Navigating Wage Agreements: How Long Should They Last and What If Unions Disagree?

Dear Seniors,

I have the following issues:

We want to enter into a wage agreement with the Union.

First, what is the duration or period of the agreement for wages/salaries we can enter into? For example, 3 years, 5 years, 7 years, 10 years - what is the maximum limit for any wage agreement and settlement that would have legal binding on both parties?

Second, if the union refuses to arrive at a settlement and management arbitrarily decides to pay revised pay scales unilaterally to implement new salary/wages, what should be the procedure to legalize this implementation?

Third, if the union refuses to arrive at a settlement or agreement on wages, can management exercise the agreement with individual employees to sign the separate wage settlement/agreement, and is it legal?

Fourth, is the notice of termination of the old agreement mandatory before the submission of the new charter of demands?

Fifth, can management also counter-propose with their charter of demand?

Your expertise and advice are highly appreciated.

Kind Regards,

Abraham

Hi Abraham,

Your question needs a response from a hardcore Personnel & IR professional with a successful track record in the field. Let me reply point by point...

Any wage settlement or agreement period can be up to a maximum of three to five years. Please refer to the ID Act. Currently, I am not in India; otherwise, I could have provided you with the relevant section and some court case references. When I was in India, I participated in wage agreements, both bi-partite and settlements, during conciliations and through courts for periods ranging from three to five years. During my time as a Personnel Manager in a Public Sector Company, I executed an agreement in line with the Recommendations of the Fifth Pay Commission for a period of 10 years, from 1997 to 2007.

In case the Union does not reach an amicable settlement or agreement, they may resort to adjudication or arbitration. Even if an agreement is valid and signed by the same unions, objections may be raised to terminate or review it based on changes in facts and circumstances. Another option available to management is called "TO PAY," where written consent of employees is obtained on a "TO PAY" form for revised salaries under unilateral management decisions to introduce or implement wage revisions if the union is unable to negotiate due to various reasons.

A notice of termination is only required for interim application or charter of demand during the existing agreement's tenure if the union wishes to amend the agreement. When the agreement ends, it automatically expires, and a fresh notice of termination is not mandatory.

Upon receiving the charter of demand, management, after carefully reviewing the financial implications, devises strategies to propose their charter of demands during negotiation meetings. These proposals may include withdrawing certain privileges, customary concessions, practices, and benefits deemed nonviable by management.

I hope all your queries are resolved.

Best regards,
Badlu