Navigating Wage Agreements: What Should HR Know About Working with Trade Unions?

Dear Respected Seniors,

Very Good Morning.....

Can you please explain to me the procedure of Wage Agreement with trade union/workers? What is expected from HR in this process?

Dear Mr. Prashant,

First, let us understand how many recognized trade unions there are. The modus operandi would be different if there is one or more.

Regards,
vsure

Under the ID Act, there are settlements defined. Please go through Section 2(p) of the ID Act.

Normally, the steps are as follows:
1. Submission of COD (Charter of Demand) by the Union
2. Negotiations between Management Representatives and Union Representatives
3. Reference to the conciliation officer (not required if a settlement is reached)
4. Conciliation procedure
5. Settlement
6. Registration of the settlement

If you do not have trade unions, do you have a works committee?

Describe your organization for better understanding by other members so they can provide assistance.

We are a manufacturing industry specializing in plastic moulding located in MIDC Pune. We do not have a work committee established yet.

Permanent Workers: 60
Staff: 45
Casual Laborers: 100-120 per day

Dear Mr. Parekh,

I could not find Section 2(p) as per the ID Act. Could you please provide me with the same?

Hi Prasanth,

Regarding your query as mentioned by you that you do not have any trade union(s).

The question of wage settlement does not arise. However, now you can make a policy for wage settlement in the long run in the interest of the organization.

Procedure:

Wage settlement period duration and implementation should be clearly mentioned. (Minimum settlement period should be once in 5 years).

For any wage settlement, first, take the charter of demands from a recognized union.

Study and analyze the charter of demands and work out incidence in 2 ways: 1. Economical 2. Non-Economical.

Prepare counter demands by management and submit to the union as below:

1. Settlement shall apply to all the confirmed workmen as on the date of signing of the settlement.

2. Management may introduce new or improved methods of production.

3. To observe 48 hours per week.

4. It is the responsibility of each workman to keep his place of work clean and maintain his machine in good condition.

5. The union and workman should recognize that the company may deploy their manpower depending on business exigencies.

6. Excepting Basic and DA, none of the allowances whether monthly paid or otherwise shall be deemed to be a wage for the purpose of overtime, paid holidays working, PF, gratuity/superannuation.

7. The union and workman should cooperate in achieving maximum productivity to maintain harmonious industrial relations.

8. The management will exercise to rationalize the existing manpower at their discretion for business development.

9. The union and workman should give active support in compliance with safety norms.

10. The union shall extend whole-hearted cooperation and strive for achieving:

a) In creating healthy harmonious industrial relations

b) In maintaining high standards of discipline

c) In timekeeping and punctuality

d) In achieving high operational standards

e) In achieving high efficiency and quality

f) In achieving higher productivity and meeting production and sales targets.

11. The union and employees further agree that they shall not either individually or collectively raise, pursue, or agitate any demand involving any additional financial or any other implications/commitment/burden on the company during the currency of this settlement.

Similarly, you can mention an endless number of clauses from management and submit to the union before negotiating.

For any wage settlement, it is always better to conclude the settlement amicably at the earliest instead of prolonging the discussions and payment of arrears.

Also, it is better to negotiate in a package deal (lump sum) instead of pointwise discussion and leave the choice to the union for distributing the amounts in various allowances (except Basic & DA).

Finally, if you have a Dearness Allowance formula, it is better not to agree to 100% DA neutralization while making the pay scale structure. That will have a recurring incidence on the employers.

Hope the above is clear.

Thanks and Regards.

Dear Colleagues,

I thank the team for raising such an important topic on this platform and providing such useful information.

Thanks and regards,
Deepak Jain

Dear Mr. Prashant,

For the signing of any agreement, there have to be at least two parties. In the process of Wage revision agreement, you should have representatives of workmen (5-7) authorized by the management as a sole bargaining agent, who will also take responsibility to convince the workmen on the clauses of the agreement. Kudos to Mr. Parekh for explaining the cycle of the wage agreement. I would like to add a process of wage survey in the nearby industries engaged in manufacturing similar products.

Mr. Vadlamani has also explained the management demand in detail. Form a works committee, understand the genuine need of your workmen, make them understand management's requirements from the wage revision, and amicably come to a consensus of signing the settlement. Wishing you all the best for your endeavor.

Regards,
Arvind

Could you search Section 2 (p) in the attachment I have provided? It's a PDF file, so please use the search/find option.

Dear Prashant,

I am enclosing a draft of the agreement for your perusal.

Dear Mr. Vadlamani SR,

Thank you very much for your information, which is also useful for me since we are currently in the process of LTS, pending since 2009.

Could you kindly forward any wage agreement copies you have to my email address, bsklinkesh@yahoo.com?

Regards,
B. Saravanakumar
Trichy, Tamil Nadu

Procedure of Wage Agreement with Trade Union/Workers

Can you please explain to me the procedure of a wage agreement with trade unions/workers? What is expected from HR in this process?

Best Regards,
Ashish Soni
[Phone Number Removed For Privacy Reasons]

Expectations from HR:

1. Understand the figures of wage settlement around the vicinity of the company.
2. Determine the minimum expectations of the union to reach a settlement.
3. Note the minutes of each meeting and sign off on the same.
4. First, discuss and agree on business needs (PQCDM), and then focus on the financial aspect.
5. Do not compare with other industries, as the profit margin, raw material cost, and labor cost may vary.
6. Once the terms of reference from unions and management expectations are amicably settled, prepare a draft in Form H.
7. Have it vetted through an advocate or the legal department.
8. Verify the figures, arrears, distribution pattern, targets, etc.
9. Sign the settlement.

Kindly understand sections 2(p), 18(1), 18(3), 12 of the ID Act, along with state laws for binding effects.

Please let me know if you need any further clarification.

Regards,
Rahul Bagale
[Phone Number Removed For Privacy Reasons]

I am adding some valuable information regarding the expectations of management from the union in the agreement. I hope it adds to your knowledge.

Expectations of Management from Union in Agreement

1) The Union members must agree that they shall fully cooperate in all the endeavors of the plant management team to improve areas such as productivity.

2) The Union members must agree that they shall follow the constitutional method for the resolution of any dispute and shall not resort to any agitation, including work stoppage, work refusal, go-slow, and work-to-rule, which will affect production/material movement.

3) All the workmen at all times shall keep their work area clean and in hygienic conditions.

4) All the workmen shall undergo medical examinations as and when organized by the company. Being a unit manufacturing items for human consumption, this will be mandatory for us as per the state guidelines of the State/Central Government.

5) They shall also use safety equipment required in the specific area in the manufacturing department. Non-use of safety equipment or bypassing any safety-related instructions would be liable for disciplinary actions.

6) All the workmen without exception, including the union members, assure the management representatives that they shall perform their duties diligently and shall not while away the working time for any reason whatsoever.

7) Benefits under this settlement shall not accrue or be payable to the workmen who have resigned from the services of the company or who have been discharged, dismissed, or terminated from the services of the company.

8) The workmen will be responsible for the maintenance of the plant and machinery/equipment they are working on. They will take care of the day-to-day routine maintenance and also help the maintenance team in major breakdowns/overhauling work plans.

9) The Union members must agree that this settlement is in full and final of all the demands raised by the union in its charter of demands or otherwise. The demands that are not specifically mentioned in this settlement are treated as negotiated and withdrawn.

10) The Union members must agree that they shall not raise any demands of a financial nature directly or indirectly during the tenure of operation of this settlement and thereafter until this settlement is validly terminated.

11) The Union members must agree to maintain clean personal hygiene. To facilitate the same, the company expects that they will adhere to all norms and instructions given by the supervisors from time to time in this regard.

12) The union members must agree that they shall participate in work and carry out improvements in all areas, including the quality of the products. The union members shall cooperate with the management in all such efforts of the unit.

13) The Union members must participate to improve and maintain the competitive status necessary for the plant.

Regards

As per the ID Act, we are conducting wage agreements with our employees either under section 8(1) or 12(3). Our general practice is to set the LTS for a maximum period of 3 years. Is there any possibility to extend it to a maximum of 5 years? I believe there is no clause or section specifying a time limit for settlement periods.

Can you please share your views?

Regards,
P. PACKIARAJ