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Xaviers Institute
of Business Management Studies
Industrial relations and Labour Law
Note:
(i) There are two Sections A and B.
(ii) Attempt any five questions from Section A. Each question
carries 8 marks each
(iii) Section B is
compulsory and carries 15 marks each case study.
SECTION A
1. What are the constitutional directives in the field of labour laws?
The labour laws have reached new dimensions with the advent of the doctrine of
welfare state. Discuss.
2. Attempt any two of the following:
(a) What are the safety measures under the Factories Act, 1948?
(b) What are the obligations of the principal employer and contractor
under the Contract labour (Regulation and Abolition) Act, 1970?
(c) What are the occupations and processes where child labour is
prohibited under Child Labour Act, 1986?
3. What is a "trade union" under the Trade Unions Act, 1926?
What is the procedure for registration of a trade union under the Act?
4. Discuss the various provisions laid down under the Industrial
Disputes Act, 1947 for settlement of Industrial disputes.
5. Examine the main features of the Payment of Wages Act, 1936. What are
the provisions for deduction from wages? Are they sufficient?
6. (a) What are the benefits payable under the ESI Act, 1948? Give
details.
(b) What are the provisions regarding payment of gratuity to employees
under the Payment of Gratuity Act, 1972? Explain.
7. Write short notes on any three of the following:
(a) Main features of the Maternity Benefit Act, 1961
(b) Salient features of the Provident Fund Scheme, 1952
(c) Notice of change (Section 9-A)
(d) Special features of labour laws
(e) Principles of natural justice
8. Discuss the role of Indian Constitution in evolving labour policy.
Identify the impact of ILO on industrial relations.
9. Briefly explain how internal affairs of the union are managed.
Describe the new roles of trade unions.
10. Define collective bargaining. Describe the types of collective
bargaining citing suitable organization examples.
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SECTION B
1. Theft or
Ignorance
Read the case given below and answer the questions given at the end.
CASE
On March 25, 1996 at about 6.45 PM, the Duty Officer (Security), Kumar,
at the Work gate informed Rathod, Electrical Engineer on telephone that one
Narayan, supervisor of his department has been caught red-handed at the Works
gate while attempting to steal one small electric motor and certain other spare
parts used in the Electrical Dept. Rathod was requested to come to the Security
Control Room, where a preliminary enquiry was to be held.
During the preliminary enquiry, it came to light that Narayan, Personnel
No. 5824, Foreman, came to the Works gate at 6.15 PM on his Suvega auto cycle
bearing registration no. BRX 1421 (the number was not clearly visible). The
works guard on duty, Krishna Bahadur asked Narayan to stop and open the
tool-box that was hanging on the right side of the rear wheel. When it was
opened, only one empty Tiffin-box was found. Since the driver's seat appeared
to be thicker and of unusual size, the works guard enquired about the same from
Narayan, and not being satisfied with the reply, gave it a jerk. It was found
that Narayan had constructed one box under the seat where a 0.50 hp motor and
eight 5 amps switches belonging to the company were concealed.
On being asked, Narayan replied that he had attended a break-down after
5 PM in the Mill and replaced one 0.50 hp motor. The motor that was recovered
was the defective one but he could not return it as the store-issuer had
already left for home after his duty which ended at 5 PM. He thought he would
return the motor next day, as he had done many times in the past. He, however,
could not explain why he was carrying the 5 amps switches. Nor did he give any
satisfactory reason for not keeping the materials in the tool-box that was
visible from outside, rather than where these were kept. On checking up at the
Security Control Room, it was found in the presence of Narayan that the
electric motor recovered was in working condition.
As per the Company's Certified Standing Order No. 23 (iii), 'theft,
fraud, or dishonesty in connection with company's business or property' is
misconduct.
Questions:
(a) Does this case deserve suspension, pending enquiry?
(b) Advise the Works Manager on the steps for handling the above case.
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2. Norman
(I) Limited
Read the case carefully and answer the questions given at the end:
Norman (I) Limited
THE COMPANY
The first wall tile manufacturing plant in India was established by Kay
Pee in 1963 at Thane in Mumbai under the name Norman Tiles. The company was
using the brand name 'Norman', a leading international tile manufacturer,
Norman International Limited and was paying royalty for the same. The Norman
International Limited owned 49% equity in this venture since its inception.
With growth in sight the company set up another manufacturing unit at Rampur in
the state of Uttar Pradesh with an investment of Rs. 85 million in the year
1981. Initially, at Rampur unit the company was carrying out only partial operations
with semi-finished products being supplied by Thane unit. It was only in 1984,
that the company started carrying out full operations at the Rampur unit. Since
the market for ceramic tiles started expanding, the company expanded its
operations accordingly. The process of manufacturing wall tiles was such that
it needed unskilled manpower barring few fitters and electricians. Accordingly,
the company hired 400 workers mostly uneducated and unskilled from nearby
villages. Few of them were taken for the fitter and mechanic positions. Apart
from these, there were sixty staff members looking after the other support
functions. The workers were paid low wages and were employed on temporary basis
at the beginning and till 1986 most of them were not made permanent. The human
resource department was headed by R.C. Jain, who was an experienced
professional and was with the firm since its inception.
THE GENESIS
In 1986 the company ventured into floor tile manufacturing and set up
another facility at Rampur unit. This plant was semi-automatic as compared to
the wall tile plant which needed manual operations. The machinery of floor
tiles unit was bought from Italy and due to the nature of process some
experienced workers were shifted from wall tile facility. Slowly, two distinct
groups of workers emerged based on the nature of their job and subsequent
skills required. First group was that of unskilled workers mostly associated
with manual operations and the second group was that of skilled workers looking
after technical operations. The second group was paid higher wages than the
first group. This disparity led to discontentment among workers but in the
absence of union, it never came out as an organized reaction. The first such
organized attempt was made by workers in 1988, but a prompt and harsh action
from management aborted the workers bid to form union. However, this event drew
management's attention towards workers grievances and management helped workers
to form a union in 1989. The union was named "Bhartiya Crystallization
Mazdur Sangh". However, since most of the workers barring few technical
ones were uneducated, they were unaware of roles and responsibilities of union
The management started negotiations with the newly formed union and the
first wage settlement agreement was signed on January 19, 1990. In this
agreement, though the management agreed to increase wages to the extent of Rs.
250 per month, it linked wages to production targets. After three months of
this agreement, the union leader left the organization to join government
service. The union was left leaderless. After some time the workers started
voicing their concern about the target-linked wages, but in the absence of a
leader their concerns could not get a voice. It was at this point that some external
labour leaders started inciting the workers. A gate meeting was organized to
exploit the situation on September 21, 1990. After this incident the industrial
relations situation further worsened and led to a go-slow movement by workers
in January 1991. This affected the productivity of the plant severely. Due to
the absence of union leadership, management too found it difficult to control
the situation, since external leaders influence was very much visible and
company's HR manager R.C. Jain refused to talk to the outsiders. He remained
adamant and left the job in March 1991 and the go-slow by the workers
continued. In another development the incumbent HR manager Arun Joshi, who took
over after Jain left converted variable DA to a fixed DA rate. Since, at that
time inflation was spiraling and the rate of DA, elsewhere, was high, the
workers refused to accept this provision. Ultimately, under pressure from
external leaders as well as workers of the firm, Joshi withdrew the fixed DA
and accepted the variable DA provision.
In the meantime, K.N. Trivedi took over as the unit head on May 5, 1991.
Before joining this plant, he had served the Indian Air Force for seventeen
years and was a strict disciplinarian. The organizational situation demanded
quick action to stop go-slow because the company had market share of forty per
cent in both the tile categories and the demand for tiles was still going up.
The management did not want to lose a single day's production. In a calculated
move the management suspended thirty five workers who were on a go-slow. This
was for the first time that any worker was suspended from the plant which
instilled a sense of fear in the minds of the workers. As a result of this,
workers started working and the productivity of the plant started showing
Meanwhile, the management had terminated some of the suspended employees who
later on moved to the labour court against management's action on the
presumption that labour courts are generally sympathetic to the workers. At the
same time, Trivedi started dialogue with the external leaders to end the
stalemate. The external leaders put pressure on the management to reinstate the
suspended workers. Management agreed to make permanent those employees who were
working with the company since its inception and did it with immediate effect.
Suspension of some of the workers was also cancelled. Though these efforts
helped management in streamlining the production, the attitude of the workers
could not be changed totally. The ownership spirit amongst workers could not be
developed.
The situation took another ugly turn in February, 1992 when the workers
who were suspended earlier tried to create disturbances in the plant. The
discontent was further fuelled by bad food provided to the workers in the
unit’s canteen in March, 1992. Ultimately, this led to formation of a new union
"Bhartiya Yuva Sanitary and Crystallization Mazdur Sangh". This union
was not affiliated to any national labour union. However, the leaders were
under the influence of Bhartiya Mazdur Sangh (BMS). This union submitted a
charter of demands to the management. The demands included grain loan which was
a contentious issue because the company had never given any grain loan to the
workers. The demands were not accepted by the management. The workers gheraoed
Trivedi but the management did not accede to the demands and called the police
to intervene.
On March 17, 1992 the workers went on strike on the call of the union
without giving any prior notice. The management terminated seventeen workers
during the strike. The strike continued till May 5, 1992. The workers were not
paid any wages during the strike period. Since the workers were low wage
earners, they were unable to continue the strike for a longer period. The
management used the situation to their advantage and accepted only minor
demands of sanctioning an advance of Rs. 500 to the workers. The workers
accepted the management decision and were willing to restart production.
Management re-employed the suspended workforce gradually over a period of
fifteen-twenty days. Since, the workers did not receive wage. For the strike
period. they had realized the importance of their employment.
In October, 1993 the second agreement was signed between management and
the union. Between October, 1993 and December, 1996 the productivity and
industrial relations were improved. In 1996 the organization started receiving
export orders for its products. The quality requirements for the export orders
were stringent. Therefore, the organization decided to go in for ISO 9000
certification for their Rampur plant. The management realizing the importance
of workers involvement in ISO 9000 certification process started training
workers on a continuous basis in June, 1996. The in-house training emphasized
on housekeeping, general hygiene of the workers, standard operation procedure
and awareness about all kinds of losses. As a result of continued efforts, ISO
9002 certification was received by the plant in January, 1997. Meanwhile, the
third wage agreement was signed between the management and the union for a
period of three years in January, 1997. To reinforce the training process, HRD
cell with well-equipped in-house training tools was developed in January, 1998.
Training programmes focused on shop-floor excellence and total Productive
maintenance (TPM). Quality manual for internal use was also developed. The
goals for 2000-2001 for the plant were devised as under:
- Laying
of natural gas pipeline
- Reduction
in personnel expenditure
The Rampur plant of Norman had come a long way since its inception. In
the words of Trivedi "despite all the bottlenecks we have achieved a
satisfactory level of productivity. We still intend to continue doing so by
various means. However, I want to build this plant as a community where each
member's commitment with the plant remains high. This can only be achieved by
inculcating the ownership value. We sincerely believe that this can only be
developed by creating a community of Norman in which every member is ensured of
a minimum standard of living with all basic amenities and worry free life away
from work. We intend to do so by providing medical, educational and vocational
training facilities for their families, thereby developing trust between the
management and the workers".
Questions:
(a) Does formation of trade unions help organizations improve industrial
relations?
(b) Was it a right strategy to nurture pro-management union leaders?
(c) The strategy to instill fear in the minds of workers to improve
their productivity was in the interest of the organization, Discuss.
(d) In your view, what action should have been taken by the management
at various stages to improve labour-management relations?
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3. Geetha
Laboratories
Read the case carefully and answer the questions given at the end.
Geetha Laboratories Private Limited was established by Mohan Ramnath in
1988 at Chennai. He, a soft spoken gentleman, was Ph.D. in chemistry, who did
not believe in working under pressure. The company was a small scale unit
manufacturing non-patented antimalarial medicines. The company had 6 days per
week working making 26 working days per month and was running smoothly. In
1978, CITU supported union came into existence. The industrial relations started
deteriorating making it difficult for the company to survive. In 1988 Ramnath
decided to enter into partnership with three other partners, Chandan Keshav,
Bharat Pathak and Veenu Ramachandran to overcome the difficulties faced by him.
The company came to be known as Geetha Laboratories Limited. Even after this
the industrial relations did not improve till 1990 and it was during this
period that 14 workers were sacked. In 1990 Ramnath decided to sell his shares
to Emission Pharmaceuticals, a multinational, though other partners continued.
Now, the company was called German Drug House (GDH). During this period CITU
withdrew support to the union and Bhartiya Mazdoor Sangh (BMS) came into the
picture. An average increment of Rs. 225 was given to all workers and
industrial relations improved to some extent.
IMPLA Pharmaceuticals Limited was another non-patented antimalarial bulk
drug manufacturing giant having units at Pune, Mysore, Hyderabad, Coimbatore
and Corporate office at Baroda. It wanted to have monopoly in the ant malarial
drug manufacturing by taking over GDH. But before taking such a step. They
wanted to assess the internal condition of the company. Therefore, in January
1994 Vishal Shrivastava, qualified chartered accountant was inducted as Director
by purchasing a requisite number of shares of the company. In September, 1994
after IMPLA was convinced about the favorable conditions of GDH it formally
took over the company. At that time the manpower strength of the plant was 210
in which 130 were workers and 80 were executives and staff members. After
taking over, IMPLA made many changes and the major ones were:
(i) They increased the salaries of executives and staff of the unit to
reduce the gap in the pay structure of the executives and staff of this unit
and their other units.
(ii) They invested Rs. 3-4 crores for up gradation of the plant.
(iii) They shifted from 6 days working per week to 7 days working per
week to improve the productivity and enhance cost-effectiveness of the unit.
The shift from 6 days to 7 days working without any financial gains made
workers resist the change. At this juncture, Sumeet Joshi, Corporate Manager
(lR) intervened and promised the workers that they would be paid for 30 days
instead of 26 days, but Ravi Shriman, Director (Personnel) and Vishal
Shrivastav, CM (Operations) refused to agree to this since they were not
involved when Sumeet Joshi made the commitment. The promise was not fulfilled
which further complicated the problems. The issues kept on Lingering for 6 months.
No decision could be taken because of the difference of opinion among senior
executives. In June, 1995 the workers gheraoed Vishal Shrivastav to pressurize
the management to take the decision. They were successful to some extent as it
led to the agreement of management with workers that financial benefits would
be given with retrospective effect of 4 years making it one additional year
over and above 3 years of normal agreement. They were asked to give a notice of
change which the workers could not give till December, 1995 because of
disagreement among themselves It was felt at this point of time by Shrivastav
that plant should have an Assistant Manager (personnel) instead of having
Personnel Officer. Ajit Dubey, Assistant Manager (personnel) was appointed in
October, 1995 but even this appointment took 3-4 months because of discord in
opinions of Shrivastav and Shriman.
In December, 1995 the workers gave a notice of change demanding an
increase of Rs. 2200 per month. In January, 1996 a notice of change was given
by management. In February, 1996 the negotiations started and continued till
July, 1996. Shrivastav, Rajkumar, the new Corporate Manager (IR), Ajit Dubey
and Kishore were to represent the management side and nine members of the union
were to represent the Workers, besides V.D. Agarwal the General Secretary of
BMS.
The first two rounds of meeting did not lead to any outcome as none of
the parties were ready to budge. This made V.D. Agarwal withdraw as he was fed
up with the rigid stand of the union leaders.
The third meeting was held without Agarwal wherein the union leaders
came down to Rs. 1, 200 from Rs. 2, 200 p.m. The minutes of the meeting were
jotted down but the union leaders refused to sign. Taking advantage of the
occasion, Dubey and Shrivastav had a secret meeting with Agarwal in a hotel.
Agarwal advised the representatives of the management to maintain a low key for
a few months to crack down the workers aspirations as they had very high
expectations. It was observed by Dubey that there were perceptual differences
between senior and junior union leaders. Taking cue from this, Dubey adopted a
policy of divide and rule and took into confidence Devilal, the senior union
leader and had a secret meeting with him to explore the last settlement amount
and apprised him that the management could go only up to Rs.450. He also took
Janak Singh, the junior union leader into confidence and convinced him that
management was not going to bend before their demands and as such the workers
were going to be the ultimate sufferers. Besides this, Dubey spread the message
that no wages would be given retrospectively.
The next day meeting resumed in which union representatives came down to
Rs. 750 (because of the pressure from the workers) beyond which they were not
ready to come down. It was decided that instead of having meeting with all the
members, only two members, one senior union leader, Devilal and one junior
union leader, Janak Singh would sit in the negotiations. Immediately a meeting
among Shrivastav, Rajkumar, Devilal and Janak Singh was held and it was
resolved that Rs. 575 average per month would be given for 4 years
retrospectively. An MOU was drafted by the legal consultant at the corporate
office and was duly signed by Shrivastav, Rajkumar, Dubey and all the union
representatives. In the evening a dinner was hosted in which all the
negotiators were invited. When the papers were sent to R. Shriman, he objected
to the MOU on two points.
First, the other plants were having 30 days pay system leading to less
average pay per day and in Chennai plant it was to be given for 26 days leading
to higher average per day. Second the milk allowance given for overtime at
Chennai unit was higher than other units. It look Shrivastav and Rajkumar two
months to convince Shriman about the agreement and thereafter, implementing the
same. A total amount of Rs. 14 to 15 lakhs was given to all the 160 workers
within a week as arrears and the issue was settled.
Questions:
(a) Was it right for V.D. Agarwal to withdraw half way during the
negotiations?
(b) Identify the tactics used by management in the case. Are they
justified?
(c) Should Director (Personnel) have raised objections after MOU
(Memorandum of Understanding) was signed? Give reasons.
(d) In view of the information given in the case, suggest the strategies
that could have made IMPLA Pharmaceuticals a more progressive organization.
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4. V. J.
Textiles
Read the case carefully and answer the questions given at the end.
V.J. Textiles is a leading industry having a workforce of more than 1200
employees, engaged in the manufacture of cotton yarn of different counts. The
company has a well-established distribution network in different parts of the
country. It has modernized all its plants, with a view to improve the productivity
and maintain quality. To maintain good human relations in the plants and the
organization as a whole, it has extended all possible facilities to the
employees. Compared to other mills, the employees of V.J. Industries are
enjoying higher wages and other benefits.
The company has a chief executive, followed by executives in-charge of
different functional areas. The Industrial Relations Department is headed by
the Industrial Relations Manager. The employees are represented by five trade
unions - A, B, C, D and E (unions are alphabetically presented based on
membership) - out of which the top three unions are recognized by the
management for purposes of negotiations. All the unions have maintained good
relations with the management individually and collectively.
For the past ten years, the company has been distributing bonus to the
workers at rates more than the statutory minimum prescribed under the Bonus
Act. Last year, for declaration of rate of bonus, the management had a series
of discussions with all recognized unions and finally announced a bonus. This
was in turn agreed upon by all the recognized unions. The very next day when
the management prepared the settlement and presented it before the union
representatives, while Unions A and C signed the same, the leader of Union B
refused to do so and walked out, stating that the rate of bonus declared was
not sufficient. The next day Union B issued a strike notice to the management
asking for higher bonus. The management tried its level best to avoid the unpleasant
situation, but in vain. As a result, the members of Union B went on strike.
They were joined by the members of Union D.
During the strike, the management could probe the reason for the deviant
behavior of Union B leader; it was found that leader of Union A, soon after the
first meeting, had stated in the presence of a group of workers, "lt is
because of me that the management has agreed to declare this much amount of
bonus to the employees; Union B has miserably failed in its talks with the management
for want of initiative and involvement". This observation somehow reached
the leader of Union B as a result of which he felt insulted.
Soon after identifying the reason for Union B's strike call, the
Industrial Relations Manager brought about a compromise between the leaders of
Unions A and B. Immediately after this meeting the strikers (members of Unions
B and D) resumed work and the settlement was signed for the same rate of bonus
as was originally agreed upon.
Questions
(a) Was the leader of Union A justified in making remarks which made the
leader of Union B feel offended?
(b) What should be management's long term strategy for avoiding
recurrence of inter-union differences on such issues?
(c) If you were the Industrial Relations Manager what would you have
done had the Union B resorted to strike for a reason other than that mentioned
in the case
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