The article focuses on the positive requirements to ensure long-lasting industrial peace. The first part of the article discusses the comprehensive settlement between the South India Mill Owners’ Association (SIMA), Coimbatore and trade unions in 1956, which served as a model agreement for the Indian textile industry. The second part describes the author’s experiences at Ashok Leyland, the second largest automobile factory in India. A company with one union, Ashok Leyland, had a good industrial relations climate till an aggressive leader became the union president. Go-slow, lay off, gherao, closure of the company, large scale disciplinary action and replacement of the external union president by a workman as president were witnessed in the company. The last section of the article narrates a gentleman’s agreement and a win-win collective bargaining settlement.
Beatrice Webb, one of the co-founders of the internationally reputed London School of Economics in 1891, for the first time gave shape to the concept of “Collective Bargaining”. She and her husband Sydney Webb focused on the concept of “Industrial Democracy”.
When Gulzarilal Nanda became the Labour Minister of the Government of India, the historic Code of Discipline was evolved. The Code which took shape after deep deliberations with the representatives of four unions and the leading employers’ organizations at the national level raised hopes on meaningful collective bargaining, but there was no breakthrough to bring about a real change. The government of India later appointed two high-powered Commissions, one under the chairmanship of the former Chief Justice of India, P.B. Gajendra Gadkar and later under the chairmanship of Ravindra Varma. They submitted their findings for the improvement of the labour scenario in the country. As per the Constitution of India, “labour legislation” is included in the concurrent list. The federal government and the state governments can legislate at the same time on labour matters. The federal government could not legislate on union recognition till date, in spite of all good intentions and many share the view that multiplicity of unions stood in the way as every political party was particular to have their own labour unions. There were four national trade union centres in India, when the appointment of the Gajendra Gadkar Commission was announced in the sixties. Now there are twelve national trade union centres in the country. There also exist several powerful trade unions operating in the states, posing challenges to the national unions. The unions spearheaded by individual leaders also exist. In USA, there is only one powerful union at the national level, after merger of AFL and CIO in 1955. It was consolidation of unions in USA. In India it is just the opposite way.
The process of collective bargaining should start with recognition of unions, and for the success of collective bargaining, recognition of the bargaining agent is an absolute must. Recognition becomes difficult when there are many unions representing the workers. The unions in certain industries like the textile industry sit together and enter into long term wage pacts with the managements. There are establishments where the single union with full mandate from the working class finalises long term settlements and this is ideal for both the parties. There are establishments where union representation does not exist at all and in such establishments if the managements behave fairly towards the employees, many issues can be finalized if both the parties proceed in good faith.
My Experience at SIMA, Coimbatore
When I joined South India Mill Owners’ Association (SIMA) in December, 1960 I found that the employers in the textile industry in South India were in a position to establish good relationship with the industry wide unions operating under different banners. There was strained relationship between the employees and employers prior to 1956, but they were in a position to sit together at the bargaining table and settle many unresolved sensitive issues for the betterment of the workers, the industry and the country after a historic settlement known as the 1956 Settlement. This was signed before the then Labour Commissioner, Madras. The unions who did not sign the settlement also agreed to act as per the recitals in this historic wage pact, which was considered a model settlement aimed at establishing peace and discipline in the member mills in South India. This was achieved as the parties to the deal were sincere and they had a positive vision to develop the industries. There was no hidden agenda to defeat the other side in any manner. They were particular that “both sides should win”.
It will be meaningful to refer to the recitals in this settlement while reflecting on collective bargaining in the fifties of the last century and thereafter. The dispute which led to the historic settlement related to occupational nomenclature, duties, workloads, gradation, basic wages, differentials in wages and production bonus to workers in the member mills of SIMA. The agreement was for a period of five years from October, 1956. The parties also agreed to look into the Tripatrite Textile Enquiry Committee recommendations regarding the absorption of workers at a later date. There was also a provision not to lower the workload in force, along with a provision to pay extra wages on the basis of the new pact. There were also provisions to protect the interests of Badlis and temporary workers in the covered mills. There were provisions relating to transfer of employees to the lower grade, if there was surplus as well as to provide alternate employment if workers could not work as per the agreed workload. There were provisions to pay higher wages as before in the case of certain mills covered by the settlement. There was a provision to refer certain issues relating to workloads to a standing labour committee aimed at solving anomalies, if any in the settlement, and to refer disputed issues to an arbitrator in the case of failure to resolve the disputes if anything arose subsequent to the settlement.
The representatives of both sides at SIMA interacted very closely for the success of the settlement. It was a real pleasure to work in this atmosphere of trust. The 1956 Settlement was a model agreement to establish industrial democracy and this move gave meaning and life to the concept of collective bargaining. Several managements in North India drew inspiration from this pact and this settlement provided the road map to many employers and unions in the textile industry in India.
Experience at the Madras Scene
I was at Madras during 1967-77. I was connected with the Easun Group of Companies under the dynamic leadership of late K. Eswaran and later for seven years as the Industrial Relations Manager of Ashok Leyland, the second largest automobile factory in India. The experience in Ashok Leyland was unique in the sense that the union represented all the workers in the establishment and was entirely different from the union set-up at Coimbatore. Prior to my joining Leyland, the Ashok Leyland employees’ union was led by the late S.C.C. Anthony Pillai, the national President of the Hindu Mazdoor Sabha. He was an expert in the incentive bonus system and in evolving formulas on payment of annual bonus to employees. The payment to the employees every year was more than the quantum of bonus as per the Payment of Bonus Act. He was a shrewd negotiator and the management of Ashok Leyland had great respect for his stewardship in the trade union field. The payment of bonus for the year 1971 was due when I entered Ashok Leyland. At that time the elections for the union were held and R. Kuchelan, an advocate and President of the Workers’ People Council, which was not affiliated to any national union in India, was elected the President of the union. Kuchelan was in a position to make inroads into the trade union field at the Madras scene by defeating several established trade union leaders at Madras as he was in a position to show substantial results to help the have-nots of society. Prior to 1971, Anthony Pillai, through meaningful bargaining, could settle issues with Ashok Leyland without staging a strike on the principle of “more profits more bonus, less profits less bonus” and these payments were far in excess of the statutory bonus fixed by the rule book on the principle of “set-off and set-on” subject to a minimum of 4% of the annual earnings and a maximum of 20%. Kuchelan demanded a radical change of the formula. The profits of Ashok Leyland declined during the year and the management offered bonus at a lesser rate taking into account the decline in profits during that particular year. The union demanded more bonus far far in excess than the previous year, in spite of the reduction in profits. The management was eager to settle the issue in a peaceful manner and hinted to the union leadership that any bonus to be settled “will be less than the previous year”. This stand was taken based on the directive given by the Chairman of the Board. The negotiations started in a peaceful manner though there was divergence of opinion. But the situation became tense after two or three meetings. The Labour Department of the state government interfered at the State Commissioner’s level. As the Commissioner could not settle the issue, the Minister of Labour held direct negotiations several times with the management and the union. There was no breakthrough before Dipavali, as the bonus was to be paid before the festival as was the practice in the previous years.
Kuchelan suggested to the management that a higher quantum of bonus as demanded by him could be paid if the management can stop the payment of Royalty to British Leyland as the managerial personnel at Madras have acquired the expertise to manufacture the best chassis to suit the Indian roads and that the Income Tax Department will refund a big amount as bonus rebate to the company on payment of higher bonus to the employees. In that way the company will not lose the necessary finance to run the establishment. The management refused to accede to these suggestions both at the bipartite and the tripatrite deliberations.
Considering the importance of the industry the Central government also took cognizance of the matter and the Union Labour Minister invited the management and the union representatives for discussions at Delhi. The management team pointed out at every stage that stoppage of payment of Royalty will go against a long term contract with the British manufacturer and that will be considered as a breach of contract and will result in the stoppage of the transfer of technical knowhow from time to time which will ruin the establishment. Late S. Mohan Kumaramangalam, the then Union Minister, suggested to the management and also to the Union Labour Minister that the issue should be settled at Madras itself as such disputes should not go beyond the state. The year came to an end, and the bonus issue dragged on without a meeting point.
In the beginning of 1972 the union President advised the unionized employees to resort to “go slow” to pressurize the management for settling the bonus issue. In Ashok Leyland there are various departments in the manufacturing section and the employees were paid basic wages, dearness allowance, HRA and also incentive bonus calculated by the Industrial Engineering division of the company. The object of incentive bonus payment was to maintain the tempo of production from time to time based on time study and the incentive payments varied from department to department. Employees in the personnel, finance and other divisions, where production could not be measured, the employees were paid the average incentive bonus based on the average incentive bonus paid in the other departments. There was real chaos in the manufacture of chassis as the employees decided to go slow according to their own standards as the union did not advise the workers to reduce production by a particular percentage. Most of the time, the workers were wandering about without doing any work and wasting their time in the industrial canteen, and the management, in that turbulent situation, could not enforce discipline as per the provisions in the Standing Orders in force. On a particular day in the month of February, 1972 there were no engines manufactured in the engine assembly of the factory with the result, the workers in the chassis assembly could not assemble even one chassis on that day. The production of chassis came to a halt and the marketing department of the company could not send chassis for sales through the dealer network in India. The management woke up in that situation and decided to fight back legally as they found that they were pushed to the wall by the union and the employees. During the go slow period the management repeatedly advised all the workers to settle the issue in a peaceful manner and not ruin the establishment, which will again prove fatal to the employees themselves in the long run. The union did not even react to the notices issued by the management to the employees and to the union from time to time. In this situation the management decided to lay off all the employees in the chassis assembly of the factory as per Section 25 of the Industrial Disputes Act, 1947. There was no obligation on the part of the management to pay 50% of the compensation as per Section 25 of the Industrial Disputes Act in such a situation. On the action taken by the management, there was great resentment amongst the employees and a public meeting was held at Ennur to condemn the action of the management in laying off the workers without compensation. The workers were informed at the meeting by the union leadership that the action taken by the management was illegal as per the labour laws of the land and that the workers will wage a battle against this action and recover full wages from the management through negotiation/conciliation/court proceedings at a later stage. The go slow continued in all the departments as before and during the next two months due to the fall in production in various departments the management laid off practically all the workers in the manufacturing section of the factory with the result there were no sales of chassis for the next three months and spare parts also were not available in the market to meet the demands of the vehicle owners in India. As the union took the stand that they will be in a position to collect full wages later, the workers also were confident that in the tussle between the management and labour, success was assured to them at a later date. In May 1972 when the Managing Director was having discussions with the bargaining team in the room of a senior executive, a big group of workers “gherao”ed the entire bargaining team and the management found that there was difficulty to manage the establishment in a normal manner. The management informed the police about the gherao and the Police rushed to the scene to prevent untoward incidents and to maintain law and order inside the factory and outside based on the instructions given by the Chief Minister. The police was prepared to march inside the plant, but the Managing Director requested the Superintendent of Police not to resort to police action inside the plant. The Superintendent then requested the Managing Director and others (including myself) to jump out through the open window and all, except myself, jumped out to avoid a tense situation inside the factory. I alone had to face the gherao from morning till evening without food or water. The matter was reported to the Chairman of the Board. An urgent meeting was convened by the Chairman at his residence and it was decided to close the factory as the management found it difficult to manage the factory in that situation. The Chief Minister issued an appeal through the press to the union to settle the issue in a constitutional matter and appealed to the management to re-open the factory.
Considering the appeals of the Chief Minister and the Union Minister, the management took the decision to re-open the factory on the condition that all the workmen in the unionized category will give a written undertaking to maintain discipline in the establishment and to initiate action against the erring workers. Finally 183 workers, including the office bearers of the union, who took part in “gherao”ing the officials of the company, were charge-sheeted for various misconducts as per the provisions in the Standing Orders in force. All the charge-sheeted workers were suspended pending departmental action. Later two retired district judges were requested to conduct departmental enquiry against all the charge-sheeted employees. The domestic enquiry lasted four full months and all the workers were either dismissed or discharged. In the meanwhile the government provided police protection to all the workers in the Ennur area where the factory is situated and the police also watched the routes in which the employees were travelling in the company buses from the different parts of the city to the factory to work in the various shifts on all working days.
After the disciplinary action, the workers realized the gravity of the situation and they found that collection of full wages later was simply a dream. They decided to change the union leadership after consultation with the top trade union leaders in Madras. All the leaders attached to the national trade unions advised the employees to elect an insider from the factory to the position of the President of the union and E. Varadan, an ordinary workman, was elected President of the Union. Varadan was a close associate of Anthony Pillai and had rich experience as union leader by associating with Anthony Pillai for several years.
The new leadership again commenced negotiations with the management at the factory level. Varadan was told that bonus payment will be based on the principles as laid down before and the union agreed to settle the issue as per the original offer given to the previous President of the union. The quantum of bonus disbursed was marginally less than the quantum paid during the previous year and the settlement was signed before the Labour Commissioner and the Labour Minister. The workers maintained discipline, and normalcy in production followed.
Another Settlement with Anthony Pillai
Anthony Pillai was representing the Ashok Leyland Convoy Drivers’ Union at Madras. TATAS and Ashok Leyland transported the manufactured chassis from their manufacturing plants to the dealership network in India through the contractors. The contracting agencies recruited qualified drivers for delivery of the chassis to the various destinations in India. Both the companies also entered into long term wage pacts with the unions as well.
The wage contract relating to the payment of wages to the drivers in the case of Leyland was to expire in December 1973. Anthony Pillai gave notice of termination of the pact as per the provisions in Section 19 of the Industrial Disputes Act. He also requested the contracting agencies for finalizing a new deal as per the Industrial Disputes Act. As these agencies were dealing only with Leyland they sought the help of the management at bipartite discussions The management entrusted this task to me and after three or four long sessions the deal was finalized. The management agreed to pay an increase in the daily wages to all drivers and the deal was for a period of three years. Anthony Pillai agreed to sign the settlement on a particular date. Prior to signing this document, he contacted me over the telephone and informed me about his concern on a particular issue. The daily wages paid to the drivers at TATAs were always slightly higher than the wages paid to the drivers who were taking the Ashok Leyland chassis to various destinations. The wage pact was over in the case of Ashok Leyland by the year end. But in the case of TATAs, their contract was due to expire only six months thereafter. “What if TATAs agree for a substantial increase compared to the wages of the Ashok Leyland drivers?” He was worried about that he told me. At the same time, he made it clear that he was not going back on the commitments made already, but he was particular not to cause any disillusionment amongst his members. “What was the solution?” I queried. “Will the contractors of Ashok Leyland agree to revise the wages if TATAs agree to give a substantial increase by a new pact?” He asked. “What do you mean by the expression substantial increase?” I asked him over the telephone? Anthony Pillai replied with figures: “Out of 10 if it is 1 it is nominal. Out of 10 if it is more than 5 it will be substantial.” I realized his genuine concern and I took time for a reply as I was eager to get the approval from the Managing Director on this sensitive issue. He further agreed to sign the settlement as promised on the due date. He wanted a gentleman’s assurance from me on this. A written settlement coupled with a gentleman’s assurance. That was a new experience for me in the field of collective bargaining. I contacted the Managing Director and he told: “He has a point. There should be industrial peace. We will ask the contractors to revise if there is going to be a substantial upward revision”.
The agreement was signed as originally planned. TATAs gave a substantial increase. I got a message from Jamshedpur immediately after finalization of the deal. I conveyed the message to the Managing Director. “Go ahead, we will stand by the commitment. You may inform Pillai before he contacts you” he informed. I contacted Pillai about the commitment given to him. He complimented me for the quick decision. I complimented him for his forethought. The gentleman’s assurance was implemented, and the union leader and the employees were happy. In the settlement the parties had no false ego. The management wanted to win. The union also wanted to win.
Collective Bargaining exercises will succeed only if the parties resort to a win-win approach for the maintenance of peace, based on principles. Collective Bargaining is not collective begging by either of the parties to finalize a deal. Collective Bargaining is also not collective bullying as well by either the management or the Union.
C.P. Chandra Das
Former Industrial Relations Manager (Ashok Leyland) and Visiting Professor (IIT, Madras)
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