QUESTION : WHAT Should SUBRAMANIAM do ? Cases of Indian Organizations449CASE 7:SUBRAMANIAM'S DILEMMAShivram Gears, a medium sized gear manufacturing public limited company based atFaridabad with its head office at New Delhi, was established by a young and dynamicentrepreneur Sunil Sanghi. It was a small scale industrial unit in the year 1962 with a totalworkforce of 20 persons.Company BackgroundThe small scale industry of the 60s grew into a private limited company of 70s and ultimatelya public limited company in the 80s. The company sold its products to heavy vehicle andtwo-wheeler industries. They also had a huge replacement market served through theirdistribution network.A charter of demands (Annexure I) was submitted to the factory manager R.P. Chaddhaon November 20, 1995 by the representative union, the Engineering Mazdoor Sangh (EMS),demanding a better wage structure. Chaddha forwarded the notice of change to R. Subramaniam(GM-HRM). As he read it, he could foresee a dark cloud hovering over theexisting between the management and workers.sunnyrelationsThe Brewing of DisputeThe company had a workforce of 2400 with staff to worker ratio being 1:3. The workers werecategorized into skilled, semi-skilled and unskilled. The organization had been enjoyingindustrial harmony and not even a single manday had been lost since 1983 due to strike.The organization had two trade unions, the Engineering Mazdoor Sangh (EMS) and theEngineering Shramik Sangathan (ESS). The representative union as per the Haryana IndustrialRelations Act (HIRA) was EMS, which had the right to negotiate on behalf of the employees.However, EMS did not enjoy support of the majority of workers in the organization whoseallegiance was more towards the rival trade union, the ESS. In addition, the workers wereknown to change their allegiance frequently.The wage rates of the workers were much above the Minimum Wages Act(Annexure II). In fact, the wage rates were fixed in accordance with the industry norms soas to ensure a low manpower turnover. The wage rates in theory were governed by the wagesettlement agreement between the management and workers. Apart from the existing wagestructure, the management also offered other incentive schemes to further motivate theworkforce (Annexure III). The revisions in the same were considered along with the wagerevisions.Chronological Order of EventsNovember 20, 1995. On receiving the charter of demands from the union, the negotiationscommenced. The GM (HRM), the factory manager and the personnel officer alongwith otherdepartmental heads scrutinized the notice of change, calculated the costs and studied itsimplications. They even compared the practices in the industrial units in the surroundingarea as well as in the other engineering units specially in view of the new demands. Sincethe wage settlement agreement was to expire on 31st December, 1995 it was decided by themanagement that they would not discuss this issue till January, 1996 and the same wasintimated to the representative union. 450Human Resource ManagementDecember 28, 1995. A notice of dispute was served by the representative union to theconciliation officer for registering an industrial dispute in the factory. This prevented theworkers from going on strike, which was in the interest of the management.January 28, 1996 to September 9, 1996. During this period, a series of negotiations werecarried out between the representative union and the management in the presence of theconciliation officer in order to evolve a wage structure which could be acceptable to boththe disputing parties. The management was represented by R. Satish (Personnel Officer),P.K. Mishra (Finance), S.K. Bhatia (Production) and was headed by R. Subramaniam,GM (HRM) and the union was represented by the union leader R.K. Joshi and 13 othermembers of the union. The management had a clear strategy and they offered a package dealto increase the wages in lumpsum by Rs. 190/- for the unskilled workers and a proportionateincrease in the other categories. However, the offer was unacceptable to the union. Negotiationscontinued and finally both parties agreed to a lumpsum increase of Rs. 400/- for theunskilled workers. The break-up of this amount was jointly decided by both the parties(Annexure IV).September 11, 1996. On September 11, the new wage settlement was signed between therepresentative union and the management and a copy of the agreement was placed on thenotice board.September 18, 1996. On September 18, Chaddha received a letter from the other union, ESSwhich registered its objections against a clause included in the wage settlement agreement.According to this clause one-time deduction of 7% from the arrears (for the period of January96-September 96) was to be made and credited to the building fund which was to be usedby EMS for its union activities. Since management was bound by law to negotiate with EMS,they took no notice of the letter by ESS despite the fact that it had membership of moreworkers.October 7, 1996. The payment of the arrears was made on October 7, 1996 alongwith thesalary of September 1996 in the same envelope after deduction of 7% for the building fund.The workers refused to accept the envelope, and for the first time since 1983, there wasagitation in the factory, they gheraoed the management bringing work to a halt.Now what should Subramaniam do?Annexure ICharter of Demandsgolono1. There should be an increment of Rs. 250/- in the basic salary.2. The existing rate of increment should be doubled.3. The HRA should be increased from Rs. 80 to Rs. 200.4. *Washing allowance of Rs. 50/- per month.5. *Conveyance allowance of Rs. 100/- per month.6. *An education allowance of Rs. 100/- month.

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December 28, 1995. A notice of dispute was served by the representative union to the conciliation officer for registering an industrial dispute in the factory. This prevented the workers from going on strike, which was in the interest of the management. January 28, 1996 to September 9, 1996. During this period, a series of negotiations were carried out between the representative union and the management in the presence of the conciliation officer in order to evolve a wage structure which could be acceptable to both the disputing parties. The management was represented by R. Satish (Personnel Officer), P.K. Mishra (Finance), S.K. Bhatia (Production) and was headed by R. Subramaniam, GM (HRM) and the union was represented by the union leader R.K. Joshi and 13 other members of the union. The management had a clear strategy and they offered a package deal to increase the wages in lumpsum by Rs. 190/- for the unskilled workers and a proportionate increase in the other categories. However, the offer was unacceptable to the union. Negotiations continued and finally both parties agreed to a lumpsum increase of Rs. 400/- for the unskilled workers. The break-up of this amount was jointly decided by both the parties (Annexure IV). September 11, 1996. On September 11, the new wage settlement was signed between the representative union and the management and a copy of the agreement was placed on the notice board. September 18, 1996. On September 18, Chaddha received a letter from the other union, ESS which registered its objections against a clause included in the wage settlement agreement. According to this clause one-time deduction of 7% from the arrears (for the period of January 96-September 96) was to be made and credited to the building fund which was to be used by EMS for its union activities. Since management was bound by law to negotiate with EMS, they took no notice of the letter by ESS despite the fact that it had membership of more workers. October 7, 1996. The payment of the arrears was made on October 7, 1996 alongwith the salary of September 1996 in the same envelope after deduction of 7% for the building fund. The workers refused to accept the envelope, and for the first time since 1983, there was agitation in the factory, they gheraoed the management bringing work to a halt. Now what should Subramaniam do? Annexure I Charter of Demands igolono 1. There should be an increment of Rs. 250/- in the basic salary. 2. The existing rate of increment should be doubled. 3. The HRA should be increased from Rs. 80 to Rs. 200. 4. *Washing allowance of Rs. 50/- per month. 5. *Conveyance allowance of Rs. 100/- per month. 6. *An education allowance of Rs. 100/- month.