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Right to sack a recalcitrant worker
Written By murali772 - 25 July, 2012
law and order Citizen Reports Economy India labour laws
The brutal attacks on senior managers of Maruti-Suzuki's Manesar unit, leaving one of them dead and several others seriously injured, has again brought to the fore the matter of labour law reforms. During a TV discussion following the incident, Mr Rahul Bajaj, the respected industrialist - parliamentarian, brought to bear the practice of many industries (including apparently the Maruti plant) having just a small work force directly on their rolls, and upto 5 or more times that many on contract, all for the same kind of work. And, while these 'regular' workers are paid excellent salaries and accorded all kinds of benefits, the contract workers get just the government notified minimum wages, which at best matches just about one-third the salary levels of the regular workers. Mr Bajaj pointed out that such flagrant differentiation is amongst the biggest causes of disaffection amongst the workers
While such practices are rampant, particularly in the SME sector, in the Corporate sector however I had thought that contract workers were engaged only for non-core activities of a unit, like for house-keeping, security, canteen, transport, etc. So, if the Manesar plant was engaging contract workers for their core activities too, it is kind of unusual. Actually, government organisations are the biggest culprits in this regard, and, worse still, they don't even ensure the minimum wages for the contract workers - check this.
Mr Bajaj then went to add that the reason for this plainly is the fact that once you have a worker on your rolls, the process of terminating his services, if he turns recalcitrant, is so tortuous that the industries are forced to take the easier option of keeping them all on contract, leading to the kind of disparity, consequent disaffection, and perpetration of such incidents, though the cruelty meted out in this particular instance was beyond all comparison. The obvious answer Mr Bajaj stated was to make it easier for employers to terminate workers, who they have decided are not helping the overall cause any, against payment of a fair compensation package. When another panelist, Mr Anil Padmanabhan, a trade unionist, termed this the "hire & fire policy", Mr Bajaj responded that there was a difference in that a fair compensation, based on the years of service put in, was being paid, in addition to the regular benefits of gratuity and all such entitlements.
An outcome of adopting Mr Bajaj's suggestion would perhaps be that the bargaining power of the workers will then depend largely on their individual skills and thereby their usefulness to the company, as compared to the present situation where it depends mainly on the labour union's collective strength to hold the management to ransom (This is of course why it will not be acceptable to the Anil Padmanabhan's of this world). This will spurr a fair section of them to keep upgrading their skills, and thereby command high wages, particularly in a growing economy. On the other hand, however, there is also the fear that those unable to cope up with the demand may tend to get eased out, though of course they will then be simultaneously collecting their severance packages. Now, very orten, non-performance of an employee is the result of his having lost interest in the job, in which case, it would be in the fitness of things that, putting the severance package to good use, he finds himself something more meaningful to do.
Another outcome would be that employers will no longer hesitate to add on more workers, as may be required, leading to huge alround employment generation, and, since they will all now be employed directly, they will also become eligible for all the benefits, thus ensuring a more egalitarian environment too.
The positives as such are too many, and it is time the government looked at all of them seriously, if it wants to prevent Manesar like incidents to happen again.
Apart from all of these, I would also venture to add that, when every kind of right is being claimed today by all and sundry, and many of them are being addressed by the government, shouldn't there be some basic rights for the employer too? Labour is an important component of any value addition exercise, and therefore every employer would do his best to cultivate his workers. But, for all his efforts, if an employee chooses to remain recalcitrant, why should the employer have to suffer him interminably? Many are the instances where a handful of recalcitrant workers have caused total ruination of industries, placing their own livelihoods, those of their colleagues, as also that of the employer too in jeopardy. The country has paid huge costs on this account already. It cannot afford them any longer.
Muralidhar Rao
COMMENTS
das - 25 July, 2012 - 15:09
Nice article.
A common excuse for poor performance in public sector firms is that they have a social duty to perform while the private sector can afford to focus on profits alone.
Like Rahul Bajaj says, a lot of public sector firms too run their shop floors with contract or temporary labour. I started my career in BEML (Bharat Earth Movers Ltd.) on the shop floor. There used to be machine operators who used to be taken off the rolls every 3 months, reemployed after 2 days. Some of them had been working for BEML for 15-20 years. So much for the 'social responsibilty' of the public sector.
Firms like Tata Steel and the TVS group companies haven't had labour problems for decades, because they treat their people like people. Firms like Maruti import all their other processes and systems from their Japanese principals, except the ones relating to employees - lifetime employment, part of the family, etc.
most harmful piece of legislation
murali772 - 12 August, 2012 - 13:12
A sensible company in India will not hire a permanent worker today because of our senseless labour laws. Instead, it hires contract workers to which it denies long-term benefits. Meant to protect workers, the laws have harmed them. They are the main reason why India has not been able to create a manufacturing revolution and create more jobs. The spread of contract labour has reduced the bargaining power of unions as well, who now represent less than 4% of India's workers.
Nowhere in the world has so much harm been done by a piece of legislation.
For the full text of the essay by Gurcharan Das, in the Sunday ToI, click here.
Very true, Sir. And, will the government ever get down to correcting the anomalous situation?
abidpqa - 17 September, 2012 - 10:51
Around the same time Maruti incident happened this news regarding Industrial Employment (Standing Orders) came. If the labor law is wrong, industry should propose a new law, which they will not do. They want to have no law. Even if they propose, it will be biased. They say Indian labor law is not fit for globalization, then will they bring US labor law here, or Japanese. IS US and Japan not part of globalization? They say Japanese work more, and wants to bring Japnese working conditions there, then why not bring Japnese laws too.
Now the Industry is complaining because managers are hurt. What do they have to say when the union leaders are murdered. In Maruti itself in 2000 during strike many union leaders died, is that investigated? The management always have more power, illegal in most cases. When the workers, showed their power they are just playing victims. The job of the govt is not just defence, where they do a good job, but they are neglecting bringing equality and justice.
Industry wants hire and fire, but opposes subsidies and social security. If there is hire and fire there should be choice available whether to work at all. Hire and fire can be allowed if everyone has house, medical insurance, and minimum social security payment to have a decent life.
They say that non permanent employees are more flexible, then why not pay them more. They are paid about one-third, if the industry is sincere to their own argument, shouldnt they be paid double?
urgent need for flexible labour laws
murali772 - 14 November, 2012 - 14:19
Twenty million young people are enrolled in higher education - a figure comparable to the United States. The more qualified workforce that will be created each year is unlikely to settle for careers in the unorganised sector, which currently accounts for 93% of total employment in the country.
The primary reason for such excessive dominance of the unorganised sector is the rigid and cumbersome labour laws, which employers circumvent by setting up much smaller informal units which fall outside the purview of the law. The impact on productivity has been disastrous, as productivity of workers at high-end manufacturing units in the formal sector can be as much as 20 times higher than in low-end informal units.
- - - Evidence from states shows that regions with stringent employment protection, or where dispute settlements are ineffective and costly, have much lower employment. So flexible labour laws which allows workforce adjustments in tune with production requirements, is the only option to boost employment and scale up the organised sector.
For the full text of the ToI editorial piece, click here
@ abidpqa -
Hire and fire can be allowed if everyone has house, medical insurance, and minimum social security payment to have a decent life.
How do you pay for all of these without generating surplus in the economy? By printing currency? If you do that, without corresponding value additions through production of goods and providing of services, you will land up like Zimbabwe, with inflation of the order of 200 + %
They say that non permanent employees are more flexible, then why not pay them more. They are paid about one-third, if the industry is sincere to their own argument, shouldnt they be paid double?
Here, you have a point. And, that's exactly what flexible laws are about.
status quo rules, inspite of a cabinet decision
murali772 - 25 July, 2012 - 11:37
The findings of the recent survey of job trends across states by the labour bureau should serve as an eye-opener for all concerned. States like Gujarat and Himachal Pradesh, which have introduced labour reforms, have lesser unemployment than Kerala and West Bengal, which have been following pro-labour policies. In other words, labour reforms create jobs, not destroy them. Yet, the United Progressive Alliance government is wary of introducing reforms in the labour sector for fear that it would antagonise the working class and the vote-banks it represents. As a result, antiquated labour laws that prevent investment act as a dampener for job creation.
- - - The UPA government has not summoned up courage to introduce the national manufacturing plan, which the Union Cabinet had cleared nine months ago. It is nobody’s case that labour should be allowed to be exploited by vested interests. At the same time, an industrialist, who invests money in a project, should have the freedom to choose his staff and get work done by them and in the event of failure should have the ability to lay off staff and, if necessary, close down the factory. To put it differently, the labour laws need reforms so that they meet modern-day demands and create more jobs.
For the full report in the New Indian Express, click here.
Tragic inaction leading to tremendous costs, the worst sufferer being none other than the aam aadmi
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