How Should We Address Growing Unity and Demands Among Contractual Workers?

We are a six-year-old reputed auto ancillary operating from Gurgaon and providing online services to OEMs. Besides employing around 150 permanent operators, we also engage around 200 contractual workers, some of whom are involved in core business functions while others support operations. A few of them have been with us for more than four years.

Last year, we faced a strike from the permanent operators related to their long-term settlement issue. Over the past year, we have observed varying behavior patterns among the contractual workers as well.

Recent Industrial Relations Scenario

The recent industrial relations scenario in my unit is as follows:

1. Contractual workers are forming a strong unity, with a few emerging as opinion leaders among them.
2. The contractual workers are receiving indirect support from the permanent operators.
3. Similar to the permanent operators, they are also attempting to disrupt shop floor discipline.
4. Indirectly, they are requesting equal wages and welfare facilities that we provide to our permanent operators (including subsidized canteen services).
5. They are also planning to demand the same Diwali gifts, bonuses, etc., that we offer to the permanent operators.

Recent IR Scenario Described by You

Issue 1: Contract Labors Are United

Position: Contract Laborers (CLs) may join or form a registered trade union, with a few taking an active part as opinion leaders.

Issue 2: CLs Are Indirectly Supported by Payment Operators

Position: Any person employed as a CL may be directly or indirectly supported by others, including permanent operators.

Issue 3: Disturbance of Shop Floor Discipline

Position: Maintaining workplace discipline and effectively dealing with indiscipline in accordance with standing orders is management's responsibility and prerogative. Discipline is non-negotiable.

Issue 4: Demand for Equal Wages and Welfare Facilities

Position: CLs are entitled to amenities at par with other employed persons. Wages payable to CLs are governed by the Minimum Wages Act and the rules framed thereunder. However, read the terms stipulated in the labor license obtained by/issued to the contractor/subcontractor, as for the same and/or similar work/job, the same wages are payable.

Issue 6: Demand for Diwali Gifts and Bonuses

Position: Gifts are not a part of wages. However, past practices and precedent would determine the distribution of gifts.

You may revert if you so desire.

Regards,
Kritarth Consulting Pvt Ltd.

Attribution: https://www.citehr.com/469784-behavi...#ixzz2dNBjb588

Thanks, Kritartha, based on your reply, the following queries are still in my mind:

1. If They Form a Registered Union:

- Are we bound to recognize them?
- After registration, can they give a letter of demand (LOD) to management regarding their demands?
- Is management liable/responsible for receiving the LOD and initiating negotiation meetings with them?
- Suppose management does not pay attention to their LOD or show interest in negotiating; can they approach the labor officer in the area?

2. Interest Behind CWs Being Indirectly Supported by PWs:

What is the interest behind CWs being indirectly supported by PWs (where both are two separate classes of working hands)?

3. Initiating Formal Disciplinary Actions:

Can we initiate formal disciplinary actions (such as issuing warning letters, charge sheets, suspensions, domestic inquiries, etc.) in writing? We don't have certified standing orders and are managing with model standing orders.

4. Minimum Wage Payment:

As per the individual contracts issued, the manpower contractor has to pay only the minimum wage. Almost every industry is paying minimum wages.

Please feel free to reach out if you need any further clarification or information.

Best regards

Dear HR Prof, you call yourself "HR Prof," then you are supposed to be strong in HR theory. From the HR Management standpoint, it is a clear failure to manage human resources. If you want to give second-class treatment or step-brotherly treatment to a certain section of employees, then these things are bound to happen. In fact, forget about the theory of HR, but you have failed on the basic principle of equality itself.

Wage Parity and Employee Treatment

What stops you from bringing wage parity and giving similar facilities to both types of workers? What percentage of savings do you make by maintaining this disparity?

Casual Employees and Flexibility

Why do companies keep casual employees on their payroll? One simple reason is that it gives them the flexibility to remove them in case of a slump in business activity or industrial decline. Since they are the soft target, do you want to exploit them further?

Lessons from Maruti Suzuki Labor Unrest

The disparity between permanent workers and casual workers was the main reason behind the labor unrest that engulfed the Maruti Suzuki factory at Manesar. It was a great wake-up call to the entire India. But it appears that your company has not heeded this wake-up call. Then, God bless you; this is what I can say.

My views are very strong, but they are needed too.

Regards,
Dinesh V Divekar

Dear Sirs,

Addressing Your Queries on Union Recognition and Management Responsibilities

First, let us dwell on your queries raised in your 2nd posting:

Query 1: Recognition of a Registered Union

Position: Recognition of a Registered Trade Union is not automatic and is the prerogative of the employer. Upon recognition, the recognized union becomes privy to certain privileges granted by the employer, including collective bargaining and joint consultations, etc.

Query 2: Management's Responsibility Towards COD

Position: Management is liable to act on the Charter of Demands (COD) submitted by a registered and duly recognized Trade Union.

Query 3: Interest Behind Support Among Workers

Position: The management team ought to know "what is brewing" at the workplace and around their business (business intelligence). Being caught unawares is unhelpful. Workers are naturally free to relate to each other, particularly to promote their common interests, and there exists no separateness. One distinguishing feature of contract labor is that Contract Laborers (CLs) can only be employed on the muster rolls of a contractor/sub-contractor for work that is not regular or of a permanent perennial nature. The nature of work/duration of work in question, as declared in Forms IV & V by the principal employer and the contractor/sub-contractor, and submitted for obtaining a proper labor license, assumes importance. Please check the licenses obtained by your contractors/sub-contractors and issued by the Labor Commissioner's Office after due verification.

Applying for a labor license by a contractor/sub-contractor on the basis of the certificate issued by the principal establishment to employ CL is declaring that the work/job against which CLs are to be employed is not of a permanent and perennial nature, and any falsification of facts would amount to perjury. Employers, beware of that.

Query 4: Initiating Formal Disciplinary Actions

Position: Management must initiate prompt disciplinary action once any act of misconduct occurs or is reported. The certified standing orders are a mandatory legal requirement and specify various acts of misconduct for which the delinquent employee is liable to punishment only after the laid-down disciplinary procedures have been followed in sequence.

Query 5: Absence of Standing Orders

Position: Frame draft standing orders applicable to your establishment post-haste and submit the same for certification by adhering to the procedure for the purpose and obtain certification. Instruct the contractors/sub-contractors who employ CLs in their own establishment to examine whether they are legally required to have their own Certified Standing Orders (CSO). Then, they will deal with their CL employed on their muster rolls as and when misconduct occurs or is reported.

Query 6: Payment of Minimum Wages

Position: Payment of wages to CL is as per the minimum wages notified by the respective state government through the Gazette notifications and as applicable for the wage periods. There is no immunity unless so exempted by law.

It is imperative and expedient for your organization to formulate, for long-term benefit, a pragmatic approach to the issues raised in the two posts in consultations with a reliable management service provider before the issues become problems.

Our business is to set right your business. We are available for consultations.

Regards,
Kritarth Consulting Pvt. Ltd
Delhi Office
Email: [Email Removed For Privacy Reasons]
31-8-2013, 6:30 p.m.