Industrial Relations Code: Are apples same as oranges?

The Industrial Relations Code (IRC) introduced in Parliament recently has considerably revised penalties against truant employers upwards and used the concept of ‘continuing offence’ to impose the stiffer punishment option of imprisonment. However, the penal scheme suffers from some shortcomings.

For the first time, the IRC requires inquiry by an officer not below the rank of Under Secretary to the Government of India (and equivalently ranked official at the state level) before imposing the stipulated penalty for contraventions of some clauses. This arrangement is probably to remove reckless penal behaviour on the part of labour department officials and to ensure the ‘liberal’ orientation of the government to promote ‘ease of doing business’. But this is bad for three reasons, namely that it will lead to lobbying by the business class, create unnecessary bureaucratization of penal procedures, and the officer concerned may not have the time or the technical expertise to deal with labour matters.

Moreover, while the penal amounts may appear large, when discounted for inflation and given the magnitude of offences, say illegal retrenchment or closure, the amounts are not actually large at all.

The IRC, unlike the existing law, has stipulated imprisonment as a punishment for many of the contraventions on the part of employers (relating to retrenchment, closure, standing orders, etc.) only if the same offences are committed more than once. This becomes a joke in the case of say retrenchment and closure, especially the latter as one does not close a unit twice – to be sure, there may be a possibility of a partial closure (in which case the continuing offence concept will apply).

The question is: should the law wait for the employer to repeat an offence to impose imprisonment even if the first-time offence will have serious consequences? What prevents the employer from resorting to illegal actions concerning retrenchment and closure for the first time and get away with meagre fines of Rs 1-10 lakh if he figures that the gain from violating the law is higher than the penalty. Worse, the clauses on penalties mention a range of fines, so the actual fine need not be close to the maximum amount.

On the other hand, in the case of workers and employees, even the first offence of commencing, continuing or otherwise acting in furtherance of an illegal strike or lockout under the Code is punishable with a fine or with imprisonment for up to one month or both. This means that an illegal strike/lockout is far more socially harmful than an illegal retrenchment/closure, which logic is curiously pernicious.

Interestingly, for offences concerning strike/lockout or breach of settlement described in Section 86 (15) to (18) and regarding unfair labour practices in Section 6 (unfair labour practices), the principle of equality that the illegal actions of workers/trade unions will be equal to those by employers/management has been invoked and hence the same monetary penalty, with or without the imprisonment is provided for even for a first-time offence. For example, any person who for the first time instigates or incites others to take part in, or otherwise acts in furtherance of, an illegal strike or a lockout is punishable with fine of Rs 10,000-50,000 or with imprisonment up to one month or both [S.86(15)].

It is important to note that a breach of a settlement or an award or an unfair labour practice by the workers/trade unions may not have equal significance in practice though in principle a violation irrespective of who commits it can be seen with a mathematical equality logic. For example, can we say that unfair labour practices on the part of workers/trade unions, such as illegal strikes or a go-slow, have equal import or impact with respect to the unfair labour practice on the part of employers such as victimisation of union members/leaders by discharge/dismissal?

The unfair labour practices of workers deserve disciplinary action but discharge/dismissal of workers by employers will mean loss of livelihoods for workers and they have to wage long and hard battles to get reinstated in case of wrongdoing by the employers. On the other hand, for the employers, there is no threat to livelihood due to any of the unfair labour practices with reference to the employer, like illegal strike or go-slow or damage to the property, though revenue loss may occur to the employer.

Even a casual reading of the list of unfair labour practices shows far more numerous actions by employers which could hurt jobs or incomes of workers and the basic democratic rights of workers, that of freedom of association and collective bargaining. Their actions can put a free and democratic society at peril. So, it is a double whammy for workers/trade unions. For the law to equate the actions of the employers with those of workers/trade unions is faulty. It is essential to recognise the basic structural conditions of imbalance in the power and economic resources between labour and capital in the industrial relations system. Otherwise, we end up valuing gold and copper equally as both are metals in a generic sense. The normative and legal deficits in such a perspective as employed in the IRC will have serious consequences in our pursuit of promotion of a strong democratic and pluralistic, industrial society. Hence, the lawmakers need to carefully tread these landmines when they deliberate on these provisions and pass the law.

(The writer is Professor, XLRI, Xavier School of Management, Jamshedpur)