Understanding 18(1) to 12(3) Settlement Conversion: What Steps Are Needed?

Dear Professionals,

Conversion of 18(1) Settlement to 12(3)

Can the 18(1) settlement signed between the management and the union be converted into 12(3)? If so, how? Please clarify.

I hope that just sending the signed copies of 18(1) to the concerned government authorities does not mean it has been converted into 12(3).

In order to make a bilateral settlement tripartite or a settlement under section 12(3), the signatories may need to appear before the Labour officer, RJLC, or Commissioner, as the case may be, and sign the settlement again in his presence.

For further inputs, please wait for our Umakanthan Sir to respond.

Dear Madan,

What Mr. Madhu has said is correct

Sending copies of the bilateral settlement under Section 18(1) of the IDA, 1947 to the appropriate Government, Commissioner of Labor for the State or Centre as the case may be, and the Conciliation Officer for the area is mandatory. Normally, it is the duty of the Conciliation Officer to register the settlement in the concerned register maintained at his office if the settlement complies with the provisions of labor laws in force in all respects. If not, he will refuse to register the settlement. However, mere submission of the settlement copies will not automatically make the bilateral settlement into a tripartite one.

For conversion

The signatories of both sides have to officially request the Conciliation Officer by means of a joint memo disclosing the names of other trade unions, if any, in the industry who are not parties to the 18(1) settlement in case the terms pertain to common issues. In such a case, the Conciliation Officer will invite such non-signatory unions to the conciliatory talks to be held for the purpose. If they accept the terms, they will also sign the tripartite settlement. Otherwise, the settlement would be signed according to the majority opinion, and the fact would be placed on record in the body of the settlement. Eventually, it will bind all the workmen in the industry and be in force until its expiry.

Similarly, the Conciliation Officer can refuse to convert the settlement

1) If the terms are against the provisions of any law, and the parties refuse to modify them, OR
2) If the signatories object to the inclusion of any non-signatory unions in the conciliatory process.

The effects of non-conversion are

1) If the terms pertain to common working conditions for all, there is a possibility of scuttling the settlement by blocking its smooth implementation by those who are not signatories. In due course, the realignment of workers may lead to re-agitation of the same issues during its operation on the ground of changes in the material circumstances as the settlement covers only the people belonging to the signatory trade union.
2) Even in the case of F&F Settlement with individual workmen on discharge, dismissal, or retrenchment, there is the possibility of a complaint later on the ground of coercion by the employer.

Thanks to Mr. Madhu for his invitation to join the discussion.
M. Umakanthan.

Thank you very much, sir, for your valuable comments on the subject.

Question about Union Representation in Conciliation

One question: Supposing that the other union represents less than 15% of the workmen, is it mandatory that they should also be called for conciliation to change the settlement from 18(1) to 12(3)?

Our experience at WB is different. If it is an 18(1) agreement, it is not possible to convert it into 12(3). The Labor Directorate suggests getting it signed by all willing employees before implementation. Most organizations follow the process where if the management and Union(s) agree on everything at the bipartite level (MOU), before signing the MOS, they jointly approach the labor directorate and sign it in the presence of the ALC/DLC/JT.LC, etc., to make it compliant with 12(3).

In other cases, where before the agreement, it has been reached with the Labor Directorate and concluded with one MOS, then it automatically falls under 12(3).

S K Bandyopadhyay (WB, Howrah) CEO-USD HR Solutions [Phone Number Removed For Privacy-Reasons] [Email Removed For Privacy Reasons] USD HR Solutions – To strive towards excellence with effort and integrity