Bad I Ganna Var 2012

Industrial Law Journal, Vol. 41, No. 4, December 2012 © Industrial Law Society; all rights reserved.
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doi: 10.1093/indlaw/dws038
Do Labour Laws Protect Labour in India?

Union Experiences of Workplace Employment
Regulations in Maharashtra, India
Downloaded from http://ilj.oxfordjournals.org/ at Nanyang Technological University on May 20, 2015

VIDU BADIGANNAVAR* and John Kelly**
Abstract
The debate over labour market regulations in India is highly polarised. Advocates
of labour market deregulation suggest that the labour law framework in the country
confers disproportionate powers on workers and trade unions in the formal sector of
the economy, resulting in industrial conflicts and poor productivity. Using workplace
union survey data from the state of Maharashtra, this paper examines the veracity of
these claims. Maharashtra is recognised as a state with a broadly pro-worker labour
law framework. We find that even pro-worker labour laws at best offer only weak
protection to workers and unions in the formal sector establishments. Unions find
themselves increasingly vulnerable to employer hostility. We discuss these findings
in the context of the role of state and judiciary in employment relations and of union
links with political parties.
1. Introduction
This paper attempts to empirically examine the extent to which the labour
regulatory framework in India protects the interests of workers and trade
unions at workplace level. The employment relations debate in India is
largely centred on the regulation of labour markets and the role of actors
within the existing regulatory framework, namely the State, trade unions
and employers.1 Thus, theoretically, this debate is rooted in the institutional
approach to industrial relations. The economic reforms programme fol-
lowed by the Government of India since the early 1990s has intensified the
focus on the role of the State in altering the power balance between capital
*Royal Holloway, University of London, email: vidu.badigannavar@rhul.ac.uk;

**Birkbeck, University of London, email: j.kelly@bbk.ac.uk
1
A. Sharma, ‘Flexibility, Employment and Labour Market Reforms in India’ (2006) Economic
and Political Weekly 2078.
439
Industrial Law Journal Volume 41
and labour through changes to the labour regulatory framework and its
implementation or the lack of it.2 More recently, analysts and practitioners
have also focused their attention on the role of judiciary in its interpreta-
tion of labour laws and its resulting influence on the labour–capital power
balance.3

The growing interest in Indian employment relations is primarily sparked
by the new economic policies of liberalisation, privatisation and globalisa-
tion, which the Government of India embarked upon since 1991.4 Following
a serious balance of payment crisis in 1991, India embarked upon major
economic reforms, consisting largely of a move from policies of import
substitution to an export orientation. It is claimed that the deregulation of
product and capital markets over the past decade has resulted in an impres-
sive GDP growth rate of around 7% per annum and a healthy foreign
exchange reserve of over US$ 270 billion.5 However, the Confederation
of Indian Industry (CII 2006), the main employer association, argues that
although the product and capital markets have been deregulated, the labour
2
See D. Banerjee, Globalisation, Industrial Restructuring and Labour Standards: Where India
Meets the Global (New Delhi: Sage, 2005), and Labour Regulation and Industrial Development in
West Bengal, Report for the Institute for Studies for Industrial Development (ISID), European
Union (EU) and International Institute for Labour Studies (IILS) (New Delhi: Bookwell,
2008); P. Jha, ‘State’s Growing Intolerance Towards Labour in India: A Note Based on Some
Recent Developments’ (2005) 48 Indian Journal of Labour Economics 897; P. Jha and S. Golder,
‘Labour Market Regulation and Economic Performance: A Critical Review of Arguments and
Some Plausible Lessons for India’, Working Paper, Employment Analysis and Research Unit,
Economic and Labour Market Analysis Department, International Labour Office (Geneva:
ILO, 2008); S. Desai, Special Economic Zones: Myth and Reality (Mumbai: Mill Mazdoor
Welfare Trust, 2009); D.S.Saini, ‘The Contract Labour Act 1970 Issues and Concerns’ (2010),
46(1): 32–44 Indian Journal of Industrial Relations 32; K. Shyam Sundar, ‘Emerging Trends in
Employment Relations in India’ (2010) 45 Indian Journal of Industrial Relations 585; K. Shayam
Sundar, Industrial Conflict in India: Is the Sleeping Giant Waking Up? (New Delhi: Bookwell).
3
See S. Babu and R. Shetty, Social Justice and Labour Jurisprudence: Justice V.R. Krishna
Iyer’s Contributions (Mumbai: Sage, 2007); G. Singh, ‘Judiciary Jettisons Working Class’ (2008)
7 Combat Law: The Human Rights and Law Bimonthly 24.
4
See e.g., R. Agarwala, N. Kumar and M. Ribound, Reforms, Labour Markets and Social
Security in India (New Delhi: Oxford University Press, 2004); S. Frenkel and S. Kuruvilla,
‘Logics of Action, Globalization, and the Changing Employment Relations in China, India,
Malaysia, and the Philippines’ (2002) 55 Industrial and Labour Relations Review 387; E. Hill,
‘The Indian Industrial Relations System: Struggling to Address the Dynamics of a Globalizing
Economy’ (2009) 53 Journal of Industrial Relations 395; T. Papola, J. Pais and P. Sahu, Labour
Regulation in Indian Industry: Towards a Rationale and Equitable Framework (New Delhi:
Institute for Studies in Industrial Development, 2007).
5
A. Panagariya, India: The Emerging Giant (Oxford: Oxford University Press, 2008). See
also the website of the Reserve Bank of India: http://www.rbi.org.in/home.aspx (accessed 16
October 2012).
440
December 2012 Do Labour Laws Protect Labour in India?
regulatory framework in India remains archaic and in dire need of reform

in order to make the country an attractive destination for private domestic
and foreign investments.6
These views are inspired by influential reports such as the World Bank’s
Doing Business Reports (2001 onwards) and the OECD’s Jobs Strategy

(1994), which recommend weakening of employment protection laws and
greater flexibility in wage and labour costs to propel economic growth
and employment. The validity of these claims has been widely scrutinised
and debated,7 and hence we do not go into the details again here. However,
the labour regulation debate in India can be seen in the wider international
context of such debates on weakening labour rights vis-à-vis employers’
rights particularly in Europe in the post-economic crisis period since 2008.8
The proponents of labour market deregulation in India argue that the
existing regulatory framework confers disproportionate power to workers
and trade unions compared to employers, which creates inflexibilities, con-
flictual industrial relations and consequently lower industrial output (CII
2006). For instance, the CII cites the provisions of the Industrial Disputes
Act (IDA) 1947, one of the key industrial relations laws in the country, which
require management of enterprises employing 100 or more workers to seek
prior approval from the appropriate government before implementing job
cuts, redundancies or closures. Other provisions within the statute allow
the State to refer any actual or potential dispute to adjudication without
consultation with employers. Likewise it is said that the Bombay Industrial
Relations Act 1946 requires employers to consult and negotiate with rec-
ognised unions even on very minor amendments to work arrangements
thereby stifling flexibility and productivity.
The pro-reform view is based on the belief that historically trade unions
in India have had a close relationship with political parties during the
Independence movement and hence have managed to secure favourable
6
See also M. Carter, ‘Improving the Investment Climate: Challenges for India’ (The World
Bank Group, 2004) http://go.worldbank.org/RTXXIY5G50 (accessed 16 October 2012).
7
See B. Casey, ‘The OECD Jobs Strategy and the European Employment Strategy: Two
Views of the Labour Market and the Welfare State’ (2004) 10 European Journal of Industrial
Relations 329; S. Lee, D. McCann and N. Torm, ‘The World Bank’s Employing Workers Index:
Findings and Critiques–A Review of Recent Evidence’ (2008) 147 International Labour Review
416; P. Bakvis, ‘The World Bank’s Doing Business Report: A Last Fling for the Washington
Consensus?’ (2009) 15 Transfer: European Review of Labour and Research 419.
8
See S. Clauwaert and I. Schomann ‘Undermining the European Social Model’ (2012) 19
International Union Rights 6–7; G. Meardi ‘Labour Market Reforms in Italy and Spain: diver-
sity and convergence’ (2012) 19 International Union Rights 3–5.
441
labour laws in the post-Independence period.9 A large number of trade unions

in India are affiliated to political parties through national federations. For
instance, the Indian National Trade Union Congress (INTUC) is affiliated to
the Congress Party,10 the Bhartiya Mazdoor Sangh (BMS) is affiliated to the
Hindu Nationalist Bhartiya Janata Party, the All India Trade Union Congress

(AITUC) is affiliated to the Communist Party of India, and the Hind Mazdoor
Sabha (HMS) is the Socialist labour wing. It is suggested that in the post-Inde-
pendence period, politically affiliated trade unions have provided captive ‘vote
banks’ to their political parties at the times of elections and have thus proved
to be electoral assets, and in return they have managed to secure favourable
changes to labour laws and collective bargaining.11 Such party–union nexus
proved mutually beneficial in the pre-globalisation era until 1980s but resulted
in labour market inflexibilities, which are unsuited to the competitive advan-
tage of the country in the post-economic reforms period.
The global economic crisis since 2008, which has adversely affected GDP
growth rate in India amongst many other countries, probably provides
a stronger justification for labour market reforms. The 2012–13 Global
Competitiveness Index published by the World Economic Forum (WEF)
has downgraded India by three places compared to its 2011 ranking to
59th place out of 144 countries, and the WEF’s report has been particu-
larly critical of inflexibilities in hiring and firing, redundancy costs and wage
inflexibilities in the country. India is now poorly placed compared to other
emerging economies such as South Africa, Brazil and China on its labour
market efficiency. Shyam Sundar12 draws a comparative illustration of labour
market reforms in China and India. In China, for instance, employers can
summarily dismiss workers without paying wages for violating company
rules, and employers do not have to seek prior permission from the state to
enforce redundancies. The second National Commission on Labour (NCL)13
9
E. Ramaswamy, A Question of Balance: Labour, Management and Society (Oxford: Oxford
University Press, 1997), and ‘Changing Economic Structures and Future of Trade Unions’
(1999) 42 Indian Journal of Labour Economics 785.
10
By ‘Congress Party’ we refer to the Indian National Congress (INC), the party which led
India to its Independence from British rule in 1947. There are other breakaway factions of the
Congress Party, such as Nationalists Congress Party (NCP) and Trinamool Congress, which
have no links with the INTUC.
11
See Ramaswamy, above n.9.
12
K. R. Shyam Sundar, Labour Institutions and Labour Reforms in Contemporary India:
Trade Unions and Industrial Conflict, Volume 1 (Hyderabad: ICFAI University Press, 2009).
13
National Commission on Labour (2002), Ministry of Labour, Government of India: www.
labour.nic.in/lcomm2/nlc_report.html.
442
appointed by the Government of India makes similar if not identical rec-

ommendations for the reform of Indian labour laws with employers being
allowed greater discretion in hiring and firing workers although with a
higher severance package. Similarly to the Chinese model, the NCL in India
also recommended greater state control on trade union functioning and

significant changes to union recognition laws and representation rights.14
None of these recommendations has so far been adopted by the central
or federal governments in India, but nevertheless, the Commission’s views
reflect the prevalent orthodoxy within the state with respect to labour mar-
ket reforms.15
The critics of labour market reforms, on the other hand, argue that there
is very little evidence if any to suggest that the existing regulatory frame-
work and in particular the job security provisions enshrined in the IDA
1947 have hindered employers’ ability to reduce or deploy labour or have
adversely affected their profitability.16 This is because firstly employers have
for decades managed to circumvent the regulations by restructuring their
work, outsourcing jobs, hiring contract and casual labour, reducing perma-
nent workforce through voluntary retirement schemes (VRS) and hiring
new workers on flexible and precarious contracts, thus creating a two-tier
workforce within the same establishment.17
In the following sections, we first review the theoretical premise of the
employment relations debate in India and some of the empirical work
that has informed this debate. We then illustrate the salient feature of the
labour law framework in India. Following this, we present the findings of
our union survey on workplace employment regulations in the federal state
of Maharashtra. We then discuss our findings in the context of the state and
judicial interventions in labour regulations and discuss the socio-political
factors that are likely to influence employment relations outcomes.
14
Ibid.; see V. Badigannavar, ‘Industrial Relations in India’ in M. Morley, P. Gunnigle and
D. Collings (eds), Global Industrial Relations (London and New York: Routledge, 2006).
15
A. Chakrabarti and B. Dasgupta, ‘Disinterring the Report of National Commission on
Labour: A Marxist Perspective’ (2007) Economic and Political Weekly 1958.
16
E. D’Souza, ‘The Employment Effects of Labour Legislation in India: A Critical Essay’
(2010) 41 Industrial Relations Journal 122.
17
D’Souza, above n.16; K. Shyam Sundar, ‘Trade Unions in India: From Politics of
Fragmentation to Politics of Expansion and Integration?’ in J. Benson and Y. Zhu (eds), Trade
Unions in Asia (London: Routledge 2008); L. Deshpande, A. Sharma, A. Karan and S. Sarkar,
Liberalisation and Labour: Labour Flexibility in Indian Manufacturing (New Delhi: Institute
for Human Development, 2004).
443
2. THEORETICAL DEBATE ON EMPLOYMENT RELATIONS IN INDIA
As mentioned in the preceding section, the employment relations debate

in India with its primary focus on labour market regulation and the role of
actors is largely based on the institutional approach to employment relations.

According to the institutional analysis, the globalisation of product, labour
and capital markets has intensified competition for firms worldwide that dur-
ing 1980s operated in relatively ‘protected markets’ with high entry barriers
for competition. However, the liberalisation policies pursued by national
governments (including India) through the General Agreement on Trade
and Tariffs (GATTs treaty), which led to the setting up of the World Trade
Organisation (WTO), opened up markets for foreign goods. As a membership
requirement of the WTO, national governments had to reduce their entry bar-
riers for domestic and international competition. The intensified competition
in turn provided a greater impetus and opportunity for capital to move across
national boundaries in search of cheaper labour and infrastructure.18
In the Indian context, the balance of payment crisis of 1991 when the gov-
ernment had to seek a loan from the International Monetary Fund to ser-
vice its debts served as an impetus to economic and labour market reforms.
As a result of globalisation and the increased capital mobility, it is argued
that unions can no longer afford to engage in conflictual and adversarial
industrial relations, nor can workers take improvements in their wages and
conditions for granted. Union survival is now increasingly dependent on
its ability to engage in cooperative industrial relations with employers with
collective bargaining closely tied to the business goals of the enterprise.19
The WEF’s Global Competitiveness Report (2012–13)20 too highlights the
importance of labour market efficiency in propelling economic growth. It
highlights cooperation in labour management relations, flexibility in wage
determination and a close link between pay and productivity as precondi-
tions of economic prosperity.
Venkata Ratnam21 analysed some 215 collective bargaining agreements
signed by employers and unions in both public and private sector enterprises
18
J. Bhagwati, ‘Wages and Labor Standards at Stake?’ in J. Bhagwati (ed), In Defence of
Globalization (Oxford: Oxford University Press).
19
P. Haynes and M. Allen, ‘Partnership as Union Strategy: A Preliminary Evaluation’ (2001)
23 Employee Relations 164.
20
http://www.weforum.org/issues/global-competitiveness (accessed 16 October 2012).
21
C. Venkata Ratnam, Negotiated Change: Collective Bargaining, Liberalization and
Restructuring in India (New Delhi: Response Books (Sage), 2003).
444
in the decade following the launch of economic reforms by the Indian gov-
ernment in 1991. His study indicates that there is clear shift in the pattern
of collective bargaining from maximising ‘rent seeking’ on part of unions
to productivity-linked cooperative bargaining with increased employer
assertiveness. He reports increased decentralisation of bargaining in both

public sector and large private sector enterprises, a shift towards long-
term agreements extending up to 10 years’ duration in the public sector,
and higher wages for workers but lower wage costs to companies accrued
through increased labour flexibility and higher output per worker.22 He
strongly advocates unions to focus increasingly on ‘consumer satisfaction’
and competitiveness, which in his view should be central to their bargaining
agenda and which in turn would serve the best interests of their members—
‘Trade unions can retain bargaining power if they put consumers’ interests
first, company’s interest second and their members’ interest third.’23 What
is unclear from this analysis is the extent to which employers are willing
to reconcile flexibility with employment security or indeed employability.
Nor is it clear the extent to which unions were willing or equal partners to
cooperative bargaining, or was cooperation a pre-condition to any form of
bargaining in the first instance.24
One could question, why should employers cooperate with workers or
trade unions when they can circumvent labour regulations, and the com-
petitive pressures and state support enable them to hire, fire and deploy
labour at will especially in an increasingly liberal market economy such as
India? From an institutional perspective, it could be argued that although
liberalisation policies of the state have created opportunities for employers,
these policies have at the same time intensified product market competi-
tion for many employers who hitherto had operated in protected markets
with high entry barriers. Consequently, to sustain their competitive advan-
tage, they require a workforce that is highly skilled, committed and flexible.
By engaging with workers and their representatives in an ‘integrative bar-
gaining’,25 employers are more likely to secure a shared sense of ownership
22
Venkata Ratnam, above n.21, at p. 237.
23
Venkata Ratnam, above n.21, at p. 246.
24
T. Claydon, ‘Problematising Partnership: The Prospects for a Cooperative Bargaining
Agenda’ in P. Sparrow and M. Marchington (eds), Human Resource Management: The New
Agenda (London: FT Pitman Publishing, 1998).
25
R. Peccei, H. Bewley, H. Gospel and P. Willman, ‘Is it Good to Talk? Information Disclosure
and Organisational Performance’ (2005) 43 British Journal of Industrial Relations 11.
445
and commitment towards higher productivity and possibly lower resistance

to change.
In this context, Das26 examined the changing patterns of employment rela-
tions in the post-liberalisation period in India. His work relies on a series of
case studies in large- and small-scale enterprises across varied industrial sec-

tors ranging from traditional manufacturing with strong union presence to
information technology with no union representation. Das finds a shift from
tripartite agreements of the pre-liberalisation period to more of ‘HRM’ or
‘joint team-based’ patterns of employee–employer relations across indus-
trial sectors. This he attributes largely to the competitive pressures that have
forced employers, employees and their unions (where present) to work in
cooperation with each other.
Most of the quantitative work on Indian employment relations has been
undertaken by economists. The primary focus of this strand of literature
has been on the analysis of economic policies on labour markets in terms
of employment/unemployment, industrial output and wages.27 A variant of
this strand of literature has examined the differences in labour regulations
between federal states within India and its impact on employment, income,
poverty and industrial output.28
In the Indian constitution, ‘Labour’ is on the ‘concurrent list’, which means
both the central and state (or federal) governments have the powers to legis-
late on issues of industrial relations and labour welfare. This has inevitably
26
S.Das, ‘Managing People at Work: Employment Relations in Globalizing India.’ SAGE
Publications, New Delhi, India (2010).
27
See e.g., T. Anant, P. Mahapatra, R. Nagraj and S. Sasikumar, ‘Labour Markets in India:
Issues, Perspectives and a Research Agenda’ in Felipe and Hasan (eds), Labour Markets in Asia:
Issues and Perspectives (Basingstoke: Palgrave Macmillan, 2006); A. Bhaduri, ‘Macroeconomic
Policies for Higher Employment in the Era of Globalisation’, Employment Strategy Paper,
ILO, Geneva, 2005; A. Sharma, ‘Flexibility, Employment and Labour Market Reforms in India’
(2006) Economic and Political Weekly 2078; T. Papola, ‘Globalisation, Employment and Social
Protection: Emerging Perspectives for the Indian Workers’ (2004) 47 Indian Journal of Labour
Economics 541; Papola et al., n.4, above.
28
P. Aghion, R. Burgess, S. Redding and F. Zillibotti, ‘The Unequal Effects of Liberalization:
Evidence from Dismantling the License Raj in India’ (2008) 98 American Economic Review
1397; T. Besley and R. Burgess, ‘Can Labor Regulation Hinder Economic Performance?
Evidence from India’ (2004) 99 Quarterly Journal of Economics 91; A. Ahsan and C. Pagés,
‘Helping or Hurting Workers? Assessing the Effects of De Jure and De Facto Labor Regulations
in India’, World Bank Report, and ‘Are all Labour Regulations Equal? Evidence from Indian
Manufacturing’ (2009) 37 Journal of Comparative Economics 62; P. Fallon and R. Lucas, ‘The
Impact of Changes in Job Security Regulations in India and Zimbabwe’ (1991) 5 World Bank
Economic Review 395, and ‘Job Security Regulations and the Dynamic Demand for Industrial
Labor in India and Zimbabwe’ (1993) 40 Journal of Development Economics 241.
446
created some variations across states within India with respect to the nature
and level of protection offered by labour laws to workers and trade unions.
These variations provide quasi-experimental models for economists to test
the impact of labour regulations on job creation and industrial productivity.
D’Souza29 and Jha and Goldar30 have provided a comprehensive critique of

many of these econometric studies that generally tend to claim a negative
impact of job security regulations on employment generation, wages and pov-
erty. They find several conceptual and empirical limitations of these studies.
One of the often-cited studies on this issue is by Besley and Burgess.31
The authors looked at amendments made by federal states to the IDA
1947 over a 30-year period and classified these states into ‘pro-worker’
and ‘pro-employer’ categories. They found that states that had amended
the IDA in a pro-worker direction suffered from lower industrial output,
higher unemployment and higher urban poverty compared to the states that
had amended the statute in pro-employer direction. The key conceptual
limitations of this study lies in its method of classification of states as pro-
worker or pro-employer. The authors have assigned a code of +1 to every
pro-worker amendment, −1 to pro-employer amendment and 0 to a ‘neu-
tral’ amendment. Simply assigning subjective codes to every change in the
statute without understanding its legal and operational significance on the
ground is conceptually flawed. Some amendments may be far more signifi-
cant than the others, and hence to weigh all at the same level is over-simplis-
tic. Furthermore, classifying a state as ‘pro-worker’ or ‘pro-employer’ based
exclusively on the changes made to a single statute is a rather restricted view.
D’Souza32 rightly points out that one has to draw a distinction between
simply having a law in the statute book and the law being enforced in prac-
tice. He cites several anomalies in the work of Besley and Burgess.33 For
instance, states such as Maharashtra and Gujarat, which were classified
by the authors as ‘pro-worker’, have significantly reduced their monitor-
ing and inspections of labour law implementation by employers compared
to many of their ‘pro-employer’ states. Besley and Burgess34 only refer to
Above, n.16.
29
P. Jha and S. Golder, ‘Labour Market Regulation and Economic Performance: A Critical
30
Review of Arguments and Some Plausible Lessons for India’, Working Paper, Employment
Analysis and Research Unit, Economic and Labour Market Analysis Department, ILO,
Geneva, 2008.
31
Above, n.28.
32
Above, n.16.
33
Above, n.28.
34
Above, n.28.
447
the manufacturing performance. So we have no information on the impact

of IDA in other sectors of the formal or regulated sector of the economy
(also known as the ‘organised sector’). The authors are themselves unsure
whether their findings can be attributed to labour regulations per se or a
result of poor industrial relations climate and labour management hostil-

ity.35 They implicitly assume that pro-worker amendments result in labour
militancy and hence higher unemployment without actually testing the
impact of these amendments on workplace employment relations.
Some later studies have improvised on the work of Besley and Burgess36
and have taken into account a broader range of legal indicators, such as the
type of employment contract, employee representation, industrial action,
judicial efficiency and pro-worker awards made by law courts, and have
assessed the impact of these variables on employment and industrial out-
put in the formal or registered sector of the Indian economy.37 These stud-
ies report rather contrasting findings compared to those of the Besley and
Burgess study. They find little or no adverse impact of pro-worker labour
laws in India on unemployment or industrial stagnation. Neither do they
find any significant association between pro-worker awards made by labour
courts and growing casualisation of employment particularly in the infor-
mal sector of the economy. Nevertheless, these later studies too rely on
macro-level analysis of econometric data and consequently fail to capture
the ground realities of workplace employment regulation as experienced by
workers and trade unions in India.
In this context, the 2004 Global Labor Survey38 attempts to ‘measure de
facto labour practices in countries around the world, covering issues such as
freedom of association, regulation of work contracts, employee benefits and
the prevalence of collective bargaining’ (ibid, 2). The survey elicited online
responses from trade union activists, academics and government officials
amongst others from a total of 77 developed and developing countries. The
main limitation of this online survey was the very small number of responses
the researchers received from developing countries. For instance, only 15
35
Above, n.28, at p. 125.
36
Above, n.28.
37
S. Fägernas, ‘Labour Law, Judicial Efficiency and Informal Employment in India (2010)
7 Journal of Empirical Legal Studies 282; S. Deakin and P. Sarkar, ‘Indian Labour Law and
its Impact on Unemployment, 1970–2006: A Leximetric Study’ (2011) 54 Indian Journal of
Labour Economics 607.
38
D. Chor and R. Freeman, ‘The 2004 Global Labor Survey: Workplace Institutions and
Practices around the World’, Working Paper 11598, National Bureau of Economic Research,
2005: www.nber.org/papers/w11598 (accessed 16 October 2012).
448
individuals from India participated in this survey, who reported that the gen-
eral economic situation in the country was favourable to employers while the
labour market conditions at the time were slightly favourable to workers in
the formal sector of the economy. The authors suggest that future research
should include non-internet-based surveys preferably through country-based

organisations by inviting practitioners to participate in the surveys (ibid, 25).
Sen and Dasgupta39 have collected primary data from workers in the manu-
facturing sector enterprises from six different states in India. They report
that the liberalisation policies pursued by the Indian government have deliv-
ered an unfair deal to the workers in terms of their job security, wages and
working conditions. Their work, however, is confined to the manufacturing
sector and does not explain the impact of labour regulations on working con-
ditions. Our research attempts to address this gap in the literature on labour
market regulations in India by undertaking an extensive survey of workplace
union activists of a large national trade union federation.
3. THE LABOUR LAW FRAMEWORK IN INDIA
There are about 400 million workers in the Indian labour market. Of these,
around 93% are employed in the ‘informal’ or unregistered sector of the
economy (also referred to as the ‘unorganised sector’). Only about 7% are
employed in the registered sector enterprises operating in the formal sector
of the economy. Some estimates suggest that within this regulated sector of
the economy, about 60–70% of workers are employed as ‘contract workers’
hired through labour contractors/agents with little or no legal protection.40
Thus effectively, the coverage of labour laws in India is restricted to only a
small proportion of the entire workforce. Papola et al.41 estimate only about
15% of the total workforce are covered under some provisions of the indus-
trial relations and welfare laws in India.
There are 60 central laws and 200 federal (state laws governing labour
relations in India.42 In this section, we will briefly review the salient features
39
S. Sen and B. Dasgupta, Unfreedom and Waged Work: Labour in India’s Manufacturing
Industry (New Delhi: Sage, 2009).
40
D. Saini, ‘The Contract Labour Act 1970 Issues and Concerns’ (2010) 46 Indian Journal of
Industrial Relations 32, at p. 33.
41
Above, n.4.
42
D. Saini, ‘Employment Law Framework: Structure and Potential Hurdles’ in P. Budhwar
and A. Varma (eds), Doing Business in India: Building Research-Based Practice (London and
New York: Routledge, 2011), at p. 24.
449
of some of the central and federal industrial relations laws. The IDA 1947
has been the most contentious piece of central legislation in India primarily
due to its employment protection provisions. The IDA technically applies
only to enterprises in manufacturing, mining and plantations. However,
over the years, central and state governments have included many other

industries in the purview of this legislation.43 The IDA provides for dis-
pute resolution machinery through conciliation, arbitration and adjudica-
tion. Every state has a Labour Commission, which is empowered to appoint
labour officers as conciliators in labour management disputes. If the dispute
cannot be resolved through conciliation, it is then referred to the labour/
industrial courts for adjudication. The parties to the dispute have an option
to ask for an independent arbitration. Parties can select the arbitrator and
notify the appropriate state officials of the agreement reached, which is to
be included in the state gazette. However, the arbitration route is far less
popular due to mutual distrust between the employers and unions, and the
preferred route instead is adjudication through law courts if conciliation
fails to resolve the dispute.44
According to the provisions of the IDA, a firm employing 100 or more
workers has to secure prior permission from the appropriate government
before laying off or retrenching even a single worker, or closing down the
firm. Some analysts suggest that governments are reluctant to grant such
permission due to political expediencies.45 There have been suggestions from
the employer lobbies to increase this threshold from 100 workers to 300 or
perhaps 1000 workers.46 Another provision of the IDA requires employers
to give a 21-day notice to workers and their unions if the employer intends
to make any changes to their service conditions. According to some ana-
lysts,47 this allows unions to raise an industrial dispute resulting in prolonged
negotiations and in turn a missed opportunity for employers to restructure
their internal labour markets and stay competitive.
The Trade Unions Act 1926 allows registration of trade unions by any
seven employees (including managers) in an establishment or a minimum
10% of workers employed in an industry or 100 workers, whichever is less.
43
D. Jain, Commentaries on Industrial Disputes Act 1947 (3rd edn) (Mumbai: Labour Law
Agency, 2007).
44
Saini, above n.40, at p. 34.
45
D. Bhattacherjee and P. Ackers, ‘Introduction: Employment Relations in India–Old
Narratives and New Perspectives’ (2010) 41 Industrial Relations Journal 104.
46
Above, n.40.
47
Above, n.40, at pp. 41–2.
450
Even where a union is formed, there is no legal obligation on the employer

to recognise the union for collective bargaining. There are some states in
India, such as Maharashtra and Madhya Pradesh, where unions can seek an
enforcement order from state bodies or the courts that requires an employer
to recognise a union. Once registered as a trade union, its office bearers

and members secure immunities from some civil and criminal acts, which
if pursued in an industrial dispute (e.g. cessation of work) might otherwise
constitute a conspiracy.48
Another important piece of labour legislation, which has been much
debated in the post-economic reforms era, is the Contract Labour
(Regulation and Abolition) Act 1970. This is primarily due to the significant
rise in the number of contract or casual workers even in enterprises in the
formal or ‘registered’ sector of the economy and in the wider labour mar-
ket.49 This law stipulates the tasks for which an employer can hire workers
on short-term contracts. It prohibits employment of contract labour in core
activities of the firm, which are carried out on a long-term and continu-
ous basis. It also provides for the fair payment of wages to contract work-
ers and stipulates supervision of wage payment by the principal employer.
Furthermore, it requires the contractor/agent or, in some instances, the prin-
cipal employer to provide for health and safety and welfare of the contract
workers employed in the enterprise. There are some cross-references with
the IDA 1947. Section 25B of the IDA states that if a worker has continuous
service of 240 days (which includes contract workers), then that worker can
claim permanency of employment which in turn confers upon him/her the
statutory protections under various labour laws.
The Maharashtra Recognition of Trade Unions and Prevention of Unfair
Labour Practices Act (MRTU and PULP 1971) is a federal act applicable to
establishments operating in the federal state of Maharashtra. The act came
into force from 8 September 1975 and covers all industries covered by the
IDA 1947 and the Bombay Industrial Relations (BIR) Act 1946. The pri-
mary purpose of the statute is to set out the procedure for trade union rec-
ognition and describes what constitutes unfair labour practices on part of
employers and unions. It also sets out the enforcement machinery and the
penalties for engaging in such unfair labour practices. A union with 30%
membership in an undertaking for a continuous period of six months can
48
Saini, above, n.40, at pp. 31–2.
49
Saini, above, n.40; S. Bhaumik, ‘Casualisation of the Workforce in India, 1983–2002’ (2003)
46 Indian Journal of Labour Economics 907.
451
apply to the industrial court for recognition. Once granted recognition, the
employer is obliged to engage in collective bargaining with the recognised
union. Failure to do so constitutes an unfair labour practice.
Other unfair labour practices stipulated under the MRTU and PULP
law include: dissuading employees from joining a union through the use of

threats or favouritism, employer organising a non-recognised union, victim-
ising employees for union activities, dismissal of employees for engaging
in legal strikes, attempting to break a strike through outsourcing work to
sub-contractors, employing casual or temporary workers for years without
giving them permanency of employment, etc.50
Thus, overall, the statutory provisions of some of the key labour laws in
India summarised above suggest a fairly protective legislative environment
for workers and trade unions in the formal sector of the economy. According
to Deakin and Sarkar, ‘India has a system of labour regulation that is pro-
worker by reference to international comparisons, the effect is largely due
to its laws on termination of employment.’51 One would expect that such
a legislative environment will afford a reasonable degree of protection to
workers and unions from employer excesses.
4. RESEARCH METHODS: SETTINGS, PROCEDURES AND QUESTIONS
The data for this research came from a survey of workplace union repre-
sentatives of the second largest national trade union federation in India,
namely the INTUC, which is affiliated to the ruling Congress Party.
According to Shyam Sunder,52 the total verified membership (by state offi-
cials) of INTUC in December 2002 was about 3.9 million workers nation-
ally. The INTUC’s own website (accessed 18 June 2012) claims its total
national membership to be in the region of 8.2 million workers. In the state
of Maharashtra, which is the setting of our research, the INTUC’s member-
ship totals to about 1.2 million workers. It is quite likely that this includes a
large proportion of agricultural workers, which fall beyond the purview of
industrial relations laws in the country. In 2002, the reported non-agricul-
tural membership of INTUC nationally was 2.95 million workers. Thus, in
50
A. Thakker, Labour Law: Highlights of Major Labour Enactments in India, Updated till
April 2009 (Mumba: Mill Mazdoor Welfare Trust, 2009), at pp. 17–9.
51
Deakin and Sarkar, above, n.37, at p. 616.
52
K. Shayam Sundar, ‘Emerging Trends in Employment Relations in India’ (2010) 45 Indian
Journal of Industrial Relations 585.
452
terms of its membership strength, INTUC is a significant labour federation

in the country. The INTUC was founded in 1947 by senior political figures in
the Congress Party just before India got its Independence from the British
colonial rule. Owing to its close relationship with the Congress Party, some
analysts have typified the INTUC as a moderate union, which has at crucial

times, such as the national emergency imposed by the Congress government
from 1975–77, towed the party line.53
The INTUC on its website cites its founder Gulzari Lal Nanda empha-
sising the importance of cooperation with state for nation building in the
post-Independence period and to counteract the threat of strikes and agita-
tions posed by the communist unions at the time. The federation’s objectives
state that it will aim ‘to secure redressal of grievances without stoppages of
work, by means of negotiations and conciliation and failing these by arbi-
tration and adjudication’.54 Based on these observations, one would expect
INTUC to be a federation that is more likely to cooperate with employers
rather than engage in militant unionism, and thereby its union activists are
less likely to suffer employer hostility. Secondly, we could also expect that
INTUC’s close connections with the powerful ruling Congress Party both
in the central and the state government of Maharashtra is likely to prove a
deterrent against employer arbitrariness. And hence, given its political clout
and membership strength, the INTUC would be in a good position to pro-
tect workers’ interest.
We first approached INTUC for research access in June 2009, and the
survey of workplace representatives of unions affiliated to INTUC in the
state of Maharashtra was undertaken between February and May 2010.
The survey covered workplaces in the formal sector establishments from
the public services (including banks and insurance companies; local govern-
ment, civil services, port and docks and education), private services (includ-
ing health care, private cooperative banks; stationary, retail and commercial
establishments; private higher education institutions and private transport)
and private manufacturing sector (including textiles, cement and construc-
tion materials, and light manufacturing). The population for this research
was workplace union activists of the INTUC-affiliated unions in the formal
sector establishments. We only included those enterprises employing 100 or
more workers to ensure that they fall within the ambit of all major central
and state industrial relations laws. Furthermore, we only sampled workplace
Above, n.12, at p. 43.

53
www.intuc.net (accessed 12 October 2012).

54
453
union representatives with at least three years of active trade union experi-
ence in the same establishment.
Based on our sampling criteria, a total of 975 workplace union represent-
atives were included in our survey. The survey questionnaire was translated
in Hindi and in Marathi, which is the regional language of Maharashtra. In

most cases, the surveys were administered as self-completion questionnaires.
However, in some parts of the state, it was administered as a structured inter-
view schedule by a researcher. The field researcher was deployed locally in
those parts of the state where postal services were unreliable and it could
have been time-consuming to collect data through self-administered ques-
tionnaires. The field researcher was competent in the regional languages and
English and was trained in administering the structured interview schedule.
We received a total of 447 completed usable questionnaires, thus giving us a
response rate of 46%. The survey questionnaire included a total of 65 ques-
tions. In addition to questions on the demographic profile of the respondent
and the workplace, we sought information on key areas covered by the main
industrial relations laws such as employment protection, industrial disputes,
dispute resolutions and unfair labour practices.
In addition to the survey, we also undertook extensive interviews with
senior union officers of the INTUC as well as other trade union federations
representing workers in the formal sector enterprises in Maharashtra, such
as HMS (a socialist union federation), AITUC (a communist union), CFTUI
(a politically independent trade union) and New Trade Union Initiative
(NTUI) (an umbrella body of various politically affiliated and independent
unions and some NGOs). We also interviewed academics and policy ana-
lysts, state officials in the Ministry of Labour, labour lawyers, retired high
court and labour court judges, officials of the Employers Federation of India
and senior HR–IR managers in the industry. In total, about 56 interviews
were carried out from July 2009 to December 2010. The purpose of these
interviews was to expand and clarify our survey findings, but more impor-
tantly to get a better understanding of the socio-political factors that con-
tinue to shape employment relations in India.
The federal state of Maharashtra provided an interesting setting for our
research. Besley and Burgess,55 based on their analysis of the amendments
made to the IDA 1947, have classified Maharashtra as a state with a ‘pro-
worker’ labour regulatory framework. Likewise, Deakin and Sarkar56 have
55
Above, n.28.
56
Above, n.37.
454
included the labour laws in Maharashtra in their composite index of labour

regulation as ‘it is one of the most industrially developed states and also
one with extensive labour law provisions’. Indeed Maharashtra does have
a bespoke trade union recognition law, namely the MRTU and PULP, dis-
cussed earlier in this article. Hence one would expect that in a ‘pro-worker’

state like Maharashtra, employee and union rights are protected to a rela-
tively high degree.
5. RESULTS
A majority of the union representatives who participated in the survey

were employed in the public services (47%). Twenty-three percent of the
respondents came from establishments in the private services, and the cor-
responding figure for private manufacturing was about 30%. The average
size of workplace covered in our survey was 146 employees. In total, our
respondents represented about 65,262 workers. Eighty-nine percent of our
respondents were men and only 11% were women, and the average duration
of being a workplace union representative was 6.3 years. The demographic
profile of our respondents was fairly similar to the population of workplace
union representatives covered in this survey with around three-fourths of
the union representatives being men, largely employed in public services
and with an average experience of around seven years as a workplace union
representative. Despite the close match between our sample profile and the
population, we do realise that there is likely to be a respondent bias in our
survey. We have tried to overcome this bias by interviewing a large number
of union representatives from our population who had not participated in
the survey. As expected, the average union density was comparatively high
in the public services (67%) compared to private services (23%) and private
manufacturing (54%). Eighty-three percent of our respondents in the public
services reported that their management recognised the union for collec-
tive bargaining. The corresponding figures for private services and private
manufacturing were 41% and 68%, respectively.
A. Employment Protection

This is the most contentious provision in Chapter VB of the IDA 1947,
which requires management of establishments with 100 or more workers
employed in the preceding 12 months to seek prior approval of appropriate
455
government authority before laying off or retrenching even a single worker

or closing down the establishment. There are some exceptions with regard
to casual and replacement or ‘badli’ workers. In our survey, we asked work-
place union representatives to report any job cuts of permanent/regular
employees at their establishment in the past five years. Fifty-seven percent

of union representatives in the public services reported such job cuts at their
workplace. The corresponding figures for private services and manufactur-
ing were 58% and 71%, respectively.
Interestingly, 68% of union representatives from private services reported
that their employer failed to obtain prior permission from state authorities
before cutting jobs of permanent workers. The corresponding figures for
manufacturing and public services were 59% and 12%, respectively. Thus
it appears that only a small minority of employers in the private services
and manufacturing enterprises are actually fulfilling the requirements of the
IDA when it comes to job cuts. In cases where the employer had duly sought
prior permission of state authorities, we asked whether the union recog-
nised for collective bargaining had been given a copy of the approval letter
from the state authorities. Only 26% of union representatives from private
manufacturing establishments reported that their employer had given a
copy of the approval letter to the union. The figure was slightly lower at
18% in the public service organisations and even lower at 11% in private
services establishments.
We then asked union representatives about any headcount reductions
at their workplace through VRS in the past five years, and whether or not
the employer consulted with the union over the target group of employ-
ees for VRS, the number of employees involved and the severance package.
Although this is not a statutory requirement under the IDA, it is to some
extent covered under the Code of Discipline in the Industry (1958), which is
a schedule of the IDA 1947 (Jain 2007). It is also a statutory requirement on
part of employers under the BIR Act 1946.57 VRS was a prominent feature
in public sector establishments with nearly 73% of union representatives
reporting it in our survey. Similar findings have been reported by Venkata
Ratnam.58 This was followed by workplaces in private manufacturing sec-
tor (52%) and private services (31%). In the latter two sectors, however,
union consultation was very poor with just about one in four union repre-
sentatives reporting that management discussed and consulted with them
57
Thakker, above n.50.
58
Above, n.21.
456
the details of the staff to be affected by VRS and the compensation package
to be offered. Even in the public services, just over half of our respondents
(56%) reported ‘meaningful consultation by management on VRS’. Thus, in
a large majority of cases, employers failed to fulfil their statutory obligations
under the employment protection clauses of the IDA and other relevant

labour laws.
B. Unfair Labour Practices

The state legislation MRTU and PULP in force in the state of Maharashtra
and the central legislation IDA stipulate what constitutes unfair labour
practices on part of employers and unions. In our survey, we asked union
representatives to report unfair labour practices at their workplace recorded
by the union in the past five years. We also asked whether they had seen an
overall change in the trend of such practices in the preceding two years, i.e.
either the practices had increased, decreased or had remained about the
same. Table 1 describes the incidences of unfair labour practices reported
by our survey respondents.
Data in Table 1 present a rather disturbing picture. About half of union
representatives in public services and nearly two-thirds of those in the
Table 1. Unfair Labour Practices Reported by Union Representatives (All

Figures in Percentages)
Unfair Practices Public Pvt. Pvt.
services manufacturing services
Illegal lockouts 12 35 32
Victimisation of union 47 69 62
representatives
Illegal breaks in employment 47 72 61
of workers to avoid permanent
contracts
Dismissed workers during strikes 19 59 53
Management offered incentives to 33 57 41
workers to leave the union
Employer sponsors a union to 32 43 40
break legitimate unions
Source: Survey of INTUC union representatives in Maharashtra.
457
private manufacturing and private services establishments reported ‘victim-

ization of union representatives by management’. Nearly one in three union
representatives in the private manufacturing and private services reported
‘illegal lockouts’ by management. Even in the public services, nearly one
in every three union representatives reported ‘management offered incen-

tives to workers to leave the union’. This was proportionately much higher
in the private manufacturing and private services. Nearly half of all union
representatives in public services and nearly three out of four in private
manufacturing reported ‘illegal breaks in service of employees to avoid per-
manent contracts’. Employer-sponsored unionism was also reportedly high
across workplaces in all the three sectors. And dismissal of workers during
strikes was reported by over half of our respondents in private manufactur-
ing and private services and by nearly one in five respondents in public ser-
vices. Twenty-seven percent of union representatives in the public services
reported an increase in employer unfair labour practices over the past two
years. The corresponding figures for private manufacturing and private ser-
vices were 39% and 47%, respectively.
During interviews with senior union officials of the HMS, INTUC and
CFTUI, it was reported that in two major Port Trust authorities—one in
Maharashtra and the other in the state of Andhra Pradesh, management was
actively encouraging workers to quit the recognised union and join another
rival union, which was on ‘friendlier terms’ with the management. In both
cases, workers were being offered financial incentives to quit the recognised
unions. Illegal breaks in service of workers were often reported by union
officers and workplace representatives in our interviews. Management often
hires contract workers and terminates their employment contracts a few
weeks before they complete a continuous period of 240 days. The same
workers are then rehired on a fresh contract either in the same concern or
in a sister concern of the same enterprise. The same practices are used to
terminate contract of permanent workers on probation. There are instances
where workers have been employed with the same employer for several
years but were denied permanency of employment on the grounds of dis-
continuity in tenure. These findings are similar to those reported by other
researchers, such as Mathur59 and Sen Gupta and Sett.60 They also report
59
A. Mathur, Industrial Restructuring and Union Power (New Delhi: ILO-ARTEP, 1991), and
‘Employment Security and Industrial Restructuring in India’, Paper presented at the National
Seminar on Restructuring Indian Economy, Calcutta, 18 January 1992.
60
A. Sen Gupta and P. Sett, ‘Industrial Relations Law, Employment Security and Collective
Bargaining in India: Myths, Realities and Hopes’ (2000) 31 Industrial Relations Journal 144.
458
other ingenious ways in which employers try to exclude workers from statu-
tory protection of IDA; for instance, re-designating a telephone operator to
‘communications officer’ and an accounts clerk to ‘payroll executive’.
C. Industrial Disputes and Dispute Resolution

Here we asked union representatives to report the number of strike ballots
and actual strike actions the union had undertaken in the past five years.
Likewise we asked them to report the number of times the employer had
imposed a lockout on workers over the same period of time. Furthermore,
we asked the number of individual and collective disputes the union had
raised with the employers in the past two years. We then asked what propor-
tion of these disputes was settled through bilateral negotiations between the
union and management and what proportion of disputes was referred (and
by whom) to state authorities for conciliation and adjudication. Although
unions or employers cannot directly refer disputes to labour/industrial
courts for adjudication under the IDA 1947, they can do so under the BIR
Act 1946.
On average, the union had raised three individual disputes and five col-
lective disputes per workplace with management in the past two years. Thus
on the whole, the union had in the past two years raised a total of about
1341 individual disputes and 2235 collective disputes with employers in the
public services, private manufacturing and private services establishments
covered in our survey. Only 12% of disputes in the public services establish-
ments were reportedly resolved through bilateral negotiations between the
union and management. The corresponding figures for private manufactur-
ing and private services establishments were 14% and 8%, respectively. Of
the remaining disputes, 72% of disputes in the public services were referred
by management for adjudication. The corresponding figures for private
manufacturing (83%) and private services (76%) were even higher. Thus, on
the whole, a relatively small proportion of industrial disputes was referred
to adjudication by the union. Hence claims by employer associations like
the CII that the labour law framework in India results in litigious behaviour
on part of workers and trade unions seems unsubstantiated. Our findings
suggest that, if at all anything, it is the employers who are more likely to
resort to litigations rather than the unions.
Likewise, in terms of growing labour militancy as claimed by the CII and
Employer Federation of India, our findings were quite the opposite. The
average number of strike ballots across all workplaces reported by union
459
representatives in our survey was 1.44 in the last five years. The actual
numbers of work stoppages resulting from these ballots were less than 0.5
incidences per workplace over this period. On the other hand, employers
threatened lockouts during negotiations on average 4.6 times per workplace
in the last five years. These threats were almost always in the private manu-

facturing and private services, whereas it would be politically very sensitive
to threaten or impose a lockout in the public services. The actual numbers of
employer lockouts in the private manufacturing and private services estab-
lishments covered in our survey amounted to an average of 2.63 per work-
place. In other words, the incidence of employer lockouts reported in our
survey was about five times higher compared to union strikes. It would be
interesting to see how this data compares with the national data on indus-
trial disputes published by the Labour Bureau and the Ministry of Labour.
Table 2 provides data on the pattern of strikes and lockouts in India over a
15-year period from 1991 to 2005.
Table 2. Pattern of Industrial Disputes in India During 1991–2005

Year Workers involved Man-days lost Man-days lost per
(in thousands) worker (in million)
Strikes Lockouts Strikes Lockouts Strikes Lockouts

1991 872 470 12.43 14.00 14.3 29.8
1992 767 485 15.13 16.13 19.7 33.3
1993 672 282 5.61 14.69 8.3 52.1
1994 626 220 6.55 14.33 10.6 65.1
1995 683 307 5.72 10.57 8.4 34.4
1996 609 331 7.82 12.47 12.8 37.8
1997 637 344 6.31 10.68 9.9 31.0
1998 801 488 9.35 12.71 11.7 26.0
1999 1099 212 10.62 16.16 9.7 76.2
2000 1044 374 11.96 16.80 11.5 44.9
2001 489 199 5.56 18.20 11.37 91.45
2002 900 179 9.66 16.92 10.73 94.50
2003 1010 804 3.20 27.05 3.17 33.60
2004 1903 169 4.82 19.04 2.53 112.54
2005 2722 190 10.80 18.86 3.96 98.86
Source: Labour Bureau and Annual Reports of the Ministry of Labour, Government of India.
460
The official data published by state agencies reveal that in the first one-
and-a-half decade of economic reforms, the total number of man-days lost
due to strikes was 125.54 million, whereas the total number of man-days lost
due to employer lockouts over the same period was nearly twice as high at
238.61 million. Over this period, the average intensity of employer lockouts

as measured by the number of man-days lost per worker was about six times
higher compared to that of strikes. In 2004 alone, the number of man-days
lost per worker due to lockouts was about 44 times higher compared to
the number of man-days lost per worker due to strikes. The Labour Bureau
of the Government of India reports that during 2002–3 the proportion of
man-days lost due to strikes decreased by 66.83%, whereas the propor-
tion of man-days lost due to lockouts during the same period increased by
59.86%. In 2003, out of the 297 lockouts recorded, as many as 290 or 97.64%
of lockouts were ‘pure lockouts’, i.e. lockouts originating and terminating
as lockouts. These were responsible for a time loss of 20.50 million man-
days or 75.77% of the total time loss caused by all lockouts in the coun-
try. More recent provisional figures released by the Central Labour Bureau
(2010) indicate that 65,317 workers in establishments in the ‘central and
state spheres’ were affected due to ‘strikes’ compared to 281,065 who were
affected due to employer lockouts. These figures indicate an alarming rise in
employer militancy during the period of economic reforms.
With respect to the causes of industrial disputes, the Labour Bureau
reports that in 2003, 174 lockouts were due to worker ‘indiscipline’, and
these alone accounted for 58.59% of all lockouts. Lockouts over union’s
‘Charter of Demands’ accounted for a time loss of 26.17%, while those due
to ‘Wages, Allowances and Bonus’ together resulted in a time loss of only
5.56% of the total man-days lost in 2003. Shyam Sunder61 cites an interest-
ing report from the West Bengal Labour Bureau dating back to late 1980s
and early 1990s, which documents the ‘real causes’ of employer lockouts
when the stated cause was ‘worker indiscipline’. The real causes documented
by the state officials investigating these disputes were: management’s inten-
tion to reduce business and impose job cuts, high prices of raw materials,
poor financial management (‘uneconomic running’) and financial difficul-
ties faced by management. Thus the stated cause of ‘indiscipline’ was merely
a management ploy to restructure or close business or camouflage financial
mismanagement.
61
K. Shayam Sundar, Industrial Conflict in India: Is the Sleeping Giant Waking Up? (New
Delhi: Bookwell, 2010), at p. 82.
461
In our survey, we asked union representatives to report the key causes

of industrial disputes with employers over the past five years. The most
common causes reported were ‘job cuts and voluntary retirement schemes’
(59%), ‘use of contract or temporary labour to replace permanent workers’
(63%) and ‘unfair pay and failure to implement wage agreements’ (42%).

These findings resonate with those of Deshpande et al.,62 where they found
extensive use of contract labour and numerical flexibility resulting in insecu-
rity of employment for workers employed in large establishments employ-
ing 1000 or more workers.
6. DISCUSSION
Findings of our union survey in the state of Maharashtra reveal that, while
the state may have a pro-worker legislative framework, it affords at best
only weak protection to workers and unions at the establishment level. The
statutory provisions of employment security in the IDA, which are much
debated in academic and policy literature, are grossly violated by employers
in the formal sector enterprises covered in our survey. The findings on unfair
labour practices and industrial disputes are quite disturbing. Employers
seem to pay little or no heed to the statutory provisions under central and
federal labour laws aimed at protecting workers and unions against unfair
labour practices. Data on industrial disputes indicate a rise in employer mili-
tancy and not labour militancy since the launch of economic reforms. What
could explain these findings?
One possible explanation may lie in the details of these so-called pro-
worker legislations and more importantly their judicial interpretations.
There is a growing unrest among trade unionists and employment relations
scholars in India about some recent High Court and Supreme Court judge-
ments that seem to tilt the balance of power firmly in favour of employers.
It is argued that until the mid-1990s, the courts interpreted labour laws in
favour of workers, but in line with the neo-liberal agenda followed by the
state, the judiciary too appears to be more than willing to protect the inter-
ests of capital at the expense of labour.63 For instance, the Supreme Court
62
Above, n.17.
63
R. Dhavan, ‘Arguments, Protests, Strikes and Free Speech: The Career and Prospects of the
Right to Strike in India’ (2006) 49 Indian Journal of Labour Economics 63; G. Singh, ‘Judiciary
Jettisons Working Class’ (2008) 7 Combat Law: The Human Rights and Law Bimonthly 24;
A. Ray, ‘Axing Regularisation’ (2008) 7 Combat Law: The Human Rights and Law Bimonthly 96.
462
of India in 2006 in a case involving a public sector enterprise64 ruled that

casual and temporary workers even after continuous period of service span-
ning several years have no right to claim permanency in their employment
as they were not hired through the due process and were instead recruited
through the ‘back door’. This informal system of hiring deprives other poten-

tial candidates from securing that job.65 What the Supreme Court seems to
have ignored in its ruling is that this supposed ‘back door’ entry was for the
convenience of the management and their labour contractors and not work-
ers. Hence to penalise workers for management’s failings and to deny them
employment security is unjustified.66
Similarly, in 2001 the Supreme Court of India in another public sector
dispute67 ruled that the Contract Labour Act does not provide for the auto-
matic absorption of contract workers as permanent workers if the enterprise
decides to abolish contract labour system.68 By delivering such judgement,
the Supreme Court has over-ruled its own previous pro-worker judgements
that required employers to absorb permanently contract and temporary
workers who fulfilled the necessary conditions of 240 days of continuous
service. The repercussions of these anti-labour judgements have been felt
widely across public and private sector enterprises in India, affecting the
working conditions and livelihood of thousands of workers.69
A review of judgements of various higher courts in India dating back
to 1970 and 1980s suggests that the pro-employer stance within the Indian
judiciary is not such a recent phenomenon after all. For instance, under the
IDA 1947, an employer can lock out even a single employee from its prem-
ises. There is no legal obligation on an employer that lockout should apply
to more than one worker. Needless to say, such legislative provisions are
likely to be abused by employers to demobilise union-organising campaigns
or shift the balance of power during industrial disputes by quickly despatch-
ing the ‘ring leaders’. Furthermore, ‘labour unrest’ can be a valid reason for
closure of establishments by employers as long as employers can prove that
the unrest is not a genuine industrial dispute over which they have control,
such as inter-union or inter-worker rivalry, which adversely affects the firm’s
64
Secretary, State of Karnataka & Ors v Uma Devi & Ors. [2006] 4 S.C.C. 44.
65
Shyam Sundar, above, n.61.
66
Interview with retired Justice Kochar, September 2010.
67
Steel Authority of India v National Union Waterfront Workers. [2001] 7 SCC 1.
68
J. Cox, ‘Judiciary Leaves Contract Labour in the Cold’ (2008) 7 Combat Law: The Human
Rights and Law Bimonthly 68.
69
Ray, above, n.63.
463
commercial interests. One can imagine how such legal provisions can be
creatively used by employers to thwart unionism. Employer’s commercial
interests are further safeguarded by the law, which allows an employer to
close down their establishments and continue to trade the same product
under the same brand label but sourced from another manufacturer. Such

provisions further shift the balance of power in favour of employers who
can close down establishments facing (real or fabricated) labour unrest and
transfer production to sister companies registered elsewhere.70
Under one of the union recognition laws (MRTU and PULP 1971), an
employer who has commenced an illegal lockout without giving due notice
to employees can issue such notice during the continuance of the lock-
out and ‘cure its illegality’. However, the law is not so benevolent when it
comes to illegal strikes by workers/unions.71 In explaining employer mili-
tancy in the use of lockouts, some analysts have suggested that employers
use lockouts as a proxy to firm closure. This is because during periods of
lockouts an employer is not liable to pay wages to employees as it would
be in the case of layoffs, retrenchments or firm closures.72 Given such tech-
nicalities and judicial bias in the interpretation of labour laws, it seems
hardly surprising that workers and unions find themselves vulnerable to
employer hostility.73
Besides judicial interpretations, we can also analyse our findings in the
context of the broader role of the state in employment relations in India
and the relationship between trade unions and political parties.74 There is a
general disenchantment among workers and trade unions in India that the
state favours private domestic and foreign capital to the extent of violating
the fundamental rights of labour enshrined in the Indian Constitution. Even
in a pro-worker communist-ruled state of West Bengal, the Chief Minister
in 2008 publicly stated that he did not support worker agitations, labelling
them as ‘illegal’ and ‘immoral’.75 The state police machinery is frequently
70
Dilip Trading Company v Vasant Babu Patil 2002 III CLR 597; Bhavnagar Municipality v
Alibhai Karimbhai & Ors AIR 1977 SC 1229; Shree Rameshwar Dass & Ors v State of Haryana
& Ors 1987 I LLJ 514 SC; Workmen of M/s Sur Iron & Steel Co. Pvt Ltd. v Sur Iron and Steel
Co. Pvt. Ltd. 1971 I LLJ, 570 SC.
71
See Premier Automobiles Limited v G.R. Sapre 1981 LIC 221.
72
Sen Gupta and Sett, above, n.60.
73
Singh, above, n.63.
74
K. Burgess, Parties and Unions in the New Global Economy (Pittsburgh, PA: University of
Pittsburgh Press, 2004).
75
Shyam Sundar, above, n.52, at p. 213.
464
deployed at the behest of employers to oppress workers and curtail attempts

to unionisation. Sharma76 reports that the federal government in the north
Indian state of Uttar Pradesh has set up a special Police Cell headed by sen-
ior police officials, which holds regular meetings with employers to resolve
labour-related disputes. This erodes the legitimacy of the state’s Labour

Department and sends an unequivocal message to employers that they can
avail the privilege of state-sponsored violence for the smooth running of
their enterprises.
Some analysts cite the central and state government policies of setting up
‘Special Economic Zones’ (SEZs) as a clear evidence of state collusion with
employers to exploit labour.77 For instance, the state of Maharashtra has
been at the forefront of introducing SEZs, which are designated industrial
zones for export-oriented establishments. Firms operating in these zones
are given preferential treatment with respect to taxation, infrastructure
costs and indeed labour regulations. Desai78 observes that firms operating
within these SEZs will be exempt from section 9A of the IDA 1947, which
regulates changes in work practices and work reorganisation. Likewise cru-
cial trade union laws, such as the Trade Unions Act 1926, MRTU and PULP
1971 and the BIR Act 1946, which offer representative status to trade unions
and require employers to engage with unions on matters of changes to work
practices and terms and conditions, will be inapplicable to firms operating in
the SEZs. Sen and Dasgupta79 empirically examine the working conditions
of workers employed in SEZs in different states of India. They report that
even in higher growth industries in SEZ, working conditions and wages for
workers are extremely poor.
In selecting the INTUC as a case study federation for our research, we
were optimistic that given its strong membership base and affiliation to the
ruling Congress Party, which has been in power in Maharashtra for several
decades, the INTUC would be in a strong position to protect workers’ inter-
ests, and workplace representatives of unions affiliated to INTUC would
be less vulnerable to employer hostility. Some analysts have argued that
political affiliations have rendered trade unions in India incapable of pro-
tecting workers interests, which has resulted in worker disenchantment and
Sharma, above, n.1.

76
See e.g., S. Desai, Special Economic Zones: Myth and Reality (Mumbai: Mill Mazdoor
77
Welfare Trust, 2009).

78
Above, n.77, at pp. 42–5.
79
Above, n.39.
465
the rise of politically independent trade unions.80 Burgess81 offers a more

nuanced view. She suggests that party–union relationships are more likely
to be tested in times of economic instability or when political parties intro-
duce major institutional reforms that hurt the interests of union members.
In times such as these, union leaders have to decide whether to side with the

political party they are affiliated to and risk antagonising their membership
or to confront the party and stand by the interests of their members.
In her view, union leaders base their judgements on which of the two
constituencies (party versus union members) are likely to offer better incen-
tives to the union leadership and equally which of them are likely to punish
them the most. Party incentives could be in the form of tickets to contest
elections, senior posts within the party’s executive, political intervention to
secure union recognition with employers or secure favourable collective
bargaining arrangements. It is likely that a political party is in a better posi-
tion to offer such incentives to union leaders when they enjoy an absolute
majority in the government. The party’s ability to offer such incentives is
likely to be constrained when it is part of a coalition government.
The Congress Party is indeed in a coalition with other regional parties
in the state government of Maharashtra as well as in the central govern-
ment. This perhaps restricts its ability to provide incentives to union lead-
ers of the INTUC particularly in terms of getting union recognition with
employers, dispute resolution and favourable collective bargaining arrange-
ments. In such circumstances, INTUC and its affiliate unions then have to
rely on its membership base and mobilisation capacity to prove its cred-
ibility in the labour market. This is unlikely to be an easy task for a union
federation that has historically relied on its political affiliations to secure
favourable labour market outcomes. Employers are quite likely to notice
this decline in union’s political power and its influence with the government.
And consequently, they are much more likely to feel emboldened to engage
in anti-union activities. This employer hostility to INTUC-affiliated unions
is probably reflected in our survey findings.
A senior union official of the INTUC reported that ‘Congress Party has
let us down very badly. In the past if employers were not listening to us, we
could make a phone call to the Labour Minister in Delhi and get things
80
Ramaswamy, above, n.9; K. R. Shyam Sundar, Labour Institutions and Labour Reforms
in Contemporary India: Trade Unions and Industrial Conflict, Volume 2 (Hyderabad: ICFAI
University Press, 2009).
81
Above, n.74.
466
sorted out. But now although our party is leading the coalition government,
we have no hotline with the ministers. They [minsters] are busy taking phone
calls from employers and putting us on the hold for ever.’ Another INTUC
union officer commented that ‘it is high time we realise that Congress is
not going to support our policies. So far we have supported their policies…

helped them win elections…and to some extent it has helped the union to
grow…but now the party’s priorities have changed. That is the reason why
we are holding general strikes and ‘dharnas’ (demonstrations) against our
own party in power.’82 On 23 February 2011, the INTUC along with some
other national trade union federations organised a ‘Workers March to the
Parliament’ to register their protest against the violation of labour laws by
employers, increased use of contract labour on exploitative terms and priva-
tisation policies pursued by the government, amongst other things.
7. Conclusions
Previous empirical work on Indian labour regulatory framework has largely

examined the impact of labour laws on macroeconomic outcomes, such as
growth and employment. In some widely cited studies, such as Besley and
Burgess,83 Ahsan and Pagés84 or the Doing Business Reports of the World
Bank, there is an implicit assumption that pro-worker labour regulation dis-
proportionately tilts the balance of power in favour of workers and unions,
which in turn results in labour militancy, poor industrial productivity and
joblessness. None of these studies have actually tested these interven-
ing variable(s), i.e. the impact of law at the workplace level. Our research
attempts to address this gap in the extant literature. Using survey data from
one of the largest trade union federations in India, we have examined the
extent to which pro-worker labour laws in the state of Maharashtra enable
unions to protect employee interests at the workplace levels.
Contrary to popular assertion by employer bodies such as the CII, we
found that despite the ostensibly pro-worker legislative provisions in several
central and state labour laws, workers and unions find themselves increas-
ingly vulnerable to employer excesses. This is largely due to poor compliance
with legislative provisions by employers. The use of unfair labour practices
82
Interviews with INTUC officers, September 2010.
83
Above, n.28.
84
Ibid.
467
by employers was disturbingly high. Such violations on part of employers

raises concerns about the role of state in the implementation and moni-
toring of labour laws in India and particularly in the state of Maharashtra,
which has been typified as a pro-worker state.85
We found an alarming rise in employer militancy and not labour mili-

tancy in the post-liberalisation period. Our survey findings on strikes and
lockouts seem to correlate with the national patterns of industrial disputes
reported by state agencies in India. Hence the assumption that pro-worker
labour laws result in labour militancy is questionable. With regard to dispute
resolution, we found that employers were far more litigious compared to
trade unions. Pro-employer judicial interpretations of various labour laws
especially in the past decade or so86 have perhaps emboldened employers to
engage in anti-union activities and increasingly resort to adjudication.
INTUC’s affiliation with the Congress Party seems to have helped the
union federation in the past but now holds little value for the union in terms
of securing favourable employment relations outcomes. This may be partly
due to the coalition politics that now prevails both at the central and the
state government level in Maharashtra, which in turn constrains the abil-
ity of political leaders to reward union leaders for their loyalties,87 but also
perhaps due to the growing competition between federal states within India
to attract private capital, which has resulted in a deregulation of labour mar-
kets by stealth.88
Our findings also raise a broader question on what type of labour regula-
tory framework should a developing country like India adopt in order to
ensure protection to workers and at the same time improve economic effi-
ciency. A radical view on this issue could be: if a large number of employers
are violating labour laws, then these laws have clearly lost their relevance
and deserve no place in the statute books. One the other hand, it could be
argued that these laws provide for the basic protection and welfare of work-
ers in a society where the state provides negligible social security. And non-
compliance by employers who do not wish to recognise a trade union or are
unwilling to honour the basic rights of their employees calls for a stricter
enforcement of these laws and not their repeal89. Even going by the OECD
85
Besley and Burgess, above, n.28.
86
Singh, above, n.63.
87
Burgess, above, n.74.
88
Shyam Sundar, above, n.52.
89
Papola, above, n.27, at p. 547.
468
and WEF or World Bank rankings of national economies, it is apparent that

developed economies with relatively stronger labour regulations and wel-
fare provisions rank higher compared to developing economies with weak
regulatory framework and welfare states. Any dilution in labour laws needs
to be compensated by a strengthening of the welfare state, which can pro-

vide a safety net for displaced workers. Nation states also have to consider
the political ramifications of labour market reforms. The rising labour unrest
in China ultimately forced the Communist government to enact the Law on
Employment Contracts in 2008, which protects workers’ interests. The situa-
tion in a democratic state like India where civil society and trade unions are
much more active could be far more volatile if the government attempts to
radically reform the labour markets.
In a developing country like India, where nearly 93% of the workforce
is employed in the informal sector of the economy, it is imperative that this
large segment of the workforce needs protection. In 2008, the Government
of India passed the Unorganised Workers Social Security Act, which makes
welfare provisions for millions of workers employed in the informal or
unregulated sector of the economy. The legislation has had a mixed response
with some leading NGOs, such as the Self Employed Women’s Association
(SEWA), welcoming its provisions of health service and old age pension pro-
visions for unorganised workers while other groups such as the lawyers col-
lective finding it an inadequate piece of legislation for its inability to regulate
wages and working conditions for those employed in the informal sector.90
There are limitations to our research. Our empirical data come from a
single trade union federation (INTUC), which is affiliated to the Congress
Party. It may be that union representatives from other trade union federa-
tions may have different experiences of workplace employment regulations.
However, INTUC being the second largest trade union federation in the
country with a large presence in the formal sector and being affiliated to the
largest political party in India, which is currently in power both at the cen-
tre and in the state of Maharashtra, offers a unique case to examine. Some
analysts have suggested that politically independent (non-affiliated) trade
unions are in a better position to represent worker interests at the workplace
levels as they are not subservient to the dictates of political leadership or
wedded to the political agendas of the party, which may be pro-employer.91
90
T.S. Sankaran, ‘A Critique of India’s Unorganised Worker’s Social Security Act 2008’ (2009)
Lawyers Magazine, www.sacw.net/article658.html accessed on 2/5/2012.
91
Ramaswamy, above, n.9; K. Shyam Sundar, ‘Current State and Evolution of Industrial
Relations in Maharashtra’, Working Paper, ILO, Geneva (2009), and above, n.12.
469
Hence, the poor experiences of statutory protection amongst our sample of

union representatives may be a function of their political affiliation. While
this may be the case, surveys involving politically non-affiliated trade unions
have yielded similar results.92
We do recognise that there may be differences between individual unions

and their activists affiliated to the INTUC and that these differences may
to some extent account for the variations in union experiences across
workplaces. Likewise, we also acknowledge that there are variations across
industrial sectors and enterprises within those sectors from where our union
representatives were sampled. While it will be empirically and analytically
useful to isolate these differences, the primary purpose of this research was
to capture the ground realities of workplace employment regulation—a cru-
cial element missing from previous empirical work on labour regulations in
India. We also recognise the limited generalisability of our findings given
that the survey data come only from the state of Maharashtra. Nevertheless,
Maharashtra does offer an interesting test-bed for this research given its
pro-worker labour regulatory framework. Future research would benefit
from a quasi-experimental matched pairs design using union and employer
data from two or more states with varying degrees of labour regulation.
92
V.Badigannavar, ‘Labour Market Regulations and the Prospects of Social Partnership in
India’ (2012) Journal of Social and Economic Development vol.14(2). Page numbers are still
not available from the publisher. The article is likely to be published in December 2012.
470

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Do Labour Laws Protect Labour in India?

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*Royal Holloway, University of London, email: vidu.badigannavar@rhul.ac.uk;

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regulatory framework in India remains archaic and in dire need of reform

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labour laws in the post-Independence period.9 A large number of trade unions

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appointed by the Government of India makes similar if not identical rec-

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2. THEORETICAL DEBATE ON EMPLOYMENT RELATIONS IN INDIA

As mentioned in the preceding section, the employment relations debate

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and commitment towards higher productivity and possibly lower resistance

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the manufacturing performance. So we have no information on the impact

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3. THE LABOUR LAW FRAMEWORK IN INDIA

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Even where a union is formed, there is no legal obligation on the employer

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4. RESEARCH METHODS: SETTINGS, PROCEDURES AND QUESTIONS

terms of its membership strength, INTUC is a significant labour federation

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Above, n.12, at p. 43.

www.intuc.net (accessed 12 October 2012).

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included the labour laws in Maharashtra in their composite index of labour

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A majority of the union representatives who participated in the survey

A. Employment Protection

government authority before laying off or retrenching even a single worker

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B. Unfair Labour Practices

Table 1. Unfair Labour Practices Reported by Union Representatives (All

Source: Survey of INTUC union representatives in Maharashtra.

private manufacturing and private services establishments reported ‘victim-

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C. Industrial Disputes and Dispute Resolution

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Table 2. Pattern of Industrial Disputes in India During 1991–2005

Strikes Lockouts Strikes Lockouts Strikes Lockouts

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In our survey, we asked union representatives to report the key causes

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of India in 2006 in a case involving a public sector enterprise64 ruled that

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deployed at the behest of employers to oppress workers and curtail attempts

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Sharma, above, n.1.

Welfare Trust, 2009).

the rise of politically independent trade unions.80 Burgess81 offers a more

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