CASE STUDY: BAJAJ WORKERS’ STRIKE

Submitted by: Submitted to:

Riyan Vatcha Dr. Vedantam Leela

1172 Faculty of

Semester II- B.B.A. LL.B. Human Resource Management

NATIONAL LAW UNIVERSITY, JODHPUR

TOPIC: Bajaj Workers’ Strike
HR AREA: Workforce Management- Labour Management Accommodation: Union
Representation and Collective Bargaining
PERIOD OF TIME: 25th June 2013- August 2013
RESEARCH OBJECTIVES:
1. What is strike?
2. Is the strike undertaken by the Bajaj workers legal?
3. What is the due process to be followed in carrying out the strike?
RESEARCH QUESTIONS:
HR Questions:
1. Do the workers have a right to go on strike?
2. Whether the workers are entitled to receive wages for the strike period?
3. Whether retrospective action should be taken against the workers who went on strike?
Legal Questions:
1. What is the legality of the strike undertaken by the workers?
2. Do the workers have a right to receive shares under Employee Stock Option Plan?
3. What is the due process for the reconciliation and settlement of dispute?
FACTS OF THE CASE:
The workers of the Bajaj plant in Chakan went on strike.The demands of the workers were three-
pronged, i.e.-
a) for a wage increase,
b) for the allotment of shares at a discounted rate, and;
c) for the reinstatement of 22 workers suspended by the management on disciplinary
grounds. 
However, the management were not interested in any of these demands. While originally,
they did listen and have some dialogue with the workers, in the end, they ended up playing
hardball, and gave a deadline by which they would shift half their operations to their other
factories.
After this threat, the strike was withdrawn one day before the eventual deadline.

CASE ANALYSIS:
What is a strike? Section 2 (q) of the Industrial Disputes Act defines a "strike" as cessation of
work by a body of persons employed in any industry acting in combination, or a concerted
refusal, or a refusal, under a common understanding of any number of persons who are or have
been so employed to continue to work or to accept employment.
Further, in the case of Bank of India v T. S. Kelawala1, the Supreme Court observed that whether
the strike was a legal one or an illegal one, the workers were liable to lose their wages during that
period of time.
When 950 workers at the Chakan (Pune) plant of Bajaj Auto struck work on 25 June, among
their demands for improved wages and work conditions was one that generated much
controversy – the union asked for equity shares, or what is called employee stock ownership plan
(ESOP), at Re 1 a share. While a number of information technology (IT) companies and a few in
other fields are no strangers to ESOPs in India, this was the first time that workers from the
assembly and production floor made the demand. The demand for ESOP was dismissed in no
uncertain terms. “No one, not even the chairman, has got free shares in the last 50 years, and we
are not about to start now,” Rajiv Bajaj, managing director (MD) of Bajaj Auto, told the media.
He added for good measure that if the workers’ demand is like that of a wayward child, the
company, as a parent, had to be “fair but firm”. In another media interview, he said, “This is a
public limited company, not a kirana (grocery) shop that I can handle (company) shares like
that”2. Bajaj also made it clear that his company did not believe in “buying the loyalty of people
by throwing them shares”. ESOPs are okay for the IT industry or where capital is an issue, and
even the automobile companies that issue shares do so only to the top management in their
research and development (R&D) division and not to workers, he said. Bajaj’s almost indignant
response to the demand and the union’s justification for making it shows the chasm between how
managements view workers’ role and how the latter see it.

Share in Profit
The Vishwa Kalyan Kamgar Sanghatana (VKKS), the local union that led the strike at the plant
that makes the auto giant’s popular Pulsar motorcycle and has a capacity of 3,000 units a day,

1
(1990) 4 SCC 744
2
Gupta, S D and Swaraj Baggonkar (2013): “This Is Not a Kirana Shop that I Can Handle Shares Like that: Rajiv
Bajaj”, Business Standard, 28 June, viewed on 9 March 2015, http://www. Business-
standard.com/article/companies/thisis-not-a-kirana-shop-that-i-can-handle-shareslike-that-rajiv-bajaj-
113062700840_1.html
clarified that it was not on strike, but had “stopped work”. Dilip Pawar, president of the union,
explained the reason behind the unique demand for cheap equity shares. “We are the ones
producing the wealth, why should we not have a share in it? Since the management is not paying
us fair wages and is refusing to review the wage agreement, we thought shares via the share
dividends of the company are a fair exchange,” he said in a personal interview. He clarified that
the union was demanding individual, not group shares. The latter would have given the workers
a stake in the management and it would not be easy to sell them off, as in the case of individual
shares.

Fair Compensation
Bajaj Auto has been offering gradually higher dividends to its shareholders over the years. A
dividend of Rs 45 per share was announced for 2013 compared to Rs 22 per share in 2009. The
company is considered the “world’s most profitable” two-wheeler manufacturer3. The VKKS, in
a document circulated via email, alleged that the compensation paid to workers has not kept up
with the company’s profits, which have been rising over the past decade or so. It claims that for
every Pulsar motorcycle produced, the workers as a whole get only Rs 300, while management
staff and shareholders get Rs 16,700 and the government and dealers Rs 10,000 each. Further, in
Pune, inflation as measured by the consumer price index for industrial workers grew by 11.7% in
2010 over 2009, and by 10.5% in 2011 over 20104. It was even higher in other towns and cities
of Maharashtra. The workers’ demand for shares in the company, they said, was mainly to ensure
proper compensation for work, which has been inadequate in the wage agreements negotiated
from time to time. The last wage agreement was for a period of nine years (ending 2019), with a
revision every three years. The workers nullified this agreement and asked for shares in the
company. This demand was uncommon, but not as outrageous as some sections of the business
newspapers made it out to be.

Other Experiences

3
Philip, Lijee (2012): “Hero Powers on Minus Honda, Beats TVS; Bajaj Auto Takes the Race to Global Tracks”,
The Economic Times, 25 March, viewed on 9 March 2015, http://articles.economictimes. indiatimes.com/2012-03-
25/news/31234304_1_ pawan-munjal-splendor-hero-and-honda
4
Labour Bureau (2012): Consumer Price Index Numbers For Industrial Workers Annual Report 2011 (Shimla:
Labour Bureau).
In the early 1990s, the Bharat Electronics Limited Union in Bangalore sought shares for workers.
In the context of this, Bhowmik5 raised some pertinent questions on worker-shareholders and
how it could potentially alter worker-management and worker-union relationships. It was the
fear of a changed worker-union relationship that has made some unions apprehensive of such
schemes. Also, they see the sale of shares to workers as a way of privatising public sector
companies through the back door. Bhowmik has also looked at the worker-shareholders
experience in other countries. ESOPs have been “successful” in the US in terms of the number of
companies that have implemented such plans, and the number of workers who have become
shareholders in the companies they work for. In India, however, the question of worker-
shareholders was most debated with respect to public-sector companies which through the 1990s
(it continues even today) offered shares to their employees at discounted prices. In the US,
ESOPs have been largely successful in small and medium enterprises, which, according to
Bhowmik, provide the bulk of employment to American workers. A more recent article in the
Nation6 says that about 11,000 companies employing nearly 12 million workers and operating in
all sectors of the economy have worker-shareholders. The number of employees in each of these
companies range from 50 to 1,50,000. The US experience has been made possible by the laws in
place. Companies are offered tax incentives for enrolling in the ESOPs scheme, and workers are
allowed to form trusts and borrow capital to purchase shares collectively. These two critical
provisions make ESOPs lucrative for companies and possible for workers. However, Bhowmik
argues that this had little bearing on the decision-making in companies with ESOPs, as there was
a clear distinction between ownership and control, and this has been a bone of contention
between workers and companies. For example, the United Auto Workers (UAW), one of the
largest unions in the US, owns substantial portions of major corporations and is itself valued in
billions of dollars. It has been many a times accused of acting against the interests of workers.
The UAW owns a large number of shares in Ford, Chrysler and General Motors, among others.
It is a big player and has been accused of allowing anti-worker policies in these companies
because it has a direct interest in their profits7. The UAW has supported the policies of the
5
Bhowmik, K Sharit (1994): “Workers as Shareholders: Case for Closer Examination”, Economic & Political
Weekly, 29(40).
6
Mackin, Christopher (2011): “Employee Ownership: The Road to Shared Prosperity”, The Nation, 8 June, viewed
on 9 March 2015, http://www. thenation.com/article/161255/employee-ownership-road-shared-
prosperity#axzz2bjVkUL00
7
White, Jerry (2010): “UAW Membership Continues to Plummet”, World Socialist We Site, 1 April, viewed on 9
March 2015, http://www.wsws. org/en/articles/2010/04/uawm-a01.html
Barack Obama administration to restructure the auto industry, for which it has been severely
criticised8. Further, ESOPs in the US have not led to any sea change in the hierarchy within
factories. The various methods used to exclude workers from decision making have ensured that
they continue to have limited information about or limited say in managerial decisions9.
Canada’s experience has been different. Workers, with the support of the government and
unions, have established cooperatives. Ownership via cooperatives has been more meaningful,
according to Bhowmik. Further, the cooperatives have continued to enjoy the support of unions.
This has exposed workers to management techniques and built up their awareness, both of which
are important if they are to eventually organise production. In India, ESOPs, in general, have
been mainly offered to middle and higher management employees at a discounted price or as
bonuses. This is a common practice in the IT sector, which sees giving shares to employees as a
way of retaining talent. Companies like Infosys have been able to do this with some success10.
But most shareholder-employees have no real say in the management of the companies. ESOPs
do not mean collective bargaining. They are still largely viewed as plans for individual
shareholding. But the only way employees, with or without ESOPs, can have a meaningful say in
matters of management and company policy is when they unite, or collectivise.

Maintaining Workers’ Morale

While the VKKS’ unexpected demand for ESOP became a talking point, the “unconditional
withdrawal” of the 50-day agitation on 13 August raises a number of questions. Apart from the
Shramik Ekta Mahasangh (SEM), representing 88 unions in the Pune industrial belt, the National
Trade Union Initiative (NTUI) and some other unions had supported the strike. Many had hoped
that with the Maruti Suzuki workers in Manesar carrying on a tenacious struggle, this agitation
would also pave the way for a vigorous debate on labour reform. The VKKS pointed out that the
speed of assembly lines has gone up a good deal in the last six years – from 42 seconds per
motorbike to 28 seconds, resulting in 1,028 two-wheelers being produced daily. Pawar said that

8
White, Jerry (2013): “UAW Sanctions Elimination of the Eight-hour Day at Chrysler”, 2 March, viewed on 9
March 2015, http://www.wsws.org/en/ articles/2013/03/02/auto-m02.html; J Jones, Shannon (2013): “UAW and Fiat
Battle Over Union’s Multi-billion Dollar Stake in Chrysler”, World Socialist Web Site, 23 May, viewed on 9 March
2015, http://www.wsws.org/en/articles/2013/05/23/veba-m23.html
9
Russell, John D, Mark Dirsmith and Sajay Samuel (2004): “Stained Steel: ESOPs, Meta-Power, and the Ironies of
Corporate Democracy”, Symbolic Interaction, 27(3).
10
Kumar, Nagesh (2001): “Indian Software Industry Development: International and National Perspective”,
Economic & Political Weekly, 36(45): 4278-90.
many of the young workers suffered from kidney stones because of the unrelenting pace and a
fall in the number of “relievers”. From the five to seven relievers needed for every 75 workers
(so that the latter can go to the toilet or to drink water), the number has come down to three.
There is also the issue of contract labourers. The VKKS alleged that the company was using
contract labourers and the “learn and earn” diploma holders to try and break up the agitation.
Pawar said production-line workers never got an opportunity to talk to the top management and
had to deal with the middle level management members who could not be relied upon to give a
fair assessment of the workers’ problems and issues to the higher-ups. The VKKS says that the
Bajaj Auto management was upset with Pawar because workers at its Pantnagar (Uttarakhand)
unit approached him to resolve their issues. When Pawar attempted to organise the workers in a
state not known for workers’ movements, it led to allegations that he was “provoking” them, it
says. Workers of the Pantnagar plant, established in 2007, had approached the VKKS to take up
their demands. In 2012, they went on strike, mainly for the right to form a union and the VKKS
supported the agitation. The VKKS alleges that it was after this episode that relations at the
Chakan plant became strained. According to VKKS, the Bajaj Auto management suspended 22
workers in Chakan after June 2012. It also refused to revise the wage agreement. The agreement
of 2010 stated that in case employees of Bajaj Auto were given a higher increment than that
mentioned in the wage agreement, this higher increment would be applicable to those covered by
the agreement as well. The management violated this clause, according to the VKKS. The VKKS
was only recognised in 2007 after a prolonged struggle. The Bajaj management had responded
by shutting down its Akurdi plant (where the union was first established) and shifting production
to Aurangabad and Uttarakhand in September 2007. Finally, after a court order, the Bharatiya
Kamgar Sena (backed by the Shiv Sena) was derecognised and the VKKS was recognised as the
majority union that would represent workers11. Drawing a parallel with the Maruti Suzuki
workers’ struggle, N Vasudevan of the NTUI observed, “In both places young workers, most
below 35 years, have health issues because they have to work at tremendous speed that makes
them into machines rather than human workers.” Interestingly, when asked about these
allegations, Bajaj said that the company followed the “Kaizen technique of constant

11
Menon, Sudha (2007): “Biggest Bajaj Auto workers union gets court recognition”, LiveMint, 17 October, viewed
on 9 March 2015, http://www. livemint.com/Companies/wHNEgoPH4oOFHB8IHByoUK/Biggest-Bajaj-Auto-
workers-union-gets-court-recognition.html
improvement. There used to be seven relievers, which was r educed to six, five, four, and so on.
At Bajaj Auto, we are constantly improving our standards and reducing wastage”12.

Winners and Losers

For Indian workers and especially for their leaders, the real dilemma is keeping up their morale
at a time when the prices of essentials are skyrocketing, jobs are scarce, and managements are
threatening to shift production to other plants (as Bajaj did) instead of negotiating. Having called
a strike, keeping internal dissent in check and knowing when to call it off calls for skill and
strategy. For now, on the face of it, it seems that the VKKS has got nothing to show for the 50-
day agitation. Media reports also suggested that the workers had gone on strike at the wrong time
when the automobile sector in that region was staring at production cuts and job losses13. While
the SEM did support the VKKS, there was no industry-wide strike or action, and no show of
solidarity from civil society. Even the media coverage was restricted to daily follow-ups with
hardly any discussion of the issues raised. The state government too remained a mute spectator,
with the labour minister having called just one unsuccessful meeting. But as Ajit Abhyankar of
the Centre of Indian Trade Unions (CITU), Pune, says, “That this union was able to keep the
young workers united and carry on the struggle for 50 days is itself a triumph and a victory”. The
practice of offering ESOPs may be here to stay, or at least this can be a reasonable assumption
after a recent ruling by a special bench of the Bangalore income tax appellate tribunal. Following
an application fi led by Biocon, it ruled that discounts under ESOPs are an employee cost and
that it should be eligible for a tax deduction14. This may prove to be an incentive for private
companies to give discounted shares to employees, including shop-floor workers.

HR MANAGER’S DECISION:
 Yes, the workers were entitled by their union to go on strike.
 No, they will not receive any salary for the strike period.
12
Byatnal, Amruta (2013): “Bajaj Protests: Talks Aim at Job Security for Suspended Workers”, The Hindu, 11
August, viewed on 9 March 2015, http://www.thehindu.com/business/Industry/bajaj-protests-talks-aim-at-job-
security-forsuspended-workers/article5011023.ece
13
Gupta, S D and H Joshi (2013): “How Downturn Helped Bajaj Quell Chakan Strike”, Business Standard, 15
August, viewed on 9 March 2015, http://www.business-standard.com/article/companies/how-downturn-helped-
bajaj-quellchakan-strike-113081501009_1.html
14
Kably, Lubna (2013): “Companies Can Get Tax Breaks on Employee Stock Option Plans”, The Times of India, 18
July, viewed on 9 March 2015, http://timesofindia.indiatimes.com/business/india-business/Companies-can-get-tax-
breakson-employee-stock-option-plans/articleshow/21130684.cms?
  No, no retrospective action should be taken by the HR Manager.
LEGAL ISSUES:
 The strike is legal.
 The workers cannot receive Employee Stock Option Plans.
 The method followed for reconciliation was just and correct.
CONCLUSION:
In conclusion, at the end of the strike, nothing changed over the 50 days. The situation was
exactly how it was when we left the factory.
The union had demanded reinstatement of 22 suspended workers, wage revision, and shares of
the company at reduced prices. Although there were several rounds of meetings over the six
weeks between the VKKS and top official of Bajaj, no satisfactory conclusion was reached.
More than 900 workers lost out on 50 days of salary. Considering this at least, Bajaj decided to
solve matters amicably.
Announcing the end of the strike, Managing Director Rajiv Bajaj issued a statement saying, “I
am very pleased that the union has unconditionally called off their strike at Chakan. On behalf of
the management, I assure all the 22 workmen who are suspended pending inquiry that their cases
will be considered objectively and sympathetically in the collective interest of all stakeholders.”
In the end, the threat of Bajaj to pull out of the factory, scared the workers into calling off their
strike.

BIBLIOGRAPHY:
 The Industrial Disputes Act, 1947
 Bank of India v T. S. Kelawala, (1990) 4 SCC 744
 Bhowmik, K Sharit (1994): “Workers as Shareholders: Case for Closer Examination”,
Economic & Political Weekly, 29(40).
 Byatnal, Amruta (2013): “Bajaj Protests: Talks Aim at Job Security for Suspended
Workers”, The Hindu, 11 August, viewed on 9 March 2015,
http://www.thehindu.com/business/Industry/ bajaj-protests-talks-aim-at-job-security-
forsuspended-workers/article5011023.ece
 Gupta, S D and H Joshi (2013): “How Downturn Helped Bajaj Quell Chakan Strike”,
Business Standard, 15 August, viewed on 9 March 2015, http://www.business-
standard.com/article/companies/how-downturn-helped-bajaj-quellchakan-strike-
113081501009_1.html
 Gupta, S D and Swaraj Baggonkar (2013): “This Is Not a Kirana Shop that I Can Handle
Shares Like that: Rajiv Bajaj”, Business Standard, 28 June, viewed on 9 March 2015,
http://www. business-standard.com/article/companies/thisis-not-a-kirana-shop-that-i-can-
handle-shareslike-that-rajiv-bajaj-113062700840_1.html
 Jones, Shannon (2013): “UAW and Fiat Battle Over Union’s Multi-billion Dollar Stake
in Chrysler”, World Socialist Web Site, 23 May, viewed on 9 March 2015,
http://www.wsws.org/en/articles/2013/05/23/veba-m23.html
 Kably, Lubna (2013): “Companies Can Get Tax Breaks on Employee Stock Option
Plans”, The Times of India, 18 July, viewed on 9 March 2015, http://timesofi
ndia.indiatimes.com/business/ india-business/Companies-can-get-tax-breakson-
employee-stock-option-plans/articleshow/ 21130684.cms?
 Kumar, Nagesh (2001): “Indian Software Industry Development: International and
National Perspective”, Economic & Political Weekly, 36(45): 4278-90.
 Labour Bureau (2012): Consumer Price Index Numbers For Industrial Workers Annual
Report 2011 (Shimla: Labour Bureau).
 Mackin, Christopher (2011): “Employee Ownership: The Road to Shared Prosperity”,
The Nation, 8 June, viewed on 9 March 2015, http://www.
thenation.com/article/161255/employee-ownership-road-shared-
prosperity#axzz2bjVkUL00
 Menon, Sudha (2007): “Biggest Bajaj Auto workers union gets court recognition”,
LiveMint, 17 October, viewed on 9 March 2015, http://www.
livemint.com/Companies/wHNEgoPH4oOFHB8IHByoUK/Biggest-Bajaj-Auto-workers-
union-gets-court-recognition.html
 Philip, Lijee (2012): “Hero Powers on Minus Honda, Beats TVS; Bajaj Auto Takes the
Race to Global Tracks”, The Economic Times, 25 March, viewed on 9 March 2015,
http://articles.economictimes. indiatimes.com/2012-03-25/news/31234304_1_ pawan-
munjal-splendor-hero-and-honda
  Russell, John D, Mark Dirsmith and Sajay Samuel (2004): “Stained Steel: ESOPs, Meta-
Power, and the Ironies of Corporate Democracy”, Symbolic Interaction, 27(3). White,
Jerry (2010): “UAW Membership Continues to Plummet”, World Socialist We Site, 1
April, viewed on 9 March 2015, http://www.wsws. org/en/articles/2010/04/uawm-
a01.html
 (2013): “UAW Sanctions Elimination of the Eight-hour Day at Chrysler”, 2 March,
viewed on 9 March 2015, http://www.wsws.org/en/ articles/2013/03/02/auto-m02.html

ANNEXURE I- The Econmic Times, August 14th, 2013

http://articles.economictimes.indiatimes.com/2013-08-14/news/41410048_1_chakan-plant-
vishwa-kalyan-kamgar-sanghatana-bajaj-auto

50-day strike at Bajaj Auto's Chakan plant called off

PTI Aug 14, 2013, 03.56AM IST


(The 50-day strike at Bajaj…)

NEW DELHI: The 50-day strike at Bajaj Auto's Chakan plant has been called off on Tuesday and the
work will resume from Wednesday.

While the company claimed that the workers called off the stir "unconditionally", Vishwa Kalyan Kamgar
Sanghatana (VKKS) - the union of workers at the plant - said it decided to end 'stoppage of work' in view
of the upcoming festive season and will continue to push for its demands.

"I am very pleased that the VKKS...has unconditionally called off their strike at Chakan," Bajaj Auto
Managing Director Rajiv Bajaj said in a statement.
When contacted, VKKS President Dilip Pawar told PTI: "With Diwali and Ganpati festivals coming up, we
decided that it will be in the interest of all to end the stoppage of work. We will resume work from
tomorrow."
The workers at the Chakan plant had gone on strike from June 25. The management had claimed that
they "stopped coming" to work, thereby affecting production, following refusal to allot them shares at
discounted price. On the other hand, the workers have asked for higher wages and reinstatement of
sacked colleagues.
"On behalf of the management, I assure all the 22 workmen who are suspended pending enquiry that
their cases will be considered objectively and sympathetically in the collective interest of all stakeholders,"
Bajaj added.

When asked if the union has withdrawn its demands for higher wage or employee stock options, Pawar
said: "No, we have not dropped the demands, we will discuss those issues with the management going
forward without affecting work immediately." When asked if the workers would go on strike in future if their
demands are not met, he said: "That's an option we have but we will discuss the issues with the
management without having to resolve to it, hopefully."

In a filing to the BSE, Bajaj Auto said it has received a notice from the workmen's union of its Chakan
plant, VKKS, that the work "stoppage has been withdrawn and all the workmen at Chakan Plant will
resume their duty in their respective shifts from August 14, 2013". The Chakan plant has an installed
capacity of over 3,000 units a day. It employs over 1,500 workers. Earlier in the day, Bajaj had announced
that deadline for permanent transfer of 50% of production from Chakan unit to other plants at Aurangabad
and Pantnagar was extended till Friday as the company was hopeful of finding a solution to end the strike
in the next two days.
The company had earlier threatened it would move out half of the production to other plants by August 12
unless the strike ended but the deadline expired without a satisfactory result being achieved.