Can Contract Workers Really Form a Union? Let's Discuss the Possibilities

Hi All, On what grounds can contract workers form a union?

Regards, Raja

Dear Koti,

Contract workers and union formation

Contract workers can form a union, and this right is derived from the Trade Unions Act, 1926. They are not excluded from the definition of "workers" under the Act, making them eligible to create or join a trade union.

While the Contract Labour (Regulation and Abolition) Act, 1970 governs the working conditions of contract labor, their right to form a union is protected under the Trade Unions Act, 1926. Contract labor is entitled to the same rights as any other workers when it comes to forming unions and protecting their interests.

Rights under the Trade Unions Act, 1926

1. Right to Form a Union

Under Section 2(h) of the Trade Unions Act, 1926, a "Trade Union" is defined as any combination of workers or employers whose primary purpose is regulating relations between workers and employers, or among workers themselves. The definition of "workers" includes contract labor, as there is no exclusion of any category of workers. This means contract workers can form or join trade unions.

2. Eligibility to Form a Union

Under Section 4 of the Act, any seven or more members of a trade union can apply for the registration of the union. Contract workers can meet this requirement and register their own union or join an existing one.

3. Protection of Rights

Section 10 of the Trade Unions Act, 1926, provides that registered trade unions are bodies corporate, giving them legal status and the right to sue or be sued. This ensures that even contract workers who form a union can enjoy legal protection. Once the trade union is registered, it has rights like collective bargaining, negotiating working conditions, wages, etc.

Very true, but a trade union is also an association of persons with common interests. Therefore, you cannot have contract workmen in the same trade union as regular workmen. A trade union of regular workmen cannot ask the employer to negotiate on matters concerning the contract workers. However, being workers, the contract laborers can form a separate union and present their charter of demands to their employer, i.e., the Contractor. The Contractor, in turn, can negotiate with the employer.

I think there are enough cases where trade unions have negotiated directly with the company. The company has very little option if they are on strike and disrupting the business, especially if they are supported by local political parties who ensure that the company cannot simply replace striking contract workers.

Mostly, the trade unions know the contractor is just a flimsy front and has no rights or decision-making power, so they will insist on going directly to the principal employer for negotiations.

I have one question here.

Contract Termination and Workers' Rights

Suppose "A" is the company and "B" is the contractor. A has awarded the contract to B for the deployment of manpower. The worker of the contractor has formed a union. This came to the notice of the company, and the company has terminated the contract of the contractor.

Will the workers still have the right to bargain with the company?

That depends on the circumstances. They can always raise an industrial dispute if they can show that management had control over workers and work processes, or that the job was a core function or perennial in nature. If they can prove it, they can force the company to actually absorb all the contract workers as direct employees and also pay restitution.

In principle, the workers of the contractor have no lien on employment with the principal employer, i.e., the company. Their contract of employment is with their employer, i.e., the contractor. Therefore, as soon as the contract with a company is terminated, the contractor will have to address the issue of either deploying the workers (of the contractor) in other plants or retrenching them. In this process, the principal employer has no obligation. The workers of the contractor also do not have any right to raise an industrial dispute against the principal employer, though they can raise it against their employer, i.e., the contractor, for non-employment, etc.

Practical Implications of Union Disputes

However, in practice, in such scenarios, the union will raise a dispute against the principal employer only, knowing that it is just illegal. But a strike, being a manifestation of the right of workmen, will get support from the media and the public. They are not concerned with what is written in the law, but for them, those who work for the company are workers of the company only. If it is established that the same workers of the contractor were being controlled and supervised by the supervisors of the company, the contract would become a sham contract, leading to making the strike a legal one.

My doubt is how can they show that they are being supervised by the company. Are there any specific examples or case laws on this? Please share.

I am trying to understand various scenarios of how contract labor can become an obligation to the principal after forming a union.

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Understanding Contract Labor and Union Formation

In human resources management, the relationship between contract labor and the principal can evolve significantly when a union is formed. Understanding the implications of this transformation is crucial for both parties involved. By exploring different scenarios, we can gain insights into the potential obligations that may arise for the principal in such situations.

I am trying to understand various scenarios where people formed unions and on what basis unions are recognized. Thank you.

You have not clearly stated why the contract workers formed a union. If there is any nexus of control by the principal employer, then the union formed by the contract workers will ask you to negotiate with it. At the same time, if the contract is not a sham but genuine, ignore the union. Let the contractor deal with the union. If the workers are creating issues on your premises, not delivering the expected results, then terminate the contract itself. In such scenarios, the question of recognizing the union will not arise. On the other hand, if the contract itself is just a camouflage arrangement, then there is no other way; you should recognize them and negotiate with them.