This article has been written by Shraddha Vasanth, pursuing a Diploma in Labour, Employment and Industrial Laws (including POSH) for HR Managers from LawSikho.
Collective bargaining is a fundamental right of every citizen and trade unions have a crucial role to play in ensuring that the rights of the workers are upheld. Towards this end, the trade unions have been vested with several rights as well as obligations. This article throws light on the rights of trade unions in India. However, it is important to discuss the importance of trade unions in a developing country like India. It can be done by looking at its history of origin and the role that it plays in a particular industry. The relevance of trade unions will also be discussed in the light of legal provisions and case laws which highlight both the rights as well as the obligations of trade unions. At last, a clear demarcation is made between the rights of recognised unions and unregistered unions.
Trade unions : introduction and a brief history
The industrial revolution began in Europe in the early 1700s, which continued well into the 1900s. The economy was shifting from being agrarian towards one dominated by machines and manufacturing. It was during this time that the concept of industry emerged, various forms of technologies were being created, it was also a time in history that was filled with scientific discoveries and inventions. All of this led to a standardisation of processes of manufacture and the goods produced. This large-scale manufacturing is what is known as “industry” in modern parlance. Massive economic and technological changes naturally brought in huge shifts in the socio-cultural aspects as well and in the initial phase, it led to abject poverty among people. Their employment and job security were in question as labour was being replaced by technology. Moreover, they were being paid paltry wages for long hours of work, and were subjected to abuse and often worked in unhygienic conditions.
While the industrial revolution and technological innovations continued, the old ways of doing trade were being replaced by joint-stock companies. This essentially put money, ownership and power into the hands of several people, thereby creating an entire class of rich entrepreneurs apart from royalty. This further created a divide between the already poor labour class. Thus, these 2 classes i.e., the owner-employer and labour dominates the discussion of trade unions. The exploitation of labour, meagre wages, job insecurity, terrible working conditions demanded that power be regulated, thereby bringing about the concept of collective bargaining. This led to the formation of trade unions.
During the time of the industrial revolution, India was a colony of British rule, hence the same model of trade was replicated in India as well. While the Europeans essentially came to India to source raw materials, India soon became a market for finished goods and a source for cheap labour under the British regime. With this, the exploitation of labour began, especially, in early industries like textiles, jute, cotton, railways etc. A need was felt to lend a voice to the workers and hence, the first Trade Union was established in India in 1851 when the Bombay Textile Mills was formed. With this, trade unions also emerged in the jute mills of Calcutta in 1954. Several labour unrest and agitation began in the 1860s and 1870s. This led to the setting up of the first factory commission to study and recommend solutions to the problems of factory workers. Consequently, the first Factories Act was passed in 1881, it was however, ineffective.
In 1890, N. M. Lokhande led a workers’ rally, which eventually led to the formation of the first organized trade union in India, called the Bombay Mill Hands Association. Post this, several others like the Ahmedabad Weavers (1895), Jute Mills, Calcutta (1896), Bombay Mill workers (1897), Madras Press Workers (1903) etc. were established.
A major breakthrough was the enactment of the Trade Unions Act, 1926 which gave statutory recognition to the cause of labour and provided for the registration and governance of unions. With India being a huge market for labour, several trade unions have been established since then, some notable ones being, the Bharatiya Mazdoor Sangh, the Indian National Trade Union Congress, the All India Trade Union Congress, the Hind Mazdoor Sabha, the Centre for Indian Trade Unions, Self-employed Women’s Association of India (SEWA).
Role of trade unions
The very purpose of unions in the labour market is to voice the issues faced by the workers in their employment, hence the role played by trade unions is critical. This is called collective bargaining; it is the process by which the employees/workers put forth their issues before the management or the employer. This is usually done through the unions by placing the charter of demands before the employers. The issues are then negotiated for and an agreement is reached which then becomes binding on the employer as well as all the workers.
Some of the functions they perform and the matters that are negotiated upon most often are:
- Securing better wages and benefits to workers,
- Improving their bargaining power in order to create a level playing field for the workers,
- Supporting workers in disputes with the management through negotiations and strikes,
- Securing better working conditions for workers,
- Availing of better wages, compensation packages and social security benefits,
- Regularisation of employment.
Laws regulating trade unions and rights of registered unions
The critical role played by the unions is backed by several prominent legislations; there are 3 major laws that govern the functioning of trade unions in India. The legislation and the rights bestowed upon the unions under the various provisions are explained below:
1. The Constitution of India
The essence of unionism and bargaining is laid down in Article 19(1) of the Constitution of India which provides to all its citizens the fundamental right of freedom of speech. Clause (c) of Article 19(1) includes the right to form associations or unions. The Supreme Court has extended the meaning of this right to also include the right of the members to conduct meetings and the right to discuss their problems and put-forth their views in the case of All India Bank Employees vs National Industrial Tribunal.
2. The Trade Unions Act, 1926
The Trade Unions Act, 1926 (the “TU Act”) regulates the constitution and governance of trade unions. Section 2(h) of the Act defines the term trade unions under to mean any combination which is formed for the purpose of regulating the relations between
- workmen and employers
- workmen and workmen
- employers and employers or
- for imposing restrictive conditions on the conduct of any business or trade.
Trade unions can be temporary or permanent and registered or unregistered. However, registration is recommended as it enables better rights and bargaining power. The process of registration involves the submission of applications by 7 or more persons, who are engaged or employed in the establishment or industry; such persons need to subscribe their names to the rules of the trade union. The registration can be made only if atleast 10% or 100 workers are members of the union at the time of registration. The application has to be submitted with the names, addresses and occupations of the members, name of the trade union and its objects etc.; which needs to be drawn up in accordance with the rules.
Registered trade unions enjoy a variety of rights with respect to their operations, these are briefly explained below:
- Rights associated with a body corporate – By virtue of Section 13 of the TU Act, a registered trade union is a body corporate; and as such, it shall have a perpetual succession and common seal and shall have a right to:
- hold and acquire properties, both movable and immovable, under its own name,
- right to enter into contracts, and
- the right to sue and be sued.
b. Right to provide funds for political purposes – Section 16 of the TU Act permits a trade union to constitute a separate fund to provide contributions to political parties. The provision also lists the objects for which the funds may be provided. However, it has to be noted that the members cannot be compelled to contribute funds towards these activities.
c. Immunity from certain criminal and civil proceedings
- Section 17 provides immunity against criminal proceedings initiated under Section 120B(2) of the Indian Penal Code to the office bearers and members for any actions undertaken by them pursuant to an agreement entered into to further the objectives of the trade union, as provided in Section 15, some of which includes payment of salaries, compensation, allowances etc. to office bearers, payment of expenses of the union, conduct of trade disputes and other objects permitted by the appropriate government. However, no immunity shall lie in cases where an offence has been committed.
- Section 18 provides immunity to the office bearers and members of the trade union against any act done in continuance or furtherance of a trade dispute, only on the ground that such acts induce another person to breach an employment contract or interfere with the trade or business of the other person. The immunity also extends to any tortuous acts done in contemplation or furtherance of a trade dispute by an agent of the trade union. In such a case, it is required to be proven that such an act was done without the knowledge of or contrary to the instructions given by the executives of the union. The provision, however, does not provide any protection against acts of violence by the member/office bearer.
d. Right to enforce agreements in restraint of trade – Section 19 makes it valid for a registered trade union to enter into agreements that are otherwise invalid on account of being in restraint of trade.
e. Right to change of name, right to amalgamation and dissolution – A trade union has a right to change its name under Section 23 of the TU Act. Additionally, the trade union can also amalgamate with another union under Section 24 and also apply for dissolution under Section 27.
Along with the abovementioned rights, trade unions are also vested with certain obligations, such as:
- Spending the funds of the union only towards activities permitted under Section 15.
- The statutory duty is to keep the books of accounts available for inspection to the public. [Section 20]
- Provide notices of change of name, amalgamation and dissolution [Section 25]
- Submission of annual returns/ general statement to the registrar of trade unions [Section 28]
3. The Industrial Disputes Act, 1947
The Industrial Disputes Act, 1947 (the “ID Act”) essentially provides mechanisms for settlement of disputes of workmen and employers and other such related activities. Though the ID Act does not specifically provide the rights, trade unions play a significant role in resolving industrial disputes; hence they are inherently vested with inherent rights in these matters. Some of them are:
- Right to represent the workers in the Works Committee constituted under Section 3 of the ID Act and before the dispute resolution forums such as the Conciliation, Labour Courts, Industrial Dispute Tribunal, National Industrial Tribunal etc. [Section 36],
- Right to represent the individual worker, who is a member, before the grievance settlement authorities constituted under Section 9C,
- Right to strikes as per the procedure mentioned in Sections 22 and 23,
- Right to negotiate on behalf of the workers regarding lay-off, retrenchment, dismissal, compensation, compensation in case of transfer/ closure of undertakings, working conditions etc.,
- The draft standing orders have to be reviewed and approved by the trade unions as per the Industrial Employment (Standing Orders) Act, 1946 prior to certification by the certifying officer [Section 3]. The same applies in the case of modification of standing orders as well [Section 10]. The trade unions also have a right to appeal if they are aggrieved by the order of the certifying officer with regard to any of the matters/terms of employment or working conditions specified in the standing orders [Section 6].
The ID Act also casts a duty on the unions to not indulge in unfair trade practices [Section 25T, read with Schedule V]. Some unfair practices include advising or instigating illegal strikes, coerce workmen to join or refrain from joining the trade union, refuse collective bargaining, instigating coercive actions such as willful ‘go slow’, ‘gherao’ of managerial staff, indulging or inciting violence or intimidation etc. It is thus essential for unions to follow the procedures laid down in the legislation while exercising their rights.
Rights of unregistered trade unions
While the registered trade unions enjoy several rights, the same cannot be said for unregistered unions. The unregistered trade unions, per se, have no rights except to represent their members. In cases where the union has a considerable number of workmen as its members, they can raise industrial disputes and put forth their negotiations. Since such a union would have support from the workers, it would be necessary for the employer to maintain good relations with them.
The fact that unregistered trade unions or unions whose registration has been cancelled have no rights either under the ID Act or the TU Act was established by the Supreme Court in the B. Sreenivasa Reddy vs. Karnataka Urban Water Supply & Drainage Board Employees Association & Others.
Rights of recognised trade unions
While the trade union may be registered, to make the bargaining process more effective, it is also necessary that the concerned establishment/ employer recognizes the union for the purpose of negotiation and settlement. There is no specific central law that provides for recognition of unions, however, many states have enacted such laws, for eg, the Kerala Recognition of Trade Union Act, 2010, the West Bengal Trade Unions Rules, 1998, the Maharashtra Recognition of Trade Unions and Prevention of Unfair Labour Practices Act, 1971 etc. provide specific rules and procedure for recognition of unions as the sole bargaining agent for its workers. Additionally, the Code of Discipline, adopted by the 15th Indian Labour Congress provides the procedure for recognition.
As per Clause VIII of the Code of Discipline, recognized trade unions enjoy the following rights vis-à-vis the unrecognised unions:
- Right to raise issues and enter into collective agreements with employers,
- Right to collect membership fees and subscriptions,
- Right to put up notices and make announcements at prominent places in the premises of the undertaking,
- Right to hold discussions with employees and employers for the purpose of either prevention or settlement of disputes,
- Right to representation on the grievance committee, joint management councils, and other non-statutory bipartite committees like the welfare committee, canteen committee etc.
With the implementation of the Industrial Relations Code, 2020 round the corner, the Central Government has also tabled the Industrial Relations (Central) Recognition of Negotiating Union or Negotiating Council and Adjudication of Disputes of Trade Unions Rules, 2021. Once this becomes effective, there will be a central framework for the recognition of trade unions.
Some important judgments
There are some very important case laws that help in better understanding the role and rights of trade unions, some of them are briefly given below:
- In the Workmen of Indian Bank vs. Indian Bank, the Supreme Court noted that every trade union is a body corporate, and as such, has all rights inherent to body corporates. It was also laid down those office bearers and executives of trade unions had every right to indulge in union activities both during and after office hours and that the management/ employer is obliged to provide their co-operation to legitimate union activities being carried on by them.
- In Balmer Lawrie Workers’ Union, Bombay and Another vs. Balmer Lawrie & Co. Ltd. and Others, the Supreme Court decided on the existence of a multiplicity of trade unions, and while taking note of the differences between the rights of recognized and unrecognized unions, held that recognition of a trade union aids in effective bargaining.
- In the case of RML Hospital vs. Wellington Hospital Workers’ Union, the Supreme Court held that the workers and unions have a right to peacefully ventilate their grievances but have no right to agitational resources that put other’s lives and hospital services in peril.
- In B. R. Singh vs. Union of India, a strike was recognised by the Supreme Court as a valid mode of dispute redressal.
- In the West India Steel Company Ltd. vs. Azeez, the Kerala High Court the trade union can espouse the cause of workers, however, an individual executive or union leader does not have a right to stop a worker from attending to work or otherwise obstruct the work of an establishment.
The growth of an economy depends on the growth of corporations, which in turn depends on its workers and employees. This is possible only in the presence of an environment that allows the workers to voice their grievances and opinions on matters that directly or indirectly concern their employment. Most often, power vests in favour of the employers, so balancing that with providing equal, if not more, powers to the workers is absolutely necessary. This is where the importance of trade unions comes in.
Though political interference, a multiplicity of unions, lack of unity amongst unions, low membership, non-recognition or non-registration pose problems in the effective functioning of unions, largely they have been successful, especially in the unorganized sector. Moreover, with unions growing in the technology sector in states like Karnataka, Tamil Nadu, West Bengal, Kerala and Maharashtra, the trade union movement is certainly growing. With changes such as negotiating union and their recognition, streamlining of the process of grievance redressal in the newly introduced Industrial Relations Code, 2020, the significance and role of trade unions is sure to continue.
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