How Should Management Handle Wage Settlement Payments: Direct to Workers or Through the Union?

Dear Experts:

In one litigation, the Trade Union filed a petition on behalf of 80 workmen claiming a difference in emoluments in terms of the wage settlement entered between the Management and the recognized Union during the year 1988. The said 80 workmen of the Trade Union have not offered their acceptance of the terms of the agreement in writing as required by the terms of the settlement. Hence, they were not paid the said difference in wage by the Management. Now the court of law has finalized the issue partly, allowing the petition of the Union by granting relief of 75% of the claim of each workman. Since the issue was a long-pending one, the Management has now decided to go by the verdict of the court in making payment. The Trade Union also accepts the said verdict of the court of law.

Queries Regarding Payment Disbursement

In this matter, my queries are as follows:

1. Whether the Management should disburse the amount directly to the workmen concerned or through the Trade Union. If through the Trade Union, should the Management draw a cheque/DD in favor of the Trade Union?

2. Whether the Trade Union seeks payment from the Management to draw a cheque/DD in favor of the Trade Union President's Name by passing a resolution to disburse the same by the Trade Union President himself? If so, is the Management liable to draw a DD/cheque in favor of the Trade Union President's Name?

3. Any other suggestions?

Request expert views on this matter.

Regards, V Sridhar

Since the amount due is the difference in wages, it should be calculated separately for each worker and paid to them individually. We cannot issue the payment to the Union with instructions for them to distribute it among the workers. Therefore, whatever amount is owed to each worker should be paid directly to the employee, either by cheque or by crediting their bank account, similar to how their regular salary is processed. This action will fulfill your liability. The Union will not request the cheque to be made out in their name. If a cheque is issued to the Union, they will be marked as a creditor. Furthermore, the purpose of payment is unclear in such a transaction. Therefore, the payment should be made directly to the workers as salary arrears, after any necessary tax deductions.

While disbursing the arrears in the acknowledgment/receipt, you may add wordings as follows:

As per the orders of the Honorable court (name) and also fully accepting the clauses of the earlier settlement dated [date] with the Union, we, the undersigned, acknowledge having received the amount mentioned against each as full and final settlement of all our claims in respect of differential wages.

Eligibility for Benefits in Collective Disputes

In any collective dispute under Section 2(k) of the Industrial Disputes Act, 1947, the trade union, if any, espousing the cause of the workmen concerned, acts only as a representative. Therefore, only the workmen who were represented by the trade union in the said dispute are eligible to receive the benefits, if any, arising out of the award or orders of the tribunal.

In case of impossibility of disbursement, such as the subsequent death of any workmen, the financial benefit shall be paid to their legal heirs. In any instance of non-traceability, the amount due shall be deposited in the State Labor Welfare Fund.

I am very thankful to all for offering valid inputs in disbursing the amount. It has been decided to pay the amount to the individual workman concerned.

Regards, V. Sridhar