This article is written by Shivangi Tiwari, a student pursuing B.A.LL.B. from Hidayatullah National Law University, Raipur and Kishita Gupta, a Unitedworld School of Law, Karnavati University, Gandhinagar, graduate. This is an exhaustive article dealing with the Trade Union Act, 1926. The article also discusses the history, development, and the shortcomings of trade unions, along with a discussion on collective bargaining.
It has been published by Rachit Garg.
Table of Contents
Before the emergence of industrialization on a massive scale, there were personal contracts between workers and employers. Therefore, no requirement for the evolution of any machinery governing the relationship between workers and employers arose until then. But after the establishment of the modern factory system, this relationship lost its significance due to large-scale industrialization, which enticed employers to reduce the cost of production in order to withstand the cut-throat competition in the market and maximise their profit by using technologically more sophisticated means of production. This in turn resulted in the rise of a new class of workers who were completely dependent on wages for their survival, which changed the existing employer-and-employee relationship in which the employees were exploited by their employers. The conflict of interest between workers and employers and the distress of workers resulted in the growth of various trade unions.
A trade union is an organised group of workers who strive to help the workers on issues relating to the fairness of pay, good working environment, hours of work, and other benefits that they should be entitled to instead of their labour. They act as a link between the management and the workers. In spite of being newly originated institutions, they have turned into a powerful force because of their direct influence on the social and economic lives of the workers. To control and manage the work of these trade unions, different legislation regulating the same is required. In India, the Trade Unions Act of 1926 is a principal Act for controlling and managing the work of trade unions. The present article aims at explaining and bringing forth various aspects of the Act.
History of trade unionism in India
In India, trade unions have developed into an important platform for putting up with the demands of workers. They have also turned into one of the most influential pressure groups, which is an aggregate seeking to influence the government in framing legislation in favour of workers without aspiring to become part of the government. As an organised institution, trade unionism took its concrete shape after the end of World War 1. The trade unions in India are essentially the product of modern large-scale industrialization and did not grow out of any existing institutions in society. The need for an organised trade union was first realised in 1875 by various philanthropists and social workers like Shri Sorabji Shapurji Bengali and Shri N.M. Lokhandey, whose constant efforts resulted in the formation of trade unions like the Printers’ Union of Calcutta (1905) and the Bombay Postal Union (1907).
The setting up of textile and mill industries at the beginning of the 19th century in the presidency towns of Bombay, Madras, and Calcutta gave impetus to the formation of industrial workforce associations in India. The Bombay Mill-Hands Association, founded by N.M. Lokhande in 1890, was the first labour association in India. The following years saw the rise and growth of several other labour associations and unions in India, like the Madras Labour Union, which was the first properly registered trade union founded by B.P. Wadia in the year 1918. In the year 1920, the country saw the growth of the Ahmedabad Textile Labourer’s Association in Gujarat, which turned into a union under the guidance of Mahatma Gandhi and was considered to be one of the strongest unions in the country at that time because of the unique method of arbitration and conciliation it had devised to settle the grievances of the workers with the employers. Since the union followed the ideals of truth and nonviolence laid down by Mahatma Gandhi, it was able to secure justice for the workers in a peaceful manner without harming the harmony in society. In the same year, the first trade union federation, the All India Trade Union Congress (AITUC), saw the light of day. It was formed after the observations made by the International Labour Organisation which highlighted the influence of politics on trade unions and associations and how the same is detrimental to any economy’s ability to prosper.
The importance of the formation of an organised trade union was realised by nationalist leaders like Mahatma Gandhi, who, to improve the employer and worker relationship, introduced the concept of trusteeship, which envisaged the cooperation of the workers and employers. According to the concept, the people who are financially sound should hold the property not only to make such use of the property as will be beneficial to themselves but should make such use of the property as is for the welfare of the workers who are financially not well placed in society, and each worker should think of himself as being a trustee of other workers and strive to safeguard the interests of the other workers.
Many commissions also emphasised the formation of trade unions in India for eg. the Royal Commission on labour or Whitley commission on labour which was set up in the year 1929-30 recommended that the problems created by modern industrialization in India are similar to the problems it created elsewhere in the world and the only solution left is the formation of strong trade unions to alleviate the labours from their miserable condition and exploitation.
Development of Trade Union Law in India
Labour legislation in India has a key impact on the development of industrial relations. The establishment of social justice has been the principle of all labour legislation in India. The establishment of the International Labour Organisation to uplift the condition of labour all over the world gave further impetus to the need for well-framed labour legislation in the country. Several other internal factors like the Swaraj movement of 1921-24, the Royal Commission on Labour also paved the way for various labour laws and also encouraged the framers of the constitution to incorporate such laws in the constitution which will benefit the labourers. Under the Constitution of India, labour is the subject of the concurrent list and both the centre and the state can make laws related to the subject. The different labour laws in the country are as follows:
- The Apprentices Act, 1961: The object of the Act was the promotion of new manpower at skills and the improvement and refinement of old skills through practical and theoretical training.
- The Contract Labour (Regulation and Abolition) Act, 1970: The object of the Act was the regulation of employment of contract labour along with its abolition in certain circumstances.
- The Employees’ Provident Funds and Misc. Provision Act, 1952: The Act regulated the payment of wages to the employees and also guaranteed them social security.
- The Factories Act, 1948: The Act aimed at ensuring the health of the workers who were engaged in certain specified employments.
- The Minimum wages Act, 1948: The Act aimed at fixing minimum rates of wages in certain occupations.
- The Trade Union Act, 1926: The Act provided for the registration of trade unions and defined the laws relating to registered trade unions.
Provisions of the Trade Unions Act, 1926
The labourers, especially the ones who work in the unorganised sectors, lack the capacity to bargain, and this becomes a major reason for their exploitation. The right to collective bargaining is provided only to those trade unions that are registered. But in India, there is legislation regarding the recognition of trade unions but there is no single legislation on the registration of trade unions. Realising the need to have central legislation for the registration of trade unions, the parliament passed the Indian Trade Union (Amendment) Act in the year 1947. The said Act sought to introduce Chapter III-A into the Trade Union Act, 1926, which enumerated the conditions required for the mandatory recognition of any trade union. However, this Act was never brought into force. Therefore, the mandatory recognition of trade unions is not present under any law in force in India.
The words in Section 1 of the Act, “except the State of Jammu and Kashmir” were omitted by the amendment Act 51 of 1970. Thus, the Trade Unions Act of 1926 extends to the whole of India.
Section 2(h) lays down the definition of trade unions. It states the following:
Trade Union means any combination, whether temporary or permanent, formed primarily for the purpose of regulating the relations between workmen and employers or between workmen and workmen, or between employers and employers, or for imposing restrictive conditions on the conduct of any trade or business, and includes any federation of two or more Trade Unions:
Provided that this Act shall not affect –
(i) any agreement between partners as to their own business;
(ii) any agreement between an employer and those employed by him as to such employment; or
(iii) any agreement in consideration of the sale of the good-will of a business or of instruction in any profession, trade or handicraft.
A trade union is typically thought of as a group of wage earners or workers. It is a voluntarily formed group of workers in a specific trade or business. An organisation of wage workers known as a trade union was created largely for the purpose of taking collective action to further the defence of its professional interests.
These are the components of a trade union:
- There must be a combination of employers and workers in a union;
- The business trade is necessary, and
- The primary goal of the union must be to control employer-employee interactions and establish limitations on how any trade or company may be conducted.
Since it includes both employers’ unions and workers’ unions, the definition of a trade union under Section 2(h) is excessively broad.
It was held in National Organisation of Bank Workers’ Federation of Trade Unions v. Union of India (1993) that a federation is not a trade union in accordance with Section 2(h) of the Trade Unions Act of 1926 if it is not a registered organisation under that Act. Any federation made up of two or more unions is included in the definition. The appellant lacked the authority to initiate or make any demands for and on behalf of the employees because it is not a registered organisation.
The Madras High Court in the case of the Registrar of Trade Unions, Union Territory of Pondicherry v. the Government Press Employees Union represented by its Secretary V. Thirunavukkarasu (1975) observed that the workmen who are employed in an industrial undertaking, for example, a government press, are ‘workmen’ entitled to the benefits of the Trade Unions Act of 1926.
Registration of trade unions
By relying on the registration mechanism, unions are encouraged to grow steadily and permanently. According to the Act, a registered trade union is entitled to certain protections and benefits. As a result, the union’s supporters are prompted into registering their trade unions under the Trade Unions Act of 1926.
The regulations relating to the registration of trade unions are outlined in Sections 3 to 14 of Chapter 2 of the Trade Union Act of 1926 and the Central Trade Union Regulations, 1938, which have around 17 Rules and forms A, B, and C. A useful tool for ensuring the expansion of long-lasting and reliable unions is registration. Although it is not required, registration is preferred because a registered trade union is granted certain benefits and immunity. Members of a registered trade union are also granted certain rights and advantages. In other words, those who belong to a legally recognised union are entitled to protection, immunity, and exemption from certain legal obligations on both the civil and criminal sides. However, it should be remembered that a personal conflict only becomes an industrial issue when it is represented by a group of employees or a trade union, whether they are registered or not.
In the case of Tamil Nadu N.G.O Union v. The Registrar of Trade Unions (1962), the N.G.O. union’s petition was denied by the High Court of Madras. The registrar of the trade union in this case rejected the N.G.O.’s union’s application for registration on the grounds that public servant unions could not be registered under the trade union Act. In order for the union to be registered under the Trade Union Act, its members must be workers employed by trade, business, or industry, and the applicants lack this qualification because they are civil servants responsible for the state’s sovereign and legal functions. Accordingly, the High Court dismissed the appeal.
The Calcutta High Court ruled in the case of Registrar of Trade Unions, West Bengal v. Mihir Kumar Gooha (1962) that E.S.I. Corporation workers would fall under the definition of workmen and could, thus, register themselves as union members.
Section 3 : appointment of registrars
Section 3 of the Act empowers the appropriate government to appoint a person as the registrar of a trade union. The appropriate government can also appoint as many additional and deputy registrars in a trade union as it deems fit for carrying on the purposes of the Act.
The aforementioned actions must be taken in order to exercise and carry out the Registrar’s legal obligations under this Act, including any specific powers and functions that the Registrar may, by order, specify, as well as to specify the local boundaries within which any additional or deputy Registrar may exercise and carry out those obligations.
Section 4 : mode of registration
Section 4 of the Act provides for the mode of registration of the trade union. According to the Section, any seven or more than seven members of a trade union may by application apply for the registration of the trade union subject to the following two conditions:
- At Least 7 members should be employed in the establishment on the date of the making of the application.
- At Least 10% or a hundred members whichever is less, are employed in the establishment and should be a part of it on the date of making the application.
Section 5 : application of registration
According to Section 5 of the Act, every application for a trade union’s registration must be presented in writing to the Registrar and include a copy of the union’s rules as well as a statement of the information listed below:
- Firstly, the members submitting must mention their names, occupations, and addresses;
- Secondly, the name of the Trade Union and its headquarters’ address must also be included; and
- Finally, the titles, names, ages, addresses, and occupations of the Trade Union’s office holders must also be included.
A trade union’s executive must be organised in conformity with the Act’s requirements before it may be registered.
Section 6 : provisions to be contained in the rules of a trade union
Section 6 of the Act enlists the provisions which should be contained in the rules of trade union and it provides that no trade union shall be recognized unless it has established an executive committee in accordance with the provisions of the Act and its rules, specifies the following matters, namely:
- Name of the trade union;
- The object of the establishment of the trade union;
- Purposes for which the funds with the union shall be directed;
- A list specifying the members of the union shall be maintained. The list shall be inspected by office bearers and members of the trade union;
- The inclusion of ordinary members who shall be the ones actually engaged or employed in an industry with which the trade union is connected;
- The conditions which entitle the members to any benefit assured by the rules and also the conditions under which any fine or forfeiture may be imposed on the members;
- The procedure by which the rules can be amended, varied or rescinded;
- The manner within which the members of the manager and also the alternative workplace bearers of the labour union shall be elective and removed;
- The safe custody of the funds of the labour union, an annual audit, in such manner, as may be prescribed, of the accounts thereof, and adequate facilities for the inspection of the account books by the workplace bearers and members of the labour union, and;
- The manner within which the labour union could also be dissolved.
The Supreme Court ruled in the case of M. T. Chandrasenan v. Sukumaran (1974) that a member cannot be regarded as a trade union member if the subscription fee is not paid. However, subscriptions cannot be rejected on the basis of a reason that prevents membership.
The Supreme Court of India ruled in the 2004 case of Bokajan Cement Corporation Employees Union v. Cement Corporation of India that membership in the union did not end immediately upon loss of employment.
Section 7: Power to call for further particulars and require alteration of the name
Section 7 of the Act confers upon the registrar the power to call for information in order to satisfy himself that any application made by the trade union is in compliance with Sections 5 and 6 of the Act. In matters where the discrepancy is found, the registrar reserves the right to reject the application unless such information is provided by the union.
This Section also confers power to the registrar to direct the trade union to alter its name or change the name if the registrar finds the name of such union to be identical to the name of any other trade union or if it finds its name to so nearly resemble the name of any existing trade union, it may be likely to deceive the public or members of either of the trade unions.
The Bombay High Court in the case of All India Trade Union Congress v. Deputy Registrar of Trade Unions (2005) set aside a request to register a trade union with a name that already existed, claiming it to be expressly contrary to the language in Section 7(2), leading to the cancellation of registration. It further observed that the very purpose behind Section 7 is to avoid misleading the general public or trade union members into thinking that the union seeking registration under the name for which registration is requested is somehow associated with the union already registered.
Section 8 : registration
According to Section 8 of the Act, if the registrar has fully satisfied himself that a union has complied with all the necessary provisions of the Act, he may register such a union by recording all its particulars in a manner specified by the Act.
Each registered trade union should be a body corporate, which makes it a legal entity with perpetual succession. It shall have a common seal, the ability to buy, possess, and enter into contracts with both movable and immovable property, as well as the ability to sue and be sued using that name.
The Supreme Court ruled in the 1935 case of the Re-Indian Steam Navigation Workers Union that a Registrar just needs to check that all the technical conditions are being met, not whether it could be deemed illegal.
Whereas in another case before the Supreme Court of India, ACC Rajanka Limestone Quarries Workers Union v. Registrar of Trade Unions (1958), it was determined that an appeal might be filed to the High Court under Article 226 of the Indian Constitution if the registrar fails to register the trade union within 3 months of the application.
Section 9 : certificate of registration
According to Section 9 of the Act, the registrar shall issue a registration certificate to any trade union which has been registered under the provisions of Section 8 of the Act, and such a certificate shall act as conclusive proof of the registration of the trade union.
Section 9A : minimum requirement related to the membership of a trade union
Section 9A of the Act lays down the minimum number of members required to be present in any union which has been duly registered. This Section mandates that a trade union which has been registered must at all times continue to have not less than 10% or one hundred of the workers, whichever is less, subject to a minimum of seven, engaged or utilised in an institution or trade with which it’s connected.
Section 10 : cancellation of registration
The registrar, according to Section 10 of the Act, has the power to withdraw or cancel the registration certificate of any union in any of the following conditions:
- On an application made by the trade union seeking to be verified in such manner as may be prescribed;
- If the registrar is satisfied with the fact that the trade union has obtained the certificate by means of fraud or deceit;
- If the trade union has ceased to exist;
- If the trade union has wilfully and after submitting a notice to the Registrar, contravened any provision of the Act or has been continuing with any rule which is in contravention with the provisions of the Act;
- If any union has rescinded any rule provided under Section 6 of the Act.
In the case of Tata Electric Companies Officer’s Guild v. Registrar of Trade Unions (1994), the Bombay High Court ruled that wilful disregard of the notification is a requirement for the registrar to cancel the registration. The registrar cannot cancel the registration on the grounds that the account statement was not filed earlier if the trade union provides the account statement after receiving notification from the registrar.
Where a 2-month show cause notice was not sent by the registrar to the changed address of the union, it was held by the Bombay High Court in Bombay Fire Fighters Service Union v. Registrar of Trade Unions, Bombay (2003), that the registrar did not comply with the mandatory provisions of Section 10 and quashed the order of cancellation.
Section 11 : appeals
According to Section 11 of the Act, any union which is aggrieved by a refusal to register or a withdrawal of registration made by the registrar can file an appeal:
- In any High Court, if the head office of the trade union is located in any of the presidency towns;
- In any labour court or industrial tribunal, if the trade union is located in such a place over which the labour court or the trade union has jurisdiction;
- If the head office of the trade union is situated in any other location, an appeal can be filed in any court which is not inferior to the Court of an additional or assistant has chosen a principal Civil Court of original jurisdiction.
As observed by the Bombay High Court in Mukand Iron & Steel Works Ltd. v. V.G. Deshpande, Registrar of Trade Unions, Bombay and another (1986), a trade union has the choice to file an appeal or apply for new registration if the Registrar of Trade Unions cancels or withdraws its registration. If the appeal is successful, the trade union would continue to be included on the register as if the decision of cancellation or withdrawal of recognition had never been made. If a new registration is allowed, it will take effect as of that date. The Registrar loses all authority over that order once he cancels or withdraws a trade union’s registration. Because of the following circumstances, he is unable to evaluate it or rescind it.
In Philips Workers Union v. Registrar of Trade Unions (1989), the Calcutta High Court observed that Section 11 of the Trade Unions Act, 1926 is no bar to filing an application under Article 226 of the Indian Constitution.
Section 12 : registered office
Section 12 of the Act lays down that all communications and notices to any trade union must be addressed to its registered office. If a trade union changes the address of its registered office, it must inform the registrar within the period of fourteen days in writing, and the registrar shall record the changed address in the register mentioned under Section 8 of the Act.
Section 13 : incorporation of registered trade union
Section 13 of the Act states that every trade union which is registered according to the provisions of the Act shall:
- Be corporate by the name under which it is registered.
- have perpetual succession and a common seal.
- Power to contract and hold and acquire any movable and immovable property.
- By the said name can sue and be sued.
Rights and liabilities of registered trade unions
Sections 15 to 28 elucidate the rights which a registered trade union has and also the liabilities which can be imposed against them.
Section 15 : objects on which general funds may be spent
Section 15 of the Act lays down the activities on which a registered trade union can spend its funds. These activities include:
- Salaries are to be given to the office-bearers.
- The cost incurred for the administration of the trade union.
- Compensation to the workers due to any loss arising out of any trade dispute.
- Expenses incurred in the welfare activities of the workers.
- Benefits are conferred to the workers in case of unemployment, disability, or death.
- The cost incurred in bringing or defending any legal suit.
- Publishing materials with the aim of spreading awareness amongst the workers.
- Education of the workers or their dependents.
- Making provisions for medical treatment of the workers.
- Taking insurance policies for the welfare of the workers.
This Section also provides the reason for non-contribution to the said fund and also that a contribution to the fund can not be made as a criterion for admission into the union.
Section 16 : constitution of a separate fund for political purposes
Section 16 provides that a trade union, in order to promote the civic and political interests of its members, can constitute a separate fund from the contributions made separately for the said purposes. No member of the union can be compelled to contribute to the fund.
A legally recognised labour union may establish a separate fund with the goal of advancing the civic and political objectives of its members. A recognised trade union is not allowed to use its general finances for its members’ political campaigns. The trade union must establish a separate political fund for political causes. Contributions to such a fund must be separately collected. Some of them are as follows:
- The recovery of all costs incurred, directly or indirectly, by a candidate or prospective candidate for election as a member of any governmental body or local authority. The costs cover all outlays in connection with his candidacy before, during, or after the election.
- Maintenance of any individual who serves on a local or legislative authority.
- The election of a candidate for any legislative body or municipal authority, or the registration of voters.
- The staging of political gatherings of any type or the dissemination to trade union members of any political material or papers.
Section 17 : criminal conspiracy in trade disputes
Section 17 of the Act states that no member of a trade union can be held liable for criminal conspiracy mentioned under sub-section 2 of Section 120B of the Indian Penal Code regarding any agreement made between the members of the union in order to promote the lawful interests of the trade union.
The office bearers of the registered trade unions are exempt from penal punishment for criminal conspiracy, per Section 17 of the Trade Unions Act of 1926. An agreement between two or more people to carry out an illegal act or a legitimate act through an illegal method is referred to as a conspiracy in English law.
Criminal conspiracy is defined in Section 120-A of the Indian Penal Code of 1860 as follows:
When two or more people agree to do something or make it happen
- A prohibited act,
- An Act that is not committed via unlawful methods; such as a contract is referred to as a criminal conspiracy;
The Trade Union Act of 1926 grants registered trade unions immunity. Nevertheless, this immunity is only applicable with regard to the legal agreements made by trade union members for the promotion of legitimate trade union purposes. The right to call for a strike and persuade members is one of the rights granted to registered trade unions in the stimulation of their industrial conflicts. All acts that give rise to civil litigation are considered illegal acts. For instance, two men who conspire to get workers to violate their employment contracts are guilty of a crime. However, Section 17 safeguards a trade unionist from a crime if the arrangement they have entered into is not an agreement to conduct an offence.
In the case of West India Steel Company Ltd. v. Azeez (1988), a trade union representative protested against the delegation of a worker to another sector by blocking or stopping work inside the factory for five hours. It was decided that a worker in a factory had to obey the directives issued by his superiors. A trade union leader is not exempt from following the rules. There is no legal authority for a trade union official or any other employee to share managerial responsibilities.
Section 18 : immunity from civil suits in certain cases
Section 18 of the Act immunises the members of trade unions from civil or tortious liabilities arising out of any act done in furtherance or contemplation of any trade dispute.
For example, in general, a person is subject to tortious liability for inducing any person to breach a contract. But, the trade unions and its members are immune from such liabilities provided such inducement is in contemplation or furtherance of any trade disputes. Further, the inducement should be awful and should not involve any aspect of violence, threat, or any other illegal activity.
Any authorised officer or member of a registered trade union is eligible for this immunity. No civil action may be brought against them for conduct related to a trade dispute on the grounds that it encourages another person to breach an employment agreement; or interferes with another person’s trade, business, or employment.
Furthermore, the incentive should be made via legal techniques that are not against the legislation of the state. There is no protection from physical harm, verbal abuse, or other illegal tactics.
The Kerala High Court ruled in the case of P. Mukundan and Ors. v. Mohan Kandy Pavithran (1991) that a strike by itself is not a legally actionable offence. Furthermore, it was determined that the provisions of Section 18 shield the trade union, its officers, and its members from legal actions related to the workmen’s strike.
In the landmark decision, Rohtas Industries Staff Union v the State of Bihar (1962) by the Patna High Court, it was decided that employers did not have the right to sue an employee who participated in an illegal strike and subsequently lost business and output.
In another case, Simpson & Group Companies Workers & Staff Union v. Amco Batteries Ltd. (1990) by the Karnataka High Court, the Court relied on the judgement in Chandrana Bros. & Others v. Venkata Rao (1976) to observe that workers’ protection under Section 18 of the Trade Unions Act is unaffected by “strike” or “lock-out” situations and remains unchanged. In both circumstances, the consideration and the principle are similar. Physically impeding the movement of management staff, contractors, goods, or trucks transporting raw materials is neither a trade union right nor a basic freedom protected by Article 19 of the Constitution. Section 18 immunity cannot be invoked for such actions. Picketing is a highly undefined right that only extends to other people’s freedom of movement. The only acceptable means of persuasion are vocal and visual; physical interference with people or objects is not permitted.
In the 2005 case of Shahdol Pipe Works v. Zala Loghu Udyog Kamgar Sangh, it was claimed that the employer had suffered a loss of Rs. 22,500 due to the strike that the defendant’s trade union had arranged. The Court dismissed the employer’s request for damages and determined that members of a registered trade union were exempt from being held accountable for any torts committed in advance of or in support of a trade dispute. Furthermore, it was not possible to conclude from the evidence in the current case that the loss was brought on by the defendant’s trade union members, officers, and supporters.
The provision puts an end to action against trade unions while looking at the right of trade unions to use and to be used. The union or its members are not prohibited from bringing a claim for wrongs done to the union. Unlawful threats and coercion are not protected since doing so would deprive the person of the Section’s protection.
In East India Hotels Ltd. v. Oberoi International Hotel Employees Union (1994), the Court emphasised that it is well established that no one has a basic right to stage demonstrations on company property if doing so will interfere with the office’s regular operations. The freedom of expression, organisation, and unionisation that citizens have does not grant them the right to use these rights wherever they wish. The moment someone else’s right to own their property interferes, the exercise of this freedom will terminate. The Court added that the law acknowledges both the existence of unions and the scope and ambit of legal activity. Such actions or acts may be protected under Section 18 of the Trade Unions Act of 1926, depending on the specifics of each instance. However, in order to obtain this safety net, the temptation and interference must be done so legally.
Torts are considered to be civil wrongs. It can be resolved by civil court action. It is different from breaking a contract, a quasi-contract, a trust, or other equitable obligations (like trespassing or creating a private nuisance). However, Section 18(2) grants an exemption from tort liability. The action of the parties must further result in a trade dispute in order to be eligible for exemption or immunity from tort liability. If an agent acts without the knowledge of the executive committee of the trade union or against the specific instructions of the executive committee, the registered trade union is not accountable for the torts committed by the agent in the advancement of the trade dispute.
Section 19 : enforceability of agreement
According to Section 25 of the Indian Contract Act of 1872, any agreement in restraint of trade is void. But under Section 19 of the Trade Unions Act, 1926, any agreement between the members of a registered trade union in restraint of trade activities is neither void nor voidable. However, such a right is available only to registered trade unions, as unregistered trade unions have to follow the general contract law.
Section 20 : right to inspect the books of trade union
According to Section 20 of the Act, the account books and the list of the members of any registered trade union can be subjected to inspection by the members of the trade union at such times as may be provided under the rules of the trade union.
Section 21 : rights of minors to membership of trade union
Section 21 provides that a person who is above 15 years of age can be a member of any trade union, and if he becomes a member, he can enjoy all the rights conferred upon the members of the trade union, subject to the conditions laid down by the trade union of which he wants to be a member.
Section 21-A : disqualifications of office-bearers of trade union
Section 21A of the Act lays down the conditions, the fulfilment of which disqualifies a person from being a member of the trade union. The conditions laid down in the Act are as follows:
- If the member has not attained the age of majority
- If he has been convicted by any of the courts in India for moral turpitude and has been sentenced to imprisonment unless a period of five years has elapsed since his release.
Section 22 : proportion of office-bearers to be connected with the industry
Section 22 of the Act mandates that not less than half of the members of the trade union should be employed in the industry or work with which the trade union is connected. For example, if a trade union is made for the welfare of agricultural labourers, then, as per this Section, half of the members of such a trade union should be employed in agricultural activities.
The Calcutta High Court in the case of Kesoram Rayon Workmen’s Union v. Registrar of Trade Unions (1966) observed that if all officers and members of the executive were needed to be employees of the industry to which the union is related, Section 22 would have no purpose. Of course, Section 2(h) of the Act defines a trade union as a group of workers employed in a certain industry. However, Section 22 specifically states that a non-member of the union may be a member of the executive or another officer, as long as the required proportion is not exceeded.
Section 23 : change of name
Section 23 states that any registered union is free to change its name provided it does so with the consent of not less than 2/3rd of its members and subject to the fulfilment of the conditions laid down in Section 25 of the Act.
Section 24 : amalgamation of trade unions
Section 24 lays down that two or more trade unions can join together and form one trade union with or without dissolution or division of the fund. Such amalgamation can take place only when voting by half of the members of each trade union has been effectuated and that sixty per cent of the casted votes should be in favour of the proposal.
Section 25 : notice of change of name or amalgamation
Section 25 of the Act provides that:
- A notice in writing of every change of name and of every amalgamation which is duly signed by the Secretary and by seven members of the Trade Union changing its name, and, in the case of an amalgamation, by the Secretary and by seven members of each and every Trade Union which are a party thereto, should be sent to the Registrar.
- If the Registrar feels that the proposed name is identical to the name of any other existing Trade Union or, it so nearly resembles such name as it is likely to deceive the public or the members of either Trade Union, the Registrar may refuse to register the change of name.
- If the Registrar of the State in which the head office of the amalgamated Trade Union is situated is satisfied that the provisions of this Act have complied with the amalgamation shall be given effect from the date of such registration.
In D.C.M. Chemical Mazdoor Ekta Union v. Registrar of Trade Unions, Delhi (1978), the Delhi High Court held that according to Sections (3) and (4) of Section 25, the Registrar has the same authority to register a trade union as he or she does under Section 8. Regardless of whether the registration is made in accordance with Section 8 or Section 25, the Registrar must issue the certificate of registration. Therefore, it cannot be claimed that the revocation of the certificate of registration under Section 10 solely applies to the issuance of the certificate under Section 9, which is a result of an order made under Section 8. It cannot be argued that Section 25 does not include the grant of certificates, and as a result, anyone who is requesting the reversal of the Section 25 judgement cannot seek the remedy of cancellation of the certificates of registration. The Court further observed that Section 10 must be read to cover both situations where fraud or mistake were used to gain the registration itself as well as only the certificate of registration.
Section 27 : dissolution
Section 27 of the Act talks about the dissolution of a firm as follows:
- If a registered trade union has been dissolved, a notice of such dissolution which must be signed by seven members and by the Secretary of the Trade Union should be served to the registrar within 14 days of such dissolution and if the registrar is satisfied that the dissolution has been effected in accordance with the rules laid down by the trade union may register the dissolution.
- Where a union has been dissolved but its rules do not lay down the way in which the fund is to be distributed after its dissolution, the registrar may distribute the funds in any prescribed manner.
Section 28 : returns
Section 28 provides that each trade union should send the returns to the registrar annually on or before such a day as may be prescribed by the registrar. The return includes:
- General statement
- Audit report
- All the receipts and expenditures incurred by the trade union
- Assets and liabilities of the firm on the 31st day of December
Sub-Section 2 of the Section provides that, along with the general statement, a copy of the rules of the trade union, corrected up to the date of dispatch thereof, and a statement indicating all the changes made by the union in the year to which the statement is referred, be sent to the registrar.
Whenever any registered trade union alters its rules, such alterations should be conveyed to the registrar within a period of not less than 15 days from making such alterations.
Section 29 : power to make regulations
Section 29 of the Act confers the right on the appropriate government to make provisions in order to ensure that the provisions of the Act are fairly executed. Such regulations may provide for any or all of the matters, which are as follows:
- The manner in which a trade union or its rules shall be registered;
- The manner in which the registration of a trade union has to be transferred which has changed its head office;
- The manner of appointment and qualification of the person who shall audit the accounts of the registered trade union;
- Circumstances under which the documents kept by the registrar shall be allowed to be inspected and also the fees that shall be levied in lieu of the inspection so made.
Section 30 : publication of regulations
Section 30 states that:
- The power of making regulations conferred to the government is subject to the condition that such regulation has been made after the previous publication.;
- The date from which the regulation shall be given effect shall be specified in accordance with clause (3) of Section 23 of the General Clauses Act, 1897, and the date should not be less than three months from the date on which the draft of the proposed regulations was published for general information;
- The regulations which are made must be specified in the official gazette of India and it shall have the effect of an enacted law.
Penalties and procedure
Section 31 to Section 33 of the Trade Union Act lays down the penalties and the procedure for their application to a trade union which is subject to such a penalty.
Section 31 : failure to submit returns
Section 31 states that:
- If any trade union was required to send any notice, statement or any document to the registrar under the Act and if the rule did not prescribe a particular person in the union to provide such information then in case of default each member of the executive shall be imposed with the fine extendible to five rupees. In case of continuing default, the fine may be extended to five rupees a week.
- If any person willfully makes or causes to be made any false entry or omission in the general statement required under Section 28 of the Act shall be punishable with a fine extendible to 500 rupees.
The Madras High Court observed in the judgement of Neyveli National Workers Union v. Additional Registrar II of Trade Unions and Deputy Commissioner of Labour II, Chennai (1998) that in addition, under Section 10(b) of the Act, the penalty of cancellation is applied if the Registrar determines that the registration certificate was obtained through deception, error, etc. All union members who violate the law will get punishment. However, the penalty outlined in Section 31 of the Act is only applicable to officeholders who are overdue in completing their returns. Because the union’s members or the entire body of the union cannot be punished, they alone must be punished when they fail to perform their duties. Section 10 of the Act, in summary, foresees the violation by the union. As a result, Section 10 is related to the offence of the union, whereas Section 31 is related to the offence of the office-holders. It’s important to keep this distinction in mind. Section 31 was specifically enacted to punish office bearers only for this reason. According to that interpretation, the first respondent is likewise ineligible to use the provisions of Section 10 of the Act to punish the entire union for the offences committed by the office-bearers.
Section 32 : supplying false information regarding trade unions
Section 32 states the following:
- Any person who in order to deceive a member of any trade union or any other person who purports to be part of the trade union,
- Gives a copy of the document with the pretext of it containing the rules of a trade union.
- Which he knows or has reason to believe that it is not a correct copy of such rules and alteration and,
- Any person with the like intent give a copy of any document purporting it to be a copy of the rules of a registered trade union which in reality is an unregistered union,
- Shall be imposed with a fine which may extend to two hundred rupees.
Section 33 : cognizance of offences
Section 33 contains the provisions with respect to the cognizance of offences. It says that no court which is inferior to a presiding magistrate or a magistrate of the first class shall try an offence under the Act. The courts can take cognizance of the offences under the Act only in the following cases:
- When the complaint has been made with the previous sanction of the registrar
- When a person has been accused under Section 32 of the Act, he shall be tried within six months of the commission of the alleged offence.
Shortcomings of trade unions
Even though trade unions are very important for the well-being of workers, they also have some shortcomings, which are discussed as follows:
- The existence of competing unions and the abundance of unions in the same industry cause workers to become divided, which in turn leads to unhealthy trade union expansion and allows bosses to take unfair advantage of the working class during collective bargaining.
- Before the country gained its independence, there were only a few industries in existence, and employers—the managerial class—paid their employees very low wages, worsening their economic situation. In the current times, the same issue persists, and as a result, workers are unable to pay the subscription member fee for the trade union and never join it.
- The majority of trade unions in our nation are relatively small because their members are unable to effectively compel the government or companies to meet their requests and objectives.
- There is not a very strict implementation of the regulations relating to trade unions, which leads to its deteriorating the trust of the workers.
- Due to the fact that trade unions were founded as a result of disputes between employers and employees, the working class of trade unions must contend with employer resistance. As a result, the employers try to dissuade by offering bribes to union officials.
- The migrated workers are in need of economic facilities and the fundamental necessities for meeting their needs, so they do not try to join a trade union and cannot oppose the managerial class because they are completely dependent on the managerial class. Some migrated workers would obtain employment through contractors, and the contractors are supporters of industry or any establishment.
Collective bargaining and trade disputes
When an organised body negotiates with the employer and fixes the terms of employment by means of bargaining, this is known as collective bargaining. The essential element of collective bargaining is that it is between interested parties and not by third parties.
International labour organisation in its manual in the year 1960 defined the meaning of collective bargaining as:
“Negotiations about working conditions and terms of employment between an employer, a group of employees, or one or more employers’ organisations, on the other hand, with a view to reaching an agreement.” The terms of agreement are used to ascertain the rights and obligations by which each party is bound towards one another during the course of employment.
Section 8 of the Industrial Relations Act 1990 defines trade disputes. According to the Act, an industrial dispute refers to any dispute which arises between the employers and the workers, and it is usually in connection with any one of the following:
- employment or non-employment,
- the terms or conditions of the employment,
- Something which affects the employment of any person.
Essential conditions for collective bargaining
- Favourable political and social climate: all the collective bargaining which took place in the past bears testimony to the fact that a favourable political and social climate is the prerequisite of collective bargaining. The reason for the same is quite obvious as almost all the trade unions in India subscribe to one or the other political view and therefore, trade unions usually favour the employees not on the basis of the merit of the issues they raise but on the basis of their political considerations.
- Trade union: in any democratic country like India which recognizes the right to speech as a fundamental right, the right to form a trade union is a direct consequence of it and so all employers should recognize the trade unions and its representatives.
- Problem-solving attitude: it means that both parties while negotiating a bringing up their relative concerns should adopt a problem-solving attitude and should aim at amicably solving the problem without trying to put the opposite party at a loss.
- Continuous dialogue: the dialogue between the employer and the workers may sometimes end up without any fruitful negotiation or there may arise a bargaining impasse, in such a case the free flow of dialogue between the employer and employee should not be stopped and sometimes keeping aside the bone of contention helps bring up a better solution.
Purposes of collective bargaining
- To provide an opportunity for the workers to voice their complaints and grievances regarding the working conditions.
- To pave the way for the employer and workers to reach an amicable solution peacefully without having any ill will towards one another.
- To sort out all the disputes and conflicts between the employer and worker.
- To prevent any dispute which is likely to take place in the future by mutually agreeing on the contract.
- To foster a peaceful and stable relationship between the workers and the organisation.
Position in India
In India, collective bargaining remains limited in its application and has been restricted by different labour legislation in India. Different labour laws make different provisions with respect to the working conditions of the workers. Some of the labour legislation in India is as follows:
- The Factories Act of 1948 made provisions for the betterment of the workers in respect of their health, safety, welfare and other aspects while the workers are employed in factory work. However, all the provisions of the Act were not applicable in all the factories, for example, the provision for restrooms will be applicable only if there are 150 or more workers.
- The Employees Provident and Miscellaneous Provisions Act, the Maternity Benefit Act and the Payment of Gratuity Act.
- The Industrial Disputes Act, of 1947, lays down the procedures by which the settlement of industrial disputes has to be done. Its procedural aspects are applicable to all enterprises for the settlement of industrial disputes.
A closer view of the labour laws in India indicates that most of the workers who are employed in the organised sectors of the economy are protected under various labour legislation. The Fifth Economic Census of 1999 revealed that more than 97 percent of enterprises employ less than ten workers, and most of these employ less than five workers. This clearly shows that labour laws apply to less than 3 percent of enterprises.
Further, the acceleration of the formalisation of the workforce with the onset of liberalisation has also changed the formal sector in terms of shifting jobs from the formal to the informal sector and, along with it, the formalisation of jobs. Today, in the formal sector, the number of formal workers is about 33.7 million, and the number of informal workers is about 28.9 million (2004-05). The increase in employment (in whatever amount) in the formal sector has largely been informal in nature. Which in turn has been reflected on the trade bargaining?
Agreements for collective bargaining
In India, the following types of agreements are prevalent for collective bargaining:
- Bipartite agreement: These agreements usually result in voluntary negotiations between the employer and employees and are usually binding per se.
- Settlements: Settlements usually arise out of the conciliation process and they are usually tripartite in nature as they involve three parties which are the employer, employee and conciliation officer.
- Consent awards: When the parties reach an agreement while the dispute between them is pending before the adjudicatory body. Such agreements are incorporated in the authority’s award and are binding on the parties under the dispute.
The Trade Union Act of 1926 is welfare legislation that has been enacted to protect workers in the organised and unorganised sectors from inhuman treatment and provide protection of their human rights. As such, the legislation contains provisions for registration, regulation, benefits, and protection for trade unions. Therefore, the workers benefit.
Trade unions are important organs for the democratic development of any country as they represent the needs and demands of the workers through collective bargaining. Collective bargaining is an important aspect of the employer-employee relationship. However, collective bargaining is not provided to all the trade unions but is only provided to those trade unions that are recognised. Therefore, the demand for mandatory recognition of trade unions, which has not been provided under the Trade Union Act 1926, has been raised time and again by the workers. Today, the growth of the media has resulted in the empowerment of trade unions, and they have turned into influential pressure groups not only in industrial sectors but also in agricultural and other allied sectors.
- B.P. Guha: Wage Movement in Indian Industries: As Reflected in Collective Bargaining Agreements.
- Bare Act: Trade Unions Act, 1926 along with Central Trade Unions Regulations, 1938. – Universal Law Publishing
- Justice P.S. Narayana: The Trade Unions Act, 1926
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