Nothing is constant in this world except change

(How reforms of labour laws can enrich both enterprises and workers in the new Indian economy)

[Volume 2, Issue 5] – May, 2017

Author – Ashish Kumar Pathak, LL.B (Hons.), LL.M, Ph.D (Prs.) Research Scholar (BBD University Lucknow)

Co Author – Dr, Rohit P. Shabran, Head (I/C) School of Legal Studies, BBD University Lucknow.

Today’s industrial sector looks like a battlefield. With a new government that promises to act, there are all kinds of wish lists in the mail. The need to alter our labour laws figures prominently in many of them, but all too often from an interest specific perspective that misses out the whole.

The Industrial dispute Act, for instance, is foundationally flawed because at every step there is a number to climb over or duck under.

If a unit has more than 100 workers, then there is one set of rules; if less than 20, but more than 10, then another.

Industries are also categorized as small, micro and medium, and once again different regulations govern each of them. Stay employed for 240 days at a stretch and you will get retrenchment wages, if less than that go whistle in the park once you are fired.

All of these heighten the atmospherics of hostility in the work place. The truth is that these numerical thresholds encourage distrust between employers and employees; in fact, they bring out the worst in them.

For example, if job permanence is granted only when there are a 100 or more registered workers on the muster, employers will naturally tend to knock this number down by hiring casual or contract labour. This is turn generates another flurry of laws that makes the industrial sector look like a battlefield.

But the moment we take these numbers out of the picture, look at the differences this makes. If, without threshold markers, all workers are permanently on the muster, then employers will see no advantage in keeping their units small and functionally inefficient. Nor will one set of workers namely those on the muster and in large units, be privileged over the others. However, to make this happen labour too must accept conditions under which they can be dismissed, provided the process of job termination is transparently just. That both sides must give and take becomes apparent only after numerical qualifiers are removed.

This is not a wonderland we are talking about. We can see aspects of these, some in full-blown form, in large parts of Europe. Contrary to popular belief in CII and Ficcci, even in America hiring and firing is not at all that easy. However, for such a scheme to get off the ground at home, the crucial first step is to rid our labour laws of many thresholds that dog it.

For starters, entrepreneurs need to be able to right size their company’s bench strength from time to time, but only with good reasons.

What could these reasons?

They are principally three:

Indiscipline.
Bankruptcy and
Restructuring.

All of them can be allowed if the management also undertakes to bear a portion of the cost of dismissal of the worker.

Remember, unlike Europe, the unemployed in India enjoy no medical, unemployment or other such benefits. If our labour laws are changed and all employees become permanent (except, of course, those in construction and seasonal industries), dismissal would entail in every instances the payment of severance wages, or retrenchment benefits, as the case might be. You can not just take away without giving something back in return.

This immediately stops the management from being whimsical in getting rid of its workers. Now that there is a monetary sum that they must pay up for firing somebody, such a step will be taken only when there is no alternative but to do just that. In fact, under these altered conditions, management would do well to retain and retrain the workers rather than dismiss them; firing would then become the last option.

In fact, keeping workers happy might be the name of the new competition between entrepreneurs.

Now that there are no thresholds and all workers are permanent, they can join unions without fear of management reprisal. Nor should this simple act of signing up signal that employees have suddenly become hostile, radioactive material.To take full advantage of this provision, every enterprise should be allowed just one union.

This step then undermines another numerical qualifier. It does not matter now how many members a union should have in order to be ‘recognized’ by the management.

The union is still the first port of call when an Industrial dispute takes place. In case it fails to resolve the issue, then its functioning is complemented by an internal conciliation committee which has representatives from both workers and management. If within a designated period, this committee too is unable to sort out the problem, the matter then goes up to the labour tribunal whose decision are final and must be delivered within a fixed time frame. While constituting this adjudicating body, we would do well to follow the Supreme Court’s recommendations on the constitutionality of tribunals.

But we must start this process by first shaking off the many thresholds that cling to our existing labour laws. Once that happens, a brave, new, enterprise to get controle over the pnterprise they must respect workers’ yearning for permanence in the new indian economy. On the other side, for workers to enjoy permanence, they must yield to a reasonable and time-bound process of dispute resolution.

Remember it takes two hands to clap, but just one to slap! The choice should be simple.