Minority Union not bound by Settlement Between Majority Union & Employer

M/S. OIL AND NATURAL GAS VS THE PRESIDENT, OIL FIELD ASSOCIATION

JUDGE: Vineet Saran, Aniruddha Bose

NAME OF ADVOCATE

Counsel for the Company: Mr.Cama

Counsel for Union: Mr.Pallav Shishodia, Mr.Shaligram G. Mishra

JURISDICTION– Supreme Court of India

DATE OF DECISION– 4 February, 2022

CASE STATUS– Concluded

FACTS

The judgment delivered by the Bombay High Court on 30.01.2020, pursuant to the Writ Petition No. 13015 of 2019 upheld the claims of workmen, making them entitled to fixation of allowance and payments as per the award of the Central Government Industrial Tribunal No. II, subject to certain modifications was challenged by way of an appeal in the Supreme Court, filed by Oil and Natural Gas Corporation or ONGC (“the Appellant”).

The dispute involved a Direct Notice that was raised by a Union, the Oil Field Employees Association (“the Union”), being represented by their President (“the Respondent”) in the present appeal.

The employees who formed the Union were receiving their pay through different contractors appointed by the Appellant. However, as per the Appellant, the employees were the contractor’s workmen and not the workmen of the Appellant.

The Appellant had also entered into a settlement with the Union representing majority of the contractor’s workmen, over 77%, which was binding on all the other similar workmen, along with those which are represented by the Union.

The Appellant and the different Unions representing the workmen working for the Appellant entered into three Memorandum of Understanding (MoU) in the year 1992, 1995, 2000 which discussed the wages, allowances and other facilities which shall be provided by the contractors to the ‘contract labour’.

However, subsequently, six Unions representing workmen engaged by contractors submitted their charter of 28 demands to the Appellant and 57 of the Appellant’s contractors, which was thereafter admitted for conciliation. On the other hand, the Appellant intended to introduce a “Fair Wage Policy” (FWP) which would cover contract employees.

Post negotiation, a Memorandum of Settlement was signed on 19.09.2016 (“Settlement”) under which the FWP was extended to contract laborers of Western Offshore Unit, Mumbai, and was agreed to be implemented at all work centres of the Appellant. This settlement which was signed by the contractor’s representatives and the representatives of the six Unions was in consonance with Section 12(3) read with Section 18(3)(d) of the Industrial Disputes Act, 1947 (hereinafter referred to as “the Act”) and provided upward revision of wages, measures of social protection and job security for the workmen.

However, the Industrial Tribunal (the Tribunal”) and thereafter the High Court refused to enforce the abovementioned Agreement since it did not fall within the meaning of ‘settlement’ as per Section 18(3)(d) of the Act.

ISSUES BEFORE THE SUPREME COURT

• Can the Respondent claim benefit directly from the Appellant as the Appellant’s employees?
• Is the Settlement binding on the Respondent?

JUDGEMENT

The Supreme Court examined the contentions of both the parties and after duly noting the observations of the Tribunal and the High Court, the Supreme Court upheld the order of both the High Court.

With regards to the first issue, the Supreme Court held that even if it was not explicitly mentioned in the Tribunal’s order that the Respondent(s) were the employees of the principal employer, i.e., the Appellant, it was implied and the same was duly taken into consideration by the High Court as well while passing the Order.

With regard to the second issue, the Supreme Court relied on Ramnagar Cane and Sugar Company Ltd. vs. Jatin Chakravorty & Ors.[1], and General Manager, Security Paper Mill, Hoshangabad vs. R.S. Sharma and Others[2], and observed that the binding nature of any settlement has been explained in detail in the said cases.

The Supreme Court held that the Settlement shall not be binding upon the minority Union and was essentially between the contractors and the workmen engaged therein. In the said Settlement, the Appellant is only a consenting party, which is very evident from the terms of the Settlement.

The Supreme Court affirmed that the order of the Tribunal, as amended and also upheld by the High Court, is just and fair. Since the High Court has taken a fair approach, the Supreme Court did not take a different view on account of the principle of limited interference.

The Supreme Court also observed that the underlying issue in the present case was about receiving equal pay and pay at par with other workmen of the employer. The Respondent(s) herein are entitled to equal pay and receiving the same facilities and benefits as other employees of the Appellant and the Appellant cannot negate its responsibility regarding to providing such benefits and equal pay.

ROLE OF TRADE UNION WHO TOOK THE COMPANY TO COURT

Being a Petroleum Employees Union member, the members gain a lot of benefits, including:

• Health and safety guidance and support in offshore installations as well as onshore plants.
• Unrivaled protraction and representation at the work center. Welfare services for employees and employees dependent in difficult times.
• Excellent legal services including free help with work site problems and legal support for members and their families.
• Financial help by SSSP Society introduced by PEU WOU unit.

CASES

M/s. Oil And Natural Gas Corporation Ltd. v. The President, Oil Field Employees Association And Ors.[3]

The Supreme Court has held that a minority Union of workers, who were not party to the settlement entered between the majority Union and the employer, is not bound by the same and is free to raise an industrial dispute claiming to be workmen directly under the principal employer.

ANALYSIS- COMPARATIVE STUDY BEWEEN INDIA AND US

As per various studies, the principal employer and the contractor enter into a settlement or a contract, such settlement or contract shall not be necessarily binding upon all the other workmen of a similar nature or on the minority Trade Union.

Currently, in India, there are many registered trade unions, including several within an establishment. There are no criteria to determine which unions can formally negotiate with the Company. This has led to a question that if there is more than one trade union and it has entered into a settlement agreement or a contract with the company whether the settlement or the contract is binding on both the trade union or only the trade union which has entered into the settlement.

The judgment highlights the position that merely because a settlement has been entered into between the majority of the union of workers and the employers, the minority shall not be barred from raising a separate industrial dispute whereby they claim to be direct employees of the principal employer.

It is also pertinent to note that in the event, that the principal employer and the contractor enter into a settlement or a contract, such settlement or contract shall not be necessarily binding upon all the other workmen of the similar nature or on the minority Unions. Subsequently, if the workmen are engaged by the contractors of the principal employer, such workmen shall be entitled to the same benefits and facilities provided by the principal employer to the other employees or workmen of the organization.

In an employment relationship, the virtue of social security and equality is extremely important and over time, the courts have safeguarded the same.

While looking at the perspective of the Supreme Court of India it is also important to look at the perspective of the United States Supreme Court. In the United States, there is a very clear distinction between employees and independent contractors, with a different set of rules and laws in place for each of them.

However on comparing the Decisions of both the Supreme Court it can be seen that both the court have similar stances. The Supreme Court held that the Settlement shall not be binding upon the minority Union and was essentially between the contractors and the workmen engaged therein. In the said Settlement, the Appellant is only a consenting party, which is very evident from the terms of the Settlement.[4]

An independent contractor and workers under him are self-employed workers who operate independently on a contract basis. These contractors and their workers are contracted by organizations, factories, etc, and hired for either long-term projects or short-term projects. A key difference between India and the USA is that independent contractors in the US look after the workers that are under them.

[1]Ramnagar Cane and Sugar Company Ltd. vs. JatinChakravorty&Ors. [(1960) 3 SCR, 968

[2] General Manager, Security Paper Mill, Hoshangabad vs. R.S. Sharma and Others [(1986) 2 SCC 151

[3]CIVIL APPEAL NO. 1033 OF 2022

[4] National Labour Relations Board V. Murphy Oil USA, Inc.

Siddhant Jain

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