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India’s labour law amendments obliterate collective bargaining rights

Unions protest new notice requirements and heavy penalties for strikes

by Aju John

Trade Unions Rally in Rajasthan, India. Photo: Surrenders25. This file is licensed under the Creative Commons Attribution-Share Alike 4.0 International license https://creativecommons.org/licenses/by-sa/4.0/deed.en

While the pandemic raged outside, India’s Parliament sat in a curtailed monsoon session. It passed three legal codes on labour. The Industrial Relations Code, the Code on Social Security, and the Occupational Safety and Health and Working Conditions Code joined the Code on Wages, 2019 to become part of India’s statutory law on labour.

The distribution of powers in India’s federal system of government, allow both federal and provincial governments to make laws on Labour. For several years now, businesses had demanded the simplification and reform of India's labour regulations. The argument was that old and complex regulations prompted companies to remain small or use capital-intensive methods of production.

Ministers of the Union government led by the Bharatiya Janata Party (BJP) made clear that these new codes (replacing 44 federal laws), were aimed at improving India’s ranking in the “Ease of Doing Business” index.

Workers and trade unions on the other hand, called these reforms “anti-working class”, some suggesting that British Raj labour laws were more favourable for Indian workers. Ten central trade unions have called a nationwide general strike on November 26 to protest against these laws.

The decision was taken at the National Convention of Workers organised online by the central trade unions and independent federations. “Let it be known that this One Day Strike is in preparation for more intense, more tenacious and longer struggles that lie ahead,” the unions said.

Universally labour laws represent some compromise between labour and capital. The state may facilitate the emergence of some consensus between businesses and workers. In the India of 2020 however, the government’s approach to the reform of labour law, reflected its approach to pretty much everything else. As with Kashmir’s constitutional autonomy and the nationwide lockdown after the Covid-19 pandemic, Parliamentary discussion was a mere inconvenience, to be shrugged away.

Labour organisations have complained that the representatives of workers and provincial governments were not consulted in the process of law-making. In five years the government has not once organised the Indian Labour Conference, the highest tripartite labour policy body. Parliament passed these laws, along with the highly controversial agricultural reform laws, on the basis of a voice vote with very little discussion.

The role of labour law

Labour law is supposed to represent the recognition that parties to employment contracts do not negotiate from equal positions of strength. Labour law includes deference to collective bargaining agreements, immunity of trade unions from legal liability, statutory minimum wages, guaranteed social security, and legally enforced health and safety standards. This is to protect employment conditions from being determined entirely by the so-called ‘freedom of contract’.

By setting limits to the conditions of employment and by recognising workers’ unions in collective bargaining, labour law protects the weaker party in employment negotiations.

On the other hand, labour law also limits the strength of organised labour. The greatest weapon in the hands of organised workers is the threat of strike. Around the world, labour laws try to maintain ‘peaceful industrial relations’, by limiting the ability of workers to strike. As an alternative, labour laws set up mandatory dispute resolution processes. These ‘conciliate’ or ‘adjudicate’ industrial disputes to resolve them without strikes.

Labour law as a system of rules and procedures to make employment relations fairer, therefore, is incorrectly described. While it may contain provisions to protect workers in negotiations, it attempts to de-fang organised labour.

The actual wages and conditions of employment that emerge from the negotiations that take place within labour law depend on several factors: the availability of substitutable labour in the market, the extent of precarity that unemployment brings, and the strength of unions. Modifications to labour law - for example, revising the minimum standards of work, not recognising trade unions, removing the right to strike, or the functioning of dispute resolution mechanisms, can alter these factors and tilt the balance of power in those negotiations.

Applicability of the Industrial Relations Code 2020

The Industrial Disputes Act of 1947, owing primarily to its restricted definitions of the terms “industry” and “workman”, effectively covered less than ten per cent of India’s total workforce. A new code to govern employer-employee relations was a historic opportunity to expand the protections to the many new types of work that have emerged since the 1947 law.

Instead, the Industrial Relations Code, 2020 permits governments to remove establishments from the scope of the term “industry” through executive action and the new definition of “worker” excludes apprentices.

Collective bargaining and the ability to strike

By further limiting the ability of workers’ unions to go on strike, the Industrial Relations Code, 2020 has decisively tilted the balance of power in collective bargaining in favour of businesses.

These developments are part of a long process of legal disarmament of organised labour, aided by a Supreme Court that never recognised a worker’s right to strike as being fundamental to her liberty or dignity.

The 1947 law had required that strikes in public utilities were mandated to give at least 14 days notice. This meant that, several sectors of industry (including several types of mining and the cement manufacturing industry), successfully lobbied to be declared as public utilities.

The Industrial Relations Code now extends the requirement of notice to all strikes in all industries. Any strike that does not comply is now an “illegal strike”. “To advise or actively support or instigate any strike deemed to be illegal under this Code” is now an “unfair labour practice”. This carries a potential penalty of a fine of two lakh (200,000) rupees for a first offence, and a fine of up to five lakh (500,000) rupees and imprisonment for three-months for a subsequent offence. The registration of a trade union can also be cancelled for such a violation.

“The right to strike, effectively being the only weapon in the hands of the workers, has been severely blunted. Firstly, by requiring a mandatory notice period and secondly by criminalising several aspects including ‘inciting’ and taking part in a strike, it looks to criminalize an essential tool for collective bargaining”

said Maitreyi Krishnan, a Bengaluru-based lawyer with Manthan Law, who has worked with the All India Central Council of Trade Unions.

“By allowing for the cancellation of the registration of a union for a violation of the law which includes an ‘illegal’ strike, it hits at not only collective bargaining but at the right of association itself,”

she said. The right to association, it should be noted, enjoys the status of a fundamental right in India, which can only be restricted through law under some narrow grounds.

The new law also introduces the concept of a sole negotiating union. If a trade union has at least 75 per cent of the work-force as members, it becomes the sole negotiating union with an employer. Where no union has 75 per cent of the workers as members, a negotiating council has to be formed.

“It’s very difficult for a union to have 75 per cent membership”, Krishnan noted. “The government's power to constitute a negotiating council will take away from the independence of unions,” she said.

Independence of labour tribunals

In addition the 2020 Code limits any chance of justice emerging from its system for the resolution of disputes. It empowers the government to reject or modify, the awards of its tribunals. This allows the government to disproportionately influence the resolution of disputes in which it is a party.

Fixed-term employment, retrenchment

This is by no means all the complaints that labour organisations have put forward against the amendments made through the newly legislated labour laws.

Perhaps just as significant as the above problems is that it permits businesses to employ workers for a limited duration based on a contract. The system of employing workers “on contract” has been used historically, to deny benefits to those workers.

The 2020 code also permits state and federal governments to revise through executive action, the threshold number of employees at which a business is required to obtain the government's consent to retrench (termination of an employee’s service for reasons other than disciplinary reasons) workers. Previously, to revise the threshold of 100 employees present in the 1947 law, a state government would have had to pass a law (through that state’s legislature) and then seek the assent of the country’s President.

Trade unions and collective bargaining have been pivotal in improving conditions of work in India and around the world. After they emerged in England during the Industrial Revolution, they were initially prohibited from engaging in collective bargaining. Associations in defiance of these statutes became agreements to commit crimes or criminal conspiracies. The recognition of trade unions in law as legitimate agents for negotiating the conditions of work and their immunity from legal liability for anything done in the context of a dispute between employers and employees, were milestones for the labour movement.

The changes to India’s labour laws through the Industrial Relations Code, 2020 herald a return to the times when workers coming together to negotiate their conditions of employment, was a subversive criminal act.

Aju John is the founder of Nagrik Open Civic Learning and runs the Nagrik Podcast.


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