Labour Code on Industrial Relations Bill 2015-Who cares for labour?

Gopalakrishnan Sundar 

In April this year, the Centre introduced the Labour Code on Industrial Relations Bill, 2015, the second in the series of codes aimed at consolidating the existing central labour laws.

The code seeks to replace the three principal pieces of legislation governing industrial relations in the country, namely the Trade Unions Act, 1926 (the TU Act), the Industrial Employment (Standing Orders) Act, 1946, and the Industrial Disputes Act, 1947 (the ID Act).

We argue that the code has been drafted keeping in mind only employer demands for greater labour market flexibility and labour discipline, ignoring the longstanding demands of trade unions, and that on account of such a blinkered approach, the code not only fails to strengthen labour rights but also weakens them.

Labour flexibility
The ID Act requires industrial establishments employing 100 or more workers to obtain the Centre’s permission before effecting any layoff, retrenchment and closure. The code enhances the threshold number to 300 without any rationale. The revision has the effect of reducing the accountability of employers and exposing a much larger number of workers to arbitrary closures and en masse termination.

As a trade-off, the code raises the retrenchment/closure compensation payable to workers from 15 days’ wages for every completed year of service to 45 days’ wages. At the same time, it leaves avenues open for avoidance of payment of the statutorily mandated compensation.

The ultimate flexibility provision in the code is the one empowering the government to exempt any establishment or class of establishments from any or all the provisions of the code if it is satisfied that adequate provisions exist for the investigation and settlement of industrial disputes in respect of workers employed there.

Any exercise of this power could result in workers being deprived of various basic rights including the right to organise and the right of access to justice. While a similar provision was inserted into the ID Act in 1982, it was never brought into force.

The right to strike
The ID Act permits workers in public utility services (PUS) to resort to strike only after they give at least two weeks advance notice. Conciliation proceedings are immediately triggered upon issue of such notice and workers are required to abstain from going on strike during the pendency of the proceedings and seven days thereafter.

On account of these restrictive conditions, it is impossible for workers in PUS to go on a legal strike. The misuse of the power to classify industries as PUS has resulted in curbing the right to strike of workers in a large number of industries that are not really essential.

The code now uniformly places all industrial workers in the same boat as PUS workers. This means workers in all industries will be governed by the strict conditions which have so far applied only to PUS workers.

Moreover, the penalties for participating in or instigating or aiding an illegal strike are very steep, ranging from ₹20,000 to ₹50,000 with possible imprisonment. These measures significantly reduce the capacity of workers to go on strike. That apart, the definition of ‘strike’ has been widened under the code to include casual leave by 50 per cent or more workers in the industry. Thus, even a coincidental absence by several workers on a given day may be treated as an illegal strike. 

Freedom of association
The TU Act permits outsiders to be office-bearers of trade unions. On the other hand, the code mandates that all the office-bearers of a registered trade union be persons actually engaged or employed in the establishment/industry with which the trade union is concerned. Such a restriction flies in the face of the standards contained in the ILO Convention of Freedom of Association and Protection of the Right to Organize (C.87) as it interferes with and limits the ability of workers to choose the persons they think best to be their leaders. Further, the code prohibits a person holding office in more than 10 unions. This again is contrary to the principles of freedom of association.

The range of grounds on which the registration of a trade union may be cancelled is wider under the code than under the Trade Unions Act and includes the failure to hold bi-annual elections and the failure to submit annual returns. Thus, the code seeks in many ways to rein in trade unions and interfere with their internal governance.

The code requires workers who are not members of any trade union to pay subscription to a workers’ welfare fund established by the government or the employer. While one possible justification for this measure would be that it encourages workers to join trade unions, the requirement of compulsory contribution is not just incompatible with the freedom of choice but also raises issues of propriety. 

TUs and collective bargaining
The TU Act merely provides for voluntary registration and not recognition of trade unions. This legal vacuum has resulted in the non-recognition of many representative unions and led to unions waging prolonged struggles for recognition. The ILO Governing Body’s Committee on Freedom of Association has therefore recommended that the government consider introducing suitable provisions on the subject.

The code, however, shockingly neither mandates employer recognition of representative trade unions nor prescribes any procedure for that. The lapse becomes even more significant as the code refers at various places to the recognised negotiating agent or certified bargaining agent. Further, although the government is obliged to respect and realise the principles contained in ILO Convention No 98 requiring the promotion of collective bargaining, the code does not contain any provisions aimed at promoting collective bargaining.

The reform exercise sought to be achieved through the code is thus partial and arbitrary. It cannot be expected to promote industrial governance according to constitutional values and ILO standards.

Gopalakrishnan is an advocate in the Madras High Court; Sundar is a professor at XLRI, Jamshedpur