India’s New Labor Codes: Concept of Negotiating Union
India has been officially declared as the world’s most populated country with over 1.4 billion people. India’s working age population (15-59 years) is set to reach 988.5 million in 2036. 1
For a workforce of this caliber, providing them with effective bargaining tools is necessary for their optimization. Therefore, the concept of union negotiation has received a huge boost under the new Industrial Relations Code, 2020 (the “IRC 2020”)2 which has been enacted but is yet to be made effective. It exemplifies how the government is working actively to create a growth-friendly environment where unions can negotiate fairly with management.
Brief history of labor unions in India
In India, labor unions have a long history that dates to the British colonial era in the late 19th century. The first labor union in India was established in 1890 by mill workers in Bombay.3 The All India Trade Union Congress (AITUC), which later grew to be the country's biggest labor union group, was established in 1920.
Soon thereafter, the Trade Unions Act, 1926 (the “TU Act”) was passed.4 Over and above the flaws that later emerged, this legislation provided the labor unions with the much-needed protection, which helped the movement spread across the nation.
In the post-independence era, labor unions affiliated with political parties emerged as dominant forces in the Indian labor movement, with the Indian National Congress-affiliated Indian National Trade Union Congress (INTUC) and the Communist Party of India-affiliated AITUC being the two largest labor union organizations in the country. Today, besides INTUC and AITUC, there are several other independent and politically affiliated labor unions in India representing workers across various sectors, including the Bharatiya Mazdoor Sangh (BMS), Hind Mazdoor Sabha (HMS) and Centre of Indian Trade Unions (CITU), among others.
Recognition of labor unions
The Constitution of India upholds the right to form association.5 However, the TU Act does not contain provisions on recognition of labor unions but only for its registration at both6 state and federal levels. It does not deal with the concept of ‘representative labor union’7 and such status is accorded on a discretionary basis. Thus, despite a labor union being registered, in the absence of a statutory mandate of having a sole negotiating labor union, an employer may not recognise the union and refuse to bargain or negotiate with it.
In a bid to address the above shortcomings, the Indian Trade Unions (Amendment) Act, 1947, attempted to make recognition of labor unions by employers mandatory but it was never brought into effect.8 Meanwhile, some Indian states enacted laws containing provisions on recognition of labor unions, including Maharashtra9, Madhya Pradesh10, West Bengal11, Kerala12 and Rajasthan, while in certain other states, recognition is governed by the voluntary ‘Code of Discipline’13 and ‘Inter Union Code of Conduct’.14
Introduction of concepts of negotiation union and negotiating council
The IRC 2020 introduces new concepts of ‘negotiating union’ and ‘negotiating council’ as part of a federal law. It defines negotiating union in an industrial establishment as the registered labor union which has been recognised as the union having the statutory right of negotiating with the employer of the industrial establishment on prescribed matters15. A negotiating council comprises of representatives from several simultaneously functioning registered labor unions which is granted the legal right of negotiation with the employer of an industrial establishment.
As per the IRC 2020, an employer is required to recognize a registered labor union as the sole representative negotiating union. A recognized labor union has the statutory right to bargain for workers' interests in collective agreements and other consultative processes, as well as defend against unfair labor practices.
Only a single negotiating union amongst all the registered labor unions functioning in an industrial establishment, shall have the statutory right to negotiate with the employer on the prescribed list16 of bargaining matters covering the workers’ interests and other issues. Where there is only one17 registered labor union operating in an industrial establishment, then only when such a registered labor union has at least thirty percent (30%) of the total workers employed in the industrial establishment as its members, the employer shall grant it the status of the negotiating union. If there are more than one registered labor unions18, then only that labor union which secures the support of at least fifty-one percent (51%) or more workers on the muster roll of that industrial establishment, upon verification19, shall be designated as the sole negotiating union of the workers.
If none of the functioning registered labor unions garner the above minimum subscription, the employer may constitute a negotiating council consisting of the representatives of the registered labor unions20 for participating in negotiations of officially prescribed matters with the employer. Such a negotiating council shall compose of representatives of registered labor unions which have the verified support of at least twenty percent (20%) of the total workers on the muster roll of the industrial establishment. Also, to ensure proportionate representation on the negotiating council, every twenty percent (20%) of the total workers shall correspond to one (1) representative.
Draft rules to the IRC 2020
In order to provide a defined structure and uniformity to the process of recognition of labor unions and other related matters, the federal government has introduced the Industrial Relations (Central) Recognition of Negotiating Union or Negotiating Council and Adjudication of Disputes of Trade Unions Rules, 2021 (the “Draft Rules”)21 which is presently pending in the draft stage.
The Draft Rules provide for the following:
An indicative list of matters of negotiation which lays down the scope of collective bargaining which inter alia includes classification of grades, categories of workers, wages of workers including various specified components thereof, hours of work, leave with wages and holidays, promotion and transfer policy, disciplinary procedure, allotment of quarters to employees, safety, health and working conditions related standards, and also enables them to negotiate on all other matters pertaining to service conditions which are not otherwise covered in the list.
Criteria for recognizing a single registered labor union as the sole negotiating union.
Appointment of a verification officer22 by the employer for the verification of membership of labor unions. The verification officer for the purpose of verification of membership of the labor unions in the industrial establishment shall be an independent officer and shall not have any interest with any of the labor unions, whose membership verification is to be carried out.
Detailed process of verification of membership which requires the employer to bear the entire cost of making arrangements in connection with the verification of the membership of the labor unions. The Draft Rules also require employers to deploy an electronic process for the process of election to verify the membership of labor unions through secret ballot with mutual agreement with the labor unions of the establishment.
Satisfaction of the conditions by the labor union for getting accorded the status of negotiating union.
Preparation of verification report to be submitted to the employer.
Grant of recognition of labor union as the negotiating union or constituents of the negotiation council.
List of facilities to be provided by the industrial establishment to a negotiating union or negotiating council such as notice board, venue and necessary facilities for holding discussions amongst the negotiating union or council and among its members, facility for allowing entrance to office bearers of the negotiating union into the premises for ascertaining matters related to working conditions of workers, deduction of subscription of members of the labor unions on consent of employees, treating employed office bearers of the negotiating union or council as on duty when such office bearers are holding meetings or discussions with the employer, suitable office accommodation for the negotiating union or council in industrial establishments with 300 or more workers without room for flexibility based on the employer’s establishment.
Manner of making application for the adjudication of labor union disputes.
The Draft Rules also require that the process for constitution of the new negotiating union or the negotiating council must begin three (3) months before the expiry of the tenure of the existing recognition period of the labor unions recognised by the employer under the Code of Discipline23.
The IRC 2020 streamlines and simplifies the legal framework governing industrial relations, but it also adds provisions that might be perceived as restrictive of the labor unions' ability to bargain and negotiate.
The efficacy of the IRC 2020, however, will rely on how the law is put into practice and how labor unions respond to the new legal environment.
1 Women & Men in India 2022, Ministry of Statistics and Programme Implementation (MoSPI), Government of India, available at https://mospi.gov.in/sites/default/files/publication_reports/women-men22/PopulationStatistics22.pdf last accessed on 3 June 2023.
2 The Parliament approved the Industrial Relations Code, 2020 (IRC 2020) on September 23, 2020. The Industrial Disputes Act of 1947 (ID Act), the Trade Unions Act of 1926 (Trade Union Act), and the Industrial Employment (Standing Orders) Act of 1946 (SO Act) are all incorporated into the IRC 2020.
3 Evolution of Trade Unions in India, Dr. Sanjay Upadhyaya, available at: https://vvgnli.gov.in/sites/default/files/Evolution%20of%20Trade%20Unions%20in%20India.pdf last
accessed on 3 June 2023.
4 Trade Unions, Chapter 41, available at https://mospi.gov.in/sites/default/files/Statistical_year_book_india_chapters/Trade_Union.pdf last
accessed on 3 June 2023.
5 Article 19(1)(c) of the Constitution of India.
6 A combined reading of section 3 and section 2 of the TU Act imply that the appropriate government (federal or state, as the case may be) shall appoint ‘Registrars of Unions’ for each state.
7 National Engineering Industries Ltd. v. State of Rajasthan, 2000 I LLJ 247 (S.C.).
8 Trade Unionism in India, The Times of India, 21 November 2022, available at https://timesofindia.indiatimes.com/readersblog/lawpedia/trade-unionism-in-india-46867/
9 Section 11, Application for recognition of union, The Maharashtra Recognition of Trade Unions and Prevention of Unfair Labour Practices Act, 1971; A labor union functioning for at least six months is accorded recognition if its membership exceeds 30 per cent of the overall employee count.
10 Section 14, Conditions of recognition, The MP Industrial Relations Act 1960; The M.P. Trade Unions Regulations, 1961.
11 Section 28A, Application for recognition, The Trade Unions (West Bengal Amendment) Act 1983.
12 Section 4, Application for certificate for recognition, the Kerala Recognition of Trade Unions Act 201.
13 Recognition of Trade Union under the Code of Discipline, available at https://labour.gov.in/sites/default/files/code_of_discipline.pdf last accessed on 3 June 2023.
14 Trade Unions in India: Changing Role & Perspective, JS Sodhi, available at http://www.publishingindia.com/GetBrochure.aspx?query=UERGQnJvY2h1cmVzfC8yMDc2LnBkZnwvMjA3Ni5wZGY= last accessed on 3 June, 2023.
15 Section 14, Recognition of negotiating union or negotiating council, the IRC 2020.
16 Rule 3, Matters in an industrial establishment having registered Trade Union for negotiation with employer
for the workers employed in the industrial establishment under sub-section (1) of section 14, the Draft Rules.
17 Section 14(2), Recognition of negotiating union or negotiating council, IRC 2020; Rule 4, Criteria for recognizing a single registered Trade Union of workers as sole negotiating Union of workers under sub-section (2) of section 14, the Draft Rules.
18 Section 14(2), Recognition of negotiating union or negotiating council, the IRC 2020.
19 Rule 5, Manner of verification of membership of Trade Unions in an industrial establishment under sub-
sections (3) and (4) of section 14, the Draft Rules.
20 Section 14(3), Recognition of negotiating union or negotiating council, the IRC 2020.
21 The (Draft) Industrial Relations (Central) Recognition of Negotiating Union or Negotiating Council and Adjudication of Disputes of Trade Unions Rules, 2021, available at
https://labour.gov.in/sites/default/files/drart_ir_notification.pdf last accessed on 3 June 2023.
22 Rule 5 (1)(a), the Draft Rules.
23 Recognition of Trade Union under the Code of Discipline, available at https://labour.gov.in/sites/default/files/code_of_discipline.pdf last accessed on 3 June 2023.