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Can law ensure a happy & prosperous industrial relations?
PH Singh | New Delhi | Thursday, 01 October 2015

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Industry laws are meant to make us behave right in a social and natural context, but the trouble begins when someone starts behaving in an unsynchronised way.

Defining ‘God’ is an impossibly complex phenomenon, but believing in ‘God’ is a simple state of mind. Similarly, no codified law in the world can be defined exclusively and conclusively. We need to imbibe it conceptually.

The State enacts and modifies laws as per specific needs. Some of these laws do complement and supplement each other, while some others fall contradictory. Even the right person on the right track may not know all of these laws. These laws are meant to make us behave right in a social and natural context, but the trouble begins when someone starts behaving in an unsynchronized way.

Does a married couple require a statute to lead a happy conjugal life? How can any law ensure happy and prosperous industrial relations? Ideally, an employer paying more than double of the minimum wages, revising wages annually for more than just price escalations, offering gratuity, PF, bonus, etc at more than the prescribed legal limits, infusing genuine welfare, safety and social security measures, etc, should not really need to worry about the related legislations, optimum productivity, and smooth running of the workplace. But, unfortunately we do not live in an idealistically coherent society. The inflated greed of some people keeps the society volatile. Such greedy lots, found in different segments of the society, are responsible for the making, breaking and exploiting of the laws.

Like the Indian Independence Movement, the comprehensive history of the National Trade Union Movement also started under the leadership of Mahatma Gandhi, in 1918, with the struggle of the Ahmedabed textile workers. The struggle ended in success for both the workers and the mill owners, with the new technique propounded by Gandhi —governing labour management with ‘truth’ and ‘justice’.

Gandhiji's trusteeship concept was not only for the employers but also for the workers as the custodians of public interest, to promote the interests of the community. In his own words, "My ideal is that capital and labour should supplement and help each other. They should be a great family living in unity and harmony, with capital not only looking after the material welfare of the labourers but their moral welfare also". On the other hand, “while it's quite proper to insist upon (workers') rights and principles, it is imperative that they should recognise the obligation that every right carries with it ... .. the workers should treat the business of their employers as if it were their own business and give it their honest and undivided attention…..".

Arbitration was the mechanism which Gandhi preferred to settle an un-negotiated dispute. He was of the view that, first, the parties should try to convince each other of the truth of their claims. If unsettled, they should agree to appoint a respected arbitrator. Gandhiji was ready to accept the interpretation of truth defined by an arbitrator even if it was not up to his own version. Finally, if the employers refused to accept arbitration, the workers had to go on strike. The causes of a strike had to be just and only for redressal of genuine grievances. He did not want workers to resort to strikes for unreasonable demands which the capitalist cannot meet. The objective of a strike is not the coercion of the employers but their conversion.

The Gandhian concept as above becomes the unclaimed source of our various labour and other laws, governing employer–employee relationships, labour productivity, labour welfare, discipline and the tripartite principle for peaceful settlement of industrial disputes. His concepts got reflected in various company and labour laws where;


• As the company grows the proprietorship gets compulsorily shared amongst the large base of shareholders, and some of the companies prefer to include employees in it.

• The welfare statutes —like the Factory Act, PF Act, ESI Act, Workmen Compensation Act, Minimum Wages Act, Bonus Act, Gratuity Act, etc — strike a balance between our aspirations and realities, rights and duties.

• The regulatory legislations like Standing Orders Act, Industrial Dispute Act, Trade Union Act, etc mandate the process of discipline, arbitration, conciliation, tripartite settlement etc., before adjudication, strike or lock-out. They enforce fair-play and genuineness of the issues.

In addition to this, we have dozens of other labour laws, hundreds of guidelines, thousands of judgments, and lakhs of executors to ensure that the labour–management relationship is smooth, remunerative and productive. But, our inflated ego — ‘need, greed, and maryada’— and political aspirations make our simple lives unnecessarily complicated. The bunch of complex regulations and their varied interpretations provide many safe loop-holes to these manipulators.

On the other hand, in India, we have an average per capita income of around Rs 7400 per month, and the minimum wages of the States do vary and revolve around it. More than 60 per cent of our available work force does not get jobs throughout the year. Over 27 per cent of our young graduates are unemployed. On the other hand, the work productivity —of employed people— is as low as 15 per cent of US productivity, 20 per cent of Japan and about 50 per cent of China.

In such a critical situation, even Gandhi could not have justified the Income Tax paying employees going on a strike and stopping work for a high increase in wages at the cost of productivity and quality of output. Now, the reducing business profit margins, have led the Government and employers to cut vacancies to balance the wage bills and pay increments to the privileged employees at the cost of unemployability. This, in turn, also results in ‘unease to do business’ negating further job creations. The political ecosystem must understand this phenomenon.

Therefore, we —all sections put together— must think on the basis of some common interests, and feel a need to combine and simplify the executive systems. We have different formulas, criteria, instances and agencies to fix the limits of minimum wages, PF, ESI, bonus, workmen’s compensation, gratuity, etc. Why can’t all of these be driven by a single formula or logical criterion for calculation and revision of comfortable employment generation towards socio-economic growth platform?

For instance, the annual revision formula of the Income Tax exemption limit can be linked to the market escalation. The national Minimum Wages can be linked to a percentage (e.g. 50 per cent) of Income Tax exemption limit. The coverage and benefit limits under various legislations regarding PF Act, ESI Act, Workmen’s Compensation Act, Bonus Act, Gratuity Act, ID Act, Trade Union Act and all other such regulations can be linked in different proportions to the Minimum Wages. The terms and conditions of the appointment letter of an Income Tax payee employer-employee can be the sole criterion of employment engagement, productivity, discipline, remuneration, etc. Our rights and privileges cannot be unconditional to our duties and responsibilities.

With such linkages, we can simplify the connectivity, revision and understanding of various legislations . This auto mode will reduce future legislative, adjudicatory and executive burden of the Government on routine things. A balanced wage-bill linked with the productivity and disciplinary norms can boost employment opportunities through encouraged ‘ease of doing business’, to improve the economy, productivity and employment.

© 2016 HR Katha
Last modified on Thursday, 01 October 2015

2 comments

  • Comment Link Ajay Monday, 05 October 2015 posted by Ajay

    Very logical article and it would be great it atleast a large part of it can be implemented. It will ensure more job creation and fresh growth of the organised economy.

    But my bet is it will not happen. For it to happen, the politicians should stop blindly supporting trade unions for all demands however irrelevant. My bet is eventually the system will be become so large, so unwieldy (after many decades, so nothing to worry for us), it will eventually collapse on itself causing great destruction to all - the capitalist, the labour force and the common man. Then real change will happen.

  • Comment Link Mruthyanjaya Rao Mangipudi Thursday, 01 October 2015 posted by Mruthyanjaya Rao Mangipudi

    India is a vast and diversified country with all religions, castes, religions, practices, customs, traditions. Therefore, it represents unity in diversity. All the laws are not enacted on their own. After many struggles by the people, workers, unions they formed initially into agreements and then enactments as Laws. Laws are there only to control the practices. We cannot assume a country without a constitution of its own. Similarly, we cannot run the systems without any legal controls. As you rightly said, there is need to simplify the connectivity and understanding of various legislations so as to implement them effectively for the benefit of all.

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