CB and Right to Strike - NDA

M U M B AI S ILI CO N VALLEY BAN G A L O RE S IN G A PO R E M U MBA I BK C NE W DE L HI M U NI CH
India: Trade Unions

and Collective
Bargaining
November 2019
© Copyright 2019 Nishith Desai Associates www.nishithdesai.com

India: Trade Unions and Collective Bargaining
November 2019
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© Nishith Desai Associates 2019

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Acknowledgements
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Preetha Soman
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Ajay Singh Solanki

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Vikram Shroff
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8 © Nishith Desai Associates 2019

Contents
1. INTRODUCTION 01
2. HISTORY OF TRADE UNIONS IN INDIA 02
3. INDIA’S CENTRAL TRADE UNION ORGANIZATIONS 03
4. COLLECTIVE BARGAINING IN INDIA 04

I. Stages of Collective Bargaining in India 04
II. Levels of Collective Bargaining in India 06
III. Collective Bargaining Agreements in India 07
5. LAWS GOVERNING TRADE UNIONS IN INDIA 09

I. Constitution of India, 1950 09
II. Trade Unions Act, 1926 09
III. Industrial Disputes Act, 1947 11
6. LANDMARK CASES PERTAINING TO TRADE UNIONS 13
7. RIGHT TO STRIKE 15
8. RECENT TRADE UNION ACTIVITIES IN INDIA 16

I. Trade Unions in the Information Technology Sector 17
9. CONCLUSION 18
ANNEXURE I
Trade Unions Act and State Laws Provide Legal Protections to
Trade Unions in India 19
ANNEXURE II
Code of Discipline 22
ANNEXURE III
A New Challenge For India’s Technology Sector:
Trade Union Registered in Bangalore 25


1. Introduction
Trade unions in India have come a long way The potential for growth in trade union
since the first organized trade union - the represented workers is huge given the fact that
Madras Labour Union, one of the earliest India is likely to have a working population of
unions, was formed in 1918. India now has more than 64% by the year 2021.3
more than 84,642 registered trade unions1
along with an unaccounted number of
unregistered trade unions scattered across
a large spectrum of industries in India.2
1. http://mospi.nic.in/Mospi_New/upload/SYB2014/CH-41-TRADE%20UNIONS/Trade%20Unions.pdf (Accessed on January 22, 2019)

2. Ibid
3. http://articles.economictimes.indiatimes.com/2014-07-09/news/51248148_1_national-skill-development-corporation-india-october-economic-
survey (Accessed on January 22, 2019)
© Nishith Desai Associates 2019 1

2. History of Trade Unions in India

At the beginning of the last century, a few in 1920, the Bengal Trade Union Federation
groups were formed amongst workers in India in 1922 and the All India Railwaymen’s
so as to improve their bargaining power with Federation in 1922.
respect to their service conditions and wages.
In March 1921, Shri N.M. Joshi, the then
These were akin to trade unions of the present
General Secretary of the AITUC, recommended
day India. The earliest known of such unions
through a resolution that the Government
were the Printers’ Union formed in Calcutta
should introduce legislation for the
in 1905 and the Bombay Postal Union formed
registration and protection of trade unions in
in 1907.4
India. Eventually, the Trade Unions Act, 1926
The trade union movement in India began (“TU Act”) was enacted for the purpose of
after the end of First World War due to ensuring governance and protection of trade
the need for coordination of activities of unions.7
individual unions.5 The movement, over a
Today, the Bharatiya Mazdoor Sangh (“BMS”),
period of time, systematically spread to almost
the Indian National Trade Union Congress
all industrial centres and became an integral
(“INTUC”) and the AITUC are considered to
part of the industrial process in India.6 Various
be the largest trade unions in India. Also, the
trade unions were formed during such period,
country’s manufacturing sector in particular,
such as the Madras Labour Union in 1918, the
is heavily unionized.8
All India Trade Union Congress (“AITUC”)
4. See footnote 1
5. Ibid
6. Vikram Shroff and Akshay Bhargav, Trade Unions Act And State Laws Provide Legal Protections To Trade Unions In India, SHRM Legal Report,
March 2010. A copy of the article is annexed to this research paper as Annexure I.
7. See footnote 1
8. See footnote 6

3. India’s Central Trade Union Organizations

There are twelve Central Trade Union Organizations (“CTUO”) recognized by the Ministry of
Labour 9:
S.No. Name of Trade Union Political Affiliation

1. Bharatiya Mazdoor Sangh (BMS) Bharatiya Janata Party
2. Indian National Trade Union Congress (INTUC) Indian National Congress
3. All India Trade Union Congress (AITUC) Communist Party of India
4. Hind Mazdoor Sabha None. Independent Socialist Organization
5. Centre of Indian Trade Unions (CITU) Communist Party of India (Marxist)
6. United Trade Union Congress (Lenin Sarani) Socialist Unity Center of India Political Party
(UTUC (LS))
7. United Trade Union Congress (UTUC) Revolutionary Socialist Political Party
8. Trade Unions Co-Ordination Centre (TUCC) All India Forward Bloc Political Party
9. Self- Employed Women’s Association (SEWA) None. Independent.
10. Labour Progressive Front (LPF) Dravida Munnetra Kazhagam Political Party
11. All India Central Council of Trade Unions Communist Party of India (Marxist-Leninist) Liberation
(ICCTU) Group
12. Indian National Trinamool Trade Union All India Trinamool Congress Political Party
Congress (INTTUC)
As is evident from the above table, many to multi-unionism which has created various
Indian trade unions have an affiliation with a complexities for the employers especially
political party. In addition to the interference during the collective bargaining process.
of political leaders, such affiliation has also led
9. International Labour Organization, “The growth and decline of political unionism in India: the need for a paradigm shift” at p. 9, online:
<http://www.ilo.org/wcmsp5/groups/public/---asia/---ro-bangkok/---sro-bangkok/documents/publication/wcms_143481.pdf>. See also “Trade
Unionism in India” online: < http://industrialrelations.naukrihub.com/trade-unionism.html> (Accessed on January 22, 2019)

4. Collective Bargaining in India

Collective bargaining has been defined by the members. The charter typically contains issues
Supreme Court (“SC”) as “the technique by relating to wages, bonuses, working hours,
which dispute as to conditions of employment benefits, allowances, terms of employment,
is resolved amicably by agreement rather than holidays, etc. In an establishment with
coercion”.10 It is a process of discussion and multiple unions the employer generally
negotiation between employer and workers prefers a common charter of demands, but
regarding the terms of employment and in principle, all unions may submit different
working conditions. Workers are generally charters.
represented by trade unions with respect to
expressing their grievance concerning service
conditions and wages before the employer
B. Negotiation
and the management. Refusing to bargain
As a next step, negotiations begin after the
collectively in good faith with the employer is
submission of the charter of demands by the
considered to be an unfair labour practice as
representatives of the trade union. Prior to
per the provisions of the Industrial Disputes
such negotiations, both the employer and the
Act, 1947 (“IDA”) . This is generally an effective
trade unions prepare for such negotiations by
system as it usually results in employers
ensuring collection of data, policy formulation
undertaking actions to resolve the issues of
and deciding the strategy in the negotiations.13
the workers. However, the legal procedure
for pursuing collective bargaining in India is After such preparation, the negotiations
complicated . take place wherein the trade unions and the
employer engage in debates and discussions
pertaining to the demands made by the trade
I. Stages of Collective unions.14 In the event that such demands are
rejected, the trade union may decide to engage
Bargaining in India in strikes.
The collective bargaining process obviously

A. Charter of Demands takes long where the employer has to engage
with multiple unions. In the public sector, it
Typically, the trade union notifies the may take months or even years. For example,
employer of a call for collective bargaining the Joint Wage Negotiating Committee for
negotiations. However, in certain cases the the Steel Industry, covering workers in four
employer may also initiate the collective large unions, took more than three years from
bargaining process by notifying the union(s). the date of the submission of the charter of
The representatives of the trade union draft demands to the Steel Authority of India Ltd.
a “charter of demands” through various (SAIL).15
discussions and consultations with union
10. Karol Leather Karamchari Sangathan v. Liberty Footwear Company, (1989) 4 SCC 448
11. Section 18 of the IDA
12. See footnote 9 at p.60
13. R. Sivarethinamohan, Industrial Relations and Labour Welfare: Text and Cases, page 286, Available at https://books.google.co.in/
books?id=OBu-LapJUAcC&printsec=frontcover (Accessed on January 22, 2019)
14. Ibid
15. P.D. Shenoy, Voluntary bipartite approaches towards industrial peace: Indian experience (Bangkok, ILO, 1991), pp. 17-26

C. Collective Bargaining Conciliation proceedings are concluded with

Agreement one of the following recommendations: (i) a
settlement, (ii) no settlement or (iii) reference
Next, a collective bargaining agreement will to a labour court or an industrial tribunal.21
be drawn up and entered into between the
employer and workmen represented by trade
unions. It may be structured as bipartite
F. Compulsory Arbitration or
agreement, memorandum of settlement or Adjudication by Labour Courts,
consent award. For more details on the same Industrial Tribunals and National
please refer to section III below. Tribunals
When conciliation and mediation fails,
D. Strikes
parties may either go for voluntary or
If both parties fail to reach a collective compulsory arbitration. In the case of
agreement, the union(s) may go on strike. As voluntary arbitration, either the state or
per the IDA, public utility sector employees central government appoints a Board of
must provide six weeks’ notice of a strike, Arbitrators, which consists of a representative
and may strike fourteen days after providing from the trade union and a representative
such notice (a ‘cooling off period’).16 Under from the employer. In the case of compulsory
the IDA, neither side may take any industrial arbitration, both parties submit the dispute to
action while the conciliation is pending, and a mutually-agreed third party for arbitration,
not until seven days after the conclusion of which is typically a government officer.
conciliation proceedings or two months after Arbitration may be compulsory because the
the conclusion of legal proceedings.17 arbitrator makes recommendations to the
parties without their consent, and both parties
must accept the conditions recommended by
E. Conciliation the arbitrator.22
A conciliation proceeding begins once the Section 7A of the IDA provides for a labour
conciliation officer receives a notice of strike court or industrial tribunal within each
or lockout. During the ‘cooling off period’, the state government consisting of one person
state government may appoint a conciliation appointed to adjudicate prolonged industrial
officer to investigate the disputes, mediate disputes, such as strikes and lockouts. Section
and promote settlement.18 On the other hand, 7B provides for the constitution of national
it may also appoint a Board of Conciliation tribunals by the central government for
which shall be appointed in equal numbers on the adjudication of industrial disputes that
the recommendation of both parties, and shall involve questions of national interest or issues
be composed of a chairman and either two or related to more than one state. In such a case,
four members.19 No strikes may be conducted the government appoints one person to the
during the course of the conciliation national tribunal and can appoint two other
proceeding.20 advisers.

20. Section 22 and 23 of the IDA
22. See footnote 9

If a labour dispute cannot be resolved via suffers if the position of the state
conciliation and mediation, the employer and government is different from that of the
the workers can refer the case by a written central government.
agreement to a labour court, industrial
Pay scales for government employees
tribunal or national tribunal for adjudication
at the national level are revised by Pay
or compulsory arbitration. A final ruling on
Commissions, and wage increases are
the industrial dispute must be made within
determined by Wage Boards for several
six months from the commencement of the
industrial sectors, such as journalists and
inquiry.23 A copy of the arbitration agreement
other newspaper employees. Wage Boards
signed by all parties is then forwarded to
are tripartite organizations established
the appropriate government office and
by the government to fix wages. They
conciliation officer pursuant to which the
include representatives from workers,
government must publish the ruling in the
employees and independents.27 The SC
Official Gazette within one month from
recently upheld the Majithia Wage Board’s
receipt of the copy.24
recommendations to raise salaries for
journalists and non-journalists in print
media, dismissing challenges by the
II. Levels of Collective management of various newspapers.28
Bargaining in India ii. Industry-cum regional bargaining is
In India, collective bargaining typically takes peculiar to industries where the private
place at three levels25: sector dominates, such as cotton, jute,
textiles, engineering, tea plantation, ports
i. National-level industry bargaining is and docks. Bargaining generally occurs in
common in core industries such as two stages: company-wide agreements are
banks, coal, steel, ports and docks, and formed, which are then supplemented with
oil where the central government plays regional (i.e. plant-level) agreements. Basic
a major role as the employer. In these wage rates and other benefits are usually
industries, the CTUO26 do not typically decided at the company level, while certain
provide any guidelines on a charter of allowances, incentives etc., are decided
demands, including an increase of wage at the regional or plant level, taking into
or improvement of working conditions; account the particular circumstances,
instead, both sides – the government and needs etc., of the employees.29 However,
trade unions – set up a “coordination such regional agreements are only binding
committee” to engage in the collective on company management if the employers’
bargaining proceedings. Collective association authorizes it in writing to
bargaining in the public sector generally bargain on its behalf.
23. Govt. of India: Section 36 of the Industrial Dispute Act, 1947 (New Delhi, Govt. of India, 1947), at p. 22
24. Ibid at p. 18 and p. 22
25. See footnote 9 at p.63
26. For a list of recognized CTUOs, see above at p. 4
27. “National Wage Boards for Working Journalists and Other Newspaper Employees” online: < http://labour.gov.in/content/KNWageBoard/
aboutus.htm>
28. Livemint, “SC upholds Majithia wage board recommendations” 7 Feb 2014, online: <http://www.livemint.com/Consumer/
PMBDNjXi6e2ovpvss2SQoN/SC-upholds-validity-of-Majithia-wage-board.html>
29. Thomas Kochan et al. “Employment Relations in the Growing Asian Economies” online: <http://books.google.co.in/
books?id=K5MLn6k9N50C&pg=RA2-PT150&lpg=RA2-PT150&dq=industry+cum+regional+bargaining+india&source=bl&ots=nmZADkoE
_7&sig=05-EloHLJ4sgNgGOmgT5Tw4c-40&hl=en&sa=X&ei=fZNoU_K8Oszk8AWM7YK4BA&ved=0CCkQ6AEwAA#v=onepage&q=indust
ry%20cum%20regional%20bargaining%20india&f=false> (Accessed on January 22, 2019)

iii. Enterprise or plant-level bargaining i. Bipartite (or voluntary) agreements are

practices differ from case to case because drawn up in voluntary negotiations
there is no uniform collective bargaining between the employer and the trade union.
procedure. Typically, the bargaining As per the IDA31, such agreements are
council (or negotiating committee) binding. Implementation is generally non-
is constituted by a proportional problematic because both parties reached
representation of many unions in an the agreement voluntarily.
establishment. It is therefore easier for
ii. Settlements32 are tripartite in nature, as
the management to negotiate with one
they involve the employer, trade union
bargaining agent if multiple unions at the
and conciliation officer. They arise from
company can form such a single entity.
a specific dispute, which is then referred
If not, the management will then have to
to an officer for reconciliation. If during
negotiate individually with each registered
the reconciliation process, the officer feels
union. In the private sector, employers
that the parties’ viewpoints have indeed
generally press for plant-level bargaining
been reconciled, and that an agreement
because uniformity of wage negotiation
is possible, he may withdraw himself. If
can be ignored and the bargaining power
the parties finalize an agreement after the
of trade unions can be reduced. Also, trade
officer’s withdrawal, it is reported back
unions insist on plant-level bargaining
to the officer within a specified time and
because the payable capacity of the
the matter is settled. However, it should
company is much higher and because
be noted that the forms of settlement are
labour issues can be resolved more quickly
more limited in nature than bipartite
and easily. Trade unions can typically face
agreements, because they must relate to the
a dilemma in decentralized plant-level
specific issues referred to the conciliation
bargaining if the business is having a
officer.
managerial crisis from market failures or
the management is reluctant to negotiate iii. Consent awards are agreements reached
with the unions. while a dispute is pending before a
compulsory adjudicatory authority, and
incorporated into the authority’s award.
III. Collective Bargaining Even though the agreement is reached
voluntarily, it becomes part of the binding
Agreements in India award pronounced by the authority
constituted for the purpose.
A. Types of Collective Bargaining
Agreements B. Contents of Collective
Bargaining Agreements
In India, collective bargaining agreements are
divided into three classes30: As a part of collective bargaining mechanism,
employers and workmen represented
30. Nirmal Singh, “Industrial Relations” at p. 119, online: <http://books.google.co.in/books?id=gl0tzPYgko8C&pg=PA119&lpg=PA119&dq=India+

three+types+collective+bargaining+agreement,+settlement,+consent+award&source=bl&ots=loASB2mYdB&sig=jFY7BoPzB2Zcx9PuXzofK8O
OXtU&hl=en&sa=X&ei=0JRoU6CPH5Ck8AXdt4GwCw&ved=0CDAQ6AEwAQ#v=onepage&q=India%20three%20types%20collective%20
bargaining%20agreement%2C%20settlement%2C%20consent%20award&f=false>
32. As per section 2 (gg) (p) of IDA, a “settlement” means a settlement arrived at in the course of conciliation proceeding and includes a written
agreement between the employer and workmen arrived at otherwise than in the course of conciliation proceeding where such agreement has
been signed by the parties thereto in such manner as may be prescribed and a copy thereof has been sent to an officer authorised in this behalf
by the appropriate Government and the conciliation officer.

by trade unions enter into collective ɵ Conditions with respect to strikes and
bargaining agreements typically structured lockouts by trade unions and employers
as memorandum of settlements which respectively
enumerate the various clauses that govern
ɵ Obligations of workmen
the relationship between the workmen
represented by trade unions and employers. ɵ Obligations of employer
The IDA, under section 18(1) of the IDA,
provides that such settlements entered into ɵ Penalties with respect to non-compliance
between workmen represented by trade of the obligations of workmen and
unions and employers would be binding upon employers
the parties. ɵ Dispute resolution
Typically, clauses in the memorandum of ɵ Miscellaneous clauses including
settlement pertain to the following: severability, notice, etc.
ɵ Term / Duration of the memorandum of
settlement as may be agreed between the
parties
ɵ Settlement terms which, typically, may be

with respect to wages, benefits, allowances,
arrears with respect to payment to workers,
concessions, works hours, overtime etc.

5. Laws Governing Trade Unions in India

In India, the right to form and join a trade i. The right of the members of the union to
union, and engage in collective bargaining is meet,
provided for under national and state-specific
ii. The right of the members to move from
legislations. Time and again, the courts have
place to place,
upheld the right of workers to form or join a
trade union in India.33 iii. The right to discuss their problems and
propagate their views, and
iv. The right of the members to hold property.

I. Constitution of India,
1950
Article 19(1)(c) of the Constitution of India,
II. Trade Unions Act, 1926
1950 (“Constitution”) which envisages The Trade Unions Act, 1926 (“TU Act”)
fundamental right to freedom of speech and provides for formation and registration of trade
expression also guarantees the country’s unions and in certain respects to define the law
citizens the right “to form associations or relating to registered trade unions. The TU Act
unions” including trade unions.34 The SC has defines a trade union as “any combinations,
held that the right guaranteed in Article 19(1) whether temporary or permanent, formed
(c) also includes the right to join an association primarily for the purpose of regulating the
or union.35 This right carries with it the right of relations between workmen and employers or
the State to impose reasonable restrictions.36 between workmen and workmen, or between
Furthermore, it has been established that the employers and employers, or for imposing
right to form associations or unions does not restrictive condition on the conduct of any
in any manner encompass the guarantee that trade or business, and includes any federation
a trade union so formed shall be enabled to or two or more trade unions.”40
engage in collective bargaining or achieve the All workmen have the right to form a union
purpose for which it was formed.37 The right to or refuse to be a member of any union.41
recognition of the trade union by the employer However, not all workers’ organizations
was not brought within the purview of the are considered trade unions. For example,
right under Article 19(1)(c) and thus, such the Madras High Court has held that an
recognition denied by the employer will not be association of sub-magistrates of the judiciary,
considered as a violation of Article 19(1)(c)38. tahsildars, etc., is not a trade union because the
The various freedoms that are recognized members are engaged in sovereign and regal
under the fundamental right, Article 19(1)(c), functions of the government.42
are39:
33. All India Bank Employees’ Association v. N.I.Tribunal, AIR 1962 SC 171
34. Ibid
35. Damyanti v. Union of India (AIR 1971 S.C. 966)
36. Article 19(4) of the Constitution
37. See footnote 33
38. Raghubar Dayal Jai Prakash v. Union of India, AIR 1950 SC 263
39. See footnote 33
40. Section 2, Trade Union Act, 1926
41. O.K.Ghosh v. Joseph, AIR 1963 SC 812
42. Tamil Nadu NGO Union v. Registrar, Trade Unions (AIR 1962 Mad High Court)

A. Recognition and Registration Ideally, a trade union must obtain legitimacy

through registration under the TU Act and
Although no specific right is granted to any then seek recognition as a sole bargaining
trade union with respect to the right to be agent either under the appropriate law or an
recognized, it has become crucial in India to employer-employee agreement.48
develop a mechanism wherein a trade union
is recognized formally by the employer.
Recognition is the process through which the B. Registration Process
employer accepts a particular trade union as
The TU Act provides for the registration
having a representative character and hence,
of trade unions with the Registrar of Trade
will be willing to engage in discussions with
Unions in the concerned territory (“Registrar”)
the union with respect to the interests of the
but such registration is not compulsory.
workers.43 This process is important so as
to ensure smooth collective bargaining and It is also possible for more than one trade
stability of industrial relations. union to be registered in relation to the same
employer. Registration requires that at least
On the other hand, registration of a trade
seven members subscribe to the union rules.49
union carries certain inherent benefits with
In addition, at least 10% of the workforce
it. A registered trade union is deemed to
or 100 workers, whichever is less, engaged
be a body corporate, giving it the status of
or employed in the establishment, must
a legal entity that may, inter alia, acquire
be members of the trade union connected
and hold property, enter into contracts, and
with such establishment at the time of
sue others.44 A registered trade union is also
application.50 Registration of a trade union
immune from certain contractual, criminal
is subject to the Registrar’s satisfaction that
and civil proceedings.45 However, registration
all primary requirements of the TU Act
is optional and not mandatory.
have been complied with. The Registrar, in
Generally, registration of trade unions under deciding whether to grant registration, must
the TU Act does not automatically imply that a base its decision on whether the technical
particular trade union has gained recognition requirements of registration are being fulfilled,
status granted by the employer.46 Unless and not whether the trade union could be
different Indian states have specific legal described as lawful.51 If the Registrar fails to
provisions pertaining to recognition of trade register a trade union within three months of
unions, it is generally a matter of agreement application, an appeal can be made to the High
between the employer and trade union.47 Court under Article 226 of the Constitution.52
43. Singh et al., Employee Relations Management, p. 110, Available at https://books.google.co.in/books?id=vkQ7BAAAQBAJ&printsec=frontcover

(Accessed on January 22, 2019)
44. Section 13 of the TU Act
45. Sections 17, 18 and 19 of the IDA
46. R. Sivarethinamohan, Industrial Relations and Labour Welfare: Text and Cases, page 62, Available at https://books.google.co.in/books?id=OBu-
LapJUAcC&printsec=frontcover (Accessed On January 22, 2019)
49. Section 4, Trade Unions Act, 1926
50. Ibid
51. Re India Stream Navigation Workers Union (AIR 1936 SC)
52. ACC Rajanka Limestone Quarries Workers’ Union v Registrar of Trade Unions (AIR 1958)

C. Process of Recognition of Trade to the Code adopted by the Standing Labour

Unions Committee in its 16th Session in 1957 and
subsequently ratified by the representatives
Some Indian states have enacted legal of Employers and CTUOs at the 16th Session
provisions setting forth rules and principles of the Indian Labour Conference, held in
for the recognition of trade unions, each 1958. The Code is a set of guidelines mutually
with their own criteria. It is pertinent to note and voluntarily accepted by all parties to
that there is no law at the national level for maintain discipline in industry, both in
recognition of trade unions in India. Although public and private sectors. Clause III (vii) of
there is a proposal53 in the pipeline which will the Code states that the management agrees
allow trade unions to make an application to recognize the Union in accordance with
for being recognized by the central or state the criteria evolved in the Code. A copy of
governments. The various state legislations the Code is annexed to this research paper as
governing trade unions are as follows: Annexure II.
ɵ Maharashtra Recognition of Trade Unions

and Prevention of Unfair Labour Practices
Act, 1971
III. Industrial Disputes Act,
ɵ West Bengal Trade Unions Rules, 1998
1947
ɵ Kerala Recognition of Trade Unions Act, The IDA also deals with trade unions in
2010 the manner that it regulates the rights of
employers and employees in the investigation
ɵ Orissa Verification of Membership and and settlement of industrial disputes.
Recognition of Trade Union Rules, 1994 It provides for collective bargaining by
negotiation and mediation and, failing
Generally, these rules provide that a union
that, voluntary arbitration or compulsory
shall be recognized by the employer as the
adjudication with the active participation of
sole bargaining agent of a group of workers if
trade unions. As per the IDA55, a settlement
it receives a specified minimum percentage
arrived at through collective bargaining
(usually a majority) of these workers’ votes
is binding. Two types of settlements are
via secret ballot, organized by the Registrar.
recognized:
However, every trade union receiving a smaller
minimum percentage of votes (fifteen or ten i. Those reached in the course of conciliation
percent, depending on the type of industry) proceedings before the authority - such
shall also be recognized as constituents of settlements bind members of the signatory
a joint bargaining council as in the case of union as well as non-members and all
Kerala trade unions.54 present and future employees of the
management.
At present, recognition of trade unions
functioning in industrial establishments ii. Those reached outside the course of
is regulated under the provisions of the conciliation proceedings, but signed
voluntary ‘Code of Discipline’(“Code”) and the independently by the parties to the
‘Criteria for Recognition of Unions’ appended settlement - such settlements bind only
53. Trade Union (Amendment) Bill, 2018. Please see: https://labour.gov.in/sites/default/files/The%20Trade%20Unions%20Amendment%20

Bill%202018.pdf
54. Section 5 of the Kerala Recognition of Trade Unions Act, 2010

those members who are a signatory or a 100 workmen. As per the IESOA, an employer
party thereto. to which the IESOA applies is required to
draft and adopt standing orders defining its
Furthermore, the Industrial Employment
employees’ conditions of employment. As
(Standing Orders) Act, 1946 (“IESOA”) also
per the IESOA56 a registered trade union (or
contains certain provisions pertaining to
worker, if no registered union exists) must
trade unions. The IESOA regulates and
review and may object to the draft standing
codifies the conditions of service for an
orders before it is certified by an officer.57
industrial establishment employing at least
56. Section 3 of the IESOA

57. The IESOA provides for model standing orders that may be adopted by employers to whom the IESOA applies. If the employer makes any
changes to the model standing orders before adopting them then the same need to be certified by a certifying officer.

6. Landmark Cases Pertaining to Trade

Unions
There are various cases that have played a Board Employees’ Association 60 wherein
major role in interpreting and shaping the law it has been held that an unregistered trade
on trade unions in India. A few of these cases union or a trade union whose registration
have been mentioned below: has been cancelled has no rights either
under the TU Act or the IDA. This case
i. The case of All India Bank Employees’
highlights the importance with respect to
Association v. N.I.Tribunal 58 laid down
registration of trade unions.
the rights of the members of the trade
unions that are encompassed within the iii. In the case of B.R Singh v. Union of India 61
fundamental right to freedom of expression the court has recognized “strike” as a mode
and speech, i.e. Article 19(1)(c)59: of redress for resolving the grievances of
workers.
ɵ The right of the members of the union
to meet, iv. In MRF United Workers Union rep. by
its General Secretary v. Respondent:
ɵ The right of the members to move from
Government of Tamil Nadu rep. by its
place to place,
Secretary, Labour and Employment
ɵ The right to discuss their problems and Department and Ors.,62 the court has
propagate their views, and highlighted the validity of procedure for
recognition of a trade union. When the
ɵ The right of the members to hold State government accepts a particular
property, procedure for recognition, it shall direct
However, the case held that Article 19(1)(c) the Labour Commissioner to call upon two
does not account for a right pertaining to the unions to submit their membership details
achievement of the all the objectives for which as per the Code of Discipline. Subsequently,
the trade union was formed. Say for example, the Labour Commissioner shall decide as
if one of the objectives for formation of trade to which Union is a true representative
union was to push the employer for raising the union of workmen and give it a genuine
wages, the trade union cannot, as a matter of recognition. Further, the court cannot
right, ask the employer to fulfil the objective permit management to claim that the
of increasing wages of the workers. The case Union which shows larger membership
also stated that strikes by trade unions may after recognition will not be recognized by
be controlled or restricted by appropriate management.
industrial legislation. v. In Balmer Lawrie Workers’ Union, Bombay
ii. Another case which is of much importance and Anr. v. Balmer Lawrie & Co. Ltd.
is the case of B. Srinivasa Reddy v. and Ors.,63 the underlying assumption
Karnataka Urban Water Supply & Drainage made by the SC was that a recognised
59. Constitution of India
60. B. Srinivasa Reddy v. Karnataka Urban Water Supply & Drainage Board Employees’ Association , (2006) 11 SCC 731 (2)
61. B.R Singh v. Union of India ,(1989) 4 SCC 710
62. [2010(124)FLR386], (2009)IVLLJ685Mad, 2009WritLR881
63. AIR1985SC311, [1985(50)FLR186], (1985)ILLJ314SC

union represents all the workmen in the vii. In Food Corporation of India Staff Union
industrial undertaking or in the industry. vs. Food Corporation of India and Others 66,
This case was also referred to in the MRF the SC laid down norms and procedure to
United Workers case. be followed for assessing the representative
character of trade unions by the ‘secret
vi In Kalindi and Others v. Tata Locomotive
ballot’ system.
and Engineering Co. Ltd 64 the SC held that
there is no right to representation as such
unless the company, by its standing orders,
recognizes such right. The decision was
reiterated in Bharat Petroleum Corporation
Ltd. v. Maharashtra General. Kamgar Union
& Ors.65
64. AIR1960SC914, 1960(1)FLR23, (1960)IILLJ228SC, [1960]3SCR407

65. AIR1999SC401, 1999(1)ALLMR(SC)249, 1999(81)FLR358
66. AIR 1995 SC 1344

7. Right to Strike
The IDA67 defines a “strike” as “a cessation arbitrator, court or tribunal may be continued,
of work by a body of persons employed in provided it was legal at the time of its
any industry acting in combination or a commencement.70 Furthermore, a strike staged
concerted refusal, or a refusal under a common in response to an illegal lockout shall be legal.
understanding, of any number of persons who
A worker who is involved in an illegal strike
are or have been so employed to continue to
may be penalized with imprisonment of up
work or to accept employment”.
to a month and/or fine. As per the IDA71, no
In India, there is no specific right to strike. person shall provide any sort of financial aid to
Instead such right flows from the fundamental any illegal strike. Any person who knowingly
right to form a trade union contained in provides such a help in support of any illegal
Article 19(1)(c) of the Constitution, which, strike is punishable with imprisonment up to
like all fundamental rights, is subject to six months and/or fine.
reasonable restrictions. In All India Bank
Another consequence of an illegal strike is
Employees Association v. N.I. Tribunal 68, the
the denial of wages to the workers involved.
SC held, inter alia, that “the right to strike or
Furthermore, the SC has held that workers
right to declare lockout may be controlled or
shall only be entitled to wages during a strike
restricted by appropriate industrial legislation
which is not only legal, but also “justified”.
and the validity of such legislation would
A strike shall be deemed unjustified where
have to be tested not with reference to the
“the reasons for it are entirely perverse and
criteria laid down in clause (4) of Article 19
unreasonable…[which is] a question of fact,
of the Constitution but by totally different
which has to be judged in the light of the fact
considerations.”
and circumstances of each case… the use of
Therefore, legislation can and does restrict force, coercion, violence or acts of sabotage
the right to strike by deeming certain strikes resorted to by the workmen during the strike
illegal. The IDA restricts strikes and lockouts period which was legal and justified would
equally. Various restrictions are contained in [also] disentitle them to wages during the
sections 22, 23, 24, 10(3) and 10A(4A) of the strike period.”72 The SC has also held that
IDA. Furthermore, the IDA also lays down whether or not a strike is “unjustified depends
certain activities that may be deemed as on such factors as “the service conditions of
“unfair labour practices of workers or workers’ the workmen, the nature of demands of the
trade unions pertaining to strikes such as workmen, the cause which led to the strike,
advising or actively supporting or instigating the urgency of the cause or the demands of
any illegal strike or staging demonstrations at the workmen, the reason for not resorting to
the residence of the employers or managerial the dispute resolving machinery provided by
staff members.69 the IDA or the contract of employment or the
service rules and regulations etc.”73
It should be noted that a strike that was in
existence at the time of reference to a board,
67. Section 2(gg)(q) of the IDA

68. All India Bank Employees Association v. N.I. Tribunal (1962 AIR 171) at para 292
69. Fifth Schedule of the IDA
70. Section 24(2) of the IDA
72. Crompton Greaves Ltd. v. Its Workmen (AIR 1978 SC 1489) at para 4
73. Syndicate Bank v. K. Umesh Nayak (1995 AIR 319) at para 27

8. Recent Trade Union Activities in India

In recent times, trade unions have been coal blocks through e-auction process.79 This
engaging in aggressive collective bargaining caused various trade unions of Coal India
tactics by staging strikes. The Indian Ltd. and Singareni Collieries Company Ltd.
automotive industry has seen considerable to initiate a five day strike that is said to have
number of strikes backed by trade unions that a future impact on the power sector despite
have caused major slump in the earnings of these various companies having stepped up
the various companies. For instance, Honda their supplies of coal to the various sectors so
Motorcycle and Scooter India lost a total of as to limit disruption of work.80 Furthermore, it
Rs. 1.2 billion as three thousand workers appears that the trade unions in the Insurance
and supporters went on strike against the sector are preparing for strikes on similar
company.74 Even Maruti Suzuki faced a fall lines due to the reforms pertaining to the hike
in their production capacity and huge losses in FDI and disinvestment in the Insurance
in 2012 due to trade union backed violence at sector.81
one of their plants that consequently led to
Trade unions also seem to be seeping into the
shutting down of the plant temporarily.75 The
information technology sector / services sector
company was only able to reach 10% of their
and are predicted to gain a strong foothold in
original production capacity after reopening of
the sector. Traditionally, the services sector
the plant.76
has remained untouched by any trade union
There has also been a great amount of unrest activity.82 Tata Consultancy Services Ltd.,
due to the labor reforms that have been recently, met with great opposition from
introduced by the government in various various central trade unions such as CITU
industries such as the coal and insurance.77 and INTUC with respect to their move to
This is mainly due to the ordinances that terminate the employment of a number of
have been issued by the Indian government their employees.83
pertaining to de-nationalization and
The proposed recent amendments to the
privatization of these sectors in various ways.78
various labor laws by the central government
For instance, the government passed the Coal
and the state governments, more specifically,
Ordinance (Special Provisions) Bill, 2014,
the government of the state of Rajasthan,
which focuses on reallocating the various
are said to impact workers immensely. The
74. Martin Murray, “Industrial Action in the Indian Automotive Industry” online: <http://logistics.about.com/od/industryfocus/a/Industrial-
Action-In-The-Indian-Automotive-Industry.htm>
75. Maruti Manesar unrest: 100 arrested, plant shut down, July 9, 2012, Available at http://www.moneycontrol.com/news/business/maruti-
manesar-unrest-100-arrested-plant-shut-down_732607.html (Accessed on January 22, 2019)
76. Ronojoy Banerjee, All eyes on Maruti as Manesar plant sets to reopen today, August 21, 2012, Available at http://www.moneycontrol.com/
news/cnbc-tv18-comments/all-eyesmaruti-as-manesar-plant-sets-to-reopen-today_747287.html (Accessed on January 22, 2019)
77. Trade unions slam coal, insurance ordinance; threaten strike, December 28, 2014, Available at http://economictimes.indiatimes.com/news/
politics-and-nation/trade-unions-slam-coal-insurance-ordinance-threaten-strike/articleshow/45665291.cms (Accessed on January 22, 2019)
78. CIL trade unions caution against de-nationalisation of mines, October 24, 2014, Available at http://economictimes.indiatimes.com/industry/
indl-goods/svs/metals-mining/cil-trade-unions-caution-against-de-nationalisation-of-mines/articleshow/44925847.cms (Accessed on January
22, 2019)
79. Coal India staff on five-day nationwide strike from today , January 6, 2015, Available at http://businesstoday.intoday.in/story/coal-india-staff-
on-5-day-nationwide-strike-from-tuesday/1/214249.html (Accessed on January 22, 2019)
80. Ibid
81. See footnote 71
82. Moulishree Srivastava, Are trade unions gaining a foothold in IT sector?, LIVEMINT, January 6, 2014, Available at http://www.livemint.com/
Industry/niEiLE4J9rb53vz3FVAQFP/Are-trade-unions-gaining-a-foothold-in-IT-sector.html (Accessed on January 22, 2019)
83. http://www.newindianexpress.com/states/kerala/TCS-Lay-off-Minister-Seeks-Report/2015/01/09/article2610864.ece (Accessed on January 22,
2019)

proposed amendments mainly pertain to (i) Technology (IT) and Information Technology
allowing industrial establishments employing Enabled Services (ITES) sector in October
up to 300 workmen (which threshold is 100 2017. The formation of FITE was instigated
workmen currently) to terminate workmen by the mass layoffs witnessed in the sector
without availing the prior permission of during 2014. On November 7, 2017, the
the government (ii) raising the threshold of Labour Department of the State of Karnataka
number of workmen as contract labour for registered the first trade union in the State
the purpose of applicability of the Contract which exclusively caters to the interests of
Labour (Regulation and Abolition) Act, 1970 technology sector employees. The trade union
from 20 to 50 (iii) raising the threshold of has been registered under the provisions of
number of employees for the purposes of the TU Act and the Karnataka Trade Union
applicability of the Factories Act, 1948 from Regulations, 1958. Within a span of two
10 to 20 (in factories where work is being years, the Karnataka State IT/ITeS Employees
carried out with the aid of power) and from 20 Union (KITU) has initiated several state-wide
to 40 (in factories where work is being carried strikes and voiced their concerns on issues
out without the aid of power) (iv) raising the related to working conditions and wages of
minimum membership from 10% to 30% with IT/ITES employees and are rapidly gaining
respect to registration as a trade union under momentum. In early 2018, another trade union
the Trade Unions Act, 1926 (v) introducing for technology sector employees was registered
a limitation period of 3 years with respect to in the State of Maharashtra.
raising industrial disputes.84
In June 2019, it was reported that the Kolkata
The abovementioned proposed reforms Forum for IT Employees applied to the
are said to encourage strikes by the various West Bengal government for trade union
trade unions since workers may be adversely registration in the IT/ITeS, Business Process
affected by these reforms. In fact, various trade Outsourcing (“BPO”) and Knowledge Process
unions have already engaged in opposition and Outsourcing (“KPO”) industry. This made
nationwide protests against these reforms.85 West Bengal the fourth Indian state where
It is yet to be seen whether these reforms will IT employees have successfully unionized.
continue to be implemented or will succumb Although West Bengal’s technology sector is
to the demands of the trade unions. relatively small compared to Karnataka, Tamil
Nadu and Maharashtra, this development
signifies the rapidly growing trend of
Trade Unions in the unionization in the technology sector and it is
Information Technology likely that more states will follow suit in the
Sector coming years. Presently, out of approximately
4 million technology sector employees
The Forum for IT Employees (FITE), a Tamil spread across the country, Bangalore (city
Nadu based organization became India’s first in Karnataka) houses approximately 1.5
registered trade union in the Information million employees in the technology sector.86
84. Vaidyanathan Iyer, Rajasthan shows way in labour reforms, INDIAN EXPRESS, June 8, 2014, Available at http://indianexpress.com/article/
india/india-others/rajasthan-shows-way-in-labour-reforms/ (Accessed on January 22, 2019)
85. Trade Unions oppose Rajasthan’s Labour reforms, Business Standard, June 11, 2014, Available at http://www.business-standard.com/article/
economy-policy/trade-unions-oppose-rajasthan-s-labour-reforms-114061001116_1.html (Accessed on January 22, 2019)
86. https://www.techgig.com/tech-news/Karnataka-may-soon-see-India-039-s-first-dedicated-IT-employee-union-140747

Pune (city in Maharashtra) also has offices of development, technology sector employees
most of the major technology sector players. are likely to have assistance of unions to voice
Accordingly, the formation and registration of their concerns over various issues like, wages,
sector-specific employee trade unions in these termination of employment, conditions of work
technology hubs is a significant development etc. To that extent, employers in the technology
in the sector. Up until now, unionization in sector will need to be careful in devising and
India was largely limited to traditional sectors, more importantly implementing their HR
especially the manufacturing sector. With this policies.

9. Conclusion
Historically, in India, the function of the increase in work time, reduction in regular
trade unions was limited largely to collective staff strength via VRS, stress on quality and so
bargaining for economic considerations. on.87
However, trade unions now play a major
Despite certain recent developments which
role in employee welfare activities, cultural
may be largely considered as one-off incidents,
programs and banking and medical facilities
most trade unions have managed to foster
and by creating awareness through training
an environment so as to enable a healthy
and educating the members of the trade union.
discussion between the workers and employers
On the other hand, the dominant managerial
with respect to any demands the workers may
objectives in collective bargaining in recent
have. Furthermore, trade unions in India have,
years owing to heightened competition
over the period of time, ensured to provide a
have been to reduce labour costs, increase
forum to facilitate better industrial relations,
production or productivity, flexibility in
industrial growth and improve productivity.
work organization (multi-skilling /multi-
functioning, changes in worker grades etc.),
87. Krishna Murthy, R. (2006), Negotiating Wage Settlements Experiences of Innovative Managements, Indian Industrial Relations Institute,
Mumbai and Venkata Ratnam, C.S. (2003), Negotiated Change: Collective Bargaining, Liberalization and Restructuring in India, Response
Books, New Delhi

Annexure I
Trade Unions Act and State Laws Provide

Legal Protections to Trade Unions in India
By Vikram Shroff and Akshay Bhargav
The Constitution of India guarantees the country’s citizens workmen and workmen, or between employers and employers,
a fundamental right “to form associations or unions.” The or for imposing restrictive condition on the conduct of any trade
Constitution was adopted in 1951, but the concept of collective or business, and includes any federation of two or more trade
bargaining and the development of labor unions (known unions.”
as trade unions in India) dates back to the time when the
The TU Act is administered by the Ministry of Labor through
foundations of modern industrial enterprises were being laid in
its Industrial Relations Division (IRD) as well as by state
the early 1900s. The original act related to labor unions—the
governments. The IRD is concerned with improving the
Trade Unions Act—was enacted in 1926.
institutional framework related to settlement of disputes and
History of Trade Unions amendment of labor laws regarding industrial relations; state
Prompted by poor working conditions under British imperialism, governments are concerned with monitoring adherence to the
workers and social reformers began protesting for the law by all involved parties.
betterment of the state of affairs, which then gradually led to the
formation of workers’ unions wherever common interests were
State-Specific Laws
involved. However, these organizations were mostly ad hoc in In addition to the TU Act, certain state governments have
nature and lasted as long as the pressing issue did. They could enacted legal provisions concerning the recognition of
hardly be considered labor unions in the current sense. trade unions. However, each state has its own set of criteria,
including minimum requisite membership. For instance, in
The Madras Labor Union, set up in 1918, is considered the first the State of Maharashtra, the Maharashtra Recognition of
trade union in India to be formed systematically. Since then, Trade Unions and Prevention of Unfair Labor Practices Act,
the labor union movement has spread to almost all industrial 1971, governs the aspects related to the recognition of trade
centers and has become an integral and powerful part of the unions that have not been specifically covered by the TU Act.
industrial process in India. The reach of trade unions has also Similar laws have been enacted in the states of West Bengal,
expanded significantly. In addition to influencing the nitty-gritty Rajasthan, Andhra Pradesh and Madhya Pradesh. The states of
and the course of action in various industrial sectors, trade Bihar and Orissa have specific nonstatutory provisions setting
unions now influence government policies, the allocation of forth rules and principles for the recognition of trade unions.
economic resources and the very nature of economic and
social life. Registration and Recognition
The TU Act provides for the registration of trade unions with
Today, there are more than 75,000 registered and an
the Registrar of Trade Unions in their respective territory, but it
unaccounted number of unregistered trade unions scattered
does not make registration mandatory. Registration is, however,
across a large spectrum of industries in India.
beneficial as it leads to certain privileges. A registered labor
The Bharatiya Mazdoor Sangh (BMS), the Indian National union is deemed to be a body corporate, thus giving it the
Trade Union Congress (INTUC) and the All India Trade Union status of a legal entity. As a result, a registered trade union
Congress (AITUC) are considered the largest trade unions in has perpetual succession and a common seal with the power
India. The country’s manufacturing sector in particular is heavily to acquire and hold property and to enter into contracts. It
unionized. also has the power to sue and, consequently, be sued as well.
An unregistered trade union, on the other hand, would not be
Federal Law for Trade Unions
considered a juristic entity (see National Organization of Bank
Trade unions in India are governed by the Trade Unions Act
Workers’ Federation of Trade Unions v. Union of India (1993)
(TU Act). The TU Act legalizes the formation of trade unions
2 LLJ 537).
and provides adequate safeguards for trade unions’ activities. It
defines a “trade union” as “any combination, whether temporary A registered trade union assumes more importance because
or permanent, formed primarily for the purpose of regulating other labor laws such as the Industrial Disputes Act, 1947
the relations between workmen and employers or between (IDA), and the Industrial Employment (Standing Orders) Act,

Trade Unions Act and State Laws Provide Legal Protections to Trade Unions in India
continued from page 6
1946 (IESOA), define a labor union to mean a union that has Some of the practices prohibited with respect to employers are
been registered under the TU Act. The IDA, a law that to a as follows:
certain extent is similar to the U.S. National Labor Relations
Q Interfering with or restraining workers in the exercise of their
Act of 1935 (NLRA), provides for investigation and settlement
right to organize, form, join or assist a trade union.
of industrial disputes and contains provisions with respect to
inter alia layoff, employment termination, strikes, lockouts and Q Threatening a worker with discharge or dismissal if the
closure of establishment. worker joins a trade union.
The IESOA, on the other hand, provides guidelines to define Q Threatening a lockout or closure if a trade union is organized.
employment conditions. Registration would allow the trade
union to, for instance, refer disputes with the employer to labor
Q Granting wage increases to workers at crucial periods of
authorities. trade union organization, with a view to undermine the efforts
of such organization.
To be registered under the TU Act, a trade union is required
to have a minimum of seven members subscribing their names Q Establishing employer-sponsored trade unions of workers.
to the rules of the trade union. Furthermore, a minimum of Q Encouraging or discouraging membership in any trade
10 percent of the workforce or 100 workers, whichever is union by discriminating against any worker by discharging or
less, engaged or employed in the establishment are required punishing the worker for urging other workers to join a trade
to be members of the trade union, connected with such union.
establishment, at the time of application.
Q Changing the seniority rating of, refusing to promote or
The registration would, however, be subject to the registrar
giving unmerited promotions to workers because of trade
being satisfied with the compliance of all the primary
union activities.
requirements of the TU Act by the trade union. It must be noted
that the certificate of registration may be withdrawn by the For workers and trade unions, any act employed to coerce
registrar in certain cases. workers in the exercise of their right to self-organization or to
join trade unions amounts to an unfair labor practice.
Considering the prevalence of a large number of trade unions
in the country, some of the state-specific enactments set forth Evolving Role of Trade Unions
the criteria by virtue of which a particular trade union may Traditionally, the function of trade unions in India was limited
become entitled to represent employees. Furthermore, such largely to collective bargaining for economic considerations.
representative trade unions may have the preferential right to However, over time, trade unions have begun to play various
hold discussions with employers to resolve disputes, while an other roles as well.
unrecognized trade union may not.
Besides aiming to improve the terms and conditions of
Inability to Prevent Union’s Formation employment, trade unions now play a critical role in employee
The formation of a trade union, being a fundamental right of welfare activities, such as through organization of cooperative
workers, cannot be prevented by an employer. Neither can an credit societies, cultural programs, and banking and medical
employer prevent the registration of such a trade union under facilities and by creating awareness through education of
the TU Act. members and publication of periodicals and newsletters.
Any form of interference, restraint or coercion by the employer Trade unions provide a forum to help facilitate better industrial
in an attempt to prevent a worker or workers from joining a trade relations and improve productivity.
union would amount to an “unfair labor practice” as provided
under the IDA and would be punishable with imprisonment and/ Certain trade unions also have political affiliation. For instance,
or a fine (see Section 25-U of the IDA). the INTUC is affiliated with the Congress Party, whereas
the AITUC is affiliated with the Communist Party of India. In
Unfair Labor Practices addition to the interference of political leaders, such affiliation
The IDA, similar to the NLRA, sets forth the practices of has, at times, led to multi-unionism (i.e., multiple unions in
employers, workers and their trade unions that would be the same organization), which creates complexities for the
considered “unfair labor practices.” employer especially during the collective bargaining process.

Trade Unions Act and

State Laws Provide Introduction To
Legal Protections Mexican Labor Law
continued from page 7 By Ernesto Velarde-Danache
Currency of TU
Act Questioned Mexico is our neighbor to the south, one of our two North American Free Trade
Trade unions in India have Agreement (NAFTA) partners. Mexico also now is the United States’ third most
provided a powerful mechanism important trade partner—right after Canada and China.
for collective bargaining and
proactive communication between We enjoy Mexican food, and many of us are familiar with Mexico’s main
an employer and its employees. At tourist destinations. The U.S. president, no matter what his political affiliation,
the same time, disputes between celebrates on the White House grounds “el Cinco de Mayo.” In these and other
employers and trade unions ways, we appear to be close to Mexicans. But in many aspects, we remain
continue to be litigated. The cost distant—despite our proximity—and different. One significant difference is our
of disruption in production is employment laws.
constantly rising, raising questions
Mexico’s current Federal Labor Law was enacted in 1970 and has not undergone
about the role of trade unions and
a major reform since then. Ideally, the labor laws of any country should be
the efficacy of the TU Act.
drafted with the unequivocal intention of regulating employer-employee relations,
Some relatively new sectors in establishing fair rights and obligations for all parties, and identifying sensible
India—for example, the software disciplinary measures for those that choose not to comply. Most business
services sector—attribute their leaders and owners, however, believe that the Federal Labor Law overprotects
success partly to the absence of the Mexican labor force and makes it difficult for employers to control operations,
large-scale trade union movements production and even management. This is particularly true when a collective
having vested interests. bargaining agreement has been executed with a local or national labor union.
Call for Reform None of the rights recognized or granted by the Federal Labor Law may
The Supreme Court, during a effectively be waived. In most instances, when recognizing or granting rights
recent hearing of an inter-trade the Federal Labor Law establishes the minimum amount for every benefit
union dispute, remarked that the allowed. Employers may voluntarily choose, or be “forced” by union or individual
provisions of the TU Act were employees to agree to, compensation that is higher than the statutory minimums.
archaic and needed to be amended.
Whether the new government Wage and Hours
is able to bring about any policy In Mexico, a shift may not exceed eight hours for the daylight shift, seven and a
changes to promote better half hours for the mixed shift and seven for the night shift. At least one rest day
industrial relations remains to be a week is to be enjoyed. (Literal translation: An employer is not penalized if the
seen. Nonetheless, trade unions in employee has a bad day.) Employers are encouraged to make that day Sunday.
India continue to play a significant If an employee performs services on a Sunday, he or she is entitled to a bonus
role in industrial relations and are equivalent to 25 percent of his or her daily pay. The seventh, or rest, day is paid in
expected to maintain that role in the Mexico; in other words, the maximum weekly shift is 48 hours but employers pay
foreseeable future. for 56 hours.
After a year of service, employees are entitled to a six-day vacation period with
pay. This period increases by two days per every additional year of service until
the end of the fourth year. The vacation period then increases by two days per
every additional five years of service. Employers also must pay a 25 percent
vacation premium. A Christmas bonus of no less than 15 days’ salary must
be paid to all Mexican employees before Dec. 20. This payment is, however,
proportional to the number of days worked in the year (e.g., six months of service
Vikram Shroff and Akshay means seven and a half days of bonus).
Bhargav are attorneys at Nishith
Desai Associates in Mumbai, India.
By Vikram Shroff and Akshay Bhargav,

Nishith Desai Associates,
Published in SHRM Legal Report, March 2010

Annexure II
Code of Discipline
i. To maintain Discipline in the Industry g. that they will promote constructive co-
(both in public and private sectors) operation between their representatives
there has to be (i) a just recognition by at all levels and as between workers
employers and workers of the rights and themselves and abide by the spirit of
responsibilities of either party, as defined agreements mutually entered into;
by the laws and agreements (including
h. that they will establish upon a mutually
bipartite and tripartite agreements arrived
agreed basis, a grievance procedure
at all levels from time to time) and (ii) a
which will ensure a speedy and full
proper and willing discharge by either
investigation leading to settlement;
party of its obligations consequent on such
recognition. i. that they will abide by various stages in
the grievance procedure and to take no
The Central and State Governments, on
arbitrary action which would bypass
their part, will arrange to examine and set
this procedure; and
right any shortcomings in the machinery
they constitute for the administration of j. that they will educate the management
labour laws. personnel and workers regarding their
obligations to each other.
To ensure better Discipline in Industry
iii. The Management agrees-
ii. The Management and Union(s) agree -
a. Not to increase work loads unless
a. that no unilateral action will be taken
agreed upon or settled otherwise;
with any company matter and that
disputes will be settled at appropriate b. not to support or encourage any unfair
level; labour practice such as (a) interference
with the right of employees to enroll
b. that the existing machinery for
or continue as union members, (b)
settlement of disputes would be utilized
discrimination restraint or coercion
with the utmost expedition;
against any employee because of
c. that there would be no strike or lockout recognised activity or trade unions and
without notice; (c) victimization of any employee and
abuse of authority in any form;
d. that affirming their faith in democratic
principles, they bind themselves to c. to take prompt action for (a) settlement
all future differences, disputes and of grievances and (b) implementation
grievances by mutual negotiations, of settlements, awards, decisions and
conciliation and voluntary arbitration; orders;
e. that neither party will have recourse d. to display in conspicuous places in the
to (a) coercion, (b) intimidation, (c) undertaking the provisions of this code
victimization or (d) go-slow; in the local language (s)
f. that they will avoid, (a) litigation, (b) e. to distinguish between actions
sit down and stay in strikes and (c) lock justifying immediate discharge and
outs; those where discharge must be preceded

by warning, reprimand, suspension or Criteria for Recognition of

some other form of disciplinary action
and to arrange that all such disciplinary
Unions
action should be subject to an appeal
through normal grievance procedure;
(Clause III (vii) of the Code of
f. to take appropriate disciplinary action Discipline)
against its officers and members in cases
where enquiries reveal that they were i. Where there is more than one union, a
responsible for precipitated action by union claiming recognition should have
workers leading to indiscipline; and been functioning for at least one year
after registration. Where there is only one
g. to recognize the union in accordance union, this condition would not apply.
with the criteria (Annexure I) evolved
at the 16th Session of the Indian Labour ii. The membership of the union should
Conference held in May, 1958 cover at least 15% of the workers in the
establishment concerned. Membership
iv The Union(s) agree: would be counted only to those who had
a. not to engage in any form of physical paid their subscription for at least three
duress; months during the period of six months
immediately preceding the reckoning.
b. not to permit demonstrations which
are not peaceful and not to permit iii. A union may claim to be recognized as a
rowdyism in demonstrations; representative union for an industry in a
local area if it has a membership of atleast
c. that their member will not engage or 25% of the workers of that industry in that
cause other employees to engage in any area.
union activity during working hours,
unless as provided by law, agreement of iv. When a union is recognized, there should
practice; be no change in its position for a period of
two years.
d. to discourage unfair labour practices
such as (a) negligence of duty (b) v. Where there are several unions in an
careless operation, (c) damage to the industry or establishment, the one
property, (d) interference with or with the largest membership should be
disturbance to normal work and (e) recognized.
insubordination; vi. A representative union for an industry in
e. to take prompt action to implement an area should have the right to represent
awards, agreements, settlements and the workers in all the establishments in
decisions; the industry, but if a union of workers
in a particular establishment has a
f. to display in conspicuous places in the membership of 50% or more of the
union offices, the provisions of this workers of that establishment, it should
code in the local language (s); and have the right to deal with matters of
g. to express disapproval and to take purely local interest such as, for instance,
appropriate action against office- the handling of grievances pertaining to
bearersand members for indulging in its own members. All workers who are
action against the spirit of this code. not members of that union might either
operate through representative union for
the industry or seek redress directly.

vii. In the case of trade union federations, viii. Only unions, which observe Code
which are not affiliated to any of the of Discipline, would be entitled for
four central organisations of labour, the recognition.
question of recognition would have to be
dealt with separately.

Annexure III
A New Challenge For India’s Technology Sector:
Trade Union Registered in Bangalore
I. Laws Governing Trade
ɵ Trade union exclusive to the technology Unions In India
sector registered in Bangalore
Please refer to our research paper titled
ɵ Letter issued by Labour Department
‘India: Trade Unions and Collective Bargaining’
of Chennai in May, 2016 clarified that
for elaborate information on the laws
technology sector employees are free to
governing trade unions in India. A brief
form trade unions
snapshot is as follows:
ɵ Greater involvement of trade unions in
In the Indian context, the right to form
the technology sector is likely to curb
and join a trade union and engage in
the flexibility of employers in terms of
collective bargaining is provided under
dealing with employee issues
national legislations such as the Industrial
Disputes Act, 1947 (“IDA”), TU Act and the
The first trade union dedicated to technology Industrial Employment (Standing Orders)
sector employees in India has been registered Act, 1946 (“Standing Orders Act”) and state-
recently. On November 7, 2017, the Labour specific legislations such as KTU Regulations.
Department of Karnataka approved the Time and again, courts in India have upheld
application for registration of a trade union the right of workers to form or join trade
which exclusively caters to the interests unions in India89.
of technology sector employees, under the
Article 19(1)(c) of the Constitution of India,
provisions of the Trade Unions Act, 1926
1950 which envisages the fundamental right
(“TU Act”) and the Karnataka Trade Union
to ‘freedom of speech and expression’ also
Regulations, 1958 (“KTU Regulations”). As
guarantees the citizens the right “to form
per available statistics, out of approximately
associations or unions” including trade
4 million employees across the country,
unions. Accordingly, there is no prohibition
Bangalore has approximately 1.5 million
or restriction on employees (including in the
employees in the IT and IT- enabled services
technology sector) to form trade unions within
sectors88 and accordingly, the formation
the establishment or joining external trade
and registration of the first sector-specific
unions, subject to applicable laws. This was
employee trade union is a significant
also reiterated in a clarification issued by the
development in the technology industry.
Labour Department in Chennai in May 2016.
88. https://www.techgig.com/tech-news/Karnataka-may-soon-see-India-039-s-first-dedicated-IT-employee-union-140747

A registered trade union is deemed to be a II. Analysis

body corporate, giving it the status of a legal
entity that may, inter alia, acquire and hold Up until now unionization in India was largely
property, enter into contracts, and sue others.90 limited to traditional sectors, especially the
A registered trade union is also immune manufacturing sector. For the last few years,
from certain contractual, criminal and civil trade unions were trying to get a foothold in the
proceedings. As opposed to an un-registered US$ 118 billion Indian information technology
trade union, a registered trade union enjoys sector, though with little success.92 However,
greater bargaining power. If the registered trade with the registration of the first trade union in
union is a ‘recognized’91 trade union (by the the technology sector in Bangalore, employees
employer/under law), such trade union enjoys may now seek assistance from such unions to
even greater benefits. In fact, the IDA states that voice their concerns. Greater involvement of
failure on the part of the employer to bargain trade unions in the technology sector is likely
collectively in good faith with a recognized to curb the flexibility of employers in terms of
trade union will amount to an ‘unfair labour dealing with employee issues. To that extent,
practice’ which would be punishable with employers will now need to be careful in
imprisonment and/or a fine. devising and more importantly implementing
their HR policies. Employers may also need to
revisit their existing practices, especially with
respect to sensitive issues like termination of
employment.
– Preetha S & Ajay Solanki
You can direct your queries or comments

to the authors
90. Section 13 of the TU Act

91. ‘Recognition’ is the process through which a particular trade union is accepted as having an authority and representative character and,
therefore, the employer is legally bound to engage in discussions with such trade union with respect to the interests of its workers.
92. http://www.livemint.com/Industry/niEiLE4J9rb53vz3FVAQFP/Are-trade-unions-gaining-a-foothold-in-IT-sector.html

The following research papers and much more are available on our Knowledge Site: www.nishithdesai.com
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Key legal, tax and structuring Investors for India
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perspective India focused funds
February 2019
An independent submission to the
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December 2018
Nishith M. Desai Vaibhav Parikh Jaideep Reddy
February 2019 © Copyright 2019 Nishith Desai Associates www.nishithdesai.com
February 2019 December 2018
NDA Insights
TITLE TYPE DATE
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Treaty Benefits Tax May 2019
Payments For Online Subscription Services Not To Be Taxed As Royalty Tax May 2019
Taxation Of Unexplained Cash Credits: Recent Developments Tax May 2019
Taxing Cross-Border Production Activities – Contract Language Re- Tax May 2019
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Metro Express Dispute
Arbitration Clause In An Unstamped Agreement? Supreme Court Lays Dispute Resolution May 2019
Down The Law
English Court’s Dictum On The “Without Prejudice” Rule Dispute Resolution May 2019
Bombay High Court Settles Dust Over Validity Of ‘Options’ Under Dispute Resolution May 2019
Securities Law
Stamp Duty Stumps Brokers And Demat Transfers Regulatory May 2019
External Commercial Borrowings: Regulatory Framework Substantially
Relaxed Regulatory May 2019
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Government Of India Regulatory May 2019
To Strike While The Iron Is Hot: Sebi Relaxes Norms For Listing Of
Start-Ups Regulatory May 2019

Research @ NDA
Research is the DNA of NDA. In early 1980s, our firm emerged from an extensive, and then pioneering,
research by Nishith M. Desai on the taxation of cross-border transactions. The research book written by him
provided the foundation for our international tax practice. Since then, we have relied upon research to be the
cornerstone of our practice development. Today, research is fully ingrained in the firm’s culture.
Our dedication to research has been instrumental in creating thought leadership in various areas of law and
public policy. Through research, we develop intellectual capital and leverage it actively for both our clients and
the development of our associates. We use research to discover new thinking, approaches, skills and reflections
on jurisprudence, and ultimately deliver superior value to our clients. Over time, we have embedded a culture
and built processes of learning through research that give us a robust edge in providing best quality advices and
services to our clients, to our fraternity and to the community at large.
Every member of the firm is required to participate in research activities. The seeds of research are typically
sown in hour-long continuing education sessions conducted every day as the first thing in the morning. Free
interactions in these sessions help associates identify new legal, regulatory, technological and business trends
that require intellectual investigation from the legal and tax perspectives. Then, one or few associates take up
an emerging trend or issue under the guidance of seniors and put it through our “Anticipate-Prepare-Deliver”
research model.
As the first step, they would conduct a capsule research, which involves a quick analysis of readily available
secondary data. Often such basic research provides valuable insights and creates broader understanding of the
issue for the involved associates, who in turn would disseminate it to other associates through tacit and explicit
knowledge exchange processes. For us, knowledge sharing is as important an attribute as knowledge acquisition.
When the issue requires further investigation, we develop an extensive research paper. Often we collect our own
primary data when we feel the issue demands going deep to the root or when we find gaps in secondary data. In
some cases, we have even taken up multi-year research projects to investigate every aspect of the topic and build
unparallel mastery. Our TMT practice, IP practice, Pharma & Healthcare/Med-Tech and Medical Device, practice
and energy sector practice have emerged from such projects. Research in essence graduates to Knowledge, and
finally to Intellectual Property.
Over the years, we have produced some outstanding research papers, articles, webinars and talks. Almost on daily
basis, we analyze and offer our perspective on latest legal developments through our regular “Hotlines”, which go
out to our clients and fraternity. These Hotlines provide immediate awareness and quick reference, and have been
eagerly received. We also provide expanded commentary on issues through detailed articles for publication in
newspapers and periodicals for dissemination to wider audience. Our Lab Reports dissect and analyze a published,
distinctive legal transaction using multiple lenses and offer various perspectives, including some even overlooked
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Although we invest heavily in terms of time and expenses in our research activities, we are happy to provide
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As we continue to grow through our research-based approach, we now have established an exclusive four-acre,
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M U M B AI S ILI CO N VALLEY BAN G A L O RE S IN G A PO R E M U MBA I BK C NE W DE L HI M U NI CH

India: Trade Unions

© Copyright 2019 Nishith Desai Associates www.nishithdesai.com

DMS Code: 674 4,1:

© Nishith Desai Associates 2019

© Nishith Desai Associates 2019

Who’s Who Legal 2019:

Merger Market 2018: Fastest growing M&A Law Firm in India

IFLR: Indian Firm of the Year 2013, 2012, 2011, 2010

© Nishith Desai Associates 2019

Ajay Singh Solanki

© Nishith Desai Associates 2019

8 © Nishith Desai Associates 2019

2. HISTORY OF TRADE UNIONS IN INDIA 02

3. INDIA’S CENTRAL TRADE UNION ORGANIZATIONS 03

4. COLLECTIVE BARGAINING IN INDIA 04

5. LAWS GOVERNING TRADE UNIONS IN INDIA 09

6. LANDMARK CASES PERTAINING TO TRADE UNIONS 13

8. RECENT TRADE UNION ACTIVITIES IN INDIA 16

© Nishith Desai Associates 2019

© Nishith Desai Associates 2019

1. http://mospi.nic.in/Mospi_New/upload/SYB2014/CH-41-TRADE%20UNIONS/Trade%20Unions.pdf (Accessed on January 22, 2019)

© Nishith Desai Associates 2019 1

2. History of Trade Unions in India

2 © Nishith Desai Associates 2019

3. India’s Central Trade Union Organizations

S.No. Name of Trade Union Political Affiliation

© Nishith Desai Associates 2019 3

4. Collective Bargaining in India

The collective bargaining process obviously

4 © Nishith Desai Associates 2019

C. Collective Bargaining Conciliation proceedings are concluded with

16. Section 22 of the IDA

© Nishith Desai Associates 2019 5

6 © Nishith Desai Associates 2019

iii. Enterprise or plant-level bargaining i. Bipartite (or voluntary) agreements are

30. Nirmal Singh, “Industrial Relations” at p. 119, online: <http://books.google.co.in/books?id=gl0tzPYgko8C&pg=PA119&lpg=PA119&dq=India+

© Nishith Desai Associates 2019 7

ɵ Settlement terms which, typically, may be

8 © Nishith Desai Associates 2019

5. Laws Governing Trade Unions in India

iv. The right of the members to hold property.

© Nishith Desai Associates 2019 9

A. Recognition and Registration Ideally, a trade union must obtain legitimacy

43. Singh et al., Employee Relations Management, p. 110, Available at https://books.google.co.in/books?id=vkQ7BAAAQBAJ&printsec=frontcover

10 © Nishith Desai Associates 2019

C. Process of Recognition of Trade to the Code adopted by the Standing Labour

ɵ Maharashtra Recognition of Trade Unions

53. Trade Union (Amendment) Bill, 2018. Please see: https://labour.gov.in/sites/default/files/The%20Trade%20Unions%20Amendment%20

© Nishith Desai Associates 2019 11

56. Section 3 of the IESOA

12 © Nishith Desai Associates 2019

6. Landmark Cases Pertaining to Trade

© Nishith Desai Associates 2019 13

64. AIR1960SC914, 1960(1)FLR23, (1960)IILLJ228SC, [1960]3SCR407

14 © Nishith Desai Associates 2019

67. Section 2(gg)(q) of the IDA

© Nishith Desai Associates 2019 15

8. Recent Trade Union Activities in India

16 © Nishith Desai Associates 2019

Who’s Who Legal 2019:

Merger Market 2018: Fastest growing M&A Law Firm in India

IFLR: Indian Firm of the Year 2013, 2012, 2011, 2010