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INDUSTRIAL RELAIONS AND LABOUR WELFARE ASSIGNMENT I LABOR UNREST AT HONDA MOTORCYCLE & SCOOTER INDIA PRIVATE LIMITED

Submitted By, Kumaragurubaran C Naresh Kumar B Narasimha Prasad Senthil Prabhu

LABOR UNREST AT HONDA MOTORCYCLE & SCOOTER INDIA PRIVATE LIMITED INTRODUCTION: The case study focuses on the Human Resource problems faced by Honda Motor Cycle & Scooters India (HMSI). The case discusses the various reasons which led to the dispute between the management and employees of HMSI. It elaborates the incidents that led to the strike at the company that in turn resulted in HMSI workers being severely beaten up by the police. Labor strife and the management's inability to deal with it effectively had resulted in huge losses for the company due to the fall in the production level at the plant. In addition to this, the company also received a lot of negative publicity as newspapers and TV channels gave wide coverage to the violence of the action. The case highlights the growing number of instances of clashes between the employees and the management of companies in India, which are often guided by external parties such as trade unions and political parties. BACKGROUND The Gurgaon plant of Honda Motorcycle & Scooter India (Private) Limited (HMSI) had peaceful labour relations for the first few years after it was set up in October 1999. The management entered into labour contracts with individual labourers, which covered the basic wage structure and detailed

parameters specifying the work conditions for workers. In December 2004, the workers at HMSI's Gurgaon plant started demanding that the management increase their wages commensurate with the company's growth in the market.

The management and the workers traded allegations and counter allegations on what the root cause of the dispute was. They blamed each other for the situation that ultimately took an ugly turn on July 25, 2005. The management held the workers responsible for indiscipline and for slowing down production, while the workers insisted that there had been no indiscipline on their part and that the management was bringing up this issue only to prevent the formation of a trade union at HMSI.

Some analysts charged that the incident was fallout of the longterm oppression and malpractices at the Gurgaon factory by the HMSI management.

They alleged that HMSI's management had violated certain laws relating to the welfare of workers. It was reported that a worker had allegedly been kicked by a Japanese manager on the shop floor in December 2004. The services of four other workers who had come to his rescue were allegedly terminated. ISSUES: The major issues that we have chosen for careful consideration and analysis are to: Understand the factors that lead to labor unrest at a factory and the impact of such incidents on the employees and the company. Study HR policies adopted by organizations to prevent labor unrest at the workplace. Examine top management's role in maintaining a peaceful working environment. Analyze the role of external parties such as trade unions; political parties etc., in disturbing the working environment in a company PROBLEM WHAT REALLY HAPPENED AT HMSI: On July 25, 2005, the management of the Honda Motorcycle & Scooter India (Private) Limited, (HMSI), a wholly-owned subsidiary of Honda Motor Company Limited (HMCL), encountered violent protests from workers that disrupted production at their plant in Gurgaon.

HMSI workers were severely beaten up by the police, and newspapers and TV channels gave a wide coverage to the violence of the action. The protest followed six months of simmering labor unrest at the HMSI factory in which the workers also resorted to job slowdown (since December 2004 when the workers' demand for an increase in wages was rejected by the HMSI management). With their demands being rejected by the management, the workers tried to form a trade union and this resulted in a confrontation with the management. Fifty workers of the production team were suspended and four others dismissed in May 2005. Apparently there was a show of strength between the management and the workers. COMPANYS STRATEGY: WHAT HMSI DID TO TACKLE THE PROBLEM: While the management alleged that the workers were resorting to go-slow tactics and were threatening not to return to work until their colleagues had been reinstated, the workers alleged that the management was using pressure tactics such as victimization of active union members and a 'lock-out' to break the back of the union. On July 25, 2005, the workers of the plant were demanding reinstatement of the suspended employees when some workers allegedly attacked policemen on the plant premises. This led to police intervention and a violent tussle ensued between the police and the workers in which workers protesting peacefully were also beaten up.

The police were reported to have overreacted and it was alleged that they had been overzealous in protecting the interests of the HMSI management, even without any direct request from the company's management. For companies, the incident brought to the fore the need to maintain sound industrial relations to ensure productive and profitable operations. OUR VIEWS: WHAT COULD HAVE POSSIBLY GONE WRONG? The management of HMSI had long denied the workers the right to form trade unions which is against the law. Trade unions form an integral part of industrial relations and aid in peaceful settlements between workers and the management. The management had obviously wanted to stay bureaucratic, deny the workers their rights and wanted to employ them as cheap labour. There have been charges that the workers were not given proper wages as per the prescribed norms and their welfare was not taken care of. The trade union was formed only after the workers were pushed off the edge and very grave grievances were done to them. The workers should have formed a proper workers trade union well before the unrest began to fight for their wages and welfare issues. The trade unions were apparently not united and unified in their ideologies and policies as they were influenced by different political parties.

Some of the workers had indulged in violence against the police and the management which should have been avoided as trade unions are meant for peaceful settlements. The matter of the Japanese who kicked a worker was never inquired and the four employees who came to his rescue were also terminated without any reasons. These issued were never dealt with.

WHAT THE COMPANY DID? The management never once tried to find the root cause of the unrest, the protests or the uprising. They were only concerned about laying off the employees, getting them arrested and saving their faces from the media and the public.

The company staged a lock-out when it was pressurized instead of dealing with the issue. And it obviously had the police in its pockets as the police were overzealous, were completely in the interests of saving

the management and involved in unnecessary violence against the employees. WHAT COULD HAVE BEEN DONE TO AVOID? For starters, the management should always look for the interest and welfare of the employees. So, the management should have fixed proper wages, welfare benefits and other allowances to the employees in the first place. And if this had been done, all this uprising would have been avoided. When the workers felt aggrieved with their wages and benefits, they should have formed trade unions and taken the matter to the proper authority and should not have waited for the problem to grow and explode. But we should also notice that the HMSI management had denied the workers their rights to form unions. The management had apparently been involved in many malpractices related to the worker benefits. The management should have known that the word would eventually get out and create a huge hue and cry someday. They could have easily avoided this. The alleged attack of the worker by the Japanese manager is a grave and sensitive issue of human rights violation. No manager can physically assault a worker at any point of time. And moreover a foreign national attacking an Indian could have become a global human rights issue. The management had been extremely negligent about this issue.

Also, four other workers who had come to the assaulted workers rescue had been terminated without any reason or notice. This is a highly sensitive issue and vehemently condemnable one that if taken to a court of justice could result in the complete closure of the company. But since the workers did not have a proper union, they did not know what to do and had staged protests. The management should have allowed the workers to form unions which would have resulted in peaceful talks and settlements and avoided all the dirty lock outs, layoffs and unrest. The workers should have taken the assault of the employee to a court of justice. They should not have involved in violence against the police even if they had been victimized. SUGGESTIONS TO HMSI TO PREVENT SUCH INCIDENTS IN FUTURE: Ensure that the workers are satisfied with their wages, benefits and welfare provided to them Encourage the workers to form trade unions for peaceful talks and settlements of disputes Respect all the workers equally and treat them as human beings Avoid violence and abuse against the workers Take stringent action against worker abuse Avoid involving the police into the industrial disputes unless and until absolutely essential

Try to have settlements with the workers rather than indulging in layoffs and lock outs

Prevent malpractices in worker benefits and worker welfare Punish employees who defame the management with their unethical behaviour. HOW THE INDUSTRIAL RELATIONS WILL IMPROVE IN THE FUTURE IN HMSI: IF HMSI follows the suggestion that we have given above, then the industrial relations in HMSI may improve gradually over the years in the following ways: The workers may work in the interest of the management The workers would not involve in violent protests, uprising or strikes. The workers would have a peaceful and likeable work environment The workers loyally may improve Attrition and turnover may reduce a great deal Productivity would improve which in turn would improve the profitability of the company The trade unions would help in peaceful resolution of grievances and disputes The company would feature in the good books of the public and the media The company would be considered a great place to work and would be considered as one of the best employers in the country

A lot of recognition and award would pour in for efficient and effective labour relations and employee management Certifications, rewards, titles and awards would galore CONCLUSION: The Labour unrest in HMSI is a typical example how a small issue in the factory can turn out to be the reason a huge industrial dispute that could result in defaming the management in the worst possible way. The case also illustrates the importance of trade unions and how mandatory they are in the industries. Also, human rights violation is a serious issue which needs awareness and proper grievance handling machinery to deal with. The workers should never indulge in violent practices. Lock outs and layoffs are never the best options to deal with industrial relations issues or resolution of industrial disputes. A foreign national assaulting an Indian could have easily become a global issue which luckily did not become grave. The media and the public would always be watching. The companies should always take a holistic approach when dealing with sensitive issues that involve humanitarian and human rights issues and issues related to wages and welfare of the employees that are under the purview of labour legislations in the Indian constitution. The HMSI incident is a good lesson that needs to be learnt by all organizations on how to deal with industrial disputes, sensitive worker issues and labour legislation related matters.