Blog: Perils on the Employee Relations scene — Part I

Employee Relations

Perils on the Employee Relations scene — Part I

In the first of this series we examine fallout of M&As, change management and employer-workforce estrangement
Perils on the Employee Relations scene — Part I

Reflecting on past events is essential. It tells us trends and very different points of view. It also points to issues before us. It might also help us learn and find a better way ahead. “Follow effective action with quiet reflection. From quiet reflection will come even more effective action,” says Peter Drucker.

So let us review some of the events in employee relations (ER) in the recent past and see what they foretell for the future. I have not drawn conclusions. Often it is unnecessary to draw conclusions – particularly when they are obvious. And when facts are put forth to well informed readers like you! 

ING Vysya–Kotak Mahindra Bank merger deal. On January 7, the deal was presented for shareholder approval. The unions which represent 35 per cent of the employees intend to go on strike. Why? The fear is obvious. They want an agreement to be signed between the two corporates and the union protecting the employees’ interests.

Kotak Mahindra Bank has extensively outsourced work so the ING Vysya employees are afraid that their future may not be bright. But the union has clarified that they are not opposing the merger, they merely want to ensure that their interests are protected.

In a letter, KMB's Joint Managing Director Dipak Gupta has written to ING Vysya Bank's Chief Executive-designate Uday Sareen saying that KMB will be honouring all IBA settlements and bipartite agreements.
In my opinion the ‘doctrine of continuing employer’ will apply here. I invite the knowledgeable readers to opine on this issue.

Will Kotak Mahindra respect the agreements with unions? They have already said ‘Yes’ to it. The real issue is job security. And every M&A sees ‘rationalization.’ Those who are not workmen under the ID Act have no protection, and are vulnerable. Whatever the outcome, we should expect more reports of friction in this M&A. So, as they say, “stay tuned.”

Coal India’s burning problem. The government has decided to sell up to 10 per cent of its shares to fetch the Government about Rs 23,000 crore. The unions threatened strikes, fearing job loss. That is what happens with any divestment or restructuring.

Earlier in 2010, unions had resisted IPO too. They campaigned against employees buying shares. Employees lost a good amount of money which they would have earned had they invested in shares.
After the first strike notice, BMS union backed out. So the Coal India unions called off the strike. That was in the last week of November 2014. They decided to go on strike again from January 6 this year. Their grouse is against the government allowing private players to mine coal and sell it in the open market.

So yet again a strike notice is served. What’s next? Conciliation will begin. Let us hope that the parties will reach some agreement. I guess this kind of friction is inevitable. Let us see how this Government manages it.
Both the Coal India and ING Vysya-Kotak Mahindra cases have one thing in common: how to carry along those employees who stand to lose and will be adversely affected by a proposed move. There are no easy answers here!

Mercy killing by Pfizer. Sometimes when an establishment ‘dies’, people want an explanation — they want to know why it died. Like the Air Asia case, some guesswork is done from what appears on the radar. But the public awaits the Black Box to be found and the ‘real’ explanation uncovered.

Till then, there will be a lot of theories about the closure of Pfizer’s Thane plant. One such says that the Wyeth-Pfizer merger has something to do with it. And there is that other theory, applied to all closures in the Mumbai-Navi Mumbai belt — it is about real estate. The workers say the company has been discussing wage increase for the last six years. The company says “it has become impossible for the management to continue with plant operations in a peaceful and productive manner.” Reason: extreme employee indiscipline.

In theory, the plant is under lockout, not closure. The official statement to BSE says the lockout will have no impact on Pfizer’s business operations. You know what it means, and what is in store, right?
My erstwhile colleague Salil Chinchore points out that ER experts expect a spate of closures. The Pfizer plant employed 225 persons. If the Government allows units employing up to 300 to close without permission (as required in the ID Act), then it might happen.

L&T Hazira falls into comparison trap. The wage dispute at L&T’s Hazira factory dragged on for a long time, more than three months. An L&T Kamdar Union official said the company had offered an increment of Rs 6,750 to workers in Powai, but that Hazira employees were only offered a 4,500-rupee raise. While the average monthly salary at Powai is Rs 45,000 rupees, Hazira employees receive only Rs 25,000. L&T told media it would not increase its offer to the Hazira workers and could opt to hire replacements for the strikers.

Nobody, including the courts, will accept the union’s stance, which plays on employees’ emotions about salaries of others. The point is also the huge and widening gap between the rich and the poor. Nobody will work for you for less than a certain minima (this seems to be minimum wage unfortunately) and no employer will pay more than a certain limit. The trouble is that it is individual’s judgement where the line is. Therefore it must be negotiated. That is the skill of managing industrial relations.

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Topics: Employee Relations, #IndustrialRelations

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