A century after legal recognition, workers still lack real protection

Why in the News?

India marks nearly 100 years since the Trade Unions Act, 1926, yet workers still face restrictions on organising and striking. The issue gains urgency with the Industrial Relations Code, 2020, which retains many colonial-era controls while excluding gig workers. The scale is significant: over 7.7 million platform workers remain outside formal labour protection, revealing a deep mismatch between law and labour realities.

How did the trade union movement originate in colonial India?

1. Industrial Exploitation: British-era mills imposed poor wages and harsh conditions; triggered early labour mobilisation.
   1. Early Mobilization: While sporadic strikes occurred earlier (e.g., in 1877), these were unorganized. The first concerted effort was the Bombay Millhands Association (1890), founded by N.M. Lokhande, though it operated more as a welfare organization than a modern union.
2. First Organised Union: Founded by B.P. Wadia in 1918 (Madras Labour Union); addressed worker grievances and created relief funds.
   1. Purpose: It was established to address the systematic abuse of workers at the Buckingham & Carnatic (B&C) Mills in Madras.
   2. Structure: Unlike earlier organizations, the MLU operated with a regular membership, welfare funds, and a structured approach to negotiating wages, working hours, and rice allowances.
3. Criminalisation of Labour: Courts treated strikes as conspiracy; e.g., Buckingham & Carnatic Mills case (1921) imposed ₹2,000 penalty on union leaders.
4. Absence of Legal Protection: Until the Trade Union Act of 1926 was passed, union leaders had no protection from civil or criminal lawsuits, and workers faced violent repression (e.g., police firing in 1920-21 in Madras).

What role did early leaders and organisations play in shaping labour rights?

1. Nationalist Leadership: Figures like N.M. Joshi recognised labour rights as part of the freedom struggle.
2. Institutionalisation: Formation of All India Trade Union Congress (AITUC) in 1920; first national-level labour organisation.
3. Political Advocacy: Lala Lajpat Rai presided over AITUC; linked labour issues with anti-colonial movement.
4. Legislative Push: Resolutions in the Central Legislative Assembly demanded legal protection for unions.

Why was the Trade Unions Act, 1926 both progressive and restrictive?

1. Legal Recognition (Section 13): Registered trade unions became “bodies corporate,” giving them a legal personality, perpetual succession, a common seal, and the right to enter contracts, own property, and sue or be sued.
2. Immunity: Protected union activities from conspiracy charges under limited conditions.
   1. Immunity from Criminal Conspiracy (Section 17): This was crucial. It protected union members and office-bearers from being charged with criminal conspiracy (under IPC Section 120B) for simply organizing and pursuing legitimate trade union objectives.
   2. Section 18 Immunity (Civil Protection): Registered unions and their members gained immunity from civil suits for actions taken in contemplation or furtherance of a trade dispute, particularly regarding inducing breach of employment contracts or interfering with business, provided the acts were not illegal (e.g., peaceful picketing).
3. State Control Mechanism: Registration requirements ensured government oversight
4. Limited Scope: Did not guarantee right to strike; focused on legality, not empowerment.
   1. No Statutory Right to Strike: While Section 17 made organizing a strike legal, the Act did not explicitly guarantee or empower the right to strike, leaving it a gray area prone to legal interpretation.
   2. Restrictions on Union Management (Section 22): The Act restricted who could run a union, requiring that at least half of the office-bearers be actually engaged or employed in the industry.
   3. Strict Fund Usage (Section 15): The general funds of the union could only be spent on specific, restricted activities outlined in the Act, limiting financial autonomy.

How did colonial laws continue to restrict labour despite legalisation?

1. Trade Disputes Act, 1929:
   1. Notice Requirement: Made prior notice mandatory before strikes in public utility services.
   2. Extended Restrictions: Imposed cooling-off periods; reduced spontaneity of collective action.
2. Criminal Liability Retained: Workers still prosecuted under IPC provisions like conspiracy.
3. Executive Control: Government retained power to intervene and ban strikes.

How did post-independence developments alter labour dynamics?

1. Constitutional Framework: Article 19(1)(c) ensured the right to form associations but not to strike.
2. Expansion of Unions: 625% increase in registered unions (1951-1979).
3. Fragmentation: Rise of multiple unions weakened bargaining power.
4. Liberalisation Impact (1991): Shift towards flexibility and contract labour; reduced job security.

Do recent labour reforms continue historical constraints?

1. Industrial Relations Code, 2020:
   1. Strike Restrictions: Requires 60-day notice before strikes.
   2. Threshold Increase: Raises limit for layoffs approval from 100 to 300 workers.
2. Continuity with Past: Mirrors Trade Disputes Act logic of procedural restriction.
3. Reduction in Bargaining Power: Makes sustained industrial action difficult.

Why are gig workers the new frontier of labour exclusion?

While the Code on Social Security, 2020 (SS Code) acknowledges gig and platform workers, it fails to fully integrate them into the legal framework.

1. Excluded from Industrial Relations Code: Gig workers are not classified as “workmen” under the Industrial Relations Code, 2020, making them ineligible for formal employment safeguards, such as protection against unfair dismissal.
2. Classification Issue: Digital platforms exploit the binary classification of “employee” vs. “independent contractor” by labeling workers as “partners” or “independent contractors.”
   1. The “Triangular Relationship”: The worker, the user, and the platform are connected through a digital app. Platforms claim they only provide a technology bridge, not direct employment.
   2. No Minimum Wage Protection: Since they are not classified as employees, they are not covered by minimum wage laws, often leaving them with earnings that fall below subsistence levels after expenses.
   3. Algorithmic Management vs. Autonomy: While platforms offer flexibility, they actually exert control through algorithms that manage work allocation, set prices, and determine ratings. This creates a “dependent contractor” status where workers are managed like employees but denied the corresponding benefits.
3. Scale: NITI Aayog Estimates: A 2022 NITI Aayog report estimated 7.7 million gig workers in 2020-21, a number projected to grow significantly to around 23.5 million by 2029-30.
4. Absence of Rights: No social security, no union recognition, no dispute mechanisms.
   1. No Union Recognition: Because they are not classified as workers, forming or joining unions is difficult, and they lack the power of collective bargaining to demand better conditions.
   2. Absence of Traditional Benefits: They lack access to provident funds (PF), Employee State Insurance (ESI), health insurance, maternity benefits, or accident compensation.

What structural barriers continue to weaken labour movements?

1. Procedural Constraints: Long notice periods and legal compliances discourage strikes.
2. Informalisation: Majority workforce in informal sector limits unionisation.
3. Employer Advantage: Ability to suspend operations during disputes.
4. State Intervention: Broad powers to restrict strikes in “public interest.”

Way forward

1. Universal Coverage: Recognises gig and informal workers under labour laws; ensures minimum wages and social security.
2. Ease of Collective Action: Rationalises strike notice requirements; strengthens union recognition and sectoral bargaining.
3. Social Security Expansion: Ensures portable benefits (health, pension, insurance) via e-Shram and platform contributions.
4. Formalisation Push: Incentivises registration of informal workers and enterprises through credit and tax support.
5. Tripartite Mechanism: Strengthens dialogue between state, employers, and workers for balanced labour governance.
6. Global Alignment: Aligns labour standards with International Labour Organization norms on decent work.

Conclusion

India’s labour history shows continuity rather than change. From colonial suppression to modern procedural constraints, the system has prioritised control over empowerment. Future reforms must move beyond legal recognition to substantive labour rights.

PYQ Relevance

[UPSC 2024] Discuss the merits and demerits of the four ‘Labour Codes’ in the context of labour market reforms in India. What has been the progress so far in this regard?

Linkage: This directly links to the article’s critique of the Industrial Relations Code, 2020, showing continuity of restrictive labour regulation. It helps analyse how modern reforms replicate colonial-era constraints like strike restrictions and procedural control.