Tuesday, January 10, 2006

Labor Laws In India

Having a keen interest in the fields of management, economy and trade, I have a habit of reading articles, journals and write-ups which deal with this subject. With the fast pace of change in management practices around the world it is very interesting to read how new ideas and practices came into effect and how they have been evolving. I have with me a collection of articles, case studies and journals about management, economy and related topics from the late 1980’s and early 1990’s which were collected by my uncle. This archive has clippings on various topics ranging from new practices in quality management, inventory scheduling, manufacturing practices and so on, many of which practices were in their initial stages of evolution at the time. What makes interesting reading are old newspaper articles which highlight the state of industry during the pre-globalization ages.

One such Economic Times article dated July 19, 1986 deals with the prevalent labor laws of the day and is titled “Victimization of the Employer”. The authors of the article have shown by citing examples of various legal cases pertaining to strives between managements and trade unions of various companies, how the labor laws are actually biased against the employer. Among the many examples cited one particularly caught my attention. This deals with the contentious issue of closing down an industry by an industrialist under economic compulsions. The right to carry on a business includes a right to stop it or close it, extols the article and points out that under the relevant labor laws even this fundamental right of an employer is punishable under the penal code.

One of the examples provided by the authors highlighting the bias against the employer, is when in 1984, an employee suspended by Delton Cable-India for misconduct and use of inappropriate language is re-instated by the order of the Supreme Court of India. The authors have a valid point that such cases of judicial ambivalence and other similar cases have not only seriously undermined the relevance of industrial discipline but are a clear case of victimization of the employer. With the advent of globalization in the 90’s and the rules and regulations under treaties like GATT and WTO, the labor laws have become stricter and the bias against the employer has reduced. As the country tries to attract more foreign investment, it is imperative that the inherent bias against the employer which thrived under a license raj reduces.

The recent lockout declared by the management of the Toyota Kirloskar plant in Bangalore is in response to a strike by the workers union demanding the re-instatement of three employees, who had been suspended by the company on grounds of misconduct. There has not been a major lockout in Karnataka for a long time and a tough stand has been taken by the company against the striking union members. But with the involvement of a multinational like Toyota and the global investor eyesight being focused on any such incidents, there is a lot of introspection in the government about the antiquated labor laws which have aided this situation to develop. Another related issue where the government is stuck in an embarrassing situation is with regard to the Kudremukh Iron Ore Company Limited. Here the judiciary and the Government of Karnataka are at loggerheads over the closure of the company. The Supreme Court had ordered the termination of operations at KIOCL because of concerns to the environment from January 2006. But the Government faced with the large displacement of labor and internal political pressures has been lobbying with the central government to reverse this ruling. The issues surrounding this case are not limited to this and it may not be fair to outright dismiss the case against the Supreme Court ruling, but the lethargy of the Government in handling the situation in collusion of the antiquated labor laws have made case spiral into an ugly situation.

Although there has been a great improvement in the economic and industrial sector in the country, the industrial disputes and disagreements are still suffering under the archaic legal framework of The Industrial Disputes Act, 1947. It is high time for serious reforms and amendments to the labor laws and handling of industrial disputes. The authors of the 1986 article published prior to the ascendance of the free market economy, put the finger on the pulse of the issue when they stated that the plight of the employer has been overlooked in the over enthusiastic rendering of social justice and that considering the employer as an antisocial element, would be a serious injustice against the very capital which the labor is employed for.


  1. “Victimization of the Employer” by Shanti Mal Jain & D.C. Jain, The Economic Times, July 19th, 1986


Anonymous said...

Serious Writing ever encountered on bloggers world.Based on facts and well structured.Hats Off to u!!

Anand Rao said...

Hey Ann, Thanks a lot, for the encouraging words!
Keep checking the blog regularly for more similar posts. Also spread the URL to people whom u think may like such posts!

Unknown said...

Hi Anand

Its good to find someone has the interest to teach people. Anyways can you give me an article on Labour Laws in India.

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