- New Labour Codes – Government colludes with Corporates
- Getting rid of the Union headache
In my previous article in this series, I have written about the recent proposal by the Government to convert the existing 44 labour laws into just 4 codes. As I explained, the main problem is, legally a code cannot be used to punish anyone who breaks it and the companies will take high chance to break the code and terminate any employee to satiate their greed for profit.
Corporates have a tendency to break any law which they deem to be hindering their growth or breaking which would increase their revenue. A recent example of this is the Cognizant Bribery Case, where the tech major accepted of bribing government officials for the construction of its office premises in India. Cognizant has about 50 offices in different states in India. And the particular case is about the construction of an office premise in Chennai. Building contract for this office was given to the Infrastructure giant Larsen & Toubro (L&T) in 2014.
A bribe amounting to 2 million dollars (approximately 14 crores) was involved and Cognizant has now accepted that L&T had paid this bribe to AIADMK Government in Tamilnadu and to the officials of Chennai Metropolitan Development Authority.
The then Cognizant president Gordon Coburn and the legal head Stephen Schwartz had authorized this unlawful payment. This information was revealed in the investigation carried out by the US Securities and Exchange Commission (SEC).
“Bribery to further corporate goals is an illusory path to long-term success. While always the wrong choice, it is particularly egregious when senior executives chart that course for those they lead, as our complaint alleges here. We are committed to holding them accountable for their actions,” said Charles E Cain, chief of the SEC Enforcement Division’s FCPA Unit.
Cognizant has accepted to pay 25 million USD ( more than 12 times the bribe amount) to settle charges towards violation of the Foreign Corrupt Practices Act (FCPA).
In my article about Minor Kunju, I explained how corporates act for their profit greed and the Government’s role in approving it. The Cognizant bribery case proves that in an excellent manner. Here we should remember that India holds 78th position (out of 180 countries) in the list of most corrupted countries in the world.
Last year I have written another article where a young lady working in a famous IT Company was targeted for termination citing a minor compliance issue. This employee had requested her client manager to give feedback on her work in the project she was assigned. She thought that she could use the feedback for her appraisal rating. But the client manager intimated about her request to the manager of the company to which she worked. This got escalated and the company she was working with asked her to submit resignation as she violated the companies core policy on compliance.
There are various other incidents in many companies where employees are shown the door for submitting false medical bills, tweaking attendance systems, minor conflicts with their peers and many such reasons. I am definitely not justifying any of these acts by these employees. But if employees are targeted for termination on compliance norms for such trivial acts, what about the company itself engaging in unlawful practices such as this case of Cognizant. Is integrity meant only for ground level workers and not for top management?
L&T has responded that none of their company staff were involved in this bribery act. They mentioned that they usually outsource Government approvals. And this act they have accomplished using their vendors. We are happy at least L&T has responded in some way but Government officials or CMDA officials did not open their mouth about this. People are also busy in parliamentary elections and on other breaking news items.
The sad part is people now does not even care about corruption charges, as they have understood that our system is built in way to support corruption. Integrity needs to be followed only by people at the base level and it is not applicable for large corporates or the Government.
I am quoting this case only as evidence to show how companies break the law even though the violation of it is punishable. Now think about how companies would behave when these laws are converted into codes.
Collective bargaining is the biggest challenge that corporates wish to avoid while handling their employees. Labour unions are built on the bricks of collective bargaining. But corporates want to divide and rule and by doing this, they can get cheap labour which in turn helps to increase their profits. So corporates want labour unions to lose their fame and the new code has various factors to dilute the importance of labour unions.
Before going in detail on existing 44 labour laws and 4 proposed new codes, we will see in detail on the Government proposal to dilute labour unions. This would give us a feel on the intention of this new proposal and the impact it is going to create.
As part of new proposal, the Government is aiming to combine the Trade union Act 1926 and Industrial Dispute Act which are the backbone of labour welfare and labour unions.
In 2015 the Indian Government tabled the Small Factories (Regulation of Employment and Conditions of Services) Bill, which was meant to keep small factories out of the ambit of certain major labour laws. According to which factories employing less than 40 workers were deemed as small factories and would be exempted from 14 labour laws including the Industrial Disputes Act, the Factories Act, and the Payment of Wages Act. This bill also reduced the standards for health and safety established under the Factories Act 1948 for small factories.
For large factories, that employed more than 40 employees, there were changes in the number of members required for registering a trade union. The below tabular column gives clear differentiation of existing rules for forming and registering a trade union and new proposed code.
- Number of employees required to form and register Trade union
|Existing law for forming and registering union||Proposed changes for forming and registering union|
|7 people working in one company or group of similar companies can form and register a union.
This lead to more union registrations and resulted in the 2002 amendment, which said 100 people or 10% of total employee strength in the company whichever is lower is required to form and register the union.
|100 people or 10% of total employee strength in the company whichever is higher is required to form and register the union|
We will see the implications with 2 different scenarios as illustrated below:
If a company has a strength of 100 employees working
As per previous rule, it required a minimum of 100 employees or 10% of total employee strength whichever is lower. And this translates to 10 employees or even lesser. So as per previous rule, if a company has 100 employees, it requires 10 employees to register a union
But in the new proposed change, it requires a maximum of 100 employees or 10% of total employee strength whichever is higher. And this translated that a minimum of 100 employees. So as per current proposed change, if a company has 100 employees, it require all 100 employees to register a union
This proposed change will make a scenario where it is not possible for setting up trade unions in smaller companies. In our country, the vast majority of factories employ less than 200 employees and this new proposed change make no way for starting up of trade unions in these companies. In simple terms, this proposed change will close all new labour union registration for smaller companies
Let us assume large IT companies like TCS, CTS or Wipro. These companies have around 2 lakh employees. If we want to register labour union in IT companies, we will see the difference between existing code and proposed code.
As per existing law, 100 employees or 10% of 2 lakh which is equal to 20000 employees and minimum of these two which would translate to 100 is required to form labour union.
But as per new proposed change, the maximum of these two factors translate to 20000 employees. So if employees want to form and register labour union in these companies, they require 20000 employees to be registered with the unions.
In the current scenario, it will be very difficult to find even 100 employees coming out to form a union. There are no registered labour union in any of the IT companies in India. This shows the unity of IT employees and difficulty to setup a union even with minimum requirement of having 100 employees.
Imagine a situation where this proposal is finalized and in such scenario, it requires 20000 employees to form a union. This proposal will bury all possibilities of forming union in IT sector. This is not only applicable for IT sector but for all other giant corporates. The intention of this change, which is very clear, is to stop registering labour unions in any of the new companies.
The above is just small drop in the ocean but if we go through all changes, we will understand real implications this bill is going to make and why many labour unions are opposing this change. We will go through those implications in the coming parts
– Shyam Sundar