Balancing Workers’ Rights and Organisational Changes: The Gray Areas of Section 9A

by | Dec 4, 2023

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About Shiv Sankar

Shiv is a penultimate year law student from the National Law University, Odisha. His research interests include labour law, corporate law and governance.

Section 9A of India’s Industrial Disputes Act 1947 aims to strike a delicate balance between protecting workers’ rights and allowing organisational flexibility during changes to conditions of service. However, inherent ambiguities within the Act have led to contradictory interpretations by the judiciary. This has enabled the exploitation of loopholes by employers, thereby undermining the intended balance envisaged by the legislature. This blog argues that clarifying definitions, limiting exemptions, and strengthening enforcement mechanisms are necessary to achieve Section 9A’s purpose of transparency and to prevent arbitrary employer actions that adversely impact workers.

The core purpose of Section 9A of the Act is to prevent employers from unilaterally and arbitrarily altering conditions of service for workers without providing reasonable notice and opportunity for negotiation. It mandates that employers must provide 21 days (extended to 42 days in some states) advance notice before effecting any changes to the eleven enumerated conditions of service in Schedule IV of the Act. On its face, this provision appears to promote transparency, communication, and collective bargaining between employers and employees. However, the provision has several loopholes, including unclear definitions, rigid time frames, and inconsistent proceedings.

First, the Act does not comprehensively define what comprises “conditions of service.” This vagueness in scope and coverage has paved the way for numerous disputes. The court in Malabar Bank Officers v RBI held that it is not mandatory to provide notice under Section 9A when amending Certified Standing Orders (Certified standing order is an approved workplace rule and terms the government sets), reinforcing the need for fairness and informed consent.

Second, the stipulated notice period of 21 days appears both arbitrary and rigid, particularly when applied to industries undergoing rapid changes. The law does not provide any rationale behind selecting this specific timeframe, which may be inadequate for major organisational restructuring.

Third, in Lokmat Newspapers v Shankarprasad, the Supreme Court mandated notice for retrenchments resulting from rationalisation measures. However, later in Engineering and Ancillary Manufacturers v Salim Khan, the Bombay High Court held that notice is unnecessary for retrenchments unrelated to rationalisation exercises. The Court also clarified that notice is not required for every retrenchment, as employers may remove ‘dead weight’ without rationalising.

Such inconsistent judgments allow employers to unilaterally modify conditions by exploiting loopholes in the law’s phrasing. Since there is no protective framework or enforcement mechanism to resolve between employers and employees disputes fairly and objectively, the provision therefore rings hollow. This undermines Section 9A’s purpose of ensuring transparency, discussion, and preventing arbitrary employer actions affecting workers’ livelihoods.

To address this issue, the Supreme Court in Harmohinder Singh v Kharga Canteen specified three essential preconditions for Section 9A’s mandatory notice requirement before employers can unilaterally modify conditions of service:

1) The change must substantially alter existing mutually agreed standards which underpin the employment relationship. This does not include any minor adjustments or deviations made;

2) The change must be prejudicial and detrimental to the workers’ rights and interests, such as thorough pay cuts or increased workload;

3) The change must relate to a subject enumerated in the Fourth Schedule.

While this three-pronged test provided much-needed guidance on the scope and applicability of Section 9A, it still leaves room for subjective interpretations regarding what constitutes ‘substantial’ changes or ‘adverse’ effects, indicating loopholes which employers may potentially exploit.

Thus, to fulfil Section 9A’s intended purpose, greater clarity and efficient application is critical. This means elaborating on “conditions of service” with explanations, illustrations, and inclusions/exclusion; adapting notice periods based on the nature of proposed changes; and introducing stringent penalties to deter violations. Addressing these issues with Section 9A will ensure more consistent and balanced application of the law, accommodating changing business conditions while better upholding workers’ rights. India’s labour law urgently needs evolve with and accommodate changing employer-employee dynamics in order to ensure fairer and more equitable workplace conditions.

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