The Meaning of Labour Code

Sharit Bhowmik

Ever since the National Democratic Alliance (NDA) government headed by Prime Minister Narendra Modi was voted into power in May 2014 it has been talking about increasing jobs by restricting workers' rights. The government has categorically stated that in the past too much protection was given to workers in the formal sector and this is the main hurdle for expanding employment. If job protection is removed and hiring and firing are made easier for employers more jobs will be created. In keeping with its objectives the government has decided to change, amend and amalgamate the existing laws that provide protection to labour. The Factories Act has been redefined to exclude all manufacturing units that employ less than 40 workers. In other words nearly 75% of factories in the country will be exempted from regulating working conditions. Similarly four acts relating to wages and bonus have been merged in one code. These will need approval of parliament before they become laws.

The latest bill is the Labour Code on Industrial Relations that merges two major acts, namely, Industrial Disputes Act and Trade Unions Act; into a code. This bill is likely to be introduced in parliament in the ongoing monsoon session (July-August 201 5), unless the trade unions are able to thwart it. This bill has been opposed by all trade unions, including the one close to the ruling party, namely Bharatiya Mazdur Sangh (Indian Labour Council) which has the largest membership, around 8 million, among the existing 12 central trade union federations. The Bharatiya Mazdur Sangh (BMS) has been very vocal in opposing this bill and has joined the alliance of other federations to oppose the anti-working class moves of the government. This bill has very serious effects on trade unions and the working class movement in the country.

Chapter 3, Section 5 of the bill mentions that a trade union can be registered if its membership includes 10% of the workers in the industry or a minimum of 100 workers, whichever is less. A minimum of 7 workers is required to make an application for registration. This section has become the bone of contention with the trade unions as it is felt that it will be difficult to register a trade union under such conditions.

A positive aspect of this section is that it states that in the unorganised (informal) sector where there is no employer-employee relationship or the relationship is not clear, the 10% requirement shall not apply. This would imply that the self-employed, such as street vendors, home-based workers, domestic workers, rag pickers can have their own registered trade unions. At present there are unions among these sections but they are either not registered under the Trade Unions Act or they are registered as societies. Many states refuse to register trade unions of these workers precisely because they do not have employers. It took Self Employed Women's Association (SEWA), the largest union of women in informal employment and one of the 12 national federations, more than a year to register as a trade union because the state government refused to accept that self-employed were workers as they did not have employers. Yet the Act allows employers' associations to register as trade unions.

Section 7 of the bill deals with administration of trade unions. It says that the every state will have a Registrar of Trade Unions who will be the authority for registering and monitoring unions. There will be other officials such as Additional Registrar, Joint Registrar and Deputy Registrar, each of whom will have specific areas/ regions of operation and they will have the same powers as the Registrar in their respective areas. This means that a trade union cannot appeal against the decision of a Deputy Registrar to a higher authority in the office of the Registrar. The trade union has to appeal to the industrial tribunal which will be the final judicial authority in such cases. If agreements are not enforced, or there are disputes between trade unions the final authority is the labour tribunal. Section 21 debars any civil court from enforcing or recovering any damages for breach of agreement. The bill puts a lot of responsibilities on the labour tribunals for dispensing justice. Given the present situation where the tribunals are hopelessly understaffed with acute shortage of judges, one wonders how these same tribunals will function effectively with the additional work. Moreover the workers in general and trade unions in particular will be prevented from approaching higher courts of law for addressing their grievances.

The other provisions relating to trade unions are the same as in the Trade Unions Act namely, immunity from civil suits and of certain sections of the Indian Penal Code dealing with criminal conspiracy.

The chapter on Strikes and Lockouts (Chapter 5) starts with the presumption that they are illegal as the first section in the chapter (Section 71) has the heading, "Prohibition of Strikes and Lockouts'". In both cases the concerned parties must give the other side six weeks' notice before striking or having a lockout or after 15 days of giving the notice. Moreover there are conditions that both sides must follow before declaring a strike or lockout. These include that there will be no strike or lockout when conciliation proceedings are in progress. Management cannot declare lockout when a strike is on. Similarly a strike cannot be declared during lockout.

Though the bill treats strikes and lockouts on the same plane, they cannot be termed as equal because in both cases of illegality the workers suffer. An illegal strike would mean that the workers involved would lose their wages. In an illegal lockout too workers do not get paid. In case of an illegal lockout the employer gets penalised but how does that help the worker who is without wages? One of the ways of overcoming this would be to make the employers pay full wages to their workers during the period of lockout or the same could be deposited in the state government's treasury and could be released later after the issue is settled This would dissuade employers from declaring lockouts at their whims and fancies.

The most important sections of the Bill are those on penalties and fines. Chapter 12, Section 103 details the fines and penalties to be imposed for violation of the provisions of this bill. In fact this section, and not the one on registration, needs to be addressed by trade unions as it affects them the most.

The bill proposes to increase the penalties for strikes and lockouts. The original act (Industrial Disputes Act) had prescribed a punishment of Rs 50 a day for the employer if the lockout is illegal. This paltry sum of less than one US dollar a day could encourage employers to declare lockouts to pressurise or blackmail workers and their unions at the times of labour unrest. If the lockout is declared illegal the employer would plead guilty and pay the fine. This bill has increased penalties but there is a catch in this. The penalties for illegal strikes and lockouts are the same but in both cases the burden is felt more on the workers. Sub-sections 14 to 17 of Section 103 deal with penalties for illegal strikes and lockouts. Out of the four sub-sections only one covers punishment for lockouts. Sub-section 15 notes that "Any employer who commences, continues, or otherwise acts in furtherance of a lock-out that is illegal under this Code, shall be punished with a fine which shall not be less than rupees twenty thousand (US $ 333) but which may be extended to rupees fifty thousand or with imprisonment of one month or both."

The punishment for an illegal strike is the same. In addition, Sub-section 14 says that all workers who participate in a strike that is declared illegal will get the same punishment (rupees 20,000 to 50,000 plus imprisonment of one month). This means that if thousands of workers participate in a strike that is declared illegal each will have to pay the above mentioned fine and/or face a rnonth's imprisonment. The employer however is treated as one entity and will pay the penalties if the lockout is illegal. In other words there will be a single fine imposed on the company in case of an illegal lockout but there will be multiple fines on the workers if their strike is declared as illegal. Besides this, Sub-section 16 states that any person instigating or inciting others to take part in strikes will face the same punishment. This has obvious reference to trade union leaders who are not workers in the industry.

Sub-section 17 states that the same nature of penalty will be imposed on any person who lends monetary support to an illegal strike or lockout. It is doubtful if monetary support will be provided to a company for helping an illegal lockout, but the same does not apply to workers and illegal strikes. The sub-section basically says that when workers are engaged in a strike that is declared illegal, they should not be provided any monetary or other support from outside. Let them starve! Would this include spouses, kinsfolk, friends and other workers who lend monetary support to striking workers? In letter the sub-section includes them.

Anti-worker/ union approach of the bill can be seen in another sub-section, namely Section 103, Sub-section 7. This relates to non-submission of returns to the Registrar by trade unions. This reads: "If default is made on the part of any registered trade union in giving any notice or sending any statement or other document as required by or under any provisions of this Code, every office-bearer or other person bound by the rules of the trade union to give or send the same, or, if there is no such office bearer or person, every member of the executive of the trade union, shall be punishable with fine which shall be not less than rupees ten thousand but which may be extended to rupees fifty thousand. The continuing default would attract an additional penalty of rupees one hundred per day so long as the default continues."

The next sub-section (8), mentions that if any false entry is made in the returns submitted by a trade union or a rule is altered, the person will be fined rupees five thousand. Sub-section 9 states that any person who tries to deceive a member of a trade union by giving her/him false information or tries to convince workers that an unregistered trade union is indeed registered will be punished by paying a fine up to rupees twenty five thousand. The bill does not specify what the term 'false information' means. This ambiguity can be another handle to kerb trade unions by branding any information provided by them as false information.

The above penalties relate to the section on filing returns of trade unions (Section 33). The offences are not very significant but the penalties imposed are disproportionately high. The prescribed fines are higher than the average monthly wage of a worker in formal employment and several times higher for those in informal employment.
In all cases involving workers fines are imposed on individuals but in the case of lapses by the employer the fine is imposed on the collective entity. For example, Sub-section 8 imposes a fine on each member of the executive of a trade union whereas in the case of the employer the fine is imposed on the company and not on each director or other officials. This shows the bias of the bill.

If the bill does become a law in its present form it will be a major setback for the working class movement. The penalties for trade unions and workers are so high that it would deter them from raising any issue against the employers or participate in any form of resistance, in case these are declared illegal.

As mentioned earlier, all trade unions have opposed the bill. The central (national) trade unions met on 26 May 2015 in Delhi and decided to have a nation-wide strike to protest against this bill. However, so far the resistance from trade unions hover around registration of unions. Newspaper reports convey that trade unions have opposed the minimum number for registering a union. They have protested that having 10% membership or minimum of 100 members were too high and would restrict formation of unions in many industries. These are minor criticisms against the bill. If one looks at the chapter on registration of trade unions one will find that it is more or less similar to the existing rules and laws. The main problem lies in the stiff penalties imposed on trade unions and workers for violating even seemingly minor aberrations.

Trade unions in most countries are facing hostility from their respective governments. This is more so in developing countries that have adopted liberalisation and the market economy. The governments are backing private sector and corporates as the main means of developing their economies. The rights of labour on the other hand are trampled. All too often the demands of labour and trade unions for decent working conditions are viewed as impediments to development and economic growth. However India under the new regime has surpassed most of these countries by adopting an aggressive stand in depriving the working class of its rights. It will be seen during the next few months if trade unions are united in fighting this proposed anti-working class bill. Only a united and sustained working class movement can make the government change its anti-working class decisions.

Frontier
Vol. 48, No. 4, Aug 2 - 8, 2015