Is a Settlement Legal if the Recognized Union Doesn't Sign but Most Workers Agree? Seeking Advice on Alternatives

Dear All,

Company Overview

Ours is a limited company registered under the Companies Act. There are two registered trade unions that exist/work in the company. Out of these, the recognized union has been functioning for the last 40 years. However, the majority of workmen are supporting the non-recognized union. Considering this fact, to maintain industrial peace, the management is accustomed to bargaining/negotiating/talking with both unions, and the last two settlements were arrived at amicably by signing jointly.

Current Settlement Status

The current settlement is due in the year 2016, and both unions have submitted their Charter of Demands. However, due to heavy accumulated losses, the management is not in a position to take on additional financial burdens through a new settlement, and the same is pending. As per practice, each settlement period is for three years, and the current settlement period is set to end in December 2018.

Conciliation and Litigation

Meanwhile, since no amicable settlement has been reached, the recognized union filed their charter of demands before the Assistant Labour Commissioner for conciliation, which was not resolved. Consequently, the authority has sent a failure report and referred the matter to the Industrial Court, where it is pending under litigation.

Proposal by Non-recognized Union

Now, the non-recognized union, with the majority of workmen's support, has approached management and accepted the proposal/raise offered by the company. Accordingly, we are in the process of preparing a settlement under Section 2 (P) read with Section 18 (1) of the Industrial Dispute Act, 1947, along with the provisions and Rules 62 of the Industrial Disputes (Bombay) Rules framed thereunder. However, the recognized union has not accepted the proposal/raise offered by the management, indicating that they may not likely sign the settlement. Since the majority of workmen are ready to accept the proposed raise, the management is moving forward with a new wage settlement.

Legal Considerations

To make the settlement legal and valid under the provisions of the ID Act, the management has included a clause (workmen as a party to the settlement) stating that, "The workmen who have accepted the settlement by tendering an undertaking accepting the terms of the settlement as in Annexure A to the settlement."

Seeking Opinions and Alternatives

Given that the settlement is not signed by the recognized union and the reference is pending before the Industrial Court, under these circumstances, if the settlement is reached between the management and the non-recognized union with individual workmen signing an undertaking as acceptance, will it be legal and valid under the provisions of the Industrial Act?

Kindly provide your opinion and suggest alternative remedies to resolve the issue.

Regards,
Ijaj Ali
Manager HR.

Conciliation and Settlement Process

When the earlier two wage settlements had been signed by both the so-called recognized union and the non-recognized union, the Conciliation Officer ought to have involved the second union as well before the conciliation proceedings and before the submission of the failure report.

However, I feel that you may enter into a settlement under Section 18(1) of the ID Act with the majority of the workmen as parties to the settlement (not with the union), with a clause that states, "It is agreed and accepted between the parties that the settlement entered into under Section 18(1) is reasonable and valid. Having been accepted by the majority of the workmen, the same may be submitted before the Honorable Tribunal. Request or plead before the Honorable Tribunal to pass an award accordingly, as the offer and acceptance are reasonable and justified. The Honorable court may also decide that the non-recognition of the present union and its demands are not tenable."

Sign the settlement and extend the benefit of the settlement to the maximum number of workmen. Submit the same before the Honorable Tribunal as your counter with special mention about the clause of the settlement.