Labour Codes: #23 Collective bargaining and Unionization

1) Introduction

The Industrial Relations Code, 2020 (“IR Code”) was introduced to replace three labor laws i.e., the Industrial Disputes Act, 1947, the Trade Unions Act, 1926, and the Industrial Employment (Standing Orders) Act, 1946.

Collective bargaining is a doctrine well recognized since the inception of the Indian labor laws and refers to a formal process through which workers negotiate with their employer through trade union or authorized council.

Currently, the Trade Union Act 1926 is a central legislation that provides foundation of trade unions and the industrial Disputes Act, 1947 governs the role of trade unions in collective bargaining. The central Act does not contain a compulsory recognition provision. Consequently, various states have enacted their own legislation defining the process for a trade union to become a recognized body for collective bargaining, outlining the rights and obligations of both recognized and unrecognized unions, and establishing a system for preventing unfair labor practices.

Under IR Code clearer legal mechanisms on Collective bargaining are laid down which was earlier loosely regulated.

2) Key provisions

a) Section 14 of the IR Code talks about the single represented negotiating trade union to represent the employees’ concerns to employer.

b) According to subsection (3) of section 14, If there are many registered trade unions of workers, then the trade union which has 51 percent or more workers on the muster-roll will be the sole-negotiating council.

c) Section 14 (4) states that in case if there are multiple trade unions but none has the 51% support from the employees, in such case the employer must form a Negotiating Council consisting of representatives from each trade union that has the support of 20% of the workforce.

d) Further, Section 14 (6) states that if majority of the representatives in such negotiating council agree, then any agreement is said to be reached.

e) Recognition is mandatory only for registered trade unions under the IR Code, 2020. Employers are not bound to recognize unregistered trade unions.

3) Impact

a) The new provisions aim to reduce fragmentation by recognizing a sole negotiating union.

b) They also seek to minimize conflicts among unions by providing legal enforceability to settlements.

c) Unlike earlier times, when unions had no legal standing and were often left at the mercy of employers, this reform curtails unfair labour practices and reduces employer dominance.

However, along with these positives, the reform also carries certain drawbacks. It may risk weakening employee representation, as recognition may be controlled by a small fraction of workers. Furthermore, by allowing the employers to appoint the verification officer, it may increase the risk of bias against unions.