Work negotiations

April 17, 2018


THE purpose of industrial relations (IR) law has always been to regulate the formation of trade unions, regulate and improve employer-employee relations, and avoid or settle any disputes arising between them. To promote healthy relationships between employers and workers, who are represented by their collective bargaining agent (CBA) unions, there are various statutory forums that are meant not only to promote mutual goodwill and understanding but also to facilitate the resolution of work-related issues.

Nevertheless, the most critical interaction between CBAs and employers takes place at the time of negotiations on differences and disputes between the two. According to provisions of the IR Act, 2012, both CBAs and employers are entitled to serve each other their respective charters of demands. CBAs’ demands mostly relate to improving existing terms and conditions of employment and benefits.

In the case of employers, these will comprise removing irritants that hinder the smooth functioning of business or factory operations. A few years ago, employers would not give their demands, but recently this trend has increased in order to counter some of the CBAs’ unreasonable demands.

Collective labour agreements are usually signed for two years, which is the maximum period allowed under the law, on the expiry of which a new charter is due. Employers do make improvements in workers’ salaries and benefits and, in return, get commitments from CBAs to maintain industrial peace for the term of the agreement.

Handling unions’ demands wisely is less costly in the long run.

In case these bilateral negotiations do not succeed, CBAs may serve a 14-days’ notice of strike (in case of CBAs) while employers may serve a 14-days’ notice of lockout. A copy of the notice has to be delivered to the government-appointed conciliator, who is required to send a copy to the labour court. From then onwards, the conciliator presides over the negotiations between the two parties. Based upon what appears reasonable to him, the conciliator persuades the parties to reach a settlement.

In case conciliator-mediated negotiations also fail, he may advise the parties to refer the dispute to an arbitrator. Since the award given by the arbitrator is final and not subject to appeal, parties are reluctant to let the matter escalate to this point.

When a strike or lockout commences, the government may, by an order in writing, prohibit it if its continuation is causing serious hardship to the community or is prejudicial to the national interest. In any case, a strike or lockout cannot continue for more than 30 days. If the government prohibits a strike or lockout, it will immediately refer the dispute to the labour court, which must award its settlement within 30 days. It has vast powers to adjudicate in such disputes and pass settlements that it deems appropriate.

Employers, who are well prepared professionally to undergo this cumbersome process, mostly succeed in their efforts and don’t have to go through the traumatic experience of a strike, which does not augur well for either party. Progressive companies, therefore, prepare their negotiations packages well before the submission of the CBAs’ charters, and strive to reach a settlement within the shortest period possible. They even offer one-time incentives to the workforce for early signing, as they believe that a delay could be harmful to the organisation.

Employers who recognise the role of CBAs and acknowledge their rights contribute towards healthy industrial relations, and their companies are categorised as progressive or enlightened.

On the other hand, there are quite a few local organisations that make astronomical profits but still prefer to flout the law by trying to restrain and suppress the formation of trade unions. Somehow, they have the strong (but wrong) feeling that allowing the existence of unions will disrupt peace and impede their output, leading to a decline in production quality and profitability. Despite spending lots of money engaging expensive lawyers and getting involved in unnecessary litigation, they end up facing illegal strikes and adverse court decisions. Such employers should bear in mind that managing unions — and handling their demands professionally and wisely — will be less costly to them than trying to stop workers from exercising their legal right to union formation.

Against this attitude displayed by a majority of local employers, the smallest of multinational companies operating within Pakistan comply fully with all laws. These companies not only do so themselves, they also ensure that local enterprises with whom they have business dealings are also law-compliant. It is heartening to note that a few local service providers — ie outsourcing companies — now only enter into an agreement with other parties on the condition that the latter will bear the cost of total compliance with labour laws.

The writer is an industrial relations professional.

Published in Dawn, April 17th, 2018