter pending in dispute. Power should also be vested in the Government, to be used when public interest suffers due to prolonged strikes and lockout, to refer the matter in dispute for adjudication and to put a stop to work stoppage. Such a measure is advantageous in so far as it recognises the system of collective bargaining as a method of regulating industrial relations and at the same time guarantees that the system does not operate to the detriment of public interest. The adjudicatory authority should not consist solely of a single person with legal qualification. In view of the complex nature of the problems the authority has to deal with, expertise in fields other than law may also be required. It would appear to be ideal, therefore, if the Tribunal consists of three persons, one having legal qulifications and the other two having expertise in other relevant fields like economics and management so that the Tribunal will be an expert body which can arrive at informed decisions. The system of collective bargaining can function successfully only if the parties to it act with self-discipline. While a proper functioning of the system may resist the tendency of exploitation of one party by the other, resort to collective bargaining in an improper and unfair manner may result in exploitation not only of one of the parties, but also of the public in general. In the present day context it appears that we can afford to have the system of collective bargaining only to a limited extent for the purpose of regulating industrial relations. It is also important to ensure that whatever restrictions or prohibitions we may impose by law to confine the operation of the system within proper limits, unless the law is enforced properly with due regard to its spirit, legal regulation may serve no useful purpose.