THE APPOINTMENT OF HIGH POWER Commissions in the field of labour to suggest the necessary reforms in the existing labour scenario is not without precedence. Way back in 1929, the first National Commission on Labour, called the `Royal Commission on Labour`, was appointed by the Crown under the chairmanship of Whitely.  The report of the Whitely Commission in 1931 led to a change in the labour policy adopted by the British government in India.  The immediate result was the passing of the `Payment of Wages Act, 1936`, which is relevant even today in the field of regulation of payment of wages. The Whitely Commission examined all the important aspects of labour and submitted a comprehensive report. The post-independent era witnessed the appointment of the first National Commission on Labour in 1966 under the chairmanship of the late Justice Gajendragadkar, who was the architect of early labour jurisprudence in India.   The Commission submitted its report in 1969.  The workers and employers participated in the deliberations of the Commission without any reservations and the outcome showed a certain commitment. Today, its report is a guide for everybody dealing with the subject.

The announcement of the appointment of the Second National Commission on Labour in 1999 by the Government of India invited severe criticism from workers` organizations. Central trade unions barring BMS and INTUC were not represented in the Commission.  The non-participating trade unions apprehended that the government is going for the Second National Commission with a clear agenda of anti-labour programmes. Pending the submission of the report by the Commission, the government fired two salvos.  First, Finance Minister Yashwant Sinha said while presenting the Union Budget in 2001 that the government had  decided to introduce amendments to the Industrial Disputes Act, 1947 and the Contract Labour (Regulation and Abolition) Act, 1970.  Secondly, Prime Minister A B Vajpayee appointed a Task Force on Employment Opportunities under the chairmanship of Planning Commission member Montek Singh Ahluwalia.  The Task Force report, submitted on July 2, 2001 provides a blueprint for labour reforms.  With reference to the labour sector, the report aims to amend the three important labour legislations---the Trade Unions Act, 1926, the Industrial Disputes Act, 1947 and the Contract Labour (Regulation and Abolition) Act, 1970.  The justifiable reason according to the report was that "the existing labour laws and particularly the way they have been administered and implemented have unintended effect of discouraging employers from investing and expanding in labour-intensive areas.  This has made us uncompetitive in these areas in export markets, denying us the possibility of large expansion in organized sector   employment".  The government, pending the submission of the report of the Second National Commission on Labour has already made clear its final decision on important controversial labour issues.

The terms of reference of the Commission were of two-fold: i) To suggest rationalization of existing laws relating to labour in the organized sector and ii) To suggest an umbrella legislation for ensuring a minimum level of protection to the workers in the unorganised sector.     According to the Commission, the factors shaping the need for an urgent review arose from the experience that all social partners, entrepreneurs, workers and the state and central governments have complained that the existing laws were unsatisfactory.  All wanted a comprehensive review and reformulation of the legal framework, the administrative framework and the institutional structures in the field of social security. The report of the Commission dealt with i) Review of laws relating to labour ii) Minimum protection and welfare to the workers in the unorganised sector iii) Social security laws  iv) Protection for women and child labour  v) Skill development for workers in the context of globalization and changes in technology as well as work processes vi) Labour administration, and vii) Other matters that include workers` participation in management, employment scenario in the country and labour statistics and research.

On its first term of reference, the Commission drafted a model Bill consolidating the existing Trade Unions Act, 1926, the Industrial Employment (Standing Orders) Act, 1946, the Industrial Disputes Act, 1947 and other legislations dealing with industrial relations into one legislation namely, `Labour Management    Relations Act.`

Definitions and the Applicability of Labour Laws

The applicability of the existing labour laws, be it in the area of social security, social welfare or industrial relations, is not uniform. In view of this anomaly, the Commission recommended that the proposed legislation should be made applicable to establishments employing 20 or more workers, irrespective of the nature of their activity. Establishment means a place where some activity is carried on with the help and cooperation of workers.  With this the need to define the term `industry` was avoided. However, the Commission dispensed the workers who are employed in establishments with an employment size of 19 and below with a separate legislation namely the `Small Enterprises (Employment Relations) Act.  The Commission proposed the simple common definitions of terms `worker`, `wages` and `establishment`, wages to include only basic wages and dearness allowance for the purpose of contribution to social security.  For the purpose of calculating bonus and gratuity, the remuneration should be taken into consideration, which includes other allowances. The Commission recommended highly paid jobs (Rs. 25,000 and above) be outside the purview of the labour laws and assigned the government with the task of laying down a list of such jobs. The supervisory personnel, irrespective of their wages, are out of the purview of the labour laws meant for workers.  The Commission is of the view that the coverage as well as the definition of the term `worker` should be the same in all groups of labour laws, subject to the stipulation that social security benefits must be available to all employees including administrative, managerial, supervisory and others excluded from the category of workmen and others not treated as workmen or excluded from the category of workmen.  The provision of a minimum level of protection to managerial and other employees against unfair dismissals or removals, through adjudication by labour court or Labour Relations Commission or arbitration must be provided. 

The Commission recommends that there is no need for different definitions of the term `appropriate government`.  There must be a single definition of the term, applicable to all labour laws. A definition with a modified form is provided in the proposed legislation.  In case of any dispute with regard to the interpretation of the definition, the National Labour Relations Commission will determine the matter, which is a new set-up under the proposed legislation.

Industrial Relations

According to the Commission, the present system of registration of  trade unions is to be continued.  All benefits, which accrue to workers as a result of collective bargaining, should be paid to workers without distinguishing between those who are members of trade unions and those who are not. 

Employment Protection

In relation to industrial employment standing orders, establishments employing 20 or more workers should have standing orders or regulations.  There is no need to delimit the issues on which standing orders can or need be framed.  The standing orders will be prepared by the employer in consultation with the recognized unions and where there is a disagreement between the parties, the disputed matter will be determined by the Certifying Authority.  The appropriate government may prescribe a separate Model Standing Orders for units employing less than 50 workers.  The appropriate government may also frame model standing orders, the classification of acts of misconduct as major and minor to provide for graded punishment depending on the nature and gravity of the misconduct and publish them in the Official Gazette.  `Go slow` and `work to rule` are forms of action, which must be regarded as misconduct.  Employer to foresee and arrange for appropriate training to the workers so that they are equipped and ready for different kinds of jobs that restructuring may entail.  Refusal to go for such training may be included as an act of misconduct, if such refusal is without valid reasons.  According to the Commission, in view of the fast changing economic scenario and changes in technology and management, there cannot be a fixed number of posts in any organization for all time to come.  Organizations must have the flexibility to adjust the number of the workforce based on economy and efficiency. This gives a clear way for the employer to hire and fire the labour by keeping them on a non-regular basis.  Next, the Commission maintains that no worker should be kept continuously as a casual or temporary worker against a permanent job for more than two years.  It implies that the management can go on altering the number of workforce for every two years in order to avoid the regular relationship. 

Benefits under Job Losing Situations

The Commission suggests controversial reforms to the Industrial Disputes Act, 1947 in the areas of benefits if a worker loses the job, the very structure of      dispute settlement mechanism, the powers of labour courts and the customary right of workers to go on strike. Every establishment shall create a bipartite Grievance Redressal Committee to handle all grievances of workers in respect of their employment, including non-employment for a decision within a given framework.  No need of statutory obligation for the employer to give prior notice, in regard to item 11 of the Fourth Schedule for the purpose of increase in the workforce.  Notice of change, issued by an employer under Section 9A, should not operate as a stay under Section 33 in view of Section 33A.

The approach of the Commission towards Chapter VB under the Act is projected from the point of view of the society as a whole. Prior permission is not necessary in respect of layoff and retrenchment in an establishment of any employment size.  Workers will be entitled to two months notice or pay in lieu of notice in case of retrenchment. Where 300 more workers are employed, if layoff exceeds one month, such establishments are required to obtain post facto approval of the government.  In the case of closure, the Commission suggests offering a chance to workers to take up the management of the enterprise before the decision for closure and provides for a third party or judicial review of the decision, without affecting the right of the management to decide what economic efficiency demands. 

What purpose will the award of the labour court or the arbitrator serve?  The proper course action would have been placing the matter before Labour Relations Commission before the effect of intended closure.  However, the prior permission for closure is a must for the establishments employing 300 or more workers. Perhaps the intention of the Commission is that first the employer should go for retrenchment in order to bring the size of the establishment below 300 and then go for a free closure.   The rate of compensation in all cases of closure shall be for every completed year of service at a rate of 30 days in case of a sick industry, which has run continuously into losses in the last 3 financial years or has filed for bankruptcy or winding up, and other non-profit making bodies like charitable institutions etc. and at the rate of 45 days for retrenchment by such sick industry or body where retrenchment is done with a view to becoming viable.  The compensation in other cases of retrenchment at the rate of 60 days of wages and for closure at the rate of 45 days wages for every completed year of service has to be paid to the workers.  For establishments employing less than 100 workers, half of the compensation mentioned above, in terms of number of days of wages subject to a condition that a notice in the prescribed manner as in the case of bigger establishments is given before retrenching the workers or closing down.  Every employer will have to ensure, before a worker is retrenched or the establishment is closed, irrespective of the employment size, that all the dues to the workers, be it arrears of wages earned, compensation amount and all other kinds of dues are first settled as a precondition.

Labour jurisprudence has a history of over 50 years in India.  The aggrieved workers/unions can still challenge as in the case of past, the closure of an establishment on malafide grounds directly before a High Court or the Supreme Court either under Article 226 or under Article 32 of the Constitution.  This right of workers is intact unless the very constitutional provision is amended.  The scope of Article 21 is extended to the cases of  `right to livelihood`.  Such right cannot be deprived except according to the procedure established by law, which must be just and fair.  

Dispute Settlement Mechanism

The Commission prefers arbitration as the better choice of dispute settlement   machinery. Hence every settlement to provide for a clause for arbitration by a named arbitrator for all disputes arising out of interpretation and implementation of the settlement and any other disputes.  A panel of arbitrators will be maintained and updated by the Labour Relations Commission (LRCs) having experience in labour management relations such as lawyers, trade union functionaries, employers, officials of labour department, both serving and retired, academics and retired judicial officers. The labour courts, lok adalats and Labour Relations Commissions function in the form of integrated adjudicatory system in matters pertaining to employment relations, wages, social security, safety and health, welfare and working conditions etc. Officials of labour departments at the Centre and the states who are of and above the rank of Deputy Labour Commissioners with ten years  experience in the labour department with a degree in law are eligible for the presiding officers of the Labour Court.  The Labour Relations Commissions at the state level shall have as presiding officers, a sitting or retired judge of the High Court or a person who fulfils the qualifications for being appointed as a High Court judge.  The National Labour Relations Commission`s presiding officer shall be a sitting or a retired judge of the Supreme Court or a person who fulfils the qualification for being appointed as a Supreme Court Judge.  The conciliation, according to the Commission, be vested with the executive.  The inspectors should not be appointed as conciliation officers.  The conciliation officers should be clothed with the powers to enforce the attendance at the proceedings.  They carry out such directions given by the Labour Relations Commission in addition to performing their duties as prescribed under the law. The awards of the competent authorities like labour courts and LRCs would be deemed to have come into effect unless an appeal is preferred within the prescribed period.  The labour courts are empowered to enforce their own awards and the awards of LRCs.  All matters pertaining to individual workers, be it termination or transfer or any other matter be determined by recourse to the Grievance Redressal Committee, conciliation and arbitration/adjudication.  Individual disputes may be taken up by the affected workers themselves or by trade unions and the collective disputes by the negotiating agent.  All disputes, claims or complaints under the law on labour relations should be raised within one year of the occurrence of the cause of action.  Under Section 11 A, the labour courts shall not have the power to order the  reinstatement of a delinquent worker, if charges of violence, sabotage, theft or assault are proved in the labour court.   A system of legal aid to workers and trade unions from public funds be worked out to ensure that workers and their organizations are not unduly handicapped as a result of their inability to hire legal  counsels.

Provisions Relating to Strikes and Lockouts

The Commission`s approach to the workers` right to strike evinces much attention since its views are overlapping and lopsided. Under the new dispensation, a strike could be called only by the recognized negotiating agent and that too after conducting a strike ballot among all the workers, of whom at least 51 per cent should support the strike.  Similarly, an employer will not be allowed to declare a lockout except with the approval at the highest level of management except in cases of actual or grave apprehension of physical threat to the management or to the establishment.  It is submitted that the employer would go for lockout invariably with the consultations of the top-level management. "Deprivation of livelihood to the workers would amount to deprivation of life not only to worker himself but also to his dependents, but still they are prohibited from resisting it by way of collective action in contrast to employer`s privilege to declare a lock out. Do such provisions sustain the Constitutional validity?" Secret ballot for electing the bargaining agent, according to the Commission, even on a restricted basis would be a logistically and financially difficult process.  Whereas a strike, which may occur at any time, has to take place only after the secret ballot, will it not be financially a difficult process? "But the point of the strike ballot is not merely to ensure that the majority of members agree; it is also to put an obstruction in the path of official strikes.  Tactically, the unions will be caught flatfooted.  This would also pose a serious challenge in cases where the majority workers opt not to favour the collective action and if the union initiates the strike, how to interpret the immunities of a registered trade union?  In this context necessarily the term `trade dispute` has to undergo an amendment." 

The Commission favours the retention of provisions under Sections 23, 10(3), 10A(4A) and 24 with a general provision of notice not less than 14 days for a strike. 

Constitution of All India Labour Judicial Service for selecting the Presiding Officers of the Labour Courts and the creation of Bipartite or Tripartite Committees as watch dogs for the implementation of labour laws in industrial and commercial areas to protect the interests of the workers as well as the employer are the other interesting recommendations of the Commission.  Further, the Commission felt the need to create an All India Labour Administration Service for better and effective implementation of labour laws. 

Contract Labour System

The Commission has drawn a distinction between core and non-core activities.  Contract labour, recommends the Commission, shall not be engaged in core production or services or activities. In the case of sporadic seasonal demand, the employer may engage temporary labour for such activities.  It may happen that the seasonal demand might exist all through the year, thus the employer can employ the labour only on contract    basis even for core activities.  The term `core` is not defined by the Commission.  The practice of employment of labour on contract basis has become a continuous and non-ending process where an employer can make huge financial gains at the cost of deprivation of basic rights to the workers at the place of employment, yet the Commission has paid only lip service to the problem.

Fixation of Minimum Wages

The Commission apparently poises to suggest the fixation and quantification of `minimum wage` based on normative standards, but ultimately maintains the status quo.  The report says:  "Minimum wage payable to anyone in employment, in whatever occupation, should be such as would satisfy the needs of the worker and his family arrived at on the Need Based formula of the 15th Indian Labour Conference supplemented by the recommendations made in the Judgement of the Supreme Court in Raptakos Brett & Co.  However, before fixing the minimum wage the appropriate Government should keep in mind the capacity of the industry to pay as well as the basic needs of the worker."  Invariably, the employer has resorted to the weapon of `capacity to pay` whenever the question of payment of need-based minimum wage arose.  But at the same time, the employer is quite comfortable at paying the `basic minimum wage`, which again clearly refers to the bare necessities of life of workers and their families, which lie at the bottom rock of the wage level.

A general law relating to hours of work, leave and working conditions at the place of work and another one for ensuring safety at work place is given in the form of indicative bills by the Commission.  With regard to social security, the      Commission suggests a modified version of security for the workers and employees during the period of employment and in situations of unemployment. 

Unorganised Sector Workers

One can hardly find any omissions in the Commission`s efforts to identify the existing problems related to various categories of unorganized sector workers in India.  The Commission covers every type of worker/employment that comes      precisely within the ambit of unorganised sector workers and suggests comprehensive social security measures in a pragmatic way.  But the proposed draft legislation, which intends to provide a minimum level of welfare and social security protection to the unorganized sector workers, is totally disgraceful in view of the fact that it is drafted without any commitment. 

In fact, the study group on the subject presented a draft bill, which perhaps can be admired as a monumental piece of work barring a few exceptions.  The Commission has totally ignored the bill.  Amid all the controversy, recently the Ministry of Labour, Government of India, prepared another Bill entitled the "Unorganised Sector Workers Bill, 2002" to regulate employment, conditions of service and to provide social security and welfare for unorganized sector workers, which again suffers from many vices.  And at the same time it may also give rise to the doubts that the intended bill is meant for both organised and unorganised    sector workers. "Whatever may the situation, the main difficulty that might come in the way of dispensing the social security benefits to this vast segment of working population would be the contributions from the workers." Unless the purchasing power of the unorganised sector workers is improved by assuring them of sufficient income one cannot expect a sincere contribution towards the various schemes.  The wages earned by these workers hardly fall in the level of the basic minimum wage. 

This is the time when every one has to strongly reject the recommendations of the Commission in respect of certain key areas, which are unworthy and at the same time they are aimed to bury the existing labour jurisprudence in our country, which is the outcome of long drawn struggle.