Case on Eastern Tobacco Company

EASTERN TOBACCO COMPANY

THE EASTERN TOBACCO COMPANY'S CIGARETTE AND PIPE tobacco manufacturing plant employs about 2600 workers and clerks. The factory has three divisions: (1) cigarette and pipe tobacco, (2) printing and lithography, and (3) paper laminating, employing 2,000, 500, and 100 workers respectively. The company has a fully subscribed capital of 1250 million rupees. The majority of its shares are held by a foreign managing agency. There are, however, two Indian directors on the fourmember Board of Directors. The company started its production in 1982, with a small cigarette manufacturing plant. By 1988, it was able to expand its activities considerably. The company has maintained steady progress all along, and has never incurred losses. The company earned three million rupees as net profit (after taxes) for the year 2006. The General Manager is the chief executive of the company and operates from the head office of the company, about 20 kilometres from the factory. Under the broad policy guidance of the Board of Directors, he bandies most of the important affairs of the factory, including industrial relations. He gets advice from a Personnel Officer attached to the head office. The Factory Manager, with the help of a Personnel Officer and two Assistant Personnel Officers, looks after the affairs at the plant. Till 1992 no stable union was formed in the company. The sporadic efforts at organizing the workers were unsuccessful. When an attempt was made in 1992 to register a union, the company also sponsored a union of the same name, and succeeded in getting it registered. In 1995, the union came under the influence of an important Congress

worker and got affiliated to the INTUC. A stay-in strike in 1995 as a protest against demotion of some workers culminated in a lockout. As a result, about 300 workmen were thrown out of job. Workers' confidence in the union leadership sagged. In the 1998 union elections, a change in leadership took place. A well-known Communist was elected president, and the area Communist leader, a lawyer by profession, was made general secretary. The union was affiliated to the AITUC. The present strength of the union is over 2,000. It has an office within 150 metres from the factory. The union is managed by an executive committee of twenty-five, including five outsiders. The company does not recognize a union which has outsiders as office-bearers. The non-recognition of the union has increased the importance of the Works Committee. It is the only structured forum for consultation between the workers and the management. By and large, collective bargaining is absent in the plant. Both the parties seem to have reconciled to direct action. The management complains of frequent go-slows, stay-ins, and intimidations by the workers under union instigation. The union leaders are bitter about low wages, insecurity of service, recurring lay-offs, and retrenchment. There is no agreed grievance procedure. The Standing Orders were agreed to by the old union leadership. The continued nonrecognition of the union enjoying workers' confidence is resented. The pattern of industrial relations in the company being what it is, almost every major dispute assumes the character of a "battle of attrition". Efforts to wear down the other party are set into motion from both the sides. A dispute arising out of a charter of demands submitted as early as 2000 is still dragging on in the courts. The introduction of an incentive bonus scheme for direct workers is another source of continuing dispute. In September 2005, the management, without consulting the union, introduced production bonus schemes in

Case on Eastern Tobacco Company

some of the departments. The schemes have been so framed that very few workmen could earn extra income. There has also been a designation grievance for a long time. According to the union officials, the company "subjects a number of workers to perform such jobs which ought to be handled by workmen of higher categories". This practice, mainly confined to printing division, results in loss of earnings to the workmen, according to the union. In October 2006, the company declared Puja Bonus for the year 2005 at the rate of 11.26 per cent in accordance with the provisions of the Payment of Bonus Act. The union had earlier demanded 20.0 per cent bonus. Demonstrations were held, and the union decided to boycott the bonus offer. Workers were asked to refuse it. The company, however, arranged to distribute the bonus secretively to those workers who agreed to accept it. On 4 October 2006, some workers collected their bonus. When they were going out in the evening, a group of workers assaulted them. The company chargesheeted and suspended seven workers, including the joint secretary of the union. The suspension, however, was revoked at the intervention of the Deputy Labour Commissioner. The company stuck to its right to take disciplinary action, and proceeded to hold a domestic inquiry against the seven accused workmen. While the inquiry proceedings were in progress, a bomb was allegedly thrown at the Personnel Officer. The Personnel Officer described the incident thus: I was the Enquiry Officer in the matter of seven workers alleged to be responsible for the 4th October violence at the gate. I started the inquiry proceedings. Charges against four out of the seven accused appeared established. On 5 January 2007, when I was travelling back home at about 6.30 p.m. (my residence is about three kilometres away from the factory), I had a feeling that some

one was following me. I was a bit agitated, as in the afternoon I had received threats. Suddenly, there was a terrific crash and smoke. Something hit my legs. I continued driving, in spite of my bleeding feet. Then I realized some one had thrown a bomb at me. The joint secretary and three of the seven workers against whom inquiry was proceeding were arrested on 10 January 2007. After being released on bail, the joint secretary was again charge-sheeted and suspended. The other three did not report for duty and were dismissed after three days. The joint secretary was still under suspension. The workers in the printing division were greatly agitated over the failure of the company to resolve their designation grievance. On 13 January 2007, a group of workers informed the Printing Manager that "unless the workmen, who do the job of higher category, are given the designations of the said category, they are not prepared to do the said job, and they will do the job which they are meant for as per designation". Next day, the workers refused to handle jobs of higher categories, and asked for duties as per their designations. The workers sent a representation to this effect to the Factory Manager and sought his immediate intervention. The Factory Manager replied that "the matter is engaging our attention and shall be soon finalized". The Factory Manager detected certain tension in the factory on the morning of 15 January 2007. The trouble in the printing division was continuing. Some workers refused work as a protest against the company's failure to remove their designation grievance. A meeting of the union leaders of the printing division and a few members of the Works Committee was called at the initiative of the management. The union assistant secretary, who happened to be an employee of the printing division, joined the meeting a little late. A cup of tea was offered to him. Within

Case on Eastern Tobacco Company

minutes, he complained of uneasiness, and then suddenly slumped to the floor. He told the Personnel Officer, "Hamari tabiat theek nahin hai. Ap hamare department main khabar kar daina." (I am not feeling well. Please send a word to my department.) First aid was administered, and he was rushed to the nearby E.S.I, dispensary in the Factory Manager's car. In the meantime, a rumour went round the factory that the assistant secretary had been poisoned by the company. When the news reached the printing division, the workers downed their tools and rushed out. Over 500 workers joined in the demonstration before the main administration block. By 4.30 p.m. the main administration block, where most of the 150 officers of the company had by then collected, was surrounded by over 800 workers. They were shouting slogans, demanding an inquiry into the matter and punishment to the guilty officers. As the shift changed, more workers joined the demonstration. The management desperately tried to convene a meeting of the Works Committee in the lunch room of the main administration block. According to the Personnel Officer, who was present on the spot, workers rushed to the lunch room, and assaulted half a dozen officers present there. Earlier, they had assaulted the Printing Manager and the Security Officer. Efforts to contact the union general secretary proved futile. The situation was fast deteriorating into chaos. At about 5 p.m., the personal assistant to the Factory Manager informed the Personnel Officer that a group of workers was looking for him. The Personnel Officer locked himself in a small room. As per his description, "For about three hours nothing happened. At about 8 p.m. I heard breaking of glass panes and furniture. They were searching for me. They banged my door. I had no hope of life. They failed to break open the door in the first

attempt. After some time the pounding of the door started againthey smashed the door open. For five to ten minutes they fell on me, beat me, threw things at me. My watch and cash were snatched away. They were about 15 to 20. I appealed to them with folded hands to spare me. Some one shouted 'BusChhore do'. ['Leave him.'] They withdrew and left me bleeding. I went upstairs to the lunch room, and I was sent to hospital." In a communication to the State Labour Minister, the union general secretary gave the following version of the incidents that took place on 15 January 2007: "... when the poisoning incident came to the knowledge of the workmen of the factory, they spontaneously stopped -their work and demanded immediate inquiry into the matter with the help of leading union officials. But the management did not take heed of the suggestion and began to tackle the situation in their own way. . . . The union suspected it to be a case of poisoning, and made a complaint to that effect. At about 4.30 p.m. some of the workers who came out after their duty hours waited outside the Factory Manager's office in order to meet him. At about 5 p.m., workmen of next shift also joined them. They were peaceful, but demanded an immediate inquiry into the matter. Neither the workmen nor the representatives were favoured with any interview; rather, severe provocation was given from the side of the management by the officers of the company. They even threw their paper weights, flower vases, paper punch and iron rods, etc., on the workers, which caused multiple injuries to many workers. Necessary complaint was also sent to the Police Station for taking action. Many officers of the company personally attacked the mass of workers with lathis, wooden planks, steel chairs, and committed violence and intimidation."