This article was written by Madhurima Dutta, a student of  RMLNLU, Lucknow.

Collective bargaining is a procedure by which employment related disputes are resolved cordially, peacefully and voluntarily by settlement between labour unions and managements.

The collective bargaining in India remained limited in its scope and restricted in its coverage by a well defined legal structure. In reality, the labour laws systematically promoted and keep in existence a duality of labour-formal sector workers enjoying better space for collective bargaining and informal ones with no scope for collective bargaining. To understand this, I will discuss about the labour legislations in India and their scope and coverage.

  • The Factories Act, 1948 provides for the health, safety, welfare and other aspects of workers while at work in the factories. Under this Act, an establishment where the manufacturing process is carried on with the help of power and employs 10 workers or an establishment where the manufacturing process runs without power and employs 20 workers is considered to be a factory. However, the following provisions of the Act are not applicable to all factories; provision of a rest room will be applicable only if there are 150 or more workers. Provision of canteen will be applicable only if there are 250 or more workers; provisions for ambulance, dispensary, and medical and para-medical staff: applicable only if there are 500 or more workers.
  • Employees Provident and Miscellaneous Provisions Act, Maternity Benefit Act and Payment of Gratuity Act apply to all establishments with 10 or more workers. Though Employees State Insurance Act applies to only those establishments with 20 or more workers. Minimum Wages Act applies to all establishments and all workers, but the Payment of Wages Act applies only to those establishments with 10 or more workers, and also only to those workers getting wages less than Rs 1600 per month. On the other hand, the Payment of Bonus Act is applicable to only those enterprises employing 20 or more workers and only to those workers getting wages less than Rs 3500 per month.
  • Industrial Disputes Act, 1947 lays down the procedures for the settlement of industrial disputes. Its procedural aspects are applicable to all enterprises for the settlement of industrial disputes. However, actually protective clauses for the workers pertaining to closures, layoffs and retrenchment are contained in Chapter VA and Chapter VB, having limited applicability. Chapter V B does not apply to any establishment employing less than one hundred workers, and Chapter VA does not apply to any establishment employing less than 50 workers. Industrial Employment (Standing Orders) Act makes it compulsory to have Standing Orders in each enterprise to describe misconducts and other service conditions, and also entails that for any misconduct no worker will be punished without due process of law using the principles of natural justice. But this law does not apply to those enterprises employing less than 100 workers (only in few states like Uttar Pradesh, it is made applicable to all factories (i.e. employing 10 or more workers). Trade Union Act applies to all establishments with 7 or more workers, since a minimum of 7 members are necessary in order to register a trade union.

Precisely, if we have a look at the general picture, only a small section of workforce is protected by the labour laws and has assured space for collective bargaining in well defined legal boundaries. Therefore, protective labour laws apply to only less than three percent of the enterprises; and in rest of the 97 percent enterprises only Industrial Disputes Act (minus its protective sections like section V-A, V-B), Minimum Wages Act, the Workmen’s Compensation Act, Equal remuneration Act, and the Shops and Establishments Act (enacted by each state separately) and some pieces of labour legislation enacted for specific occupations are applicable.

Trade Union Act of India provides right to association only with a very limited scope and limited coverage. The Trade Union Act 1926 was amended in 2001 and subsequent to the amendment it became more difficult to form the trade unions. In the Act of 1926, only seven members were required to register a trade union, but after amendment at least 10% or 100, whichever is less, subject to a minimum of 7 workmen engaged or employed in the establishment are required to be the members of the union prior to its registration. The amendment moreover introduces a limitation on the number of outsiders among the office bearers. Collective bargaining is limited within the scope provided in Industrial Disputes Act 1947.

It is also important to mention that only when the unions are recognized by the management then only they get the full-fledged rights as bargaining agent on behalf of workers. But there is no legal obligation on employers to recognize a union or engage in collective bargaining. The statutes of only few states of India like Maharashtra, Gujarat, Madhya Pradesh and Rajasthan have made some provisions for recognition of unions with a definite percentage of the workforce.


Legal Boundaries for Collective Bargaining:

  • No ratification of ILO Convention –C-87 and C-98.
  • Limited scope and coverage of collective bargaining within legal boundaries of Trade Union Act and Industrial Dispute Act.
  • Trade Union Act and Industrial Dispute Act are silent on recognition of trade unions.
  • Right to strike is not a fundamental right but a legal right governed by Industrial Dispute Act, 1947.
  • Section 10K: can be imposed to prohibit strikes or lock outs.
  • Section 22: In public utility services there must be a notice atleast 6 weeks before strike.
  •  Section 23: Prohibition of strikes during the pendency of conciliation, arbitration and court proceedings.
  • Trade Union activities are granted immunity from the applicability of CRPC but nor in case of illegal strikes.
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New Trends in Collective Bargaining

Decentralised and Individualized Bargaining

The collective bargaining in India remained mostly decentralized, i.e. company or unit level bargaining rather than Industry level bargaining. But in few sectors (mainly public sector industries) the industry level bargaining was dominant. However, privatization of public sector changed the industry level bargaining to company level bargaining. On the other hand, due to severe infomalisation of workforce and downsizing in the industries, the strength and power of the trade unions have been heavily reduced. The trade unions mainly represented the interests of formal workers. Increasing number of informal workers in the companies soon changed the structure of the workforce in such a way that the formal workers became a minority. As a result of various reasons informal workers could not form their own trade unions, and on the other hand they are not represented by the trade unions of the formal workers. These situations resulted in spurt of individualized bargaining.

Advancing of informalisation of workforce combined with the individualized bargaining in fact changed the character of the trade unions also. In related sectors and industrial regions, it converted many trade unions (particularly in sector dominated by informal workers) in to legal consultants (pursuing individual cases and charging fees for their services) rather than collective bargaining agents.

 Declining Wage Share

Declining strength of collective bargaining is also reflected in sharply increasing share of profit and considerably declining the wage share (since 2001-02), resulting in depressing purchasing power.


New Wave of Labour Movement for Unionisation

A new wave of workers struggle for unionization is rising from below by and large independent from the central trade unions. This is generally emerging in the formal sector. The workers are realizing by their own experiences that they cannot change their fate without organizing themselves in a trade union. In numerous cases the workers do not get even the legal benefits like minimum wages, premium rate of overtime and holidays and casual leaves. Once the union is formed, at least the minimum benefits guaranteed by law are easily available to all workers. Actually large numbers of informal workers are illegally put in the category of informal, and they can convert their status in to formal workers only by organizing themselves in a trade union. On the other hand, the industrialists are not at all ready to accept trade unions in their factories at any cost. They are unleashing unimaginable suppression on workers and trade union leaders when there are efforts to form trade unions in their factories. Even after the trade unions are created, managements are not ready to recognize them and therefore deny them space for collective bargaining.

There are also new initiatives to organize informal sector workers particularly the agriculture workers. After the implementation of National Rural Employment Guarantee Act, the new possibilities emerged to unionize the rural workers around the NREGA. But, the system of collective bargaining in this sector is very different it is mostly on general issues like appropriate implementation of the act itself, ensuring minimum wages, employment guarantee and workplace facilities. There are also initiatives to organize other informal sector workers also like forest workers, fish workers and other self employed categories. But the movement is still very weak and informal sector workers are by and large not able to realize the right of collective bargaining.


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  1. As plagiarised as it can get. Reference is something else and just changing pronouns something is a different matter altogether.
    ipleaders, Really?


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