Concept of Laissez Faire

Meaning of Laissez Faire

• The new millennium, endorsing the paradigm of globalization, has

been characterized by the revival of the concept of laissez faire
conceived long ago by the French Physiocrats and later on
corroborated by the neo-classicists.

• The exact origin of the French phrase laissez faire meaning “let do”
or “permit to act”.
Inception of Laissez Faire

• the term originated in a meeting that took place around 1681

between powerful French finance minister Jean-Baptiste Colbert
and a group of French businessmen led by a certain M. Le Gendre.
When the eager mercantilist minister asked how the French state
could be of service to the merchants and help promote their
commerce, Le Gendre replied simply "Laissez-nous faire" ("Leave it
to us" or "Let us do ["it," the French verb not having to take an
object]").
Inception of Laissez Faire

• the term originated in a meeting that took place around 1681

between powerful French finance minister Jean-Baptiste Colbert
and a group of French businessmen led by a certain M. Le Gendre.
When the eager mercantilist minister asked how the French state
could be of service to the merchants and help promote their
commerce, Le Gendre replied simply "Laissez-nous faire" ("Leave it
to us" or "Let us do ["it," the French verb not having to take an
object]").
Socialism Vs. Laissez Faire

• Karl Marx opposed this view and put forward his concept of
socialism (as an interim path towards communism) based on a
completely state-controlled centralized economic system.

• The newly independent countries after the Second World War,

languishing in abject poverty and associated maladies, adopted
various prescriptions of socialism.
 Laissez-Faire Economics
Adam Smith
Wrote: The Wealth of Nations
British economist Adam Smith
promoted “laissez faire” capitalism
•The #1 economic system during
the Industrial Revolution
Capitalism – economic system in
which the means of production are
privately owned and operated for
profit.
Laissez Faire (hands off) – policy
allowing businesses to operate with
Smith little or no government interference.
 Laissez-Faire Economics
Adam Smith
Smith’s Argument:
•Free market forces (supply and
demand) would produce more
goods at lower prices
•This would encourage capitalists to
invest their money in new ideas
• Claimed that the “invisible hand” of
capitalism led individuals who
worked for their own good to
promote the good of the community
• “The Father of Economics”

Smith
 Laissez-Faire Economics
David Ricardo

• Believed that laissez

faire was the best cure
for poverty (Malthus,
Smith)
• NOT business
regulation or
government
intervention
• Advised families to be
hard workers, thrifty,
and have a small
family Ricardo
 The Birth of Socialism
Socialism – system in which the people as a whole rather than
private individuals own all property and operate all businesses.

• Claim that industrial

capitalism had
created a large gap
between the rich
and poor
• Cared less about
individual
ownership rights
and more about the
interests of society
 Marxist Socialism
Communism
Communism – a form of socialism
that sees class struggle between
employers and employees as
inevitable.

Marx
 Marxist Socialism
Communism

In The Communist Manifesto

Marx argues:
• History was a class struggle
between the bourgeoisie (wealthy
capitalists), and the proletariat
(working class)

• To make profits, the bourgeoisie

exploited the proletariat (how???)

• Capitalism created prosperity for

a few and poverty for many
 Marxist Socialism
Communism

In The Communist Manifesto

Marx argues:
• The Proletariat will eventually
revolt and overthrow the capitalists
to make a new society
• The P would take control of the
means of production and create a
classless communist society where
wealth and power would be shared
• With communism, all the evils of
the industrial revolution would end
Revival of Laissez Faire

• during the late twentieth century both the socialist countries and
the state controlled mixed economies came up against serious
economic crisis. By early 1990s most of the socialist regimes
crumbled and the mixed economies gradually started adopting
economic reforms based on LPG (Liberalization, Privatization and
Globalization). Thus once again there had been the revival of a
laissez faire paradigm through market-oriented reforms.
Revival of Laissez Faire

• According to these advocates of laissez faire, the free-market

economy is superior to any controlled system to ensure sustainable
development with equality, social justice and personal freedom. In
such a system unrestricted market forces bring about desirable
solutions to the basic economic problems, viz. what to produce,
how to produce and for whom to produce.
Thank You
Constitutional provisions relating to
labour law and their application

• Article 14 : “Equality before Law.- The State shall not deny any
person’s equality before law or the equal protection of the laws
within the territory of India.”

• Article 39(d) : ‘equal pay for equal work’ and Equal Remuneration
Act, 1976.
Constitutional provisions relating to
labour law and their application

• With respect to the liberties of individual workers and trade unions

• Article 19(1) (a) - freedom of speech and expression,
• Article 19(1) (b) - the ‘freedom to assemble peacefully without
arms’,
• Article 19(1) (c) - the ‘right to form associations or unions
enshrined in Trade Unions Act, 1926.

Subject to restrictions under Article 19(2), 19(3) and 19(4) of

Constitution and Industrial Dispute Act, 1976 (Section 22 & 23).
Constitutional provisions relating to
labour law and their application
Section 22(1) of the Industrial Disputes Act, 1947 :
• (1) No person employed in a public utility service shall go on strike
in breach of contract-
• (a) without giving to the employer notice of strike, as hereinafter
provided, within six weeks before striking; or
• (b) within fourteen days of giving such notice; or
• (c) Before the expiry of the date of strike specified in any such
notice as aforesaid; or
• (d) During the pendency of any conciliation proceedings before a
conciliation officer and seven days after the conclusion of such
proceedings.”
Constitutional provisions relating to
labour law and their application

• Article 19(1)(g).
• to practise any profession, or to carry on any occupation, trade or
business
• a consideration of the employer’s right to conduct and continue
trade or business.
Constitutional provisions relating to
labour law and their application

• Article 43-A in the Directive Principles of State policy which

emphasizes the need to secure the participation of workers in the
management of undertakings.
• Article 23 - Rights against exploitation.
• Concept of forced labour - a prohibition against slavery and
bonded labour as well as trafficking in women, children or
disabled people.
• Paying below minimum wages.
Constitutional provisions relating to
labour law and their application

• Article 24 and The Child Labour (Prohibition and Regulation) Act,

1986.
• Article 24 talks about prohibition against the employment of
children below the age of fourteen years in any factory or mine
or any other hazardous employment.
Constitutional provisions relating to
labour law and their application

• Article 39(e) also emphasizes the need to ensure that the health
and strength of workers is not adversely affected and that they are
not forced to enter unsuitable occupations.

• Article 42 which lays down that the State shall make provision for
securing just and humane conditions of work.
Constitutional provisions relating to
labour law and their application
• Article 39(f) enumerates the importance of protecting children
from exploitation and to give them proper opportunities and
facilities to develop.

• Article 41 highlights the State’s responsibility to make effective

provision for securing the right to work, the right to education and
to public assistance in conditions of need.
Constitutional provisions relating to
labour law and their application
• Article 42 also enumerates the State’s obligation to make provision
for Maternity Relief. The same is done by way of the Maternity
Benefit Act, 1961 and the Employee’s State Insurance Act, 1948.

• Article 43 imposes an obligation towards ensuring the provision of

a ‘living wage’ in all sectors as well as acceptable conditions of
work.
Constitutional provisions relating to
labour law and their application
• Article 43-A - it provides that the State shall take steps by suitable
legislation or any other means to secure the participation of
workers in the management of industrial establishments.

• introduced by the 42nd Amendment in 1976, has a direct

bearing on labour laws.
Judicial pronouncements
The worker’s right to demonstrate or assemble –

• In Kannan v. Superintendent of Police, Cannanore, (1975) 1 LLJ

83 (Kerala HC)
it was observed that a lawful demonstration or ‘satyagraha’ would
lose all significance if workmen are asked to choose a place far away
from the business premises of the employer.
Judicial pronouncements
The worker’s right to demonstrate or assemble –

• In Kameshwar Prasad v. State of Bihar and Others, (1962) 1 LLJ

294 (SC)
it was observed that to ban every type of demonstration would be a
breach of the freedom of expression. However, reasonable
restrictions can be imposed to prevent such demonstrations as would
cause breach of public tranquillity.
Judicial pronouncements
The worker’s right to demonstrate or assemble –

• All India Bank Employees Association v. National Industrial Tribunal, AIR

1962 SC 17
In this case, the appellant union had argued that they had a fundamental right
to compel the employers (Banks) to disclose the status of ‘undisclosed
reserves’ whose secrecy was protected by Section 34A of the Banking
Companies Act, 1949. held that while the ‘right to form unions’ was
constitutionally protected, the attainment of the union’s objectives was a
concomitant right, which could not be enforced by disregarding statutory
provisions.
Judicial pronouncements
The worker’s right to demonstrate or assemble –

• In National Textile Workers’ Union v. P.R. Ramakrishnan, AIR 1983 SC 75

The Supreme Court had relied on the provision of Article 43-A of Indian
Constitution to uphold the right of workers to be heard in the winding up
proceedings of a company.
Judicial pronouncements
The worker’s right to demonstrate or assemble –

• People’s Union for Democratic Rights and others v. Union of India, AIR 1982
SC 1473

In that case, it was held that when a person provides labour or service to
another for remuneration which is less than the prescribed minimum wages,
the labour so provided clearly falls within the ambit of the words ‘forced labour’
under Article 23.
Judicial pronouncements
The worker’s right to demonstrate or assemble –

• Bandhua Mukti Morcha v. Union of India, AIR 1984 SC 802

where Article 21 read with the Directive Principles enumerated in Articles 39, 41
and 42 were cited as the basis of the State’s obligation to identify, release and
suitably rehabilitate bonded labourers under the Bonded Labour System
(Abolition) Act, 1976.
THANK YOU
Historical background of Trade Unions and
Concept of Collective Bargaining
• At the beginning of the last century, a few groups were formed
amongst workers in India so as to improve their bargaining power
with respect to their service conditions and wages.
• The earliest known of such unions were the Printers’ Union formed
in Calcutta in 1905 and the Bombay Postal Union formed in 1907
Historical background of Trade Unions and
Concept of Collective Bargaining
• The trade union movement in India began after the end of First
World War due to the need for coordination of activities of individual
unions.

• Establishment of International Labour Organization in 1919 paved

the way for establishment of Trade Union Act, 1926.
Historical background of Trade Unions and
Concept of Collective Bargaining

• Various trade unions were formed during such period, such as the
Madras Labour Union in 1918, the All India Trade Union Congress
(“AITUC”) in 1920, the Bengal Trade Union Federation in 1922 and the
All India Railwaymen’s Federation in 1922.
Historical background of Trade Unions and
Concept of Collective Bargaining
• Today, the Bharatiya Mazdoor Sangh (“BMS”), the Indian National
Trade Union Congress (“INTUC”) and the AITUC are considered to be
the largest trade unions in India.

•Central trade unions in India –

• Bharatiya Mazdoor Sangh (BMS) - Bharatiya Janata Party
• Indian National Trade Union Congress (INTUC) - Indian National
Congress.
Historical background of Trade Unions and
Concept of Collective Bargaining
• All India Trade Union Congress (AITUC)
• Hind Mazdoor Sabha.
• Centre of Indian Trade Unions (CITU)
• United Trade Union Congress (Lenin Sarani) (UTUC (LS))
• United Trade Union Congress (UTUC)
• Trade Unions Co-Ordination Centre (TUCC).
• Self- Employed Women’s Association (SEWA).
• Labour Progressive Front (LPF)
Historical background of Trade Unions and
Concept of Collective Bargaining
• All India Central Council of Trade Unions (ICCTU)

• Indian National Trinamool Trade Union Congress (INTTUC)

Concept of Collective Bargaining
• collective bargaining is a method by which problems of wages
and condition of employments are resolved amicably, peacefully
and voluntarily between labour and management.

• According to Industrial relations handbook - the term collective

bargaining applied to those arrangements under which wages and
conditions of employment are settled by bargain, in the form of an
agreement between employers or association of employers and
worker’s organizations.
Concept of Collective Bargaining
• According to Dale Yoder, “Collective bargaining is the term used to
describe a situation in which the essential conditions of
employment are determined by bargaining process undertaken by
representatives of a group of workers on the one hand and of one or
more employers on the other.”

• In the words of Flippo, “Collective bargaining is a process in which

the representatives of a labour organisation and the representatives
of business organisation meet and attempt to negotiate a contract
or agreement, which specifies the nature of employee-employer-
union relationship.”
Concept of Collective Bargaining
• In Karol Leather Karamchari Sangathan v. Liberty Footwear
Company, (1989) 4 SCC 448

The Hon’ble Supreme Court defined collective bargaining as “the

technique by which dispute as to conditions of employment is
resolved amicably by agreement rather than coercion”.
Ram Prasad Vishwakarma V. Industrial Tribunal 1961 AIR 857,
1961 SCR (3) 196

In Ram Prasad Vishwakarma V. Industrial Tribunal, it was observed, it is well

known how before the days of ‘collective bargaining’, labour was at a great
disadvantage in obtaining reasonable terms for contracts of service from its
employer. As trade unions developed in the country and collective
bargaining became the rule, the employers found it necessary and
convenient to deal with the representatives of workmen, instead of
individual workmen, not only for making or modification of contracts but in
the matter of taking disciplinary against one or more workmen and as
regards of other disputes
Pre-requisites for collective bargaining:
• Recognition of the Bargaining Agent - The management should give
recognition to the trade union for participating in the collective bargaining
process.

• Deciding the Level of Bargaining - Whether the dealings are confined to

enterprise level, industry level, regional or national level should be decided as
the contents, scope and enforcement agencies differ in each case.

• Determining the Scope and Coverage of Bargaining - It would be better to

have a clear understanding of what are the issues to be covered under
bargaining.
collective bargaining process:
Prepare

Discuss

Propose

Bargain

Settlement
Features of collective bargaining:
• It is a collective process. The representatives of both workers and
management participate in bargaining.

• It is a continuous process. It establishes regular and stable relationship

between the parties involved. It involves not only the negotiation of the
contract, but also the administration of the contract.

• It is a flexible and dynamic process. The parties have to adopt a flexible

attitude through the process of bargaining.

• It is a method of partnership of workers in management

Type of collective bargaining agreements:
• Bipartite (or voluntary) agreements - are drawn up in voluntary
negotiations between the employer and the trade union.

• Settlements - are tripartite in nature, as they involve the employer, trade

union and conciliation officer. They arise from a specific dispute, which is then
referred to an officer for reconciliation.

• Consent awards - are agreements reached while a dispute is pending before

a compulsory adjudicatory authority, and incorporated into the authority’s
award. Even though the agreement is reached voluntarily, it becomes part of
the binding award pronounced by the authority constituted for the purpose.
Importance of collective bargaining towards employees:
• Collective bargaining develops a sense of self respect and responsibility
among the employees.

• It increases the strength of the workforce, thereby, increasing their

bargaining capacity as a group.

• Collective bargaining increases the morale and productivity of employees.

• It restricts management’s freedom for arbitrary action against the

employees. Moreover, unilateral actions by the employer are also
discouraged.
Importance of collective bargaining towards employees:
• Effective collective bargaining machinery strengthens the trade unions
movement.

• The workers feel motivated as they can approach the management on

various matters and bargain for higher benefits.

• It helps in securing a prompt and fair settlement of grievances. It provides

a flexible means for the adjustment of wages and employment conditions
to economic and technological changes in the industry, as a result of
which the chances for conflicts are reduced.
Importance of collective bargaining towards employers:
• It becomes easier for the management to resolve issues at the
bargaining level rather than taking up complaints of individual
workers.
• Collective bargaining tends to promote a sense of job security
among employees and thereby tends to reduce the cost of labor
turnover to management.
Importance of collective bargaining towards employers:
• Collective bargaining opens up the channel of communication
between the workers and the management and increases worker
participation in decision making.
• Collective bargaining plays a vital role in settling and preventing
industrial disputes.
Contents of Collective Bargaining Agreements :
Typically, clauses in the memorandum of settlement pertain to the
following:

• Term / Duration of the memorandum of settlement as may be

agreed between the parties.
•Settlement terms which, typically, may be with respect to wages,
benefits, allowances, arrears with respect to payment to workers,
concessions, works hours, overtime etc.
•Conditions with respect to strikes and lockouts by trade unions and
employers respectively.
Contents of Collective Bargaining Agreements :

• Obligations of workmen.
•Obligations of employer.
•Penalties with respect to non-compliance of the obligations of
workmen and employers.
•Dispute resolution.
•Miscellaneous clauses including severability, notice, etc.
Bangalore Water Supply & Sewage Board Etc. Vs. R. Rajappa
and Othrs, 1978 AIR 548

• This case is a landmark judgement under Industrial Disputes Act, 1947, which provides
clarity on what the term “industry” encompasses within its scope. The judgement
established the triple test and the dominant nature test for the scope of the definition of
“industry”, defined under Section 2 (j) of the Act. Scope of definition of Industry was
expanded.

• Their ruling was a result of the various disputes arising in establishments that are not
manufacturing industries but belong to categories of hospitals, educational and research
institutions, Governmental departments, public utility services, professionals and clubs.
The definition was accordingly expanded to cover those establishments which involved
an employer-employee relationship, irrespective of the objectives of the organization in
question.
Bangalore Water Supply & Sewage Board Etc. Vs. R. Rajappa
and Othrs, 1978 AIR 548

• Various judgements were overruled in this case.

• University of Delhi v. Ram Nath,
• Madras Gymkhana Club Employees’ Union v. Gymkhana Club, 1967 II LLJ
720
• Management of Safdarjung Hospital v. Kuldip Singh Sethi, 1970 (1) SCC
735.
Bangalore Water Supply & Sewage Board Etc. Vs. R. Rajappa
and Othrs, 1978 AIR 548

• Various judgements were followed in this case.

• State of Bombay and Othrs V. The hospital mazdoor sabha and
others, (1960) 2 SCR 866

• Corporation of city of Nagpur V. Its employees, (1960) 2 SCR 942

Bangalore Water Supply & Sewage Board Etc. Vs. R. Rajappa and
Othrs, 1978 AIR 548

The Triple Test for Scope of the definition of 
 

“Industry”
(a) systematic activity
(b) co-operation between employer and employee
(c) production and distribution of goods and services 
calculated to satisfy human wants and wishes
Bangalore Water Supply & Sewage Board Etc. Vs. R. Rajappa
and Othrs, 1978 AIR 548

• The dominant nature test :

• Where a complex of activities, some of which qualify for exemption,
others not, involves employees on the total undertaking, some of whom
are not 'workmen' as in the University of Delhi Case or some
departments are not productive of goods and services if isolated, even
then, the predominant nature of the services and the integrated nature
of the departments as explained in the Corporation of Nagpur, will be
true test. The whole undertaking will be 'industry' although those who
are not 'workmen' by definition may not benefit by the status.
Observation by the Hon’ble Court

It is high time that the Legislature steps in with a comprehensive bill to

clear up the fog and remove the doubts and set at rest once for all the
controversy which crops up from time to time in relation to the meaning of
the aforesaid term rendering it necessary for larger benches of this Court
to be, constituted which are driven to the necessity of evolving a working
formula to cover particular cases.

• Appeal was dismissed.

Syndicate Bank vs K.Umesh Nayak, 1995 AIR 319

• whether workmen who proceed on strike, whether legal or illegal, are

entitled to wages for the period of strike?

• The appeal was referred to Constitutional bench due to apparent

conflict of opinions expressed in Churakulam Tea Estate (P) Ltd.
v. Workmen and Crompton Greaves Ltd. v. Workmen on the
one hand, and Bank of India v. TS. Kelawala on the other.
Syndicate Bank vs K.Umesh Nayak, 1995 AIR 319

• Facts -
• On 10-4-1989 a memorandum of settlement was signed by the Indian Banks'
Association and the All Indian Bank Employees' Unions including the National
Confederation of Bank Employees as the fifth bipartite settlement.

• on 9-6-1989 three settlements were entered into between the parties. Under
these settlements, the employees of the appellant-Bank were entitled to
certain advantages over and above those provided under the All India
Bipartite Settlement of 10-4-1989. The said benefits were to be given to the
employees retrospectively with effect from 1-11-1989.
Syndicate Bank vs K.Umesh Nayak, 1995 AIR 319

Facts -
• Bank was not paying benefit stating that Government consent is required,
though it was not mentioned in settlement.

• After 2-3 requests, the union federation called on for 3 days strike from
18/09/1989.
• the Deputy Chief Labour Commissioner and Conciliation Officer wrote to
both bank and union and stated no formal notice of strike was given to him.
And he initiated Conciliation proceeding.

• Union again gave notice of strike to be held on 16/10/1989 and also filed writ
of Mandamus to direct the Bank to fulfil its obligation.
Syndicate Bank vs K.Umesh Nayak, 1995 AIR 319

Facts -
• Bank issued circular stating that if union go on strike, bank will deduct the
salary for the days the employees would be on strike, on the principle of "no
work, no pay".
• Employees went on strike on 16/10/1989 and also got interim injunction from
High Court directing Bank not to deduct salary.
• Bank’s contention –
• It has to take Govt.’s approval
• Conciliation proceeding is pending so no right of strike

• Single judge bench upheld the bank contention and held strike illegal.
• Division bench reversed the order.
Syndicate Bank vs K.Umesh Nayak, 1995 AIR 319

Facts -
• Supreme Court observed –
• High Court has erred in jurisdiction as it should go to Industrial adjudicator.
• The issue whether the strike was justified or no where raised.
• The impugned order of the High Court has, therefore, to be set aside.
• Hence, the appeal is allowed. Since the dispute has been pending since
1989, by exercising the power under Article 142 (enforcement of
decree) of the Constitution, directed the Central Government to refer the
dispute with regard to the deduction of wages for adjudication to the
appropriate authority under the Act within eight weeks from the day of
judgement . The appeal is allowed accordingly with no order as to costs.
Thank you
Trade Union Act, 1926

• Trade unions are organizations of workers formed to protect the rights and
interests of workers through collective action.

• In India, the first quarter of the 20th century gave the birth of the trade union
movement. A series of strikes were declared in India in the twenties. The
success of most of these strikes led to the organization of many unions.

• In 1920, the All India Trade Union Congress (AITUC) was set up. In 1926, the
Trade Unions Act was passed which gave a legal status to the registered trade
unions.
Growth of Trade Unions in India
There was labour unrest in India at the end of the First World War. In several industries,
the workers went on strikes to secure wage increases. The Russian Revolution and the
International Labour Organization have inspired the Indian labourers to launch trade
unions like the Spinners Union and Weaver’s Union which had been established in Madras
and Ahmedabad respectively.

But the important step in the history of Indian trade unionism was the foundation of All
India Trade Union Congress in 1920. There had been a steady progress of trade union
movement in India. However, the decision of the Madras High Court that the formation of
trade union is illegal stood in the way of its development.

In 1926, the Trade Unions Act was enacted to give legal recognition to the different trade
unions. The said Act also .conferred certain privileges on the registered trade unions in an
industrial unit. The Trade Unions Act has made it compulsory on trade unions to use their
funds for workers interests and to prescribe a fee of at least 25 paisa per works. Most of
the members of the executive committee of a trade union must be employed in the
In 1930, the climate was not favourable to the growth of trade Union movements in
India. There is serious economic depression during the period.

With independence and partition, the country was plunged into growing
unemployment. A series of strikes occurred, in the country. The All India Trade Union
Congress was split up as a result of which the Indian National Trade Union Congress
(INTUC) was formed in 1947 under the control of congress party. The Hind Mazdoor
Sabha (HMS) was formed by the socialist Party in 1948, and United Trade Union
congress (UTUC) was formed in 1949. Recently, Centre of Indian Trade Unions (CITU) has
been formed by the Communist Party (Marxists).

There are more than fourteen thousand registered trade unions in India. The steady
growth of trade unions in India is due to the political consciousness among the laborers
as well as the governmental measures to facilitate collective bargaining through
appropriate legislation.
Trade Union Act, 1926

• The Trade Union Act 1926 was amended twice in 1929 and 1947.

• In 1929, The Act was amended to provide procedure for appeal against the
decision of Registrar.

• In 1947, The Act was amended for compulsory recognition of Trade Union by
Employer if the Union is registered.
Definitions under Trade Union Act, 1926

• Sec. 2(d) "registered office" means that office of a Trade Union which is
registered under this Act as the head office.

• Sec 2(e) "registered Trade Union" means a Trade Union registered under this
Act

• Sec 2(f) – "Registrar" means—

• (i) a Registrar of Trade Unions appointed by the appropriate Government
under section 3, and includes any Additional or Deputy Registrar of Trade
Unions; and
• (ii) in relation to any Trade Union, the Registrar appointed for the State in
which the head or registered office, as the case may be, of the Trade Union is
situated.
• Section 2 (g) - "Trade dispute" means any dispute between
employers and workmen, or
between workmen and workmen, or
between employers and employers which is connected with
the employment, or non-employment, or the terms of
employment or the conditions of labour, of any person.
• And "workmen" means all persons employed in trade or industry whether or
not in the employment of the employer with whom the trade dispute arises.

• Section 2 (h) - "Trade Union" means combination,

 whether temporary or permanent,
 formed primarily for the purpose of regulating the relations between
 workmen and employers, or
 between workmen and workmen, or
 between employers and employers, or
 for imposing restrictive condition on the conduct of any trade or business,
 and includes any federation of two or more Trade Unions.
 Exceptions

Provided that this Act shall not affect–

(i) any agreement between partners as to their own business;

(ii) any agreement between an employer and those employed by him

as to such employment; or

(iii) any agreement in consideration of the sale of the good-will of a

business or of instruction in any profession, trade or handicraft.
Tamil Nadu NGO Union vs Registrar, Trade Unions, AIR 1962, Madras
HC
Tamil Nadu NGO Union, which was an association of sub magistrates of the
judiciary, tahsildars, etc., was not a trade union because these people were
engaged in sovereign and regal functions of the State where were its inalienable
functions.
GTRTCS and Officer's Association, Bangalore and others vs Asst.
Labor Commissioner and others AIR 2002, Kar. HC

The definition of workmen for the purpose of Trade Unions is a lot

wider than in other acts and that the emphasis is on the purpose of
the association rather than the type of workers and so it is a valid
Trade Union.
National Organisation Of Bank Workers’ Federation Of Trade Union
vs Union of India & Others, (1993) II Lab LJ 537

Where Federation of Trade Union is not registered, it is not Trade

Union under the Act. It is not a juristic person and is not competent to
raise a demand on behalf of employees which can fall in the ambit of
industrial dispute. It can not file a writ petition.
Registration and cancellation of trade union
 MODE OF REGISTRATION (S. 4)

• Section 4 says that to register a Trade Union, an application must be

sent to the Registrar of Trade Unions appointed by an appropriate
government.
• The application must be made by seven or more persons who are
engaged in the trade or industry in connection to which the Trade
Union is to be formed.
• All the applicants must subscribe their names to the rules of the
Trade Union and comply with the provisions of this act regarding
registration.
 MODE OF REGISTRATION (S. 4)

• There must be at least 10% or 100, whichever is less, members who

are engaged or employed in the establishment or industry to which
it is connected.
• There must not be less than seven members who are engaged or
employed in the establishment or industry to which it is connected.
• If more than half of the persons who applied for the registration
cease to be members of the union or expressly disassociate
themselves from the application, the application will be deemed to
be invalid.
 APPLICATION OF REGISTRATION
• Section 5 gives the details of the application. It says that the
application should be sent to the registrar along with the copy of
the rules of the trade union and a statement of the following
particulars-
1) The name, occupation, and addresses of the applicants.
2) The name of the trade union and the address of its head office.
3) The titles, names, ages, addresses, and occupations of the office
bearers of the trade union.
4) If the trade union has been in existence for more than 1 yr, a
general statement of its assets and liabilities.
 CONTENT OF THE RULE BOOK

• Section 6
• specifies the provisions that should be contained in the rule book
of the trade union.
• A copy of this rule book must be supplied along with the
application for registration of the trade union.
• This rule book details the internal administration of the trade union
and also determines and governs the relationship between the
trade union and its members.
 CONTENT OF THE RULE BOOK…….

• It must contain the rules for the following matters:

1. name of the trade union.
2. the whole object of the trade union.
3. the whole purposes for which the general funds can be used.
4. the maintenance of the list of members and adequate facilities to
inspect it by the members of the trade union.
5. the membership of ordinary members who are actually engaged or
employed in an industry with which it is connected as well as the
membership of the honorary or temporary members.
 CONTENT OF THE RULE BOOK…….

• It must contain the rules for the following matters:

6. the appointment of members of the executive body.
7. the membership or subscription fee, which shall not be less than
25 paisa per member per month
8. the conditions under which a member can get the benefits or has
to pay fines.
9. the safe custody of funds and provisions for inspecting or auditing
the statements, or other documents of the trade union.
10.dissolution of the trade union.
 POWER OF REGISTRAR (S.-7)

I. to ask for further information from the trade union to satisfy

himself that the trade union complies with section 5 and is eligible
to be registered under section.
II. The registrar can refuse to register the trade union until he
receives the information.
III. Further, he has the power to ask to change the name of the trade
union if a union with the same name already exists or if he feels
that the name could be deceiving or confusing to the public or the
members of the trade union.
 REGISTRATION
• Under section 8, upon satisfaction of all the requirements, the Registrar of the
Trade Unions will register the trade union. It is mandatory for the registrar to
register a trade union if the union satisfies all the technical requirements of
this act.

Re Indian Steam Navigation Workers Union AIR 1936

the court held that a Registrar only has to see whether all the technical
requirements are being fulfilled and not whether it could be described as
unlawful.

ACC Rajanka Limestone Quarries Worker's Union vs Registrar of Trade

Unions, AIR 1958, it was held that if the registrar does not register the trade
union within 3 months of application, an appeal can be made to the High Court
under art 226.
CERTIFICATE

• Under section 9, the registrar will issue the certificate of

registration in the prescribed form, which shall be a
conclusive evidence that the trade union is registered
under this act.
 CANCELLATION OF REGISTRATION (S.-10)
• The Registrar of Trade Unions has the power to cancel the registration of a trade union in
the following conditions:
I. On the application of the trade union to be verified in the prescribed manner.
II. If the registrar is satisfied that registration was obtained by fraud or mistake.
III. If the trade union has ceased to exist.
IV. If the trade union willfully, upon notice of the registrar, has contravened or allowed any
rule to continue in force, which is inconsistent with the provisions of this act.
V. If the trade union rescinds any rule providing for any matter, provision for which is
required to be made in section 6.
VI. If the registrar is satisfied that a trade union of workmen has ceased to have the
requisite number of members.
 S. 12- REGISTERED OFFICE

• All communications and notice to a registered Trade Union may be

addressed to its registered office. Notice of any change in the
address of the head office shall be given with fourteen days of such
change to the Registrar in writing, and the changed address shall be
recorded in the register referred to in Section 8.
 S. 13- INCORPORATION OF
REGISTERED TRADE UNIONS

• Every registered Trade Union shall be a body corporate by the name

under which it is registered and shall have perpetual succession and
a common seal with power to acquire and hold both movable and
immovable property an contract, and shall, by the said name sues
and be sued.
 M T CHANDERSENAN VS SUKUMARAN
AIR 1974

• SC held that if a member fails to pay subscription fee, he cannot be

considered a member of the trade union. However, subscriptions
cannot be refused under some pretext which results in the denial
of membership.
 BOKAJAN CEMENT CORPORATION
EMPLOYEES UNION
VS
CEMENT CORPORATION OF INDIA, 2004

• SC held that membership of the union does not automatically

cease upon termination of the employment.
 TATA ELECTRIC COMPANIES
OFFICER'S GUILD VS REGISTRAR OF
TRADE UNIONS, 1994, BOMBAY HC

• In this case the court held that for a registrar to cancel the
registration, willful neglect of the notice is a must. If the trade
union sends the account statement upon notice of the registrar,
the registrar cannot cancel the registration on the ground that the
account statement was not filed earlier.
Concept of Collective Bargaining
• collective bargaining was first used by Beatrice Webb in the
beginning of 19th century. It was not defined

• According to Industrial relations handbook - the term collective

bargaining applied to those arrangements under which wages and
conditions of employment are settled by bargain, in the form of an
agreement between employers or association of employers and
worker’s organizations.
Concept of Collective Bargaining
• According to Dale Yoder, “Collective bargaining is the term used to
describe a situation in which the essential conditions of
employment are determined by bargaining process undertaken by
representatives of a group of workers on the one hand and of one or
more employers on the other.”

• In the words of Flippo, “Collective bargaining is a process in which

the representatives of a labour organisation and the representatives
of business organisation meet and attempt to negotiate a contract
or agreement, which specifies the nature of employee-employer-
union relationship.”
Concept of Collective Bargaining
• In Karol Leather Karamchari Sangathan v. Liberty Footwear
Company, (1989) 4 SCC 448

The Hon’ble Supreme Court defined ccollective bargaining as “the

technique by which dispute as to conditions of employment is
resolved amicably by agreement rather than coercion”.
Concept of Collective Bargaining
Terms and conditions can be decided in 4 ways –

• Unilaterally dictated by an employer

• Imposed by Union
• Regulated by Government
• Joint negotiation between employer and employee.
Essential for collective bargaining:
• Right to organise

• Stable and strong Union

• Recognition of Trade Union

• Attitude of employers and trade unions

• Suitable frame works

• Statutory and non-statutory bargaining

Purpose of collective bargaining:
• mean of regulating wages

• mean of regulating labour management relation

• bargaining bodies
• National level
• Industrial level
• Unit/enterprises level
collective bargaining process:
Prepare

Discuss

Propose

Bargain

Settlement
Features of collective bargaining:
• It is a collective process. The representatives of both workers and
management participate in bargaining.

• It is a continuous process. It establishes regular and stable relationship

between the parties involved. It involves not only the negotiation of the
contract, but also the administration of the contract.

• It is a flexible and dynamic process. The parties have to adopt a flexible

attitude through the process of bargaining.

• It is a method of partnership of workers in management

Type of collective bargaining agreements:
• Bipartite (or voluntary) agreements - are drawn up in voluntary
negotiations between the employer and the trade union.

• Settlements - are tripartite in nature, as they involve the employer, trade

union and conciliation officer. They arise from a specific dispute, which is then
referred to an officer for reconciliation.

• Consent awards - are agreements reached while a dispute is pending before

a compulsory adjudicatory authority, and incorporated into the authority’s
award. Even though the agreement is reached voluntarily, it becomes part of
the binding award pronounced by the authority constituted for the purpose.
Disadvantages of Collective Bargaining

 Devided labour

 Organised employer

 Illiteracy in workers

 Lack of union leadership

 Politica association and personal enmity between various unions.

Disadvantages of Collective Bargaining

 Divided labour

 Organised employer

 Illiteracy in workers

 Lack of union leadership

 Political association and personal enemity between various unions.

Thank You