Action against illegal strike of contract labour engaged by contractor

Good morning sir,

Our company is a CPSU facing an illegal strike by the contract labor union (union comprised of contract laborers from all major contractors) demanding wage-related matters, resulting in a complete stoppage of all construction activities. The issues are pending before the RLC (Central). Since the laborers belong to contractor employees, what actions should we take against the major contractors who are not resolving their laborers' issues, causing our establishment to face serious financial problems?

Since the issue is before the official conciliation machinery, you have to wait for a settlement. In the meantime, however, you can talk to the contractors and take them into confidence and resume the work. It is illegal for the workers to go on strike when conciliation is ongoing. However, that is the law. Concerning agitators, this approach will not pacify them as all unrest typically stems from a common factor, namely, the violation of the law. Therefore, it is a waste of time to discuss the provisions of the ID Act or any other applicable law and the legality of the strike with the contractors or their workers. It is also futile to discuss their right to strike. What is necessary is to involve the workers/union in discussions and address the issue in the presence of a conciliation officer. If needed, you can request the RLC, the conciliation officer, to expedite the hearing.

I would like to invite Umakanthan Sir, who has previously served as the Labour Commissioner, to share his practical knowledge and experience in this matter.

First of all, as the Principal Employer, what is your stance? Are you ready to negotiate the matter with the contractor labor unions or are you prepared for confrontation? In case you agree to revise the wages, the contractors will seek an enhancement of the contract value, which cannot be agreed upon in the normal course as per government rules and practices. Are you prepared for this scenario? Alternatively, are you agreeable to a prolonged dispute? How critical is the need for project completion? Another crucial aspect is the support and cooperation of the contractors; what is their stance on ending the strike? Once you are clear on how the issue is to be addressed, the details can be worked out.

I agree with the observations of Mr. Madhu.

Law is always based on reason and rationality, and emotions are inconsequential in a legal dispute. But it does not mean that altogether we have to ignore the emotional value ingrained in the cause of action leading to a dispute involving questions of law, particularly in labor disputes, most of which arise from feelings of social injustice.

If we dispassionately analyze in this backdrop, the contract labor system is a form of indirect labor in which the costs or gains of labor are shared by the contractor who mobilizes the labor and the workmen who actually perform the job under him for the benefit of a third person, viz., the Principal Employer. Therefore, any PE, whether a PSU or a private person, cannot simply sit on the wall in a dispute between his contractors and their contract labor relating to the revision of wages. Whatever the negative consequences of the dispute, the ultimate sufferer would be the PE, and as such, the PE has to play a proactive role in the issue.

Mostly, contract labor engaged in ad-hoc work like construction are compelled to be content with the statutory Minimum Wages for the sake of their uninterrupted employment. When the disparity between the market wage rates and the MW rates is wide due to obvious reasons like the demand and supply of labor, spiraling inflationary trends in the economy, etc., it is quite natural for the contract labor to put up the demand for an increase in wages on par or above the prevailing market rate. Unless the PE steps in the issue and comes forward to raise the rates of wages to some acceptable extent under the provision of the escalation clause of the contract with the contractors, the issue cannot be resolved early.

Since the dispute is under conciliation, the PE and the Contractors have to take the RLC into confidence and accept his suggestions in this regard.

Legal position has been aptly explained by learned colleagues. However, the plight of PE is that he is not at fault and bears the brunt. PE pays the Minimum Wages fixed by the State Government and at times is still at the mercy of contractors. Who suffers? PE as well as the end users of the product. It is a concern for MNCs as they may face these challenges, both from outsourced and on-roll staff.

Col. Suresh Rathi

True, but how many establishments engage contract labor only in non-perennial activities? If you conduct a survey, you will find that the majority of establishments engage contract labor in the core activities where full-time regular workers could be employed. When an employer is exploiting loopholes in the law against the workers, the workers have no choice but to agitate. While we may sympathize with the plight of employers, we should also consider the pathetic conditions of the workers who truly work for the principal employer.

As workers of the contractor, they cannot directly approach the principal employer, and at the same time, the contractor is helpless as they can only act when directed by the principal employer. These poor workers may not even receive assistance from a bank when they produce a wage slip issued by a contractor.

100% right. But is it not true for Govt concerns employing contractual manpower? What safety/provision is there for, say, hotels, hospitals, and others where the manpower requirement is not static? Solicit views, please.

Government departments cannot engage people through any contractor. However, Public Service Units, being units engaged in some kind of productive activities, shall have contractors and their workers.

Hotels, etc., where manpower requirements may change depending on the season, can have additional manpower during the season to manage the show. However, that should be on a contractual employment basis, i.e., a fixed-term contract, but not necessarily through an agency supplying manpower. This system, wherein the employer engages the employee directly (but for a certain period), is fair to an extent. Nevertheless, running a business with outsourced labor in core activities is truly unfair and should be discouraged.

Dear All,

Very good discussions.

No doubt law is one; but here the satisfaction level of contract labour. Normally, PE forgets about contract labour, their level of satisfaction, and grievance level. Periodically, he should check and ascertain.

Satisfied employees, whoever he is, are the key to success.

It seems that this fact is a failure here.

Thanks,

Ram K Navaratna HR Resonance

Let me play devil's advocate - PE is paying what is permitted by law and is working within the framework of the law. He is managing a running concern and needs ROIs. If he is not breaking any rules, then the law and the Labor Department should support him, which is seldom the case.

I would like to add that, as per my knowledge, one of the biggest hospitals run by the Government in Delhi is outsourcing staff. I can share details of the manpower agency one to one.

There are plenty of organizations that outsource core activities. They do it their way and are not concerned about law enforcement authorities as long as there is no dispute. We should remember the unfortunate events that occurred at the Maruti factory a few years ago.