ASEMINAR REPORT

ON

“RECOGNITION OF TRADE UNIONS”

IN PARTIAL FULFILLMENT OF THE DEGREE OF

MASTERS OF BUSINESS ADMINISTRATION (M.B.A.)

BY

2009-2010

RECOGNITION OF TRADE UNIONS

I] DEVELOPMENT OF TRADE UNIONISM

BACKGROUND:

Trade Unions are the group’s set-up with the aim of trying to create

fairness and job security in a workplace. A trade union is an organization

of workers who have banded together to achieve common goals in key

areas such as wages, hours, and working conditions. Basically a trade

union bargains with the employer on behalf of union members and

negotiates with employers. Freedom of association has been the corner

stone of society. This freedom finds its expression in a democratic form

of government. Trade unionism has been a movement launched against

the concentration of economic power in the hands of a few individuals of

society and for the purpose of promoting the welfare of working class.

Trade union movement is not confined to the premises of one nation or

country but it has widened to the international field as well. It may be

desirable to mention that besides trade unions in specific countries, there

is one international organisation of working class known as International

Labor Organisation (ILO) for promoting labor welfare.

HISTORY OF TRADE UNION MOVEMENT:

Modern trade unionism is a product of conditions created by industrial

revolution. The industrial revolution in Great Britain and later on in other

countries brought about a sudden and drastic change in the economic

sphere. These changes were so sudden that it was difficult to bring about

a complete social, economic and political adjustment. The factory system

of production completely tore the relationship between the capitalist and

the labour class without replacing it with a new one. The new economic

order that was created was a challenge, which workers sought to meet

through the formation of associations known as trade unions to defend

their living and working conditions.

II] TRADE UNIONS ACT, 1926

The object of Trade Unions Act, 1926 is to provide for registration of

Trade unions and to define law relating to registered trade unions in

certain aspects. In the year 1925 the Government of India, after

consulting the State Governments drew up a Bill providing for the

registration of trade unions and introduced the same in the Legislative

Assembly on the 1st August,1925. The Indian Trade Union Act was

passed in 1926and came into force on the 1st June,1927. Although two

amending Acts were passed in 1928 and 1942, no major changes were

introduced in the Act till 1947. In 1947, an amending Acct was passed

which provided for compulsory recognition of the representative Unions

by the employers, and listed certain practices on the part of recognized

Unions. These provisions of the amended Act, however, have not been

brought into force.

HISTORY OF TRADE UNION MOVEMENT IN INDIA

The first cotton mill in India was established in 1951 in Bombay and the

first jute mill in 1855 in Bengal. This was the beginning of the modern

factory system in India. After 1851 and 1855, the number of factories

began to increase both in Bombay and Bengal. Prof. S. N. Dhyani has

observed that the year 1875 is landmark in the history of trade union

Movement. For the first time, in India factory workers united together for

securing better working conditions in the factories.

DEFINITION

Section 2(h) of the Trade Union Act,1926 has define a trade union as:

“Any combination, whether temporary or permanent, former

primarily for the purpose of regulating the relation between workman and

workmen or between employers, or for imposing restrictive conditions on

the conduct of any trade or business, and includes any federation of two

or more trade unions.

Thus, technically, there can be ‘union’ of employers also, though, almost

universally, the term ‘trade union’ is associated with union of workmen

or employees.

REGISTRATION OF TRADE UNIONS:

Registration of a trade union is not compulsory but is desirable since a

registered trade union enjoys certain rights and privileges under the Act.

Minimum seven workers of an establishment (or seven employers) can

form a trade union and apply to the Registrar for it registration.

The application for registration should be in the prescribed form and

accompanied by the prescribed fee, a copy of the rules of the union

signed by at least 7 members, and a statement containing

(a) the names, addresses and occupations of the members making the

application,

(b) the name of the trade union and the addresses of its head office, and

(c) the titles, names, ages, addresses and occupations of its office bearers.

If the union has been in existence for more than a year, then a statement

of its assets and liabilities in the prescribed form should be submitted

along with the application. The registrar may call for further information

for satisfying himself that the application is complete and is in

accordance with the provisions.

LEGAL STATUS OF A REGISTERED TRADE UNION:

A registered trade union is a body corporate with perpetual

succession and a common seal.

It can acquire, hold sell or transfer any movable or immovable

property and can be a party to contracts.

It can sue and be sued in its own name

No civil suit or other legal proceeding can be initiated against a

registered trade union in respect of any act done in furtherance of a

trade dispute under certain conditions.

No agreement between the members of a registered trade union

shall be void or voidable merely on the ground that any of its

objects is in restraint of trade.

REGISTRATION DOES NOT MEAN RECOGNITION:

Registration and recognition of Union by an employer are independent

issues. Registration of Trade Union with Registrar has nothing to do with

its recognition in a particular factory/company. Recognition of Trade

Union is generally a matter of agreement between employer and trade

union. In States like Maharashtra and Madhya Pradesh, there are specific

legal provisions for recognition of a trade union.

TRANSFORMATION OF THE TRADE UNIONS’ ACT, 1926

The history of trade union movement indicates that the trade union

movement in India had not to face the onslaught of legislation as in

England. In Great Britain, trade unions were regarded against the

common law, and were also looked down as criminal conspiracies.

III] RECOGNITION OF A TRADE UNION

INTRODUCTION:

The need for recognition of trade unions by employers was felt by the

working class to ensure that appropriate modes of collective bargaining

took place and that the agreements, which were collectively reached,

were mutually observed. It was considered that recognition of trade

unions was a step towards securing reasonable levels of pay and working

conditions. This in turn will be achieved if workers stood united in

representing their demands through a trade union, which is adequately

recognized.

It was the late 1990’s that it was realised that trade unions have become

massive bureaucratic bodies with interests and agendas of those who

comprise its membership. However, there is a growing debate as to the

extent to which they represent and pursue the interests of their members.

It is often argued that this is slight and coincidental.

There are elements in the discussion, such as the argument about whether

it is acceptable to require a level of support from among the whole of a

workforce, in order to be recognized - an idea with history and resonance,

which need to be debated thoroughly.

Trade union recognition works as much in the interests of the employer

as it does in the interest of the worker. The recognition of a trade union

has several repercussions in defending people on disciplinary charges,

accompanying members in meetings with managers and negotiating local

conditions of service.

After the passing of the Trade Unions Act, 1926, it may be observed that

from criminal and illegal associations trade unions have now become

legalized and recognised institutions, from institutions which were only

very small bodies they have now become gigantic associations, from

institutions that were primarily interested in the advancement of the cause

of their own membership they have now become institutions which are

interested in the social, cultural and political development of the country.

This was a remarkable process.

Recommendations of the Royal Commission on Labour

Indian Trade Unions (Amendment) Act of 1947 remained only on paper.

Recommendations by the National Labour Commission, 1969

The Commission has, inter alia, strongly recommended that:

(1) trade union registration be made compulsory;

(2) the registrar must be time bound to decide the issue of registration

(3) effective measures must be taken for cancellation if the unions do not

comply with conditions regarding filing of returns or membership;

(4) trade union recognition by the employers be made compulsory by

Central legislation as specified undertakings;

(5) such recognised unions, must be given statutorily exclusive rights

and facilities like right of sole representation, entering into collective

bargaining agreements, holding discussions and negotiations, inspection,

check-off etc; and

(6) the minority unions must also be allowed to represent workers in

redressal of individual grievances like dismissal, discharge etc. The

suggested measures are likely to promote growth of healthy and strong

trade unionism and eliminate inter-union rivalry to some extent.

Compulsory recognition of one union for one undertaking will make the

unions effective instruments of collective action and give them requisite

bargaining equality.

THE MAHARASHTRA RECOGNITION OF TRADE

UNIONS AND PREVENTION OF UNFAIR LABOUR

PRACTICES ACT, 1971

An Act to provide for the recognition of trade unions for facilitating

collective bargaining for certain undertakings, to state their rights, and

obligations; to confer certain powers on unrecognised unions; to provide

for declaring certain strikes and lock-outs as illegal strikes and lock-outs;

to define and provide for the prevention of certain unfair labour practices;

to constitute courts (as independent machinery) for carrying out the

purposes of according recognition to trade unions and for enforcing the

provisions relating to unfair practices; and to provide for matters

connected with the purposes aforesaid. Whereas, by Government

Resolution, Industries and Labour Department, No. IDA. 1367-LAB-II,

dated the 14th February 1968.

DEFINITION OF RECOGNITION:

A union must be recognised before it may effectively represent any

employees. Once a union is recognised it serves as the bargaining agent

for the workers in a particular bargaining unit. An employee may not

circumvent the union, because recognition entails willingness ‘to

negotiate with a view to striking a bargain and this involves a positive

mental decision.

NEED FOR RECOGNITION:

Recognition of trade union is the backbone of collective bargaining. It has

been debated time and again. But inspite of the government stated policy

to encourage trade unions, there is no enforced central legislation on this

subject. There are however voluntary code of discipline and legislations

in some states

Definition of Collective bargaining as the ‘performance of the mutual

obligation of the employer and the representative of the employees to

meet at reasonable times and confer in good faith with respect to wages,

hours, and other terms and conditions of employment’. absence of any

central legislation, management in several states have refused to

recognise a trade union mainly on five grounds:

(1) most of the office bearers of the union were outsiders,

(2) and sometimes, those disapproved by management, particularly

politicians and ex-employees;

(3) the union consisted of only small number of employees;

(4) there were many rival unions in existence; and

(5) the trade union was not registered under the Trade Unions Act,

1926.

CONSTITUTION AND RECOGNITION OF TRADE UNIONS:

The right to grant recognition to trade unions within the meaning of

Constitution of India, art. 19(1)(c) is a fundamental right or not is

answered in negative because the right to form association does not carry

with it the concomitant right that the association must be recognised by

the employers. Hence withdrawal of recognition does not infringe the

fundamental rights guaranteed under the Constitution of India, art. 19(1)

(c).

CONDITIONS FOR RECOGNITION:

Trade Unions (Amendment) Act, 1947, s. 25D provides that a trade union

will not be entitled for recognition by order of a labour court under s. 25E

unless it fulfills the following conditions, namely:

(1) that all its ordinary members are workmen employed in the same

industry or in industries closely allied to or connected with another;

(2) that it is representative of all the workmen employed by the employer

in that industry or those industries;

(3) That its rules do not provide for the exclusion from membership of

any class of the workmen referred to in cls. (b);

(4) that its rules do not provide for the procedure for declaring a strike;

(5) that its rules provide that a meeting of its executive will be held at

least once in every six months; and

(6) that it is a registered trade union and that it has complied with all

provisions of this Act.

The aforesaid provisions of the Act raise various problems

(1) Can an employer voluntarily recognise a union that is not registered

under the Act, which is in fact a majority union?

(2) Can an employer be compelled to recognise more than one union?

Notwithstanding the relative importance of these questions and rather

unsatisfactory answer than we get from the statute, the significance of

Trade Unions (Amendment) Act, 1947, must not be overlooked. But even

this might not be put into force.

Re-Recognition of Trade Unions

The Trade Union (Amendment) Act, 1947, s. 28H permits the registered

trade union whose recognition is withdrawn under sub-s. (3) of s. 28G to

make an application for re-recognition after six months from the date of

withdrawal of recognition.

Rights of Trade Unions in India

The trade union rights in our country are found scattered in various laws,

voluntary measures like the Code of Discipline and the constitutional

provisions under the Constitution of India, art. These trade union rights

may be divided into the following categories:

(1) right of freedom of speech and expression which includes right of

picketing and demonstrations;

(2) right regarding the formation and the registration of the trade union;

(3) right regarding the recognition of the trade union by the employers;

(4) right regarding collective bargaining and collective actions;

(5) Right regarding conduct and functioning of the trade union; and

Miscellaneous rights:

Right to form a Trade Union – A Constitutional Right of citizens of India

The right to form and continue36 a trade union is a fundamental right

guaranteed under the Constitution of India, art. 19(1)(c), which may only

be subjected to reasonable restrictions in the public interest as provided

by art. 19(1)(6)

RECOGNITION OF TRADE UNIONS BY EMPLOYERS:

After the registration of the trade union, the question of its recognition by

the employer comes to the forefront in as much as if it is recognised by

the employer for the purpose of collective bargaining, then it will have

certain privileges and an opportunity to fulfill its role. There is no

provision in the Indian Trade Unions Act or Industrial Disputes Act,

1947, the only two central enactments in this respect in the country

regarding recognition of the trade union by employers. No union

registered or otherwise may lay claim to recognition by the management

for participation in negotiations as a matter of a legal right.

However it may not be denied that fair play requires the management to

consider grant of recognition when a body of persons legitimately expects

to be affected. This right of recognition has to be secured by the trade

unions by raising an industrial dispute. The Code of Discipline regulates

this aspect, though not on a statutory level. The National Commission on

Labour has recommended such a statutory right for unions. Non-

recognition of a trade union for collective bargaining constitutes an unfair

labour practice. Provisions has however been made in the State of

Maharashtra by Maharashtra Recognition of Trade Unions and

Prevention of Unfair Labour Practices Act, 1971.

CODE OF DISCIPLINE AND TRADE UNION RECOGNITION

With the evolution of the voluntary measures in the nature of the Code of

Discipline in the industry, an attempt has been made to make a provision

for recognition of the unions by the employers. Under the Code of

Discipline, the recognized unions have been given certain rights in

preference to unrecognised unions.

These rights are:

(1) to raise issue and enter into collective agreements with employers on

general questions concerning terms of employment and conditions of

service of workers in an establishment of in the case of a representative

union, in an industry in a local area;

(2) to collect membership fees/subscriptions payable by members to the

union within the premises of the undertaking;

(3) to put up or cause to put up a notice board on the premises of the

undertaking in which its members are employed and affix or cause to be

affixed thereon notices relating to meeting, statements of accounts of its

income and expenditure and other announcements which are not abusive,

indecent or inflammatory or subversive of discipline or otherwise

contrary to the Code;

(4) for the purpose of prevention or settlement of an industrial dispute:

(a) to hold discussion with the employees who are members of the union

at a suitable place or places within the premises of

office/factory/establishment as mutually agreed upon;

(b) to meet and discuss with an employer or any person appointed by him

for the purpose,

(c) to inspect to prior arrangement, in an undertaking, any place where

any member of the union is employed;

(5) to nominate its representatives on the grievance committee constituted

under the grievance procedure in an establishment;

(6) to nominate its representative on joint management councils, and

(7) to nominate its representative on non-statutory bipartite committees

for instance production committee, welfare committee, canteen

committee, house allotment committees set

up by managements.

The Trade Unions Act, 1926 is completely silent on the question of

recognising a trade union for the purpose of collective bargaining.

This annexure A lays down the following criteria for recognising a trade

union:

(1) where there are more than one union, a union claiming recognition

must have been functioning for at least one year after registration. Where

there is only one union, this condition would not apply;

(2) the membership of the union must cover at least fifteen per cent of the

workers in the establishment concerned. Membership would be counted

only of those who have paid their subscription for at least three months

during the period of six months immediately preceding the month of

reckoning;

(3) a union may claim to be recognised as a representative union for

workers in all establishments in an industry in a local area if it has a

membership of at least 25 per cent of the workers of that industry in area;

(4) when a union has been recognised, there must be no change in its

position for a period of two years;

(5) where there are several unions in an industry or establishment, the

one with the largest membership must be recognised;

(6) a representative union for an industry in an area must have the right to

represent the workers in all the establishments in the industry, but if a

union of workers in a particular establishment has membership of 50% or

more of the workers, it must have the right to deal with matters of purely

local interest as, for instance, the handling of grievances. All other

workers, who are not members of that union might either operate through

the representative union for the industry or seek redress directly; and

(7) only unions that observe the Code of Discipline are entitled to

recognition.

RECOGNISED CENTRA TRADE UNION ORGANISATIOS:

Trade Unions Political affiliation

All India Central Council of Trade

Unions

Communist Party of India

(Marxist-Leninist) Liberation

All India Trade Union Congress Communist Party of India

All India United Trade Union

Centre

Socialist Unity Centre of India

Bharatiya Mazdoor Sangh Rashtriya Swayamsevak Sangh

Centre for Indian Trade Unions Communist Party of India

(Marxist)

Hind Mazdoor Sabha socialists

Indian National Trade Union

Congress

Indian National Congress

Labour Progressive

Federation SEWA

Dravida Munnetra Kazhagam

Trade Union Coordination

Committee

All India Forward Bloc

United Trade Union Congress Revolutionary Socialist Party