This guest post has been sent to us by RAMAPRIYA GOPALAKRISHNAN. She is a lawyer practising in the Madras High Court working on labour rights, environmental and human rights issues. She is one of the two lawyers who appeared for the MRF United Workers’ Union before the Madras High Court.

The MRF United Workers’ Union case – Ruling of the Madras High Court on the recognition of trade unions

The workers in the Arakonam factory of MRF Limited, a tyre major, ended their 125 day old strike on September 14, 2009 and resumed work following the pronouncement of the much awaited verdict in the case filed by the MRF United Workers’ Union before the Madras High Court concerning the recognition of the union by the management of the company.

The Arakonam factory of MRF Limited in Vellore District in Tamil Nadu is the largest of the six tyre manufacturing factories of the company.  The workers in the factory are paid piece rate wages with no transparency in the process. They do not have any information on what constitutes a ‘piece’ and the rate at which they will be paid for the ‘piece.’ Moreover, the number of ‘contract workers’ engaged in the factory for direct production work is more than twice the number of direct confirmed workers engaged for doing the same work. These facts by itself would indicate the status of labour law compliance in the factory. There was thus a long felt need among the workers for an independent and effective trade union to protect their interests.

The management had however been thwarting any attempt by the workers at independent trade union organisation from the 1970s onwards by victimizing those identified as working in that  direction. Apart from this, it had also established its own ‘union’ in the factory and hand-picked the office bearers of the union. Furthermore, using the check off facility extended to its union, it had arbitrarily been deducting subscription from the wages of all the confirmed workers in the factory towards its union.

In 2003, however, the workers did succeed in forming an independent trade union by name MRF United Workers’ Union and got it registered. The majority of the workers in the factory soon joined the union. In February 2004, in the light of its majority status, the union sought recognition from the management as the sole bargaining agent of the factory workers. It also sought that the management refrain from making deductions under the check off system towards subscription to the management operated union from the wages of its members. The management has however not accorded recognition to the union till date. It has also continued to deduct subscription from the wages of the members of the MRF United Workers’ Union towards the management operated union thus creating the false impression that the majority of the workers in the factory are members of the latter union as well. Moreover, with a view to destroy the MRF United Workers’ Union, the management has from January 2004 onwards engaged in a spate of acts of anti-union discrimination against the office bearers and members of the union. These include unjust dismissals, suspensions, inter departmental transfers, initiation of disciplinary proceedings on false grounds, issue of warning letters and memos on false grounds and the lodging of false criminal complaints against the office bearers and members of the union.

The labour authorities had failed to take any action to check such practices on the part of the management. They also did not refer the industrial disputes raised by the union for adjudication. In respect of the request of the union to hold a secret ballot to clearly establish the representative status of the unions operating in the factory and ensure that the management accord recognition to the majority union, the labour authorities took the stand that there was no central or state law in force in the state providing for ascertaining the representative status of the trade unions operating in an establishment by secret ballot and therefore, it could not be done. The union had sought that a secret ballot be conducted on the basis that in a case of this nature where records would indicate apparent dual membership by the majority of the workers of both the unions operating in the factory, secret ballot would be the only mode of clearly establishing the representative status of the respective unions.  Moreover, a secret ballot would ensure that the workers could freely affirm their membership of the union to which they truly belong without any fear of victimization by the management.

On account of the failure of the Government and the local labour authorities to address the legitimate grievances of the workers, the MRF United Workers’ Union lodged a complaint before the ILO Governing Body’s Committee on Freedom of Association (CFA) which was taken up as Case No. 2512 (India). The complaint highlighted the violation of the freedom of association and collective bargaining rights of the workers in the Arakonam factory by the management of MRF Limited.  In November 2007, the CFA published its 348th Report that contained its conclusions and recommendations in Case No. 2512 (India).

The CFA emphasized that only representative and independent organizations of workers should participate in collective bargaining with the employer and sign the resulting agreements. It stressed that employers should recognize for collective bargaining purposes the organizations representative of the workers employed by them and that the determination of which organizations meet the criteria of independence and representativeness should be carried out by a body offering every guarantee of independence and objectivity. Considering the factual background of the case, the CFA was of the view that ‘the determination of the most representative trade union by secret ballot  would not only be an acceptable but also a desirable way to ensure that workers exercise their right to choose the organization which shall represent them in collective bargaining.’

At the same time, taking note of the fact that the Government had in its reply filed in the case indicated that following verification of the MRF United Workers’ Union’s membership records, it was found that the union represents 70 percent of the workers in the Arakonam factory, the CFA recommended that the Government take appropriate measures to obtain the employer’s recognition of the union for collective bargaining purposes.

From a broader perspective, taking note of the fact that except for a non-binding Code of Discipline, there was neither any central law nor any state law in Tamil Nadu prescribing any procedure for recognition of trade unions, the CFA recommended that the Government consider laying down objective rules for the designation of the most representative union for collective bargaining purposes, when it is not clear by which union the workers wish to be represented.

Taking serious note of the allegations of anti-union discrimination made by the union, the CFA also recommended that the Government forthwith conduct an independent inquiry into all alleged acts of anti-union discrimination suffered by the office bearers and members of the union and provide appropriate redress if the allegations were found to be true.

The Government thereafter did not take any effective steps to implement the recommendations of the CFA despite the representations of the union and also the demonstrations conducted by the workers demanding that the Government implement the recommendations.

This led to the union filing a Writ Petition before the Madras High Court seeking the implementation of the recommendations of the CFA, particularly the recommendation relating to the recognition of the union by the management of the company. The Writ Petition came to be finally heard by a Division Bench of the Madras High Court. In the meanwhile, from May 9, 2009 onwards, the members of the MRF United Workers Union were on strike protesting against the action of the management in entering into a ‘settlement’ with the management operated union ignoring the majority union in the factory and the recommendation of the CFA for its recognition .

Before the court, the union pleaded that as a member state of the ILO, India was duty bound to implement the recommendations of the CFA. An alternative plea that was taken by the union was that even if the union could straightaway not be accorded recognition on the basis of the recommendations, the Government ought to act on the basis of the principles laid down by the CFA relating to collective bargaining and the recognition of representative trade unions and the CFA’s conclusion that secret ballot would be the most desirable way of determining the most representative union for collective bargaining purposes, given the facts of the case.

The Government of India till the very end neither filed a counter statement in the case nor did it address oral arguments before the court, perhaps because it simply did not want to take a stand in the matter.

The stand taken by the Government of Tamil Nadu was that there being no central or state law on the subject of recognition of trade unions, neither could the recommendation of the  CFA to ensure that the union was accorded recognition by the employer be implemented nor could its suggestion to hold a secret ballot be acted upon. However, it was open to the union to undergo the procedure for recognition laid down under the Code of Discipline by submitting a petition to the State Evaluation and Implementation Committee.

The employer and the management operated union took the stand that the CFA’s recommendations are not binding and therefore need not be implemented. Furthermore, the management took the stand that it is a matter of absolute discretion for the management to recognize or not recognize any particular union as there are no statutory provisions in this regard.

On September 8, 2009, the First Bench of the Madras High Court passed orders in the Writ Petition. The court underscored the importance of workers having a truly representative and independent collective bargaining agent observing that this was in the interest of industrial peace apart from being in the interest of the workers. On the basis of various entries in the fifth schedule to the Industrial Disputes Act, 1947 that enumerates ‘unfair labour practices on the part of the employer,’ the court inferred that the Act also contemplates that the collective bargaining agent of the workers be truly representative and independent. The court held that it is the mandate of the Act that the truly representative and independent collective bargaining agent of the workers be recognized by the management and that the management cannot refuse to bargain collectively in good faith with such a union.

The court further held that the stand of the management that it will decide as to who should be the representative of the workmen and that it will negotiate only with them is contrary to the letter and spirit of the Industrial Disputes Act, 1947. It observed that such a stand would also amount to interference with the right of the workers to organize themselves into a union for the purposes of collective bargaining.

On the issue of the mode of determination of the representative status of the unions operating in the factory, differing from the view expressed by the CFA that secret ballot would be the appropriate method, the court opined that the verification procedure prescribed under the Code of Discipline would be the correct method. Comparing the two methods, the court observed that while secret ballot would only indicate the following of a union at a particular point of time, the method of verification would show the following of a particular union over a longer period and would therefore be a better option.

In arriving at this conclusion, the court took into consideration the inclination of the state government for adoption of the verification procedure provided under the Code of Discipline. It also noted that the Code of Discipline was evolved on the basis of a consensus between employer’ and workers’ organizations and thus, the procedure contained therein was acceptable to employers as well. In addition, it noted that laws relating to the recognition of trade unions in some states in India prescribed the verification procedure.

Accordingly, the court issued directions for determination of the representative status of the unions operating in the factory in accordance with the verification procedure provided for under the Code of Dsicipline. The court permitted the MRF United Workers’ Union to make an application to the concerned Labour Commissioner claiming recognition on the basis of its membership figures for the last six months and issued a direction to the Commissioner of Labour to thereafter call upon the two unions to submit their membership registers for the last six months and other supporting documents required to be furnished under the Code of Discipline and on this basis determine which union has a larger membership. It observed that in the event of any objections being raised about the membership details, the method of personal interrogation provided for under the Code could be used to determine the correct membership of the respective unions. The court further directed that the union found to have a larger membership on the basis of the aforesaid exercise shall be accorded recognition by the management.

The court also ruled that it would be open for the petitioner union to raise an industrial dispute challenging the legality and validity of the settlement of May 9, 2009.

While the ruling of the court may be faulted on the ground that given the peculiar facts of the case and the CFA’s finding that secret ballot would be the appropriate method for determination of the most representative union for collective bargaining purposes, the court ought to have directed the adoption of the secret ballot method instead of the verification procedure, the ruling is nevertheless significant for the following reasons.

The interpretation of the court that the right of workers to have a truly representative and independent collective bargaining agent flows from the provisions of the Industrial Disputes Act, 1947 relating to the prohibition of unfair labour practices and the fifth schedule to the Act and that it is the mandate of the Act that such an agent be recognized by the management appears to be a first of sorts. Such an interpretation of the Act assumes added significance in the light of the fact that there is a legislative vacuum in several states on the subject of recognition of trade unions.

Furthermore, the ruling clearly establishes that even in a state when there is no specific law in operation relating to the recognition of trade unions or no statutory requirement as such requiring an employer to accord recognition to the union in the concerned establishment with the largest membership, the employer is bound to accord recognition to the most representative union in the establishment for collective bargaining purposes.

This is all the more significant for the reason that the employer in question is one in the private sector. Considering that refusal by employers in the private sector to recognize and negotiate with representative unions is commonplace and also the fact that there is an increasing trend of employers arbitrarily by-passing representative unions and instead choosing to enter into so-called settlements with minority unions/management sponsored unions or committees whose members are hand-picked by the management, this ruling is of considerable significance for trade unions of workers in the private sector.

From the point of view of the MRF United Workers Union, even while the preference of the union was for a secret ballot, the very fact that the court has directed the verification of the representative status of the unions operating in the establishment and has held that  the employer is bound to accord recognition to the union found to be truly representative amounts to a vindication of its stand.

Considering the fact that the union has been struggling for over the last five years to secure recognition by the employer and have the collective bargaining rights of its members respected, the conclusions and recommendations of the CFA in Case No. 2512 (India) as well as the ruling of the Madras High Court discussed above are definitely a shot in the arm for the union.