MODERN BUSINESS

PRACTICES

Prepared by DEEPALI MITTAL (SDJIC)

CHAPTER :TRADE UNION
 WHAT IS A TRADE UNION ?

A trade union is an organization of

workers. A trade union acts as a “lobby” that
negotiates with the management. Negotiations
may take place for a lot of relevant issues. Such
an association is meant to achieve some common
goals. Such as higher pay, better work conditions
and working hours. Another set of goals is health
insurance and retirement plans.

The Trade Unions Act, 1926 regulates

trade unions in India. As per the Act, trade unions
regulate employer-employee relationships.
Further, a federation of two or more trade unions
is also a trade union.
DEFINITION OF TRADE UNION

“A trade union may be defined as a continuous voluntary association of the wage-

earners designed to protect the interests of the members, to improve their
working lives and to promote a better-relationship between the workers and trade
unions”.
-Dr. Memoria

“A trade union is any combination, whether temporary or permanent, formed

primarily for the purpose of regulating the relations between workers and
employers, or between workmen and workmen and for imposing restrictive
conditions on the conduct of any trade and business, and includes the federation
of two or more trade unions.”
-The Indian Trade Union Act of 1926
HISTORY OF TRADE UNIONS IN INDIA

During their rule, Britishers set up textile mills in Madras, Bombay, Surat and
Calcutta.

A boom in the textile industry took place in late 19th century. This lead to massive
recruitment in these mills. This gave rise to the need for a regulating law.

The British enacted the Factories Act in 1881. This act laid down some strict laws.
These laws favored owners over the workers.

As the First World War began, these textile mills faced more work. But more work
did not mean more staff. Working conditions deteriorated further. That is how
unionism in India started.
 LAWS GOVERNING TRADE UNIONS IN INDIA

In India, trade unions are governed under national and state-specific

legislations. The right to form and join a trade union, and engage in collective
bargaining etc. are provided under these laws.
Also, the Constitution of India guarantees a fundamental right “to form
associations or unions.” A minimum of seven persons can form and register a
trade union under the Trade Union Act.
The Trade Unions Act, 1926 is the original act related to labor unions in
India. The Act provides for formation and registration of trade unions and in
certain respects to define the law relating to registered Trade Unions.
The Industrial Dispute Act, 1947, also deals with trade unions. It primarily
regulates the rights of employers and employees in the investigation and
settlement of industrial disputes.
 CHARACTERISTICS OF TRADE UNION

1) Association of employees: A trade union is essentially an association

of employees belonging to a particular class of employment,
profession, trade or industry. For example, there are unions for
teachers, doctors, film, artists, weavers, mine workers and so on.
2) Voluntary Association: An employee joins the trade union out of his
free will. A person cannot be compelled to join a union.
3) Permanent Body: A trade union is usually a permanent body.
Members may come and go but the trade union remains.
4) Common Interest: The member of a trade union have certain matters
of common interest- job security, better pay and working conditions
and so on, which bring them together.
 CHARACTERISTICS OF TRADE UNION

5) Collective Action: Even when an individual employee has any

grievance over certain management decisions, the matter is sorted out
by the intervention of the trade union. Employees are able to initiate
collective action to solve any problem concerning any particular
employee or all the employees.
6) Rapport with the Management: The trade union seeks to improve
relations between the employees and employers. The officials of the
trade union hold talks with the members of the management
concerning the problems of the employees in order to find an
amicable solution. It is thus possible for the employees to have better
rapport with the management.
 FUNCTIONS OF TRADE UNIONS
1. Collective Bargaining

2. Workers’ Welfare

3. Co-operating with Management

4. Political Activities

5. Workers’ Representation

6. Setting Individual Worker’s Complaints

7. Social Responsibility

8. Raising and Setting Industrial Disputes

• Collective Bargaining:
• Trade unions are established to enhance the bargaining power of workers by acting
collectively. Since an individual worker has very little bargaining power compared to
their employer, workers' unions negotiate on behalf of their members to prevent
exploitation. Through collective bargaining, unions can negotiate wages, work
conditions, and other matters on equal terms with employers. If trade unions and
employer federations exist at the national level, they can address many common
issues, leading to decisions that are more acceptable to both parties, especially to
workers, rather than having solutions imposed by the government. This process has
helped in settling wage rates and work conditions in several organized industries.
However, for collective bargaining to be effective, two key conditions must be met:
• The union must be recognized by the employer.
• The union must have control over the majority of the workers, meaning it must be a
strong and influential organization.
• Workers’ Welfare:
• Trade unions do more than just negotiating for higher wages or better working
conditions.
• They are also expected to engage in welfare-oriented activities for their members,
such as offering educational programs, medical treatment, sports, and cultural
events. Unions that neglect such welfare activities often lose control over their
members, leading to a loss of interest and involvement from the workers. Therefore,
maintaining a focus on the overall well-being of the workers is crucial for the long-
term effectiveness of the union.
• In conclusion, the role of trade unions is not just limited to collective bargaining but
also includes ensuring the welfare of their members.
• Co-operating with Management:
• In the daily operations of industrial units, various issues arise that require the
cooperation of workers. Examples include the introduction of automatic machinery,
addressing safety concerns, enforcing discipline, improving productivity, and changes
in wage payment systems. If such decisions are made with the consultation of labor
leaders, they are more likely to be accepted by the workers, reducing the chances of
conflict between workers and management. Trade unions, therefore, need to adopt
a more cooperative rather than confrontational approach, working constructively
with management to solve these shared problems. Cooperation benefits both
parties, helping in the smooth running of the organization.
• Political Activities:
• The policies of the government and management often directly impact the interests
of workers, employers, and entrepreneurs.
• For this reason, trade unions play an essential role in influencing government
legislation that affects labor rights. In some countries, such as Britain, trade unions
have even formed political parties to ensure their interests are represented in
government. Historically, unions have sometimes sought to challenge or even
overthrow capitalist systems, as advocated by Karl Marx. In India, the trade union
movement has always been closely linked with political activities, with unions
actively participating in the political landscape to represent workers' concerns.
• Workers' Representation:
• A major function of trade unions is representing workers' interests. They act as the
voice of workers, raising grievances and negotiating with management on issues like
wages, working conditions, and employee rights. Trade unions also represent
workers in national and international forums. For instance, organizations like the
International Labour Organisation (ILO) work to strengthen workers' representation
on a global scale, ensuring their issues and concerns are heard and addressed at an
international level.
• Settling Individual Worker’s Complaints:
• Trade unions play a crucial role in resolving individual worker grievances. By
developing a constructive relationship with employers, unions can help solve
problems related to transfers, promotions, working hours, wage payments, leave,
and suspensions. If these issues are resolved through mutual consultation between
the union and management, it creates a positive environment for workers, making
them feel supported. This also strengthens the trust of workers in the union.
• Social Responsibility:
• A mature and strong trade union should not limit its activities to the economic well-
being of its members alone. It should also contribute to the social and economic
development of society as a whole. For example, trade unions can play an important
role in the successful implementation of government development programs, such
as those under India’s Five-Year Plans. These programs focus not only on increasing
national income but also on ensuring fair distribution, which can help reduce the gap
between the rich and poor, including the labor class. By recognizing that what
benefits society also benefits workers, union leaders can take on a broader
responsibility of aligning workers’ interests with the interests of society.
• Raising and Settling Industrial Disputes:
• When trade unions’ demands are not met, they may resort to strikes as a last
measure. However, strikes can be risky. The true success of a union lies in managing
strikes responsibly, ensuring that the resolution leads to a permanent solution rather
than just postponing the problem. This requires skill in presenting the issue clearly,
understanding the management's viewpoint, and making necessary adjustments for
the benefit of both parties.
• Other Functions: In a country where industrial workers make up a large portion of
the active population, trade unions can significantly contribute to the overall social
and economic progress. Unions can promote education, create social awareness,
and foster communal harmony. Additionally, they can conduct scientific studies on
labor and industry issues, using these studies to offer well-informed perspectives
that benefit both workers and society at large.
• In conclusion, the role of trade unions extends beyond workplace issues to include
settling individual complaints, fulfilling social responsibilities, addressing industrial
disputes, and contributing to the broader socio-economic development of the
country.
 RIGHTS OF A REGISTERED TRADE UNION
1. Right to do an agreement 11. Right to contract on behalf of all the employees
2. Right to acquire protection against a civil suit / members
12. Right to announce or proclaim
3. Right to negotiate with the employers
4. Right of getting approval 13. Right to evolve a compromise policy for a
dispute between the member employees and
5. Right to hold property the employers
6. Right to maintain general funds 14. Right to handover the charge for getting a
7. Right to communicate or correspond with the solution of the dispute to an arbitrator
employers 15. Right to protection against dismissal or
8. Right to put a notice board at the place of its discharge
member employees
9. Right to appoint representatives
10. Right to participate in the evolution of new
labor policy
• Rights of a Registered Trade Union:
1.Right to Enter Agreements: A registered trade union is a legal entity with its own
identity, separate from its members. It has the right to enter into agreements or
contracts with other parties for the benefit of its members. The union cannot be sued
for actions done as a collective body.
2.Right to Protection from Civil Suits: Members of a trade union are protected from civil
suits, especially if the union’s activities—such as strikes or work-to-rule campaigns—
cause financial loss to employers. Employers cannot sue the union for such activities as
they are recognized union actions.
3.Right to Negotiate with Employers: The trade union has the right to negotiate or
discuss issues with employers on behalf of its members. This ensures that workers’
interests are represented in negotiations regarding their employment.
4.Right to Obtain Employer Approval: Employers must acknowledge a registered trade
union. If an employer refuses, the union can apply to the labor court to enforce
compulsory approval, which the court can mandate under certain conditions.
5. Right to Maintain General Funds: The trade union can collect membership fees and
maintain funds. These funds can be used for specific purposes, such as union
activities, member welfare, and administration.
6. Right to Communicate with Employers: A registered trade union has the right to
communicate with employers about service conditions and workers' duties.
Employers are expected to respond to these communications within a specified
timeframe, and meetings can be arranged as necessary.
7. Right to Post Notices at Workplaces: Trade unions can place notices on boards at
their members’ workplaces. Employers are expected to provide this facility as part of
their duty.
8. Right to Appoint Representatives: The trade union has the right to appoint
representatives to various committees such as grievance committees, production
committees, labor welfare committees, etc., ensuring workers’ voices are heard.
9. Right to Participate in Labor Policy Formation: When state or central governments
frame new labor policies, trade unions are invited to participate in discussions,
contributing their views to the formation of these policies.
10. Right to Contract on Behalf of Members: Trade unions have the right to negotiate
with employers on issues such as wages, working hours, and welfare benefits. This
protects the interests of workers without them having to confront employers directly,
maintaining good relations between the two parties.
11. Right to Announce or Proclaim Actions: If necessary, the trade union can issue
announcements or proclamations to its members, such as calling for a work stoppage
or strike, demonstrating the union’s power. Members are expected to follow these
directives.
12. Right to Form Compromise Policies: Trade unions have the right to negotiate and
form compromise agreements with employers on behalf of their members. These
agreements are generally accepted by employees and help resolve disputes.
13. Right to Arbitration: If negotiations fail to resolve a dispute, the trade union has the
right to refer the matter to arbitration to find a balanced solution.
14. Right to Protection from Dismissal: Employers cannot dismiss or discharge an
employee solely on the grounds of their trade union membership, providing
protection to workers involved in union activities.
15. Right to Hold Property: A registered trade union has the right to acquire, hold, and
manage property in its own name. It can also enter into contracts and be involved in
legal proceedings under its own identity.
These rights empower trade unions to effectively represent and protect their members,
ensuring fair treatment in the workplace.
 DUTIES / RESPONSIBILITIES / OF A TRADE UNION
• Maintenance of account book and auditing of account book by competent auditor.
• Maintain the register of the members compulsory.
• Audited account to be forwarded to the registrar in charge.
• Union can collect the membership fee for the provision of the interest of the members
and the managerial expenses of the union but paying this fee is not compulsory.
• Union cannot force its members to pay the contribution to any political party.
• Union has to keep the business environment peaceful and co-operate in maintaining
the positive attitude in the development process of the business.
• Union should leave aside the attitude of the opposition against the employers and
should try to train their members in understanding the motto that advancement of
business will result into upliftment of employees.
• Union has to help its members in the time of miseries of the members.
• Union is expected to provide a good leadership to the members.
• Union cannot use the funds for unauthorized means. It can utilize the money for
administrative expenses, court proceedings, audit, management of strikes, giving
compensation in the cases of old-age, sickness, accident, etc.
• It should try to get a compromising solution of the dispute between and employer
and employees.
• If there is no result of the negotiation, then the last tool of strike is to be announced,
otherwise not.
• It is the liability of the union to see that the strikes do not indulge into the violence.
• It is the liability of the union to co-operate in the important activities of the nation.
• At the time of industrial dispute, it is the liability of the union to maintain law and
order.
THE END!!