Employee Relations and

Labour Laws

By
MADHUKAR SAXENA
 AKTU MBA III Sem Syllabus
KMB HR03 Employee Relations and Labour Laws
Unit 1: Employee Relations Management (ERM) & Industrial Relation(IR):
Introduction, and Importance of Employee Relations Management, Employee
Relations, Management Tool, Aspects of Industrial Relations, Emerging challenges
of IR in, India, Linking IR with economic growth of a country.
Trade Unionism(TU): Development, functions, type and structure, problems &
suggestive remedial measures of TU, Trade Unions Act 1926: Objective,
Recognition & registration, Industrial Democracy & Participative Management.

Unit 2: Collective Bargaining(CB): Significance, types & procedure of CB.

Discipline: The Industrial Employment (Standing Orders) Act 1961, Misconduct,
Disciplinary Action, Types of Punishments, Code of Discipline, Domestic Enquiry.
Grievance Handling in IR: Grievance Settlement Procedure.
Industrial Disputes, Preventive & Settlement Machinery in India.
Employee Participation and Empowerment: Objectives, Employee Participation,
its Advantages, Employee Participation in India, Methods of Participation,
Employee Empowerment.
 AKTU MBA III Sem Syllabus
KMB HR03 Employee Relations and Labour Laws

Unit 3: * The Factories Act, 1948,

* The shop & Establishment Act 1948,
* The Payment of Wages Act, 1923,
* The Workmen’s compensation Act, 1972
* The Industrial Disputes Act, 1947

Unit 4: * The Payment of Minimum wages Act 1936,

* The Contract Labor (Abolition & regulative) Act
* The ESI Act 1948
* The Trade unions act 1926,
* Child Labour (Prohibition & Regulation) Act 1986 & its latest amendment.

Unit 5: * The payment of Bonus Act 1965

* The payment of Gratuity Act 1972
* The Maternity Benefit Act 1961
* Employee’s Provident fund & Miscellaneous Provisions Act, 1952 .
  Terminologies…
Factory: Factory is a premises, where 10 or more workers are engaged in
some manufacturing process with or without the aid of power(electricity)

Firm: A firm registered under Indian Partnership Act 1932 is a joint business
organisation between 2 to max 20 members with limited liability developing or
selling products or services.

Agency: A fiduciary relationship (relationship of trust and confidence)

between two persons or parties entered into a contract of Agency in which one
(called the agent) is under the control of the other (called the Principal). The
agent is authorized by the principal to perform certain acts for or on behalf of
the Principal. The Principal is bound by the acts of the agent.

Company: A company is an legal entity, incorporated under Companies Act,

formed by 2 or more individuals to earn profits through their business activities
involving developing or selling products or services. A company can have
many factories and marketing or selling points in or outside the country.
  Terminologies…
Industry: In general terms Industry is considered as a manufacturing unit.
But technically Industry is defined as a group of firms, companies or
factories engaged in similar businesses producing or selling similar
products or services. Like Leather Industry comprises all manufacturers of
leather products, likewise IT Industry, Banking Industry, Aviation Industry
etc..

Corporate: A corporate is usually a group of companies authorized as a

single entity engaged in business activities, that may belong to a business
family. Like Reliance group, Aditya Birla Group etc..

Conglomerate: A large corporation made up of a number of different,

seemingly unrelated businesses. Here one company owns a controlling
stake in a number of smaller companies which conduct their businesses
separately. Like ITC, TATA etc..
 Employee Relations or Industrial relations

Industrial relations refers to the relationship between management and

labour, or among employees and their organisations that characterize or
grow out of employment.

Two parties – labour and management, both parties need to work in a sprit
of cooperation, adjustment, and accommodation. In mutual interest they
form certain rules for coexistence and adhere to. Govt. role is major as an
initiator of policies and as an employer by setting up large public sector
undertakings.

The concept of industrial relations has been extended to denote the relations
of the state with employers, workers, and other organizations.
Thus it includes individual relations and joint consultation between
employers and workers at their places of work, collective relations between
employers and trade unions; and the part played by the State in regulating
these relations.
 Employee Relations or Industrial relations

The term industrial relations have a broad as well as a narrow outlook.

Originally, industrial relations were broadly defined to include the
relationships and interactions between employers and employees.
From this perspective, industrial relations cover all aspects of the
employment relationship, including human resource management,
employee relations, and union-management (or labour) relations.

Now its meaning has become more specific and restricted. Accordingly,
industrial relations pertains to the study and practice of collective
bargaining, trade unionism, and labour-management relations,
while human resource management is a separate, largely distinct field that
deals with non-union employment relationships and the personnel practices
and policies of employers.
  Approaches to Industrial Relations
1. Psychological Approach : Problems of differences in perception of labour
and management. Employees are ever demanding and employers tries to be
rigid and restrictive to rules framework.
2. Sociological Approach: Value system, customs & traditions affect relations :
urban congestion, transportation system, pollution, industrial working life
etc.. Culture & traditions affect relations
3. Human Relation Approach: people treated as machines, use of skills,
making workers happy, physiological and psychological needs, economic and
non-economic rewards. Formal & Informal groups.
4. Giri Approach (V. V Giri): Collective Bargaining & Joint negotiations, No
outside interference, Voluntary arbitrations against compulsory adjudications,
always a bipartite machinery.
5. Gandhian Approach: workers right to strike in a peaceful non-violent & non
cooperation, advocated trusteeship theory, treating workers as partners,
owners should serve the interest of society, workers should believe in their
collective strength.
 
Features of Industrial Relations
defined by ILO (Intl. Labour Organisation)
1. Employer-employee Interaction
2. Web of rules by Govt., Industry, and labour
3. Multidimensional for complex set of institutional, economic and
technological factors.
4. Dynamic and changing.
5. Spirit of compromise and accommodation
6. Govt. role to influence and shape industrial relations.
7. Wide coverage of issues relating to grievances, disciplinary measures,
ethics, collective bargaining, participatory schemes, disputes
settlement mechanisms.
8. Interactive and consultative in nature.

Concept of Industrial Relations covers

Employee-Management Relations, Trade Unions , Dispute Settlement
& Collective Bargaining.
 Introduction to Trade Unionism
 
Trade Unions: A trade union is a formal association of workers that
promotes and protects the interests of its members (workers) through
collective action.
Under the Trade Union Act 1926, a trade union is any combination,
whether temporary or permanent , formed primarily for the purpose of
regulating the relations between workers and employers or for imposing
restrictive conditions on the conduct of any trade or business and includes
and federation of two or more unions.
1. Trade union is an association of employees or employers or of
independent workers.
2. A relatively permanent formation of workers.
3. Formed for certain economic (better wages, better working and living
conditions) and social (educational and recreational, medical and
others) benefits of the members.
4. It includes a federation of two or more unions.
5. It emphasizes joint and coordinated action and collective bargaining.
 Introduction to Trade Unionism
 
Objectives of Trade Unions:
• To provide and bargain better pay scales for the workers.
• To safeguard the health of workers, provide basic facilities, safety, job
satisfaction, social security and other welfare measures.
• To protect the workers from the clutches of management whenever workers
become the victim of management’s unilateral acts & disciplinary policies.
• Fight against improper implementation of personnel policies in respect of
recruitment, selection, promotions, transfers, training etc.
• To work as a guide, consulting authority and cooperates in overcoming
personal problems of workers. Bring notice of management through
collective bargaining.
• To maintain harmonious relations between the employees and employer for
industrial peace. Being the representatives of the workers, it carries out
negotiations with management.
• As a negotiating machinery.
• Safeguard organisational health and the interest of the industry.
 Emergence of IR in India
IR is dynamic in nature. The nature of IR can be seen as an outcome of complex
set of transactions among the employers, the employees, the trade union, and the
state in a given socio-economic context. Thus changes in IR has become essential
with change in the socio-economic context of a country.
•IR During Pre-Independence

The structure of the British colonial economy, their labour policies, composition
of the political leadership, the dynamics of political struggle for independence, all
these shaped the colonial model of industrial relations in pre-independent India”.

Union movement was an important part of the independence movement. But the
colonial dynamics of the union frustrated the process of building industrial
relations.

Till the II World War, the attitude of the British government toward industrial
relations was a passive (inactive) regulator only as it could provide only protective
legal framework for industrial relations through Trade Union Act 1926 and Trade
Disputes Act 1929.
 Emergence of IR in India
• IR During Pre-Independence Contd…
After II World War the British government’s attitude on industrial relations changed.
They introduced National Service Ordinance, and Essential Service Ordinance.
The British colonial model of IR can be summarized as close association between
political and trade union movement, dominance of outsiders, state intervention and
tripartite consultations.
The eve of Independence witnessed several instances like passing of Indian Trade
Unions (Amendment) Act, 1947, Industrial Employment (Standing Orders) Act
1946, Bombay Industrial Relations Act, 1946, and Industrial Disputes Act, 1947 and
split in AITUC and formation of INTUC.
• IR During Post-Independence:
After Independence, British colonial model of IR remained in practice for
sometimes due to various reasons like the social, political and economic
implications of partition, social tension, continuing industrial unrest, conflict, and
competition in the trade union movement.
Later the process of consultation and confrontation started and industrial relations
system (IRS) evolved.
 Emergence of IR in India
•IR During Post-Independence: Contd…
Several considerations like unequal distribution of power in the labour market,
neutrality of the state, etc. provided moral justification for retaining state
intervention. State intervention is logical also when the state holds large stakes in
the industrial sector of the economy.
However state intervention does not mean suppression of trade unions and
collective bargaining. In fact, state intervention and collective bargaining were
considered as complementary to each other.
In mid 1960s political and economic forces aggravated industrial conflict, and thus
National Commission on Labour (NCL) was appointed in 1966.
Now the focus of restructuring shifted from political to intellectual. The Janta
Government in 1978 made, of course, a half-hearted attempt to reform industrial
relations, which was strongly opposed from all unions. The BMS termed it as “a
piece of anti-labour legislation.
Several committees were appointed reforming the IRS. In the process, tripartism
was revived in 1980s. Government passed the Trade unions and the Industrial
Disputes (Amendment) Bill, 1988.
 Emerging challenges of IR in India
Concerns for Industrial Relations cannot be limited to developing industrial
harmony but also issues of socioeconomic conditions prevailing in the country.
Industrial Relations systems and practices therefore requires major challenges
surfacing in the new economic order. Healthy industrial relation cannot be
maintained unless broader developmental issues are addressed.
A Fact Check
 India figures last among the 10 newly industrialized countries according to the
World Competitiveness Report which examines the competitive advantage of
human resources on the basis of skills, motivations and flexibility, age structure and
health of the people.
 India’s ranked lowest-134 out of 160 countries in terms of Human Development
as per 1992 UNDP Report. The index takes into account 3 parameters i.e. longevity
(life expectancy), knowledge(adult literacy) and standard of living.
 India scored 14 points out of 30 obtained medium freedom ranking in terms of
Human Freedoms Index(UNDP,1992).
 Despite significant reduction in poverty level and also literacy rate has increased
to 52% in 1991, but as compared to many developing countries, India’s
performance in terms of human resources is not satisfactory.
 Emerging challenges of IR in India
 Some of the Challenges impacting Industrial Relation can be stated as follows:-

1. Labour is a subject in the concurrent list of the Indian Constitution where both
centre and state can amend and frame the labour laws. As a result, labour law
varies from state to state.

2. In this cut throat competition, dependence on contract labours is increasing.

But there are not that many amendments in Contract Labour Act 1970.

3. The roles of the unions are defined, but their responsibilities are not mentioned.

4. ‘Protected workman’ is defined, but no provisions for factory managers.

5. Productivity & Flexibility are not mentioned in Ind. Dispute Act 1948.

6. Formation of trade union is a fundamental right in India.

7. There is a lot of misconceptions whether collective bargaining issue is a

fundamental right or not.

8. Difference in wages of the regular employees and contract labours is a major

issue of concern and is one of the main causes for several disputes.
 Emerging challenges of IR in India

Impact of Technological Change on Industrial Relations

The growing resistance of trade unions to technological changes .
1. Trade Union Response
2. Fear of Unemployment
3. Redundancy and Problems of Retraining
4. Major Benefits of Improved Technology
5. Workers Hardest Hit by Modernization
6. Negotiated Change
7. Appropriate Training
8. Accent on Team Work
9. Supportive Management Practices
 Emerging challenges of IR in India
The Changed Business Scenario & Industrial Relations
The Government of India in 1991 introduced the New Industrial Policy NEP which
was followed by a large number of trade- related policies; these policies have
reduced the role of the state and have led to unprecedented changes in the labor
management relations.
Especially due to the NEP and the subsequent economic and industrial policies in
the 1990s, the structural adjustments of the Indian economy have proceeded, and
ever since, market competition has been intensified by the gradual but substantial
deregulations and the abolition of the restrictions on entry to the market.
Deregulation and privatization can be expected to strengthen competition,
accelerate productivity growth, narrow gaps between formal and informal labor
markets outcomes, and weaken union power. 
Key areas of the economy continue to be highly regulated, including labor markets.
There are signs that industrial relations are changing. Increased competition in
product markets and dissipation of rents are eroding the protection labor regulations
once afforded workers in formal labor markets.
In a more competitive environment, the same labor regulations that once increased
job security, might expose workers to greater risks.
 Introduction to Trade Unionism
 
Trade Unions: A trade union is a formal association of workers that
promotes and protects the interests of its members (workers) through
collective action.
Under the Trade Union Act 1926, a trade union is any combination,
whether temporary or permanent , formed primarily for the purpose of
regulating the relations between workers and employers or for imposing
restrictive conditions on the conduct of any trade or business and includes
and federation of two or more unions.
1. Trade union is an association of employees or employers or of
independent workers.
2. A relatively permanent formation of workers.
3. Formed for certain economic (better wages, better working and living
conditions) and social (educational and recreational, medical and
others) benefits of the members.
4. It includes a federation of two or more unions.
5. It emphasizes joint and coordinated action and collective bargaining.
 Introduction to Trade Unionism
 
Objectives of Trade Unions:
• To provide and bargain better pay scales for the workers.
• To safeguard the health of workers, provide basic facilities, safety, job
satisfaction, social security and other welfare measures.
• To protect the workers from the clutches of management whenever workers
become the victim of management’s unilateral acts & disciplinary policies.
• Fight against improper implementation of personnel policies in respect of
recruitment, selection, promotions, transfers, training etc.
• To work as a guide, consulting authority and cooperates in overcoming
personal problems of workers. Bring notice of management through
collective bargaining.
• To maintain harmonious relations between the employees and employer for
industrial peace. Being the representatives of the workers, it carries out
negotiations with management.
• As a negotiating machinery.
• Safeguard organisational health and the interest of the industry.
  Introduction to Trade Unionism

OTHER GENERAL OBJECTIVES OF TRADE UNION

1. To represent workers on various participative forums;
2. To organisation of all eligible members under one platform;
3. To represent the workers to management in cases of disputes or differences.
4. To enter in the collective bargaining and other agreement on behalf of workers.
5. To undertake various activities for the welfare of its members.
6. To provide benefit to members in case of sickness, old age, litigation and also to
provide funeral expenses.
7. To arrange necessary activities for the social and moral upliftment of workers.
8.To arrange for printing or publishing facilities for the benefit of workers.
 Introduction to Trade Unionism
 
How the Trade Unions emerged
Trade unions have emerged along with the modern industrial development.
Trade unions occupy a crucial place in the socioeconomic and political
transformation of a country. Trade union is a by-product of industrial Revolution.
After the industrial revolution, because of mechanization, the individual skill of
the worker was not considered very important. The influence of the employer on
the individual worker was very much reduced.
On the other hand, with the introduction of the large scale production, big
machines and equipments were introduced. It was also not possible for the workers
to become the owners of the instruments of production.
To make out their livelihood, they were now forced to seek employment from the
big capitalists who had become owners of modern industries. So, the dependence
of the workers on the capitalist employer increased. This has led to the
weakening of the position of the workers.
In order to safeguard their interests and to raise their power of bargaining,
they had no other means but to form trade unions. Thus, trade union has
become the workman’s answer to industrial revolution, which has led to the
exploitation of the working class.
 Introduction to Trade Unionism
 
Defining the Term Trade Union
According to J.H. Richardson, “A trade union is essentially an association of
workers formed to safeguard and improve the working conditions of their
members and more generally to raise their status and promote their vocational
interests.

Thus a trade union is a continuous association of workers for the purpose of

maintaining and improving their conditions both of working and living. They are
formed in order to promote economic interest as well as the welfare of their
members.
 
Major Trade Unions in India
1. CITU (Centre of Indian Trade Unions),
2. AITUC (All India Trade Union Congress),
3. INTUC (Indian National Trade Union Congress),
4. HMS (Hind Mazdoor Sabha),
5. BMS (Bhartiya Mazdoor Sangh),
6. UTUC (United Trade Union Congress).
 FUNCTIONS OF TRADE UNIONS
 
As per the Indian Trade Union Act, 1926, the primary functions of a trade union is
to protect and promote the interests of the workers and the conditions of their
employment.
In India, trade unions generally undertake the following functions:
1. To achieve higher wages and better working & living conditions for members;
2. To acquire control over industry by workers;
3. To minimize the helplessness of workers by making them stand up unitedly.
4. Protecting the members against victimization and injustice by employers;
4. To raise the status of the workers as partners in industry and citizens of society
by demanding an increasing share for them;
5. To generate self-confidence among the workers;
6. To encourage sincerity and discipline among workers;
7. To take up welfare measures for improving the morale of the workers.
  The National Commission on Labour has underscored certain basic
functions to which trade unions have to pay greater attention such as:
1. To secure fair wages for workers;
2. To safeguard security of tenure and improve conditions of service;
3. To enlarge opportunities for promotion and training;
4. To improve working and living condition;
5. To provide for educational, cultural and recreational facilities;
6. To co-operate and facilitate technological advancement by broadening the
understanding of workers in their job issues;
7. To promote identity of interests of the workers with their industry;
8. To offer responsive cooperation in improving levels of production and
productivity, discipline and high standards of quality;
9. To promote individual and collective welfare.
 WEAKNESSES OF TRADE UNIONS
  Most important and pressing problems of Indian trade unions are as follows:

1. Uneven growth of Trade Unions - The degree of unionisation varies from

industry to industry. In coal industry it is 6 percent, cotton textile 56 percent,
tobacco manufacturing 70 percent where as in transport and communication,
electricity and gas it is 39 percent.
2. Low membership - Though the number of trade unions in India has
considerably increased but membership per union has declined. That’s why Trade
Union Act, 1926 provided that any 7 workers can form a union and get registered.
The union having low membership would not be more effective.
3. Weak financial position - In India, most of the trade union’s financial positions
is very weak because their average yearly income is inadequate. Subscription rates
are very low and they vary from union to union.
4. Multiplicity of trade unions - It is also a major problem of trade union in India.
It has been generally seen that there are many trade unions in the same industry.
Multiplicity of unions quarrel among themselves with rival unions.
5. Outside leadership - In India trade unions have been dominated by outside
leadership influenced by political parties. They are not generally interested to solve
the problems of workers but exploit them for their political benefits.
 WEAKNESSES OF TRADE UNIONS contd..
 
6. Absence of paid office bearers - In India, majority of trade unions do not have
whole time paid office bearers. Many of them work honorary basis. Since, they are
not paid, they devote only limited time and energy to trade union activities.
7. Lack of interest - In India, a large number of workers have not joined any
union. About 2/3 of the workers have to link with any union. Moreover, all the
members of the trade unions do not show interest in their affairs. Their attendance
at the general meetings of the unions is very low.
8. Lack of public support - As most of the trade unions believe in pressures
tactics such as strikes and demonstrations, they give limited attention to peaceful
methods for the settlement of demands and disputes. The general public is affected
due to strikes, go slow policy and other practices of unions. As a result, public
support or sympathy is not available to the unions.
9. Limited stress on welfare - Most of the trade unions in India undertake only
limited welfare activities like opening cooperative banks, stores, provision of
educational and medical.
10. Corruption – Sometimes union leaders indulge in corrupt practices, by
making secret deals with the management disheartening the worker’s interests.
 STEPS FOR MAKING TRADE UNIONS STRONG
 
The working of trade unions can be successful if following steps are taken –
1. There should be a strong base to develop the trade union by safeguarding
the interest of the members and by achieving the target of production.
2. To make effective unionism there should be one union in one industry.
3. As most of the unions are influenced by political parties, their
interference should be eliminated.
4. There should be training programme to develop the internal leadership.
5. It will be more effective if office bearers of trade unions are well paid.
6. As most of the trade unions in are financially weak. This problem can be
solved by raising the membership and collecting more funds for unions.
7. Unions should undertake economic, social and cultural activities which
are equally important for raising welfare of the working class.
8. As a considerable number of trade unions are not recognised. Hence, the
proper recognition of unions will make them more effective.
 Types and Structure of Trade Unions
  Basically unions are categorised into four types
i. Craft unions: These represent workers with particular skills e.g. plumbers and
weavers. These workers may be employed in a number of industries.
The workers belonging to the same craft, specialized skill or same occupation can
form their trade union irrespective of industry or trade they be employed.
For example, mechanists working in different industries may form a union of mechanists
only. In the same way electricians & carpenters may form their separate unions.
The main feature of this union is that during strike in craft union, the entire working
of the organisation paralyze because workers of this union cannot be easily replaced
by other workers. Their unions generally oppose technologically advances.

ii. General unions: These unions include workers with a range of skills and from a
range of industries. This type is open to all members irrespective of their craft and
industry within a particular city or region.
For example, Jamshedpur Labour Union, whose membership includes workers
engaged in different industries and crafts of Jamshedpur. There is no distinction
between skilled and unskilled workers.
General unions believe in the solidarity of working class. Hence, their membership
is open to workers of different skills and trades engaged in different industries.
 Types and Structure of Trade Unions
 
iii. Industrial unions: These seek to represent all the workers in a particular
industry, for instance, those in the rail industry.
The workers on the basis of industry can form unions irrespective of their craft. For
example, if entire workforce of a cement industry decides to form a union
consisting of workers of different craft; the union is called an industrial union.
Therefore, an industrial union is open to the members of workers of a factory like
Railway unions NRMU, URMU etc..
This type of union encourages workers solidarity and makes negotiations easy
because a single agreement covers all workers of a particular industry. One major
drawback of this type of union is that the skilled workers in it feel that their specific
demands are not scientifically taken care of.

 iv. White collar unions: These unions represent particular professions, including
pilots and teachers. This type of unions generally considered for educated, technical
and professionally working people. Unions in a country, often belong to a national
union organisation.
For example, in India, a number of unions belong to the All India Trade Union
Congress (AITUC).
 Types and Structure of Trade Unions
  Also some more types of unions are emerged
i. Federations: These are national level apex bodies in which plant level unions,
craft unions, industrial union and general unions are affiliated. They are
coordinating the affairs of various unions in their fold.
ii. Labour Unions: Here membership is open to all workers irrespective of their
occupation, skill or industry, the philosophy being that all workers have common
status and a common need for mutual help. Labour unions refer to both craft and
industrial unions.
iii. Blue-Collar Workers’ Unions: Blue-collar workers’ unions constitute of
employees usually performing operative jobs. They usually operate machines in the
production and allied departments. Blue-collar workers constitute the bulk of
membership of trade unions in the organised sector.
Such unions usually comprise office staff. White-collar category includes
executives, managers, professionals, administrators, supervisors, clerks and the
like.
Such unions are found in banks, service sector, insurance companies, BPOs,
software organisations, Central and state government offices, and so on. Their
members being educated and matured are aware of the capacity to pay off their
organisations.
 Types and Structure of Trade Unions
 
iv. Business Unions: They are also known as ‘bread and butter unions’ and aim at
securing economic interests of their members and follow the method of collective
bargaining to accomplish their objectives.
v. Revolutionary Unions: Revolutionary unions are opposed to the capitalistic
industry and replace it by the socialistic systems through radical means such as
strikes, boycott and gheraos.
Revolutionary unions may be of any of the following forms:
a. Anarchist Unions: These unions endeavour to destroy the existing
economic system and usually use violent means.
b. Predatory Unions: Initiated by Professor Hoxie, such unions believe in
plundering benefits and ruthless pursuit of the matter in hand by adopting any
means irrespective of ethical, legal or moral considerations.
Predatory unions may be of two types as follows:
(i) Guerrilla unions – These unions can go to any extent, including
resorting to terror­ism and other violent means, to accomplish their objectives. It is
the boss who rules the roost.
 Types and Structure of Trade Unions
 
(ii) Hold-up unions – The unscrupulous bosses of workers’ organisations
and unscrupulous employers conspire together to exploit the customers by selling
their products at very high rates; the major chunk of the money so earned goes to
the pockets of these unscrupulous elements, leaving very little, if at all, for the
workers.
c. Political Unions: Such unions aim at snatching the power of capitalists by
political action so that workers may become more powerful.
vi. Friendly or Uplift Unions: These unions mainly aim at improving the
intellectual, moral and social life of their members. These unions are not craft
conscious. They rather focus on the interest of workers.
They are idealistic in nature. Since they are law-abiding, they believe in the
institution of collective bargaining and also setting up of cooperative enterprises,
mutual insurance, profit-sharing and the like.
.
 Trade Unions Act, 1926
CHAPTER I - PRELIMINARY
  CHAPTER II - REGISTRATION OF TRADE UNIONS
CHAPTER III - RIGHTS & LIABILITIES OF REGISTERED TRADE UNIONS
CHAPTER IV - REGULATIONS
CHAPTER V - PENALTIES AND PROCEEDURES

Objective / Purpose of the Act

An Act to provide for the registration of Trade Unions and in certain respects to
define the law relating to registered Trade Unions

2. Definitions.-
2a) Appropriate Government means, in relation to Trade Unions whose objects
are not confined to one State, the Central Government, and in relation to other
Trade Unions, the State Government.
2d) “Registered office" means that office of a Trade Union which is registered
under this Act as the head office thereof;
2e) “Registered Trade Union" means a Trade Union registered under this Act;
 Trade Unions Act, 1926
2. Definitions.-
  2f) "Registrar" means -
(i) a Registrar of Trade Unions appointed by the appropriate Government u/s
3, and includes any Additional or Deputy Registrar of Trade Unions; and
(ii) in relation to any Trade Union, the Registrar appointed for the State in
which the head or registered office of the Trade Union is situated.

2g) “Trade Dispute" means any dispute between employers and workmen or
between workmen and workmen, or between employers and employers which is
connected with the employment or non-employment, or the terms of employment
or the conditions of labour, of any person.

2h) "Trade Union" means 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.
 Trade Unions Act, 1926
 CHAPTER II - REGISTRATION OF TRADE UNIONS
 
3. Appointment of Registrars.-

(1) The appropriate Government shall appoint a person to be the Registrar of Trade
Unions for each State.

(2) The appropriate Government may appoint as many Additional and Deputy
Registrars of Trade Unions as it thinks fit for the purpose of exercising and
discharging, under the direction of the Registrar, such powers and functions of the
Registrar under this Act as it may, by order, specify and define the local limits.

(3) Subject to the provisions of any order under sub-section (2), where an
Additional or Deputy Registrar exercises and discharges the powers and functions
of a Registrar in an area within which the registered office of a Trade Union is
situated, the Additional or Deputy Registrar shall be deemed to be the Registrar in
relation to the Trade Union for the purposes of this Act.
 Trade Unions Act, 1926
  4. Mode of registration.-
 
(1) Any seven or more members of a Trade Union may, by subscribing their names
and the rules of the Trade Union and by otherwise complying with the provisions
of this Act with respect to registration, apply for registration of the Trade Union
under this Act.

(2) Where an application has been made under sub-section (1) for the registration
of a Trade Union, such application shall not be deemed to have become invalid
merely by reason of the fact that, at any time after the date of the application, but
before the registration of the Trade Union, some of the applicants, but not
exceeding half of the total number of persons who made the application, have
ceased to be members of the Trade Union or have given notice in writing to the
Registrar dissociating themselves from the application.
 Trade Unions Act, 1926
  5. Application for registration.-
 
(1) Every application for registration of a Trade Union shall be made to the
Registrar, and shall be accompanied by a copy of the rules of the Trade Union and
a statement of the following particulars, namely: -
(a) the names, occupations and addresses of the members making the application;
(b) the name of the Trade Union and the address of its head office; and
(c) the titles, names, ages, addresses and occupations of the office-bearers of the
Trade Union.

(2) Where a Trade Union has been in existence for more than one year before the
making of an application for its registration, there shall be delivered to the
Registrar, together with the application, a general statement of the assets and
liabilities of the Trade Union prepared in such form and containing such particulars
as may be prescribed.
 Trade Unions Act, 1926
  6. Provisions to be contained in the rules of a Trade Union.- A Trade Union
  shall not be entitled to registration under this Act, unless the executive thereof is
constituted in accordance with the provisions of this Act, and the rules thereof
provide for the following matters, namely: -
(a) the name of the Trade Union;
(b) the whole of the objects for which the Trade Union has been established;
(c) the whole of the purposes for which the general funds of the Trade Union
shall be applicable, all of which purposes shall be purposes to which such funds
are lawfully applicable under this Act;
(d) the maintenance of a list of the members of the Trade Union and adequate
facilities for the inspection thereof by the office-bearers and members of the Trade
Union;
(e) the admission of ordinary members who shall be persons actually engaged or
employed in an industry with which the Trade Union is connected, and also the
admission of the number of honorary or temporary members as office-bearers
required under section 22 to form the executive of the Trade Union;
 Trade Unions Act, 1926
  6. Provisions to be contained in the rules of a Trade Union.- Contd..
 
(ee) the payment of a subscription by members of the Trade Union which shall be
not less than twenty-five nayepaise per month per member;
(f) the conditions under which any member shall be entitled to any benefit assured
by the rules and under which any fine or forfeiture may be imposed on the
members;
(g) the manner in which the rules shall be amended, varied or rescinded;
(h) the manner in which the members of the executive and the other office-bearers
of the Trade Union shall be appointed and removed;
(i) the safe custody of the funds of the Trade Union, an annual audit, in such
manner as may be prescribed, of the accounts thereof, and adequate facilities for
the inspection of the account books by the office-bearers and members of the Trade
Union; and
(j) the manner in which the Trade Union may be dissolved.
 Trade Unions Act, 1926
8. Registration.-The Registrar, on being satisfied that the TU has complied all the
requirements of this Act in regard to registration, shall register the TU by entering
 
in a register, to be maintained in such form as prescribed, the particulars relating to
the TU contained in the statement accompanying the application for registration.
9. Certificate of registration.- The Registrar, on registering a Trade Union under
sec 8, shall issue a certificate of registration in the prescribed form which shall be
conclusive evidence that the Trade Union has been duly registered under this Act.
10. Cancellation of registration.- A certificate of registration of a Trade Union
may be withdrawn or cancelled by the Registrar -
(a) on the application of the TU to be verified in such manner as may prescribed,
or
(b) if the Registrar is satisfied that the certificate has been obtained by fraud or
mistake, or that the Trade Union has ceased to exist or has wilfully and after notice
from the Registrar contravened any provision of this Act or allowed any rule to
continue in force which is inconsistent with any such provision,
Provided that not less than two months' previous notice in writing specifying the
ground on which it is proposed to withdraw or cancel the certificate shall be given
by the Registrar to the Trade Union before the certificate is withdrawn or cancelled
 RIGHTS AND LIABILITIES OF REGISTERED TRADE UNIONS

Objects on which general funds may be spent.-

The general funds of a registered Trade Union shall not be spent on any other
objects than the following, namely: -
• (a) The payment of salaries, allowances and expenses to office-bearers of
the Trade Union;
• (b) The payment of expenses for the administration of the Trade Union,
including audit of the accounts of the general funds of the Trade Union;
• (c) The prosecution or defence of any legal proceeding to which the Trade
Union or any member thereof is a party, when such prosecution or defence
is undertaken for the purpose of securing or protecting any rights of the
Trade Union as such or any rights arising out of the relations of any
member with his employer or with a person whom the member employ;
• (d) The conduct of trade disputes on behalf of the Trade Union or any
member thereof;
 CONTD………

• (e) The compensation of members for loss arising out of trade disputes;

• (f) Allowances to members or their dependants on account of death, old age, sickness,
accidents or unemployment of such members;

• (g) The issue of or the undertaking of liability under, policies of assurance on the lives of
members, policies insuring members against sickness, accident or unemployment;

• (h) The provision of education, social or religious benefits for members (including expenses
of funeral or religious ceremonies) or for the dependants of members;

• (i) The upkeep of a periodical published mainly for the purpose of discussing questions
affecting employers or workmen as such;

• (j) The payment, of general funds of the Trade Union may be spent on contributions
intended to benefit workmen provided that the expenditure in any financial year shall not at
any time during that year be in excess of one-fourth of the total gross income.

• (k) Subject to any conditions contained in the notification, any other object notified by the
appropriate Government in the Official Gazette.
 Trade Unions Act, 1926
  16. Constitution of a separate fund for political purposes.-
 
(1) A registered Trade Union may constitute a separate fund, from contributions
separately levied for the promotion of the civic and political interests of its
members.
(2) The objects referred to in sub-section (1) are: -
(a) the payment of any expenses incurred, either directly or indirectly, by a
candidate or prospective candidate for election as a member of any legislative
body before, during, or after the election in connection with his election;
(b) the holding of any meeting or the distribution documents in support of any
such candidate or prospective candidate; or
(c) the maintenance of any person who is a member of any legislative body; or
(d) the election of a candidate for any legislative body; or
(e) the holding of political meetings of any kind.
(3) No member shall be compelled to contribute to the fund for political purposes.
 Trade Unions Act, 1926
17. Criminal conspiracy in trade disputes.- No office-bearer or member of a
  registered TU shall be liable to punishment, in respect of any agreement made
between the members, unless the agreement is an agreement to commit an offence.
18. Immunity from civil suit in certain cases.-
(1) No suit or other legal proceeding shall be maintainable in any Civil Court against
any registered Trade Union or any office-bearer; or member thereof.
(2) A registered TU shall not be liable in any suit or other legal proceeding in any Civil Court.
19. Enforceability of agreements.- An agreement between the members of a
registered Trade Union shall not be void or voidable merely by reason of the fact
that any of the objects of the agreement are in restraint of trade:
20. Right to inspect books of Trade Union.- The account books of a registered TU
and the list of members shall be open to inspection by an office-bearer or member of
the TU at such times as may be provided for in the rules of the Trade Union.
21. Rights of minors to membership of Trade Unions.- Any person who has
attained the age of fifteen years may be a member of a registered Trade Union
subject to any rules of the Trade Union to the contrary, and may, enjoy all the rights
of a member and execute all instruments.
 Trade Unions Act, 1926
21A. Disqualifications of office-bearers of Trade Unions.-
  (1) A person shall be disqualified for being chosen as, and for being, a member of
the executive or any other office-bearer of a registered Trade Union if -
•(i) he has not attained the age of eighteen years,
•(ii) he has been convicted by a Court in India of any offence involving moral
turpitude and sentenced to imprisonment, unless a period of five years has elapsed since
his release.
(2) Any member of the executive or other office-bearer of a registered Trade Union
who, before the commencement of the Indian TU Act, 1964, has been convicted of
any offence involving moral turpitude and sentenced to imprisonment, shall on the
date of such commencement cease to be such member or office-bearer unless a
period of five years has elapsed since his release before that date.
22. Proportion of office-bearers to be connected with the industry.- Not less than
one-half of the total office-bearers of every registered TU shall be persons actually
engaged or employed in an industry with which the TU is connected:
Provided that the appropriate Government may, by special or general order, declare
that the provisions of this section shall not apply to any Trade Union.
 Trade Unions Act, 1926
23. Change of name.- Any registered TU may, with the consent of not less than
two-thirds of the total members, change its name.
 
24. Amalgamation of TUs.- Any two or more registered TUs may become
amalgamated together as one TU with or without dissolution or division of the
funds, provided that the votes of at least one-half of the members of each such TU
are recorded, and at least 60% of the votes recorded are in favour of the proposal.
25. Notice of change of name or amalgamation.-
(1) Notice in writing of every change of name of every amalgamation, signed, in the
case of a change of name, by the Secretary and by seven members of the TU
changing its name, and, in the case of an amalgamation, by the Secretary and by
seven members of each and every TU which is a party thereto,.
(2) If the proposed name is identical with that by which any other existing TU, the
Registrar shall refuse to register the change of name.
(3) Registrar shall, on satisfaction of compliance of provisions in respect of change
of name, register the change of name in the register, and will effect from the date of
such registration.
(4) Registrar, on satisfaction of the compliance of provisions related to
amalgamation shall, register the TU, and the amalgamation shall have effect from
that date.
 Trade Unions Act, 1926
  27. Dissolution.-
(1) When a registered Trade Union is dissolved, notice of the dissolution signed by
seven members and by the Secretary of the Trade Union shall, within fourteen
days of the dissolution, be sent to the Registrar, and
Registrar shall register, if he is satisfied that the dissolution has been effected in
accordance with the rules of the Trade Union, and the dissolution shall have
effect from the date of such registration.
(2) Where the dissolution of a registered Trade Union has been registered and the
rules of the Trade Union do not provide for the distribution of funds of the Trade
Union on dissolution, the Registrar shall divide the funds amongst the members in
such manner as may be prescribed.
 Trade Unions Act, 1926
  28. Returns.-
(1) Returns shall be sent annually to the Registrar, on or before such date as may be
prescribed, a general statement, audited in the prescribed manner, of all receipts and
expenditure, assets and liabilities of every registered Trade Union during the year
ending on the 31st day of December in the prescribed form.
(2) Also a statement showing all changes of office-bearers and a copy of the rules of
the Trade Union corrected up to the date made by the Trade Union during the year.
(3) A copy of every alteration made in the rules of a registered Trade Union shall be
sent to the Registrar within fifteen days of the making of the alteration.
(4) For the purpose of examining the documents, the Registrar, or any officer
authorised by him, may at all reasonable times inspect the certificate of registration,
account books, registers, and other documents, relating to a Trade Union, at its
registered office or may require their production at such place as he may specify in
this behalf.
 Trade Unions Act, 1926
30. Publication of regulations.-
 (1) The power to make regulations is subject to the condition of the regulations being
made after previous publication.
(2) Draft of regulations proposed to be made will be taken into consideration after three
months of publication of the draft of the proposed regulations for general information.
(3) Regulations so made shall be published in the Official Gazette, and on such
publication shall have effect as if enacted in this Act.
 Trade Unions Act, 1926
CHAPTER V - PENALTIES AND PROCEDURE
 
32. Supplying false information regarding Trade Unions.- Any person who, with
intent to deceive, gives any document purporting to be a copy of the rules or any
alterations or rules of the Trade Union which he knows, or has reason to believe, is not
a correct copy of such rules or alterations as are for the time being in force, to any
member of a registered Trade Union, applying to become a member of such Trade
Union, shall be punishable with fine which may extend to two hundred rupees.

31. Failure to submit returns.-

(1) If default is made on the part of any registered Trade Union in giving any notice or
sending any statement or other document as required, every office-bearer or other
person authorised to give the same, shall be punishable, with fine of five rupees and, in
the case of a continuing default, five rupees for each week after the first week.
Provided that the aggregate fine shall not exceed fifty rupees.
(2) Any person who wilfully makes, any false entry, or any omission from, the general
statement required by section 28, sent to the Registrar under that section, shall be
punishable with fine which may extend to five hundred rupees.
 Industrial Democracy & Participative Management
An important requirement of IR is industrial democracy. Worker’s participation in
  management (WPM) is essentially a step in promoting industrial democracy. WPM takes
the shape of self- management, co-determination, and joint management councils.
Participation means sharing decision making power between management and workers.
Participate may protect the interests of both parties. Participation is a system of
checks and balances which prevents exploitations and provides equity and fairness.
This requires great awareness, education and conceptual skill from both the parties,
to make WPM, a success.
Outcomes of Industrial democracy through Worker’s participation
1. Performance of both groups is evaluated objectively.
2. Respect workers as free persons of equal value.
3. Rule of law and natural justice.
4. Discipline through self control and self direction
5. Morale, motivation and a sense of belongingness.
6. Productivity and high quality in work.
7. Better compensation.
 Industrial Democracy & Participative Management
  Objectives of Workers Participation in Management are as follows

 To enlighten and involve workers to know better about their role in meeting
the organisational objectives.
 To know about importance of productivity and quality aspects in sustenance
and growth of the organisation.
 To help improve the supervisor-worker relations and management union
relations.
 Involve workers in subjects like safety and environment care.
 Assist in team building and HRD activities.
 Develop a culture of self involvement to reduce vigilant supervision.
 Improve employee pride, morale and integrity.
 Industrial Democracy & Participative Management
Levels of Participation:
  (a) Informative Participation: This is related to information sharing of major
aspects like product mix, productivity, balance sheet etc. Workers are not allowed
scrutiny of accounts.
(b) Consultative Participation: Here workers are consulted on such aspects like
welfare, work methods, safety programs. Worker’s body or joint councils can make
recommendation. It is left to management to accept the recommendations or not.
(c) Associative Participation: Here, the consultation is extended to more areas. In
addition, management has a moral responsibility to implement recommendation
made by joint councils.
(d) Administrative Participation: Here, management having accepted the
recommendations of joint councils refers alternatives of implementation plans or
strategies for the consideration of the councils to suggest the best one. Here
authority of decision making is delegated.
(e) Decisive Participation: Here decisions are taken jointly by management and
workers on all important matter concerning the firm. Here both are equally
responsible and accountable for the success or failure based on such decision. This,
in a true sense, is the sharing of “profits” and “pains”.