Umakanthan53
Labour Law & Hr Consultant
Ceihosur
Managing Partner

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If a company is not making profit from several years. They accept the orders without any margin to run for repaying the liabilities. How should they pay increment and bonus to their employees and how should they overcome the situation?
Karthigeyan.S, Bangalore.
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Dear Karthikeyan,
Knowingly or unknowingly, you have used the phrase " To run for repaying the liabilities". Liability does not imply financial liabilities only. The employees employed in the Company for carrying out its operations in the manner instructed to them by the Management also are one among the stakeholders to whom the company owes its moral responsibility to ensure better working conditions on par with other Companies in the industry. Keeping the operations of the Company viable and making profits are the responsibilities of the Management. Any lapse in this regard can only be termed as a managerial failure for which the employees can not be penalised. Unfortunately, labor is the only factor of production that remains always bargainable. But it does not mean that they should be denied their statutory benefits on account of the Company being in the red continuously. It is for the Management to embark upon suitable revival measures in the long run.
But if company is paying more than minimum wages and better than other companies in industry, is there liability of company to increase wages year-on-year? In such situation, company shall close one day and employees shall loose jobs.
Your comments please sir...
Dear Catapro,
I need not emphasize the importance of the upward journey of the wages of the working class from minimum wages to fair wages and finally to that of living wages as spelt out in our Constitution. Paying more than the statutory minimum wages or that of the industry wages cannot be a valid point or a reasonable justification against the subsequent increase of the existing wages of the employees. In fact, the issue is related to so many factors like the value and volume of the products manufactured or the services rendered by the establishment, the Labour cost ratio, the types and the extent of the existing fringe benefits etc. Of course the management can convince the employees and their unions about the
need for reducing the rates and periodicity of wage revision in order to maintain the competitiveness of the Company in the market. We also should bear in our minds that the subject matter of periodical wage revision cannot be isolated from the persistent inflationary trend in the economy which results in substantial reduction in the real wages of the working class.
You mentioned "as spelt out in our Constitution". May I have reference for it?
For your information, standard for fine chemical industry on expense on manpower is 3 to 5% of sales turnover while ours is over 12%. We explained this to union and labour commissioner along with supporting industry data, however union is not concerned..... they are sticking to their stand and continuing the strike for annual increase of wages.
In such background, we have recruited new employees and running the plant. Now these new employees have become permanent by virtue of their service period.
Now my questions are :
1. Can we recruit new employees to run plant if existing employees are on strike?
2. If union don't agree with industry standard of 5% wages of sales, what options do we have?
3. If now new recruited have become permanent, whom we dismiss after strike is withdrawn after negotiation?
4. Will you please give reference to constitution for fair increase in wages to improve living standard of workers?
Your replies on above specific question, one by one, shall be highly appreciated.
Thanks
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