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Draft Trade Union Rules

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Industrial Relations (Central) Recognition of Negotiating Union or Negotiating Council and Adjudication of Disputes of Trade Unions Rules, 2021

Industrial Relations Code, 2020 (“IR Code”) which is yet to come into effect, is a proposed statute to consolidate and amend the laws relating to trade unions, conditions of employment in industrial establishments, investigation and settlement of industrial disputes and for matters connected therewith or incidental thereto.

Under the IR Code, “Trade Union” means any combination, whether temporary or permanent, formed primarily for the purpose of regulating the relations between workers and employers or between workers and workers, 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.1

On May 04, 2021, the Ministry of Labour & Employment (“MLE”) published draft rules of IR Code viz. Industrial Relations (Central) Recognition of Negotiating Union or Negotiating Council and Adjudication of Disputes of Trade Unions Rules, 2021 (“TU Rules”) for public suggestions and objections by way of notification in the Gazette of India. TU Rules originate out of Section 14 (dealing with Recognition of negotiating union or negotiating council) and Section 22 (dealing with of disputes of Trade Unions) of the IR Code.

TU Rules cover five aspects: (i) criteria for recognition of a union, (ii) method for determining the negotiating agent/council and its procedures, (iii) scope of collective bargaining, (iv) facilities to be provided to the negotiating agent/council, and (v) the trade union disputes.

Some of the key aspects of the TU Rules are provided hereinbelow:

(1) RECOGNITION OF NEGOTIATING UNION OR NEGOTIATING COUNCIL (SECTION 14):

1.1 Where there is only one registered trade union having members not less than thirty percent (30%) of the total workers employed in an industrial establishment, the employer shall recognize such trade union as the sole negotiating union of workers [Rule 4].

1.2 Where there are more than one registered trade unions, the trade union having fifty-one percent (51%) or more workers on the muster roll of the industrial establishment supporting that trade 1 Section 2(zl) of Industrial Relations Code, 2020

union, and verified by verification officer, shall be recognized by the employer as the sole negotiating union of workers [Section 14(3)].

1.3 Where there are more than one registered trade unions and no trade union has fifty-one percent (51%) or more workers on the muster roll of the industrial establishment supporting that trade union, then an employer shall constitute a negotiating council. The negotiating council shall consist of representatives from trade unions having support of not less than twenty percent (20%) of total workers on the muster roll of the industrial establishments, after being verified by the verification officer. For the remainder, there shall be a representative after calculating membership on each twenty percent (20%) [Section 14(4)].

1.4 Application for recognition by trade union to the employer shall be accompanied with a copy of registration certificate, list of members, details of the membership subscription and latest annual return submitted to the Registrar of Trade Union, along with and any other relevant document the trade union relies upon [Rule 5].

1.5 A negotiating union or negotiating council shall be valid for minimum three (3) years and maximum five (5) years, to be mutually decided between an employer and the union [Rule 8].

(2) MATTERS OF WORKERS TO BE NEGOTIATED WITH EMPLOYER [RULE 3]:

2.1 Classification of grades and categories of workers.

2.2 Order passed by an employer under standing orders.

2.3 Wages of workers, their wage period, dearness allowance, bonus, increment, customary concession or privileges, compensatory and other allowances.

2.4 Hours of work of workers, number of working days in a week, working of shifts, rest days, and rest intervals.

2.5 Leave with wages and holidays.

2.6 Promotion, transfer policy and disciplinary procedures.

2.7 Residential quarter allotment policy for workers.

2.8 Standards relating to safety, health and working conditions.

2.9 Such other matters pertaining to conditions of service and/or terms of employment which are not covered in the foregoing clauses.

2.10 Any other matter which is agreed between an employer and negotiating union or negotiating council.

(3) FACILITIES TO BE PROVIDED BY EMPLOYER TO NEGOTIATING UNION / COUNCIL [Rule 9]:

3.1 Notice board for displaying information related to activities of negotiating union or council.

3.2 Venue and necessary facilities for holding discussions by negotiating union or council as per agreed schedule and agenda with employer.

3.3 Venue and necessary facilities for holding discussions amongst members of negotiating union or council.

3.4 Facility for entrance of office bearers of negotiating union or council in the premises of the employer for the purposes of ascertaining matters which are relating to working conditions of the workers.

3.5 Deduction of subscription of the members of the trade unions by employer by written consent of worker.

3.6 To treat the office bearers of negotiating union or council on duty when such representatives are holding meetings or discussions with the employer as per schedule agreed between employer and union.

3.7 Suitable office accommodation with necessary facilities to the negotiating union or council, if there are more than three hundred (300) workers in an industrial establishment.

(4) MECHANISM FOR VERIFICATION OF MEMBERSHIP OF TRADE UNION [Rule 5]:

4.1 Employer shall be required to appoint a verification officer who shall be an independent person having no interest with the trade union whose membership verification is to be initiated.

4.2 Employer shall bear all expenses and make arrangements for verification of membership of a trade union.

4.3 Verification officer can appoint additional verification officers.

4.4 Verification officer shall scrutinize all records and documents submitted by a trade union.

4.5 Verification officer shall hold meeting with the employer and participating trade unions to decide process of verification of the membership of trade unions through secret ballot, at least sixty (60) days prior to voting.

4.6 Verification offer shall decide modalities of secret ballot such as publication of voters list, date, time, mode of voting, place of voting, date, time and place of counting, and other modalities.

4.7 Verification offer shall prepare minutes of meeting to be signed by representatives of employer and union, and allot symbols to trade union. If no decision is mutually arrived in the meeting, the decision of verification officer shall be final, and he shall publish the schedule, programme and procedure of such secret ballot.

RELEVANT TO KNOW

4.8 All workers whose names are borne on the muster roll of the industrial establishment on the date of reckoning shall be eligible to cast their vote.

4.9 Voter list shall be prepared by an employer and displayed on notice board and website, if any, after obtaining approval of verification officer, with a copy to the participating trade unions.

4.10 Verification officer shall display names of participating trade unions with symbols allotted to them on notice board and website, if any, within two days of finalization of voter list.

4.11 Voting and counting of votes will be held on the date, time and place fixed by the verification officer under his supervision. During the counting, the agents of all participating trade unions shall be allowed to be remain present.

4.12 After final counting of votes, the result shall be declared by the verification officer. The result sheet shall contain names of all participating trade unions in election, total number of votes polled, number of votes cast in favour of each of the trade union.

4.13 An employer may adopt electronic process of conducting the election over electronic platform with mutual agreement entered with participating trade unions.

(5) ADJUDICATION OF DISPUTES OF TRADE UNION BEFORE THE TRIBUNAL [Rule 10]:

For any dispute that arises between (i) trade unions, (ii) member workers of a trade union regarding the registration, administration or management or election of office bearers of a trade union, (iii) workers who are refused admission as members and trade union; (iv) office bearer of trade union and a trade union being federation of trade unions; an aggrieved person can file an application in prescribed ‘Form A’ before the Tribunal within one (1) year from the date on which such dispute arises.

Anhad Law’s Perspective

The prevailing Trade Unions Act, 1926 deals only with the registration of the trade union and not the recognition of a trade union. Recognition of a trade union would mean the process through which an employer recognizes a particular trade union as having representative character of majority of its workers as members of the union. Hence, the employer ventures to engage in discussions with recognized union keeping in view the interests of the workers to ensure smooth collective bargaining and stability of industrial relations.

The IR Code and draft TU Rules for the very first time introduce the concept of recognition of a trade union by an employer as negotiating union of workers for collective bargaining on matters pertaining to their conditions of service and/or terms of employment, without the intervention of Registrar of Trade Union and/or the Labour Authorities. Presently, the States of Kerala, Maharashtra, Orissa, Rajasthan, Andhra Pradesh, Madhya Pradesh and West Bengal have State level legislations that provide for recognition of a trade union by Registrar of Trade Union of the concerned State. The state of Bihar has specific non-statutory provisions setting forth rules and principles for the recognition of trade unions.

Under Section 30(2) of the IR Code, for an establishment, wherein three hundred (300) or more than three hundred (300) workers, are employed, or were employed on any day of the preceding twelve (12) months, now an employer would be required to consult the trade unions or recognized negotiating union or members of the negotiating council in respect of the draft of the standing order before forwarding the same electronically or otherwise for certification. However, under the prevailing Industrial Employment (Standing Orders) Act, 1946, trade unions are asked for objections by the certifying officer not before submission but only after submission of the draft standing orders by an employer.

The IR Code and TU Rules permit the negotiating union or negotiating council to negotiate only the matters pertaining to workers specified under Rule 3, which is a welcome step. The recognition of a negotiating union as the primary bargaining agent of workers in an industrial establishment shall curtail multiple unions in an establishment, reduce likelihood of strikes by different trade unions for separate causes, and TU Rules shall serve as a backbone for collective bargaining by majority of workers in an establishment for common cause, thereby ensuring industrial peace and harmony between workers and employers. It is a common practice in India that multiple unions in an industrial establishment raise separate charter of demands to the employer for benefits of members of their respective unions. The formation of one negotiating union or council shall ensure that one charter of demand is submitted to the employer, which shall significantly reduce employer’s time, money and costs on negotiations and settlements with multiple trade unions.

Section 57(3) of the IR Code provides that a settlement arrived in the course of conciliation proceedings shall be binding on all parties, workers employed in the industrial establishment to whom the dispute relates and all persons who subsequently become employed in that establishment or part. Besides the employer, the said settlement is also binding on the heirs, successors or assigns of the employer. While the above Section of IR Code is not a new provision, it comes as a reminder and advisory for the employers to arrive at a settlement, on the charter of demands, before the Conciliation Officer to ensure that it remains binding and enforceable against all present and future parties/workers, for the period agreed.

The introduction of a negotiating union is a welcome step in the initiative taken by the Government of India to modernize labour legislations in India. Nonetheless, the TU Rules do lack clarity on certain crucial elements and it can be contended that there are still some shortcomings with the TU Rules, such as:

RELEVANT TO KNOW

(a) TU Rules do not contain provisions regarding obligations, rights, responsibilities and liabilities of the recognized unions, which are otherwise defined in some State level legislations such as Maharashtra, Kerala and West Bengal;

(b) Rule 9 of the TU Rules states that an employer shall provide venue and necessary facilities to negotiating union or council for holding discussions amongst themselves i.e., between the members, and for holding discussions between the union and employer as per agreed schedule and agenda, however, it does not specify whether such venue and facilities are to be provided by an employer within the premises of the industrial establishment or outside. Furthermore, if an employer provides a venue within the establishment, there is no clarity as to how the same will affect the wages and benefits of the members of negotiating union or council for that day in case the meeting is held during and is finished beyond official working hours;

(c) Rule 4 of the TU Rules requires an employer to recognize a trade union having “not less than thirty (30) percent” of the total workers in an industrial establishment as the sole negotiating union, the said threshold, in fact, can be considered too low for recognition and may be considered to be inconsistent with the fifty-one (51) percent criteria specified in section 14(3) of IR Code for the sole negotiating union in case of multiple trade unions. Significantly, under the Maharashtra Recognition of Trade Unions and Prevention of Unfair Labour Practices Act, 1971 (MRTU&PULPA), the threshold of thirty (30) percent is the eligibility for applying for recognition, and not the threshold for actual recognition;

(d) As per Rule 5 of the TU Rules, employer of an industrial establishment shall appoint a verification officer for verification of membership of the Trade Unions who shall be an independent officer and shall not have any interest with any of the Trade Union, whose membership verification is to be carried out. However, there is no clarification given in the TU Rules as to how the independence and conflict of interest of the verification officer will be ensured. As the verification officer shall be appointed by an employer, the same is likely to be an employee or a person associated with the establishment, whose independence may be alleged to be compromised and thus prone to challenge by trade unions; and

(e) As per TU Rules, all workers on the muster roll of an industrial establishment on the date of reckoning are made eligible to vote. However, it is not clear as to whether the flexi-workers like casual and temporary workers, and trainees would be included under this category. As per Rule

RELEVANT TO KNOW

5(3)(a)(ii) of the TU Rules, membership of the union must be confined to the particular industrial establishment only. It is, however, not clear as to whether the recognition would be limited by establishment, or industry, or regions. Further, it is not clear whether it pre-empts multiemployer bargaining.

It is clear from a reading of draft TU Rules that they will provide a framework for trade unions and employers, however, it is possible that union activism may grow and possibly prove to be more detrimental to industrial growth of the country as has happened in many parts of the country. It would have been more beneficial if the government could consider laying certain thresholds beyond which unions cannot go in their demands, to allow a balanced approach while providing a right of redressal to employees against their employers. Also it would have a been a praiseworthy step, if government could lay down fundamentals, basis past experiences of industries, with regard to several types of strikes and unreasonable demands leading to unrest and/or adverse impact on the business of an employer and in turn economic stability and prosperity of the country.

The relevant link to the draft TU Rules as published by the Ministry of Labour & Employment is provided hereinbelow for reference purposes:

https://labour.gov.in/whatsnew/drart-ir-central-recognisition-negotiating-union-or-negotiating-council-adjudication

Manishi Pathak, Founding Partner and Ranjan Jha, Partner.
Pankaj Anil Arora, Senior Associate also contributed to this publication.

Disclaimer: The contents of the above publication are based on easier understanding of relevant contents of a government notification/ guidelines/ publication and a reader should refer to such a notification/guidelines/ publication for further or specific details/ information, which will override the contents hereof. These are personal views of authors and do not constitute a legal opinion, analysis or interpretation. This is an initiative to share developments in the world of law or as may be relevant for a reader. No reader should act on the basis of any statement above without seeking professional legal advice.

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