CHANGES TO THE UNION OR THE EMPLOYER: UNION MERGERS

INTRODUCTION AND HISTORICAL PERSPECTIVES:

The very first question arises is that, what are Trade Unions and Why are the necessary? The Trade
Union Act, 1926 is the important law related to Trade Unions in India. According to section 2 (h)
of Trade Union Act, “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.” Is
called a Trade Union. Industrial revolution during the 19th century brought massive changes in
England and other western countries as well as in the countries under the colonial rule. There were
tremendous changes in every process of manufacturing, the method of production, shipping and
many more. There was not a single sector which was not revolutionized due to the Industrial
Revolution. The main effect of the Industrial Revolution was the changes it brought in the social
life of the people. Due to the scientific developments and technical advancements in the Industrial
sector, there was a tremendous growth in every society, that propelled the emergence of two
classes in the society, the working class (wage earning class) and the Managerial Class
(entrepreneur class).

UNION MERGERS:

Before we talk about union mergers, we must understand what is the meaning of term “merge” in
legal aspect as well as business aspect. A merger is a combination of two companies where one
corporation is completely absorbed by another corporation. The less important company loses its
identity and becomes part of the more important corporation, which retains its identity. It may
involve absorption or consolidation.

Merger is also defined as amalgamation. Merger is the fusion of two or more existing companies.
All assets, liabilities and the stock of one company is transferred to Transferee Company in
consideration of payment in the form of:
(i) Equity shares in the transferee company,
(ii) Debentures in the transferee company,
(iii) Cash, or
(iv) A mix of the above mode
MERGERS AND TRADE UNIONS:

Mergers contribute to the companies operating more efficiently, and also save on payroll expenses.
According to Professor Lars Sørgard at the Department of Economics at the Norwegian School of
Economics (NHH), the reason is that the mergers put the trade unions in the different countries
under pressure.
Played off against each other:
However, the problem is that most of the trade unions are organised nationally, which the company
takes advantage of when it merges with a foreign company. The trade unions in the different
countries risk being played off against each other under threat that jobs will be transferred if they
demand too much," Sørgard explains.

Mergers with foreign companies are therefore a big dilemma for the trade unions. If they make too
tough demands in wage negotiations, they know that this could result in jobs being lost to the
foreign branch of the company.

The research was done in some companies of the USA by Sørgard and the results he obtained, as
he concluded in his research paper, but he also told that same will be applied to all the Trade
Unions across the globe.

Unable to Cooperate:

The results show that it is the employees in the strongest unions who suffer larger losses from
international mergers. One possible solution to the problem for the unions would be more
international cooperation, but he does not think that will happen. "They have been trying for a long
time, but when it comes down to it, the unions are concerned about their members in their own
country. It is difficult to proceed beyond general declarations about cooperation."

INDIA: EMPLOYEE RIGHTS IN MERGERS AND ACQUISITIONS.

Workforce in India can be categorised into 2 broad categories of 'workman' and 'non-workman'.
There are specific labour statutes which have to be mandatorily complied with in respect of a
'workman'.
Section 2 (s) of the Industrial Disputes Act, 1947 defines 'workman' as any person who does any
manual, unskilled, skilled, technical, operational, clerical or supervisory work for hire or reward
and for the purposes of any proceedings in relation to an industrial dispute, includes any such
person who has been dismissed, discharged or retrenched in connection with, or as a consequence
of, that dispute, or whose dismissal, discharge or retrenchment has led to that dispute. The section
also makes certain exceptions. For example, an employee in a managerial or administrative
capacity or a supervisor drawing wages in excess of Rs. 10,000/- is exempt from the definition of
workman.
Consent of Employee:
As per Section 25FF of the Industrial Disputes Act, where the ownership or management of an
undertaking is transferred, whether by agreement or by operation of law, from the employer in
relation to that undertaking to a new employer, every workman who has been in continuous service
for not less than one year in that undertaking immediately before such transfer shall be entitled to
notice and compensation in accordance with the provisions of section 25F, as if the workman had
been retrenched. There is a provision to this section which states that a workman will not be entitled
to any notice or compensation if the following conditions are fulfilled:

 The service of the workman has not been interrupted by such transfer.
 The terms and conditions of service applicable to the workman after such transfer are not
in any way less favourable to the workman than those applicable to him immediately
before the transfer.
 The new employer is under the terms of such transfer or otherwise, legally liable to pay to
the workman, in the event of his retrenchment, compensation on the basis that his service
has been continuous and has not been interrupted by the transfer.

Notice of Change:

As per Section 9A of the Industrial Disputes Act, if there is any change in the working conditions
of workman as prescribed in Schedule IV of the Industrial Disputes Act, the workman needs to be
given notice at least 21 days in advance of such change.

Continuity of Service:

Another important aspect with regard to employees in case of a merger or acquisition if the
employees are being transferred is that, they need to be given continuity of service. Their seniority
should be taken into account by the new employer and the conditions of service shall not in any
way be less favorable than those immediately prior to the transfer. This has to be mentioned clearly
in the new employment agreement/ appointment letter entered into with the new entity.

MAJOR UNION MERGERS, ALLIANCES AND DISAFFILATIONS, 1995-2007 (USA):

U.S. labor unions have made moves toward maintaining their membership base through mergers
that are still occurring, although at a slower pace than in past decades. Over the period from 1995
to 2007, union membership in the United States declined by about 4.2 percent, from approximately
16.4 million members to 15.7 million members. During the same period, the level of employment
rose by about 17 percent--from 117 million in 1995 to 138 million in 2007. As a result, the
percentage of U.S. workers represented by unions has declined, as well as the absolute number of
union workers. These declines in membership have prompted union organizations to consider
union mergers as a strategy for improving their bargaining power.

Mergers:

From 1995 to 2007, there were 31 union mergers in the United States. Twenty-two of these mergers
were among AFL-CIO affiliates, occurred between the AFL-CIO (The American Federation of
Labor and Congress of Industrial Organizations) and independent unions, and 3 mergers were
among two or more independent unions. In terms of membership, the largest merger occurred in
2005, when the Paper, Allied-Industrial, Chemical and Energy Workers International Union
(PACE) merged with the United Steelworkers of America (USWA). The merger increased the size
of the USWA to 860,000 members, making it the largest industrial union in the United States. In
2004, another merger of two major unions took place, uniting the Union of Needle trades,
Industrial and Textile Employees (UNITE) and the Hotel Employees and Restaurant Employees
International Union (HERE), forming UNITE HERE, which has a combined membership of
440,000 workers.

Disaffiliations And Strategic Alliances:

During the 1995-2007 period, there were nine major union disaffiliations (splits) from the AFL-
CIO. The first major union disaffiliation occurred in 2001, when the United Brotherhood of
Carpenters (UBC) severed its relationship with the AFL-CIO. Then, in 2003, the International
Union of Journeymen, Horseshoes, and Allied Trades disaffiliated with the AFL-CIO. In 2005, six
of the largest unions joined with the United Brotherhood of Carpenters (UBC) in disaffiliating
with the AFL-CIO and created a strategic alliance called the Change to Win Federation. The six
disaffiliated unions were the United Food and Commercial Workers Union (UFCW), the
International Brotherhood of Teamsters (IBT), the Laborers International Union (LIUNA), UNITE
HERE, the United Farm Workers (UFW), and the Service Employees International Union (SEIU).
TheChange to Win Federation states that it is conducting campaigns to increase union membership
in each of the affiliated unions core industries in order to rebuild worker power and unite millions
in the growth industries of the 21st century.

In 2006, the International Union of Operating Engineers (IUOE) disaffiliated from the AFL-CIO's
Building and Construction Trades Department (BCTD) and joined with the following unions to
form a strategic alliance called the National Construction Alliance (NCA): the Laborers
International Union of North America (LIUNA), the United Brotherhood of Carpenters (UBC),
International Association of Bridge, Structural, Ornamental, and Reinforcing Iron Workers
(BSOIW), and the International Union of Bricklayers and Allied Craftworkers (BAC). The NCA
represents more than 1.8 million union workers.

Another notable alliance that formed during the 1995-2007 period is the Merchant Officers Labor
Alliance (MOLA), an agreement reached in 2007 between the International Organization of
Masters, Mates, and Pilots and the Marine Engineers Beneficial Association (MEBA). Similarly,
in 2005, the Communication Workers of America (CWA) and the International Brotherhood of
Teamsters (IBT) formed a joint alliance of passenger service workers at U.S. Airways.

MERGERS AND ACQUISITION FAILURES IN INDIA:

The following deals were foiled by unforeseen circumstances or mere non-diligence.

1. HDFC and Max Life

2. IDFC-Shriram Finance
3. RCOM-Aircel merger
4. Flipkart-Snapdeal Merger
 5. Apollo and Cooper Tire & Rubber Co.
6. RCOM and Aircel Merger.
7. TATA Steel-Corus
8. Bharti Airtel- Zain
9. Sun Pharma – Taro.

CONFLICTS OF TRADE UNIONS AND EMPLOYERS:

1. Hindustan Lever Ltd. vs Hindustan Lever Employees' Union ... on 3 December, 1998:
The Industrial Court has recorded a finding that the employer had effected a change in the
conditions of service applicable to the workmen and though the conditions of service
related to items 1, 10 and 11 of the Fourth Schedule to the Industrial Disputes Act, 1947,
no notice of change as required by Section 9-A of the I.D. Act was given. The Industrial
Court came to the conclusion that after the lock-out was lifted on June 22, 1989, certain
departments were closed down which had rendered several workmen surplus; nearly 1000
workmen had voluntarily retired as a result of their being rendered surplus; 500 workmen
were rendered idle and some skilled workmen were required to do un-skilled job as a result
of their redeployment after the lock-out was lifted. It was further held that the petitioner
had set up new units at Khamgaon where 300 new workmen were employed, at Yeotmal
with 130 new workmen, at Sumarpur with 160 new workmen and at Orai where 250 new
workmen were employed. The conditions of service of the newly employed workmen were
much lower than of those who are surplus and idle at Mumbai at the petitioner's Seweree
factory where there was a lock-out.
2. Post the merger with SBI, discontent brewing among associate bank staff:

State Bank of India’s mega merger with its associate banks, announced on April 1,2017
has been anything but smooth for some of the latter’s employees.

Officers and clerks working for the erstwhile associate banks feel they have been given a
raw deal with several instances of arbitrary transfers and many officers losing out on their
seniority post the transfer. “We are being treated as second-class citizens at SBI. The
management has not been hearing the issues being raised by us. We are hopeful of a
solution with the management without having to go to the courts,” said KS Krishna, former
 General Secretary, State Bank of Travancore Employees Union. The Associate Bank
Officer’s Association (ABOA), Hyderabad unit, had moved the court in April,2017
highlighting issues related to PF, allowances, increments, and rate of interest benefit (staff
loans) not being extended to associate bank employees. The association also flagged lack
of clarity on service conditions such as seniority of officers’ post-merger. A senior official
of the association said the employees are facing increased working hours as the servers at
SBI are unable to handle the traffic, and they (the staff) are still adjusting to the new
working conditions. The Hyderabad High Court, in its interim order dated April 10, 2017,
had directed State Bank of India not to finalise options available to the employees till June
15.

3. Merge Jet Airways with Air-India: (Subramanian Swamy):

BJP leader Subramanian Swamy has written to civil aviation minister Suresh Prabhu asking
him to recommend the cabinet to merge Jet Airways (India) Ltd, which has currently
grounded its operations due to lack of funds, with Air India, a step which according to the
politician will help the national carrier regain its "premiere position". “The ministry of civil
aviation should strongly recommend to the Cabinet that Jet Airways should be merged with
Air India not only to ensure that air services are not restricted but also to enable Air India to
recover its former premier position," Swamy said in the letter, adding that any other
solution to Jet Airways will likely raise speculations about corruption at high places and
may invite litigation.
REFRENCES:

http://www.mca.gov.in/MinistryV2/mergers+and+acquisitions.html

http://www.mondaq.com/india/x/727352/employee+rights+labour+relations/Employee+Rights+In+Mer
gers+And+Acquisitions

https://indiancaselaws.wordpress.com/2014/08/19/employee-transfers-in-mergers-and-
acquisitions/amp/

https://indiankanoon.org/doc/652653/

https://blog.ipleaders.in/what-every-indian-needs-to-know-about-trade-union-related-laws-in-
india/amp/

http://sciencenordic.com/mergers-mean-less-power-trade-unions

http://www.oxfordscholarship.com/mobile/view/10.1093/acprof:oso/9780199544943.001.0001/acprof
-9780199544943-chapter-9

https://www.thehindubusinessline.com/money-and-banking/post-the-merger-with-sbi-discontent-
brewing-among-associate-bank-staff/article9852086.ece/amp/

http://www.legalserviceindia.com/article/l463-Laws-Regulating-Mergers-&-Acquisition-In-India.html

https://blog.ipleaders.in/examples-of-failed-mergers-and-acquisitions-in-india/amp/

https://www.bls.gov/opub/mlr/cwc/major-union-mergers-alliances-and-disaffiliations-1995-2007.pdf