Recognition of trade unions and collective bargaining - Labour and Industrial Law I

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1. Recognition before the Code
2. Negotiating union and negotiating council: section 14
3. Recognition at central and State level: section 27
4. Collective bargaining: meaning
5. The process
6. Settlements
How this is examined

Cases checked to exist. Read the judgment before quoting a holding.

Every case cited here has been checked to exist — the citation resolves and names the right parties. The propositions attributed to each case have not been verified line by line against the judgment. Case names link through to the full judgment: read it before quoting a holding in an examination answer, and never carry a proposition from notes into court on trust.

The gap the Code filled. For almost a century Indian law let unions register but never made an employer recognise one. Registration gave a union legal personality, but not the right to sit across the table. Section 14 of the Industrial Relations Code, 2020 is the first central provision that requires recognition. The 1926 Act had no equivalent, so there is no bracketed section here; the old position came from the Code of Discipline and State laws.

1. Recognition before the Code

A 1947 amendment to the Trade Unions Act inserted a chapter on compulsory recognition. It was never brought into force.
The Code of Discipline, 1958, a voluntary tripartite agreement, laid down criteria for recognising a representative union on the basis of verified membership. It had no legal force.
Some States legislated, the best known being Maharashtra’s Recognition of Trade Unions and Prevention of Unfair Labour Practices Act, 1971. In Balmer Lawrie Workers’ Union v. Balmer Lawrie & Co., 1984 INSC 241, the Supreme Court upheld the provision of that Act giving the recognised union the exclusive right to represent workers, holding that it did not violate Articles 14 or 19(1)(c).
There is no fundamental right to recognition. Article 19(1)(c) protects forming a union, not compelling an employer to deal with it (All India Bank Employees’ Association v. National Industrial Tribunal, 1961 INSC 248, AIR 1962 SC 171).
How do you measure support? In Food Corporation of India Staff Union v. Food Corporation of India, 1995 INSC 117, the Court laid down a procedure for a secret ballot to decide which union represents the workers, in place of checking membership registers.

2. Negotiating union and negotiating council: section 14

Every industrial establishment having a registered union must have a negotiating union or a negotiating council to negotiate with the employer on prescribed matters (section 14(1); defined in section 2(z)). Three situations:

Only one registered union functioning: the employer shall recognise it as the sole negotiating union, subject to prescribed criteria (section 14(2)).
More than one, and one has the support of 51 per cent or more of the workers on the muster roll, verified as prescribed: that union shall be recognised as the sole negotiating union (section 14(3)).
More than one, and none has 51 per cent: the employer shall constitute a negotiating council of representatives of the registered unions that each have the support of at least 20 per cent of the workers on the muster roll, with one representative for each 20 per cent of support (section 14(4)). An agreement in the council is reached if the majority of the union representatives agree (section 14(5)).

Recognition, or the council, lasts three years, extendable by mutual agreement to a total of not more than five years (section 14(6)). The facilities the employer must provide are prescribed (section 14(7)). The negotiating union also has a role elsewhere in the Code: it is consulted on draft standing orders (section 30(2)) and heard by the certifying officer (section 30(5)).

Trap. Section 14 counts support among workers on the muster roll, not the union’s own membership claims. And a union below 20 per cent gets no seat on the council, even though it stays registered and lawful. Do not confuse the 10 per cent registration threshold in section 6 with the 20 and 51 per cent recognition thresholds in section 14.

3. Recognition at central and State level: section 27

The Central Government may recognise a union or federation as a Central Trade Union, and a State Government may recognise one as a State Trade Union, in the prescribed manner and for prescribed purposes. Disputes about that recognition are decided by the authority the Government prescribes. This gives statutory footing to the old practice of treating the major central trade union organisations as representatives on tripartite bodies such as the Indian Labour Conference.

4. Collective bargaining: meaning

Collective bargaining is the process by which an employer, or a group of employers, and the representatives of workers negotiate the terms and conditions of employment and settle disputes by agreement. The term is credited to Sidney and Beatrice Webb. Its essentials are: a collective body of workers, usually a union; negotiation in good faith; a written agreement; and a period during which the agreement is honoured.

In Karnal Leather Karamchari Sanghatan v. Liberty Footwear Co., 1989 INSC 261, (1989) 4 SCC 448, the Court described collective bargaining as the technique by which disputes over conditions of employment are resolved amicably by agreement rather than by coercion, and treated it as basic to industrial peace. The ILO Conventions on Freedom of Association (No. 87) and the Right to Organise and Collective Bargaining (No. 98) set the international standard; India has not ratified either.

Advantages: settlements made by the parties themselves are more likely to be honoured than imposed awards; less litigation; workers gain bargaining power by acting together. Limits in India: multiple rival unions, outside political leadership, weak finances and, until 2025, no legal duty to recognise anyone. Section 14 addresses the last problem.

5. The process

Charter of demands served by the union.
Negotiation between management and the negotiating union or council. Refusal to bargain collectively in good faith with the recognised union is an unfair labour practice by the employer (Second Schedule, Part I, item 15), and refusal by a recognised union to bargain in good faith is one by the workers’ side (Part II, item 3). Either is punishable with a fine of ₹10,000 to ₹2 lakh under section 86(5).
Agreement, reduced to writing.
If talks fail, conciliation under section 53, where a settlement may still be reached, and if not, adjudication or arbitration. Strike or lock-out is possible only after notice under section 62.

6. Settlements

A settlement under section 2(zi) [ID Act s.2(p)] is either one arrived at in conciliation, or a written agreement between employer and workers outside conciliation, signed in the prescribed manner, with a copy sent to the authorised officer and the conciliation officer.

Bipartite settlement (outside conciliation) binds only the parties to the agreement (section 57(1)) [s.18(1)].
Conciliation settlement binds all parties to the dispute, the employer’s successors, and all workers in the establishment on the date of the dispute and those who join later (section 57(3)) [s.18(3)].
It operates from the agreed date, or from signing, and binds for the agreed period or, if none, six months, and after that until sixty days after either side gives notice to terminate (section 58(1), (2)) [s.19]. The notice is valid only if given by a party representing the majority of persons bound (section 58(7)).
Breach of a binding settlement is punishable under section 86(17), and failure to implement it is an unfair labour practice. No strike may be held on a matter covered by a settlement in operation (section 62(1)(g)).

In Herbertsons Ltd. v. Workmen, 1976 INSC 281, (1976) 4 SCC 736, the Court substituted for a Tribunal award a settlement reached between the management and the union representing the majority. It held that such a settlement must be judged as a whole, not clause by clause, and should not be set aside because a few workers object, unless it is shown to be unfair or not made in good faith.

How this is examined

Recognition has been set as a 15-mark essay (June 2011), and “collective bargaining” is a regular short note (June 2014, December 2017). For the essay: no recognition under the 1926 Act, the Code of Discipline, State laws and Balmer Lawrie, then section 14 with the 51 and 20 per cent figures and the three-to-five year validity, section 27, and the unfair labour practice of refusing to bargain. For the short note on collective bargaining: meaning, essentials, the process ending in a settlement under section 2(zi), binding effect under section 57, Herbertsons.