Employment relations in automotive industry: Indian experiences.

AuthorSreenivasan, P.
PositionBy Contribution


The scope of employment relations has witnessed many changes including pro labor judgments, pro management judgments, recognition of unions, alignment and realignment of unions, cause of contract labor etc. These changes have taken place because of a variety of reasons including HR practices, political factors and economic realities and constraints.

Barring Minimum Wages Act, 1948 and Unorganized Workers Social Security Act 2008, existing labor laws are not providing required relief to employees representing unorganized sector. The employees representing unorganized sector are in large numbers. However, we are witnessing more problems from the organized sector. This is mainly because two sets of employees doing same job with different sets of employment conditions at the same place which is not only discriminatory but also crude oversight of the conscientious approach.

Building sensitivity to people issues within organizations requires a concerted effort. Very often with the emotions running high among fellow managers, the task of an HR Manager to re-build sensitivity and relations is next to impossible if the top management does not effectively champion it. While dealing with the union which takes up the grievances of employees, management normally look for the factor of recognition, though there is no provision under the Industrial Disputes Act or Trade Union Act, prohibiting the management from negotiating, discussing or entering into settlement with the unrecognized union. The Trade Union Act confers certain rights on the registered unions to ventilate the grievance of the members of its union. In a well settled case, it was held that the management is obliged to hear the union and resolve its disputes as far as possible without resorting to the conciliation and adjudicatory process. Though the management is not obliged to recognize the union, it cannot refuse to hear the grievances voiced by it in respect to service conditions of its members.


Our analysis is based on the secondary sources though we discussed the perspective of employment relations with various stakeholders. We concentrated on the chronology of events happened in the recent past involving five automotive industries in pan India locations. The information was collected through interaction with union leaders and union members, public utterances, newspaper reports and reports in the media. Recognition of union, unfair practices, non-compliance of statutory requirements, and violence were mentioned as common factors in these industries. Out of these five cases, three of the industries have been cited as best employers by various independent surveys.

The objectives of the study are:

  1. To understand the issues pertaining to employment relations in Indian automotive industries.

  2. To analyze the reasons for workplace aggression witnessed in recent times.

  3. To draw lessons and implications from the cases cited.

Graziano, Greater Noida, 2008

Oerlikon Graziano India, a 100% subsidiary of Graziano Italy, specializes in making gears and transmission systems for vehicles. It was set up in 1998 and commenced commercial production in 2000. The plant is located in Greater Noida on 15 acres of land (60,000 sqm) having 26,700 sqm covered area with fully capitalized power (6875 KVA PLC controlled generators).

The company employed 650 workers out of which 150 were contract workers. Graziano employed workers mostly from the eastern parts of Uttar Pradesh, Uttarakhand and Bihar. It was alleged that local people were employed mainly to confront and hold back the workers from putting up resistance. The conflict at Graziano had been going on since December 2007, when the workers first came up with the demand for higher wages. It was alleged that CCTV cameras were installed at the workplace preventing workers from taking even a moment of rest and fans were switched off which led to terrible heat in the hall. Long working hours to the tune of twelve hours a day and seven days a week were made compulsory. The second major issue was the unionization of the plant which the registrar of unions refused them thrice. During May 2008, the management started to lock out workers from the factory after they tried to defend their rights by the means of strike action. The workers initiated "go slow" tactics in May simply because the management had decided at the end of a six-month training program that five out of as many as 70 trainees did not deserve to be offered regular employment. The rejection rate worked out to be less than 10% of the trainees, a fair proportion by any standards. However, it was alleged that the managexment tried to replace the five trainees with contract workers. There was also a complaint to the police against the workers for disturbances caused by the local muscleman of the contractor. The efforts of DLC (Deputy Labor Commissioner) to convince one external union leader in explaining that they could not resort to strike for the confirmation of trainees became futile. Since the strike continued despite the intervention of the Labor Department, the management suspended 27 workers a week later on May 19 on the charge of "serious misconduct" and asked them to participate in a domestic inquiry in keeping with the prescribed procedure. The workers, however boycotted the inquiry, which was therefore conducted ex parte as provided in law. It was as a result of this inquiry against the 27 suspended employees that, two months later on July 15, the management terminated the services of 15 of them while reinstating the rest. While the reinstated members resumed duty the next day, the striking workers demanded that the terminated ones should also be taken back. The fight for the terminated employees in turn affected a settlement concerning 250 other workers who had meanwhile been subjected to a "lockout". Under the settlement brokered by the Labor Department on July 8, the locked out workers were then being re-inducted in three phases. Though the lockout was due to be lifted in the second phase for a batch of 55 workers on 21st July, none of them reported for duty on that day as an expression of solidarity with the 15 terminated employees. In the subsequent talks on 6th August, it was the turn of the management to walk out as the terminated employees insisted that they would continue to represent the workers. Three days later, the government representatives submitted a report to the district magistrate of Noida recommending that a reference be made to the Labor Court to decide the legality of the strike as well as the lockout.

As the stalemate dragged on for another month, the management returned to negotiations on 16th September. CEO (Chief Executive Officer) in the presence of DLC (Deputy Labor Commissioner) and the union leader informed that, other than the 15 terminated employees (except for those 15 who had played a key role in the struggle), he would take back all those locked out workers if they gave individual undertakings to maintain discipline and productivity i.e. not to resort to any strikes. Since it did not yield on the issue of terminated employees, the response of the striking workers to the 16th September settlement was poor. By the last day, the management received only eight applications and DLC had received another seven, out of some 250 locked out workers. The deadline to sign or to accept dismissal was the fateful day of 22nd September. It was alleged that some goons were hired by the management to repress the workers by...

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