HR Law Hotline: A new challenge for India’s technology sector: Trade union registered in Bangalore; November 10, 2017

• Trade union exclusive to the technology sector registered in Bangalore
• Letter issued by Labour Department of Chennai in May, 2016 clarified that technology sector employees are free to form trade unions
• Greater involvement of trade unions in the technology sector is likely to curb the flexibility of employers in terms of dealing with employee issues

The first trade union dedicated to technology sector employees in India has been registered recently. On November 7, 2017, the Labour Department of Karnataka approved the application for registration of a trade union which exclusively caters to the interests of technology sector employees, under the provisions of the Trade Unions Act, 1926 (“TU Act”) and the Karnataka Trade Union Regulations, 1958 (“KTU Regulations”). As per available statistics, out of approximately 4 million employees across the country, Bangalore has approximately 1.5 million employees in the IT and IT- enabled services sectors¹ and accordingly, the formation and registration of the first sector-specific employee trade union is a significant development in the technology industry.

Laws governing trade unions in India

Please refer to our research paper titled ‘India: Trade Unions and Collective Bargaining’ for elaborate information on the laws governing trade unions in India. A brief snapshot is as follows:

In the Indian context, the right to form and join a trade union and engage in collective bargaining is provided under national legislations such as the Industrial Disputes Act, 1947 (“IDA”), TU Act and the Industrial Employment (Standing Orders) Act, 1946 (“Standing Orders Act”) and state-specific legislations such as KTU Regulations. Time and again, courts in India have upheld the right of workers to form or join trade unions in India².

Article 19(1)(c) of the Constitution of India, 1950 which envisages the fundamental right to ‘freedom of speech and expression’ also guarantees the citizens the right “to form associations or unions” including trade unions. Accordingly, there is no prohibition or restriction on employees (including in the technology sector) to form trade unions within the establishment or joining external trade unions, subject to applicable laws. This was also reiterated in a clarification issued by the Labour Department in Chennai in May 2016.

A registered trade union is deemed to be a body corporate, giving it the status of a legal entity that may, inter alia, acquire and hold property, enter into contracts, and sue others³. A registered trade union is also immune from certain contractual, criminal and civil proceedings. As opposed to an un-registered trade union, a registered trade union enjoys greater bargaining power. If the registered trade union is a ‘recognized’⁴ trade union (by the employer/under law), such trade union enjoys even greater benefits. In fact, the IDA states that failure on the part of the employer to bargain collectively in good faith with a recognized trade union will amount to an ‘unfair labour practice’ which would be punishable with imprisonment and/or a fine.

Analysis

Up until now unionization in India was largely limited to traditional sectors, especially the manufacturing sector. For the last few years, trade unions were trying to get a foothold in the US$ 118 billion Indian information technology sector, though with little success⁵. However, with the registration of the first trade union in the technology sector in Bangalore, employees may now seek assistance from such unions to voice their concerns. Greater involvement of trade unions in the technology sector is likely to curb the flexibility of employers in terms of dealing with employee issues. To that extent, employers will now need to be careful in devising and more importantly implementing their HR policies. Employers may also need to revisit their existing practices, especially with respect to sensitive issues like termination of employment.

¹ https://www.techgig.com/tech-news/Karnataka-may-soon-see-India-039-s-first-dedicated-IT-employee-union-140747

² All India Bank Employees’ Association v. N.I.Tribunal, AIR 1962 SC 171

³ Section 13 of the TU Act

⁴ ‘Recognition’ is the process through which a particular trade union is accepted as having an authority and representative character and, therefore, the employer is legally bound to engage in discussions with such trade union with respect to the interests of its workers.

⁵ http://www.livemint.com/Industry/niEiLE4J9rb53vz3FVAQFP/Are-trade-unions-gaining-a-foothold-in-IT-sector.html

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