Navigating Union Conflicts: How Can We Achieve Industrial Peace and Productivity?

Union Dynamics and Settlement Issues

In our industrial establishment, there are four unions, out of which only one is a recognized union as it commands the majority of workmen (680 out of 1,000 workforce). We facilitate the recognized union by deducting union subscriptions of their members from payroll under the check-off system and credit the amount into the union's bank account every month. We have recently signed a memorandum of long-term settlement with this union after protracted negotiation under Section 18 of the ID Act 1947.

Objections from Rival Unions

The other three rival unions raised serious objections for not being invited to the wage negotiation and the conclusion of the settlement. The members of the other three unions joined together and staged a joint agitation in front of the factory's gate, demanding the scrapping of the settlement and a restart of wage negotiation with all four unions to arrive at a settlement. Now, the workmen owing allegiance to the three rival unions are not cooperating in implementing the terms of the settlement, especially the productivity and incentive commitments of such settlement.

Dual Payroll Situation

These workmen, who are members of the three rival unions numbering 320, are not accepting the revised wages and are paid wages as per the erstwhile settlement. In fact, for the past two months, we have been running a dual payroll: one for the recognized union members and another covering members of the three rival unions. These rival unions take a stand that the productivity and other commitments in the revised settlement are not binding on them, and hence they adhere to the erstwhile settlement.

Requests for Check-Off Facility

Admittedly, some members of the recognized union pay subscriptions to the rest of the three rival unions as well. It may not be out of context to mention that the three rival unions have sent written requests at periodic intervals seeking to extend the check-off facility for collecting subscriptions from their members and have submitted well-written requests every year, furnishing a list of workmen to be recognized as protective workmen. However, the management simply ignores such letters.

Conciliation Efforts

The management is seriously concerned and has raised the matter before the conciliation officer to sort out the settlement. The conciliation officer sent notices to all four unions and management, fixing a meeting of conciliation with all stakeholders on 2nd July 2019.

Please advise on how to wriggle out of this tricky situation and ensure industrial peace and smooth productivity.

Multiplicity of Unions and Inter-Union Rivalry

This is a common issue in several industrial establishments arising from the multiplicity of unions coupled with inter-union rivalry. It is understood that there is dual membership of workmen paying membership subscriptions to different unions. Although you might have collected individual letters of authorization from members of the recognized union and facilitated a check-off system, the 720 membership of the recognized union can be challenged by rival unions as a trick to weaken the recognized union and hence not be a majority union.

Secondly, it is open to members of the rival union to refuse to accept revised wages arising out of a new wage settlement and hence not to produce as per revised productivity norms. Eventually, the management will suffer, and industrial tranquility is put in jeopardy.

One-Union Concept and Settlement

If it is only a one-union concept, there is not an iota of issue in signing an 18(1) settlement. In this scenario, it is advisable for management to place its submission before the conciliation officer about the majority membership of the union and furnish the list of members, documents pertaining to month-wise payment of union subscription under the check-off system, and represent for converting the existing 18(1) settlement into 12(3) before him.

The Conciliation officer will hold a dialogue session with rival unions separately in one or two hearings and finally arrive at a settlement on the same terms of the 18(1) settlement to be signed before him. If necessary and if further management has no objection, the other three rival unions would be made to become signatories to the settlement. This is a one-time arrangement, and it is not incumbent on management to recognize all other three rival unions at a bilateral level. But the rival unions may try to involve themselves in day-to-day labor issues, especially on productivity implementation matters, which you should handle appropriately as they are also signatories to the tripartite settlement.

Sanctity of the 12(3) Settlement

In Bansilal Kishorilal Sahu vs. Akola Mazdoor Sangh ((2005) IILLJ 761 Bom), while upholding the sanctity of the tripartite settlement, the Bombay High Court opined that any settlement arrived at in a conciliation proceeding shall be binding on all the workers, especially if they intend to derive benefits from the settlement. In this case, the settlement between the recognized union and the company in the conciliation proceeding was impugned. The ground of challenge was that the settlement provided that under the voluntary retirement scheme, the workers who avail of the benefit will be paid the amount after deduction of 5% to be contributed to the said recognized union.

Case Laws Pertaining to 18(1)

The Supreme Court in Tata Chemicals Ltd. V. Workmen of Tata Chemicals Ltd. represented by Chemical Kamdar Sangh (1978 AIR 828, 1978 SCR (3) 635 = 1978 II LLJ 22 = 1978 (36) FLR 339 = 1978 LIC 637 = 1978(3) SCC 42) held that a settlement arrived not in a conciliation proceeding will not bind other unions and shall only be binding on the parties to the settlement. The Court observed: "A bare perusal of the above-quoted section would show that whereas a settlement arrived at by agreement between the employer and the workmen otherwise than in the course of conciliation proceeding is binding only on the parties to the agreement, a settlement arrived at in the course of a conciliation proceeding under the Act is binding not only on the parties to the industrial dispute but also on other persons specified in clauses (b), (c), and (d) of subsection (3) of section 18 of the Act."

In The Bata Shoe Co. (P) Ltd vs. D. N. Ganguly & Others (1961 AIR 1158, 1961 SCR (3) 308), one of the issues before the Supreme Court was whether a reference will be incompetent because the settlement was arrived at a bipartite level between the union and management. The Court dealt at length with the meaning of the course of conciliation proceedings and held that a settlement which is arrived during the course of conciliation proceeding with the concurrence of the Conciliation Officer will have the binding effect, or else it will not bar a reference by the appropriate Government.

The analysis of the aforesaid provisos on settlement and the case laws amply demonstrate that a settlement arrived at in the course of conciliation proceeding will be applicable to all workmen, including the members of the union who are not signatories to the agreement, any other minority union, workmen who are not members of the Union, and any other persons who subsequently become employed in the establishment.

Regards, Panchsen

P. Senthilkumar, Industrial Relations and Labor Law Consultant Former Corporate Head - Industrial Relations, MRF Ltd, Chennai

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I appreciate the reply given by Mr. Senthilkumar. I would like to add that in an organization where there is more than one union, it is necessary to have a referendum to decide who is the principal bargaining agent. In states where there are Acts for the recognition of Trade Unions available, you can refer to these, or there are conventions like the ILO that provide guidance on how to recognize trade unions. The union with more than 50% of members will be recognized as the principal bargaining agent. Although the principal bargaining agent is the signatory in a settlement, other unions should also be invited for negotiations if they have 15% of the membership.

It is also true that a bipartite settlement is binding on the parties to the settlement and not on the other unions. Once a referendum has been conducted, minority unions with less than 15% of membership will be excluded from negotiations. It is fair for the management to recognize those unions that qualify for recognition.

Since the matter has been referred to Conciliation, you can explore the possibility of conducting a referendum by the Labor officer himself.

In Tamil Nadu, there is no piece of legislation for union recognition or, for that matter, to identify who would hold bipartite negotiations with management to iron out wage settlements. This is unlike states such as Kerala, Maharashtra, and West Bengal. Hence, the matter is left to the vagaries of management to decide on the bargaining agent or negotiating union.

P. Senthilkumar

In such cases, the Code of Discipline accepted by the International Labour Organization (ILO) can be followed. The code is similar to the Kerala Act in this direction.