GSK – LWS Case

XLRI, Jamshedpur
Team Name: THOUSHALTNOT
GSK’s Objective

• Cost effectiveness: Right size of manpower

• Productivity improvement: Agreeing to implementation of
new projects that reduce total batch time.
• Creating a performance culture: Clear accountability,
ownership, Operational Excellence on the shop floor
• Ensuring business continuity and future expansion
• Not compromising on quality health and safety at any step
of the process.
• Reducing absenteeism to ensure availability of manpower .
Problem at Hand
• Opposition to adoption of new technology
• Increased absenteeism
• Long-term wage (LWS) settlement pending
• Recognition of a trade union
• The union with Temporary / Badli workers has a high
membership
• Secret Ballot is mandatory for Trade Union recognition in
Andhra Pradesh so the risk of Union Z getting recognized is
high if we include Union Z
Problems if Union Z wins Secret Ballot
• Union Z has mostly temporary/badli workers
• LWS cannot be signed with this union
• Loyalty of the members of this union cannot be ensured. They
might move to another organization at any point in time
• The support of the permanent workers would also be lost
Path to adoption of new technology

Recognition of the majority Union

LTWS including adoption of new
Union X supports the new technology
technology

Reducing Manpower
Reducing Absenteeism by giving
Providing VRS
incentives

Adoption of New Technology

Training Program A few new recruits
Action Plan to reduce workforce
Reducing the
Workforce

Reduce Badli VRS (Voluntary

Reduce Absenteeism
workers Retirement Scheme)

If absenteeism is
Would reduce the
Provide Incentives reduced demand for
target group
Badli goes down

Also make some

Recognition and Also others who are
elder members of
rewards are interested
Badli permanent
 Validity of settlement under
18(3) ID Act
• Subsections (1) and (3) of Section 18 that settlements are divided into two categories,
namely, (i) those arrived at outside the conciliation proceedings and (ii) those arrived at in
the course of conciliation proceedings.

• A settlement which belongs to the first category has limited application in that it merely
binds the parties to the agreement but the settlement belonging to the second category has
extended application since it is binding on all parties to the industrial dispute, to all others
who were summoned to appear in the conciliation proceedings and to all persons employed
in the establishment or part of the establishment, as the case may be, to which the dispute
related on the date of the dispute and to all others who joined the establishment thereafter.

• Therefore, a settlement arrived at in the course of conciliation proceedings with a recognised

majority union will be binding on all workmen of the establishment, even those who belong
to the minority union which had objected to the same. The object obviously is to uphold the
sanctity of settlements reached with the active assistance of the Conciliation Officer and to
discharge an individual employee or a minority union from scuttling the settlement.

Gummadisetti, S/O. Pitchaiah vs The Joint Collector on 30/12/2003

Panyam Cements Employees Union vs Commissioner Of Labour And Ors. on 17/11/2003
Andhra Pradesh, the States Rules to the
Industrial Disputes Act
• The four methods adopted for the recognition of union in India
are: Verification Method; Check-Off method; Code of
Discipline; and Secret ballot.
• The first three have found favour with the trade unions,
whereas fourth method has gained favour in recent years. Form
1970s onwards union recognition has become mandatory in the
three states of Andhra Pradesh, Orissa and West Bengal.
• In 1995 the Supreme Court of India directed Food Corporation
of India to resolve union recognition issue through secret
ballot. The judgment also mandated the procedure for the
secret ballot (Venkata Ratnam, 2006)
Recommendations for TU Recognition
• Informally talk to the senior members of Union Z. Offer them
permanency in GSK and in return they should no longer be a
part of Union Z.
• The workmen may agree for this because
 All the temporary workers would see visible benefits of a permanent
worker
 Shifting of trade unions would not be a difficult choice due to similarity

in ideologies
Recommendation for TU Recognition
(contd..)
• Get the Trade Union Z into confidence by showing that you are
serious about permanency also communicate the future plans
• Conduct the secret ballot with Union X and Union Y contesting
Long-term Wage Settlement
• The long term wage settlement can be negotiated and signed
with the recognized union (through the secret ballot)
• A new voluntary retirement scheme to be proposed during the
negotiations and obtain the approval of the trade union
Voluntary Retirement Scheme (VRS)
• Objective
 Cost Effectiveness because of right manpower size
 Productivity Improvement

 Reduction in Absenteeism

• Eligibility Criteria
 Minimum Age: 45 years*
 Amount to be given – The amount should be decided such that the

employees indulging in absenteeism have an incentive to opt for this but

not the other employees. The impact on the bottom line should be taken
into account

*Note: The age limit should be fixed based on the employees who have
been targeted
Other Implications of VRS
• The effects of introduction of VRS is
 A move towards creating a younger workforce
 Easier to implement newer projects which introduces new technology

due to younger work force (due to lower opposition)

 The members of Union Z could be made permanent to replace the

members opting for VRS

Next Steps
• Design a comprehensive VRS plan with the actual data being
used to set the criteria
• Train some of the members of Union Z to ensure that they are
suitable to be made permanent
• Move towards making Union Z one of the weakest unions