Delay and complexities plague labour reforms

It is almost impossible to implement the new Labour Codes in the near future as 23 states and UTs have to first issue draft rules and provide, at least, 30 days for public opinion to issue the final rules. In a two-part series, K.R. SHYAM SUNDAR explains in part I the drawbacks in the rules made by the Centre and eight states on recognition and verification of trade unions and the lack of a uniform method.

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The Centre's delay in implementing the Code on Wages (CW) and the other three labour codes, viz. the Industrial Relations Code (IRC), the Occupational Safety, Health And Working Conditions Code (OSHWCC) and the Code on Social Security (CSS), indicates that they will not be implemented even by October this year.

The Union government has been postponing the implementation of CW and the other three codes, passed by Parliament in August 2019 and September 23, 2020, respectively, since April 1 this year. 

The Central government framed the draft rules under the WC twice, viz. in 2019 and July 2020. The draft rules relating to the two other codes were published during 2020-21 and the IRC in bits and parts. 

Since labour figures in the Concurrent List, both the Central and the state governments can enact laws and make rules in their respective administrative spheres.

Also read: Govt defers labour codes as states fail to finalise rules  

Reasons for non-implementation of codes

There are two reasons for postponing the implementation of codes. First, neither the employers nor the employees are willing to move an inch from their demands. Secondly, 19 states and the Union Territories (UTs) have not framed draft rules even under one labour code (see Table 1 below). Karnataka, Gujarat and Tripura have not framed rules under SSC and OSWCC while Rajasthan has framed only WC rules. 

Table 1 Status on the framing of rules under the four codes by states as on August 20, 2021

Note: There are 19 states and UTs which did not frame rules under any of the four labour codes: Andhra Pradesh, Telangana, Kerala, Tamil Nadu, Puducherry, Maharashtra, Goa, West Bengal, Delhi, Haryana, Rajasthan, Himachal Pradesh, Assam, Meghalaya, Mizoram, Manipur, Nagaland, Arunachal Pradesh and Sikkim.

Therefore, it is almost impossible to implement the codes in the near future as the 23 states and the UTs have to first issue draft rules—after getting clearance from the department of law—and provide, at least, 30 days for public opinion to issue the final rules. 

Also read: Labour Law Reforms: After a Tearing Hurry, Ad-hocism, Lethargy and Complexities Dominate Processes of Making Regulations – Part I

The Centre's rules are only in the draft stage. Employer organisations and the central trade unions have vehemently opposed several clauses in the codes—for example, employers oppose the proposal to cap allowances at 50 per cent of wages while trade unions support it.

Also read: Explained: Here's Why Workers, Opposition Parties Are Protesting Against the 3 New Labour Laws

I have argued in several articles and in my book Impact of COVID-19, Reforms and Poor Governance on Labour Rights in India that the Centre has poorly and inadequately drafted the four codes and left many substantive and procedural issues to rule making. Therefore, difficulties and complexities plaguing the rule making process at the state level were expected. 

This article mentions and analyses the rules made by the Centre and the eight states so far on (a) recognition of negotiating union/council (NU/NC), (b) the matters for negotiation and (c) the facilities for NU/NC. 

Rules relating to recognition of NU/NC 

Sections 14(1) to (6) of the IRC deal with aspects related to a trade union's recognition, viz. negotiating agencies (NU/NC), manner of verification, matters for negotiation, tenure of union recognition and facilities for recognised unions. 

Surprisingly, Punjab's draft rules completely omit the rules relating to the recognition of NU/NC. Notably, the Centre came out with the NU/NC rules only on May 5, 2021, while the Punjab government framed the rules on March 5, 2021.

There are three methods to determine NU/NC: membership verification, check-off and secret ballot. Since the erstwhile Trade Unions Act, 1926, did not provide for recognition of trade unions, some state governments recognised them. 

Maharashtra preferred membership verification (in its Maharashtra Recognition of Trade Unions and Prevention of Unfair Labour Practices Act, 1971) while Kerala and West Bengal opted for the secret ballot. Even the Code of Discipline, which initially preferred membership verification to other methods, later allowed secret ballot in some cases. 

Bihar: If there is only one registered union and it commands more than 25 per cent of the total workforce of an industrial establishment, it would be recognised by its employer (rule 15). Concerning the manner of verification of workers under 14(3)(4), rule 16 blandly states that the verification of workers "… Shall (sic) be made in the presence of authority as notified by State Government of (sic) the concerned area (sic)".  

Gujarat: On receiving the application for 'sole negotiating union status' by a trade union irrespective of its tenure as a registered union, the employer shall verify its membership [61(1)(2)] as mentioned in 61(4). 

In case, where more than one union competes for recognition, they should have completed six months after their registration. Only members who have paid subscriptions for, at least, three months during the six months immediately preceding the date of reckoning [rule 61(4)] shall be counted. 

For determination of NU/NC under Section 14, the employer shall extend the check-off system to them. In cases where workers hold multiple memberships, the "last subscription deducted shall be considered for determination of membership status of them" [62(1)(2)]. 

The rules are rather opaque and poorly framed with the employer vested with the task of verifying a union membership. In the case of a single union, no quantitative threshold of membership is provided. It is not clear why the check-off system should be provided only when there is more than one union. 

If the membership payment data system is common for all the competing unions, how does the employer determine "the last subscription"? Even if it is possible, the "coincidental" instance of the "last subscription" may not reveal the "worker's preference" of a union. 

Jharkhand: The employer shall recognise the single registered union "after being satisfied that concerned (sic) union has been functioning in accordance with the rules of the union". If more than one registered union competes for recognition, the employer, after due notice to the unions, will verify their membership register. If each of them claims to have 51 per cent or more of membership support, then "the employer may demand "minimum three consecutive month's (sic) subscription receipts and membership register". 

In case, the process does not help the employer, he/she may verify membership of the unions through a secret ballot conducted in the presence of the officer authorised by the Registrar of Trade Unions [Rule 15(2)(3)]. 

The process has two striking shortcomings. First, only the employer, not an independent person/body—like the Registrar of Trade Unions—can conduct the verification. Second, the employer may/shall not follow the procedures to decide membership of the competing unions. 

Karnataka: If there is only one registered union and it has a membership of 20 per cent or more of the workers in the establishment, the employer shall recognise it. In case of more than one registered union, the Registrar shall either physically verify the membership of the competing trade unions or their membership subscription records.

Also read: Labour Law Reforms: After a Tearing Hurry, Ad-hoism, Lethargy and Complexities Dominate Regulations Making Processes – Part II  

Madhya Pradesh: The employer shall recognise a single registered union having 20 per cent or more members recognised by him/her. In case of more than one registered union, the Registrar shall make physical verification of membership or verify it based on membership subscription by members. 

Odisha: A single registered union functioning for, at least, one year after its formal registration shall apply to the verification officer for recognition and the latter shall recognise it and communicate the same to the labour commissioner and the local conciliation officer [Rule 22(1) to (3)]. 

Rule 2(h) defines a verification officer, including an additional verification officer but does not mention who could be appointed as rule 14(1) empowers the labour commissioner to appoint a verification officer (see later). However, Rule 23(1) specifies the employer of the industrial establishment as the verification officer. He/she may appoint additional verification officer(s) who should be neutral persons depending on the quantum of work [14(b)(c)]. 

The employer shall consult the trade unions to decide on the method of determination of NU/NC among the three mentioned above and determine the date of reckoning to count the membership of unions. In case of disputes, the employer "may" seek the intervention of the labour commissioner, Odisha, who, after hearing the parties, shall take decisions that will be binding on the parties. 

Rule 14(l) empowers the commissioner to appoint the verification officer to conduct membership verification or an observer to supervise the said process. Rule 14(m) describes the membership verification process based on subscriptions, 14(B) the check-off system and 14(C) the secret ballot process. There is no clarity on who shall be the verification officer—the employer or an outsider. 

Uttarakhand: The employer shall recognise a single registered union irrespective of its membership, i.e. the rules do not provide any criteria for recognition. In case of more than one registered union, the deputy Registrar shall verify the support enjoyed by them. But the rules do not provide the method of verification of membership.    

Uttar Pradesh: The employer shall recognise a single registered union provided that union elections are conducted as per its by-laws and the same is recorded in the labour department's files. In the case of more than one registered union, the one with 51 per cent or more membership shall be recognised based on membership of the competing unions. However, in case of a dispute and any demand of the union, the employer shall, after informing the Registrar, appoint an independent "observer" (who could be the inspector-cum-facilitator if the Registrar desires so) to conduct a secret ballot. 

Different states, separate rules

The rules regarding the determination of NU/NC differ substantially across the states. One can imagine the complexities that will arise if the rules of all the states and the UTs are considered. In case of a single union, some rules specify quantitative thresholds which differ—Madhya Pradesh and Karnataka (20 per cent), Bihar 25(per cent) and for the Central sphere (30 per cent)—and others specify qualitative criteria dealing with compliance with union rules/by-laws. 

The criterion is not based on membership but compliance with rules relating to the election of the union's executive body, which are internal affairs of the union. The union is accountable to the Registrar's office, not to the employer. Uttarakhand does not even specify a criterion. 

In the case of competing unions, the states have specified rather brief and vague, often complex, processes for verifying membership. In some states like Odisha, Uttar Pradesh and Jharkhand, the employer is vested with the powers to verify the membership of a single or competing union. In other states, the Registrar conducts the verification process. 

This is advisable for two reasons. One, in the erstwhile Trade Unions Act and the IRC, the powers of the Registrar were/are limited to the extent of registering a trade union as per law or cancelling their registration. He/she does not have quasi-judicial powers and cannot adjudicate on claims of the parties and disputes between the trade unions. The Registrar has only administrative powers (Kovai Periyar Maavatta Dravida Panchalai Thozhilalar Munnetra Sangam, Coimbatore vs Commissioner of Labour, 2003); R. Murugesan vs Union Territory of Pondicherry, 1976 and ONGC Workmen's Association vs State of West Bengal, 1988). 

Under the Trade Unions Act, the civil courts dealt with trade union disputes. In the IRC, on a positive note, the Industrial Tribunal shall deal with them even though this means a substantial increase in the burden on the Tribunal. So, there is a good case for providing some more powers to the Registrars of trade unions. 

As far as the method of verification of trade union membership claims is concerned, Bihar and Uttarakhand lack any, Madhya Pradesh and Karnataka rely solely on membership verification method and other states use a combination of two methods. 

Jharkhand relies on membership verification, and if there is a dispute, it provides for the secret ballot. In the case of Gujarat, both membership verification and check-off method make it confusing. In Odisha, one of the three methods shall be used after consultation with the contending trade unions. On the other hand, the Centre's rules provide for a secret ballot.

In the existing system, while the central trade union law does not provide for compulsory recognition of trade unions, few states like Maharashtra, Kerala and West Bengal do. Maharashtra stipulated the membership verification method while Kerala and West Bengal opted for the secret ballot. In Maharashtra, the Congress party enacted the union recognition laws while its labour wing, the Indian National Trade Union Congress, has strongly preferred the membership verification method. 

In the case of Kerala and West Bengal, the then-ruling Left parties enacted the recognition laws while their labour wings, Centre of Indian Trade Unions/All India Trade Union Congress, preferred the secret ballot. 

In the case of trade unions operating in multiple plants of the same company located in different states and adopting company-wide bargaining, as in the case of MNCs, or region-cum, industry-wide bargaining, different methods could pose problems. These problems could have been averted if the Central IRC stipulated a particular verification method.

The politicisation of the labour movement contributed to the stalemate over recognition of trade unions and the parties in power danced to the tunes of their labour wings. It is high time, the politicisation of the labour movement is curbed and a common method regarding the determination of NU/NC adopted.  

There is also a problem of the "universe" of union members which have plagued the researchers and administrators alike. In the case of membership verification and check-off methods, the "universe" comprises workers who are members of contending trade unions and excludes non-members. Their proportion can depend on the extent of union's coverage in the establishment. But in the case of secret ballot, the Rules specify that all the workers who are on the muster roll of the establishment shall be eligible to vote which would probably include "members" and "non-members".  

Thus, the secret ballot will compel even "non-members" to exercise their union choice even as they rejected unionism by remaining away from unions. 

Secondly, the Rules unanimously consider all the three methods involving workers on the muster roll of the establishment on the date of reckoning.  The moot question here is that will such a list include flexi-category workers like fixed-term employees, non-statutory trainees, casual and temporary workers? 

Thirdly, the contract workers recruited through the third party, like labour supply contractors, will be excluded in the case of all the three systems even though they may be working in the establishment for many years. 

Both trade unions and the legal system have excluded contract and flexi-category workers from the union security systems and other labour market securities.  

Hence these "exclusionary" and "inclusionary" issues need to be legally and institutionally resolved to ensure encompassing trade union presence in the establishment. 

(Dr K. R. Shyam Sundar is Professor, HRM Area, XLRI, Xavier School of Management, Jamshedpur. The views expressed are personal.)