Wage Agreement Disputes: How Should Employers Handle Minor Union Challenges?

Wage Agreement Challenges with Minor Unions

What if the company enters into a wage agreement with the majority of the union under sections 18(3) and 12(3), but other minor unions do not accept it and challenge this agreement?

Remedies and Approaches for Employers

What remedies are available to the employer, and what approach should the employer take to handle such a situation?

Dear Girish,

Once any settlement under section 18(1) becomes converted to section 12(3) of the Industrial Disputes Act, 1947 before a conciliation officer, it stands on a higher pedestal and would also be binding on the minority workmen who were not signatories to the settlement. The same would be in force until it is replaced by another settlement. It cannot be successfully challenged by the minority unless the terms are unfair and violative of the provisions of any law, and the determination of the majority is done by misrepresentation of facts and figures. That is the legal position.

Effective Implementation of Wage Settlement

However, the effective implementation of a wage settlement, whether done under section 18(1) or 12(3) of the ID Act, 1947, with the majority union in the establishment depends on many factors like the majority-minority ratio among the unionized workmen, the numerical proportion of the regular and contract labor engaged in the same kind of activities, the fairness of the rate of hike in wages under the settlement and its parity with the prevailing wage rates in similar industries in the region, the proportionality of the hike linked to the revision of workload, if any, the rationale behind the distribution of the hike among the various components of the wage structure, the time gap between the previous settlement and the present one, the effect of the settlement whether retrospective or prospective, the overall performance of the industry and its profitability in the past and present, the possible realignment of union membership afterward by the effective propaganda of the dissidents, and the like.

Therefore, the effective implementation of the settlement is in the hands of both the management and the majority union who signed the settlement. The management should avoid a negative attitude as well as retaliatory action against the dissidents for anything unpleasant that occurred during negotiations. The management should try to effect the terms of the settlement immediately in the letter and spirit of the settlement in its entirety. The majority union should also convince all the workmen about the reasonableness of the terms of the settlement and positively highlight the circumstances under which it was signed by means like gate meetings and distribution of handbills.

More than a legal matter, now it is an industrial relations issue with many possible outcomes. To give a real answer to this, there should be a complete grasp of the background information of your unit, the relative strength, the union leadership, how far the settlement meets the workers' expectations, etc.

As advised by Learned Umakanthan Sir, you need to go ahead and implement the settlement and jointly with the majority union try to sell the whole agreement among the workmen. Certain proactive steps are needed from the management side.

A very vital question

A very vital question is whether you need to have a dialogue with the minority union (read no negotiation). In many cases, the real problem of the minority union is that they are not heard and hence would like to make their presence seen or felt. Such ego massage would help in tiding over the crisis.

Thanks, Umakant sir, for your nice guidance. I will seek your guidance further as well.

Supreme Court Judgment on Minority Union Disputes

I read about the recent judgment of the Supreme Court where it states that a minority union can raise a dispute. Even though this case pertained to contractor labor, ONGC was a signatory on the wage settlement as evidence of the parties among the contractor representative and contractor union leaders. What is the impact of this case?

2022 LiveLaw (SC) 176 IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION L. NAGESWARA RAO; ANIRUDDHA BOSE, JJ. FEBRUARY 04, 2022 CIVIL APPEAL NO. 1033 OF 2022 (ARISING OUT OF PETITION FOR SPECIAL LEAVE TO APPEAL (CIVIL) NO. 9456 OF 2020) M/S. OIL AND NATURAL GAS CORPORATION LTD. VERSUS THE PRESIDENT, OIL FIELD EMPLOYEES ASSOCIATION & ORS. Industrial Disputes Act, 1947 - Right of minority workmen to raise an industrial dispute - A minority union of workers may raise an industrial dispute even if another union, which consists of the majority of them, enters into a settlement with the employer [Referred to Tata Engineering and Locomotive Co. Ltd. vs.