Navigating Wage Agreements: Do You Need One with Every Union in Your Establishment?

Dear Seniors, I would request you to share your views on the following points:

a) Is it compulsory to enter into a wage agreement with the union in the establishment?

b) What if the factory/establishment has more than one union?

c) In the context of Maharashtra, what does it mean for a union to be registered under the BIR Act?

d) Which act governs the wages agreement, is it the BIR Act or the Industrial Dispute Act?

e) Since my establishment is paying much more than the minimum wages and our current wages agreement is going to end in the coming months, do we need to renew the wages agreement again in this scenario?

f) Where is the BIR Act applicable, and what is the difference between the BIR Act and the Industrial Dispute Act in terms of their scope?

g) Can contract workers go straight into the wages agreement with the principal employer?

Please guide. Thanks in advance.

Legal Considerations for Wage Agreements

From a legal perspective, entering into a wage agreement with the union is recommended, as it is typically signed before a conciliation officer who checks the legality of the agreement on both sides and validates it. If any contravention occurs during the period of the agreement, the affected party can approach the legal forum for a remedy.

Dealing with Multiple Unions

Regarding the presence of two unions, management must determine which union has the majority of workers to enter into an agreement with the negotiating union. A well-proven method called the check-off system can be used to identify the majority union. All benefits and wage revisions must also be extended to other union workers, in line with the signed union workers, ensuring no partiality.

Importance of Wage Agreements

Even if you pay more than the minimum wages, it is necessary to enter into a wage agreement with the union. Paying minimum wages does not justify avoiding a wage agreement.

Contract Workers and Wage Agreements

Contract workers can be treated separately, with wage rates increased based on discussions with the contractor. The contractor and the company can agree to extend increased wages to contract workers. Including contract workers in the regular worker wage agreement constitutes a sham contract that will not be valid under the law. Either convert them into regular workers and enter an agreement, or keep them separate and enter into an agreement with the contractor regarding their wages.

Before addressing the queries, it is necessary to clarify whether you are covered under the Bombay Industrial Relations Act of 1947 or the ID Act of 1947. This distinction is crucial as it significantly impacts the approach that needs to be taken.

The Bombay Industrial Relations Act

The Bombay Industrial Relations Act is a specialized legislation that applies to specific industries in designated areas within the state of Maharashtra. Under this act, there is a provision for a Representative Union, which must have a minimum of 25% membership. In cases where there are multiple unions meeting this membership threshold, the union with the majority membership, as determined by the Registrar, holds the sole bargaining power.

The ID Act

On the other hand, the ID Act does not contain a similar provision. Consequently, the approach and legal position concerning these two acts would vary significantly.

Thank you.

Dear Colleague,

I am attempting to reply to your queries verbatim as follows:

Is it compulsory to enter into a wage agreement with the union?

a) Yes, it is in the utmost interest of industrial peace to bargain and enter into periodic wage agreements with the majority/recognized union. It is mandatory to do so at least in Maharashtra if the provisions of the BIR Act are applicable or where the union is declared as recognized under the Maharashtra Recognition of Trade Unions and Prevention of Unfair Labour Practices Act.

If you choose not to bargain and enter into an amicable agreement, you will have to face industrial unrest manifesting in strikes, work stoppages, violence, and breakdown in operations.

What if the factory/establishment has more than one union?

b) In a multi-union situation, the labor authorities under the MRTP Act referred to above will have to decide which union has the majority through a secret ballot or check-off method as considered appropriate. The company plays no role in any decision relating to recognition except to facilitate the government labor commissioner's office to hold elections on the premises or provide logistics support.

However, this picture will change after the new law on the Industrial Relations Code is implemented. In a multi-union situation, it provides for a Negotiating Council formed out of the functioning unions.

What does it mean for a union to be registered under the BIR Act?

c) The BIR Act applies to certain specified industries such as power generation, textile, sugar operatives, etc., in Maharashtra. The Act provides for registered, representative, and recognition of unions functioning in the specified industries and their rights.

For the rest of the industries, the Industrial Disputes Act applies to the settlement of industrial disputes, individual and collective.

Under the Indian Trade Unions Act, each union has to be registered as per the prescribed provisions.

Which act governs the wage agreements?

d) Both the BIR and ID Acts govern the wage agreements in the specified respective industries.

Can unions bargain for better wages?

e) The unions can bargain for better wages and service conditions than the minimum wages. The criteria will be the prevailing wage structure in comparable concerns in the industry and region as well as the financial capacity to bear the burden.

Can contract workers negotiate directly with the principal employer?

f) Principal employers should refrain from negotiating directly with the contractors' union and work behind the scenes to facilitate wage settlement between the contractor and their unions.

Regards,

Vinayak Nagarkar HR and Employee Relations Consultant