Can We Change a Union Agreement After It's Signed? Seeking Advice on VDA Issue

Clarification Needed on Agreement Changes

I am working in an LTD company. Recently, we completed an agreement for 3 years, from 2014 to 2017. All union leaders signed and accepted it at the time of the agreement. We have two unions, AITUC and BMS. AITUC made the agreement. In previous agreements, we included VDA, but the current agreement does not have VDA. After the agreement was finalized, the general secretary of AITUC is demanding VDA, and the second union, BMS, is supporting this demand. Now, the issue is with DCL.

My query is: Once the agreement is done, can changes be made? We asked DCL to refer the matter to court. The agreement was completed by both parties (Employer & AITUC).

Kindly help me out.

With Regards,
Siva Kumar

Hi Buddy,

Once an agreement is signed after mutual consensus between the employer and employee under the ID Act 18(1) sec, that agreement will be in operation for the time mentioned in the agreement and it is binding. It cannot be revoked by one party; however, if both parties agree to make changes, then it can be done by framing a new agreement.

With Regards,

Mr. Thumbs Up

Clarification on Settlement and VDA Issues

To me, your narration of the particular point leading to the backing-off by both the representative Trade Unions after signing the settlement under section 18(1) of the Industrial Disputes Act, 1947 seems to be unclear. It would have been better had you mentioned the particular clause of the settlement as well as the saving clause, if any, speaking about modifications of earlier terms and demands if any not considered.

I do agree with Kumaran's point that once signed by the parties, all the terms of the settlement are impliedly understood to have the mutual consent of the parties concerned and will have an uninterrupted lease of life as agreed upon.

Understanding VDA and Management's Approach

"VDA" can be interpreted differently. The immediate connotation appears to everyone as that of VDA linked to any Cost of Living Index. In my experience, I found some managements skeptical about VDA linked to COL on the ground of unpredictability of their financial commitment over the period of settlement and prefer differential rates of DA over the years covered by the settlement, thus fulfilling the aspect of variability in the matter of payment of DA. Both practices have their own pros and cons.

Normally, switching over from VDA linked to COL will not be acceptable to workmen. Such being the general perception, what prompted your management towards the switch-over in this aspect and how they convinced both the unions are matters of deep analysis. It might be the management used the concession of any long-term demand as a barter, and on the face of it, the union leaders signed the settlement and then backed off after its objection by all the workmen.

So, in my opinion, your management should review the settlement to restore cordial relations rather than preferring adjudication.

Regards

Understanding Agreement Terms and VDA Issues

It all depends on the terms of the agreement. If the agreement resolves some issues and leaves other issues open, and if that includes the Variable Dearness Allowance (VDA), then it is likely open to the unions to raise the VDA issue. If the agreement is on wage fixation and includes a formula on Dearness Allowance (DA) agreed to by the majority union, then it is prevented from raising the VDA issue again. If the agreement contains a clause that it settles all disputes and includes an undertaking by the union that it will not agitate any other issue during the currency of the existing settlement, then you need to invoke that clause to stop the union from raising the VDA issue. You need to take a stand according to the terms of your agreement.

Regards,
B. Saikumar
Navi Mumbai

Dear Siva Kumar,

I am with B. Saikumar. But I need to understand, do you have a recognized union in your plant? In the case of a multiplicity of unions, you must sign the settlement with the Recognized Union or with the union that has more members.

Regards,
Govind Pawar
9823411433

Dear Siva,

Your statement, "We asked DCL to refer to court," is not clear, as you have not mentioned what exactly is the management's objection to agreeing to the unions' demand. Why does the management want interference from a third party, especially the court, in maintaining cordial employer-employee relations? Employer-employee relations should always be voluntary and consensual, not imposed by any outside agencies, such as court judgments, etc.

There is no hard and fast rule to stick to an agreement if it is deficient in some way. There is no harm in modifying the agreement between the employer and the unions in the interest of the organization's productivity, management's respectability, and peace within the organization, provided there is no substantial loss to the organization and both parties agree.

So, you have to decide whether there is any harm in accepting the demands of the union on the issue of VDA.

In fact, management should prefer not to invite any outside interference in the organization's management issues. Such interference should be rare, occurring only when the management feels completely handicapped due to unjustified demands from the unions/employees.

Please remember, the costs of disputes are substantial and unbearable in terms of money, productivity, the organization's reputation, and the management's respectability.

Please substitute "IMPOSED" for the incorrectly entered word, "i,posed," which appears in the sentence at the end of the 3rd line of the text of my response.