Trust the Temps: On Maruti Suzuki Again
I have so far written more than six blog posts on Maruti Suzuki and its employee relations. A recent report in newspaper [Economic Times: ‘Labour relations: How Maruti is trying to win back workers’ trust’ Apr 1, 2014] brings some issues to the fore.
To put it in a nutshell, the story goes like this: Maruti Suzuki [MSL for short] had hired too many contract workers and we all know what happened – violence at their Manesar Plant. MSL decided not to engage contract labour and is reportedly reducing the number of contract labour. They are not appointing permanent workers but appointing temporary workers. They are called ’Company Temps.’ To quote the report “Company temps, described so as to give a sense of ‘company’s own’, are deployed for six months at a stretch and then given a break of five months. They are called back for another round of six months, if required, in keeping with the market conditions, giving the company a great deal of flexibility.” [Unquote].
So work is not temporary. Workers are! What justifies termination of employment after six months and employing another lot of workers in their place? You will readily see that there is no justification.
When I spoke to auto workers in Pune they told me that workers had to do six or seven ‘periods’ [meaning terms of six month employment] before getting confirmed as permanent workers in Tata Motors. [They also alleged rampant corruption in the process, and even told me ‘rates’ of payment to get permanent status.]
We are aware that this is a common industry practice. We have also seen that the work in such cases continues, although the worker suffers termination of his employment. There are several cases which have clearly defined the legal position on this issue: “If contractual employment is resorted to as a mechanism to frustrate the claim of the employee to become regular or permanent against a job which continues, or the nature of duties is such that the colour of contractual agreement is given to take it from Sec 2 (oo), then such agreement cannot be regarded as fair or bona fide.” This view was taken by a Division bench of Allahabad High Court in Shailendra Nath Shukla v Vice Chancellor, Allahabad Univ, by Bombay high Court in Dilip Hanumantrao Shirke v Zilla Parishad, Yavatmal etc. There are many other cases on this point too, all in support of the interpretation given above.
There are many issues here:
Firstly, we have to understand that this is a devious device of employers to circumvent the law. One cannot indulge in practices which are in breach of law. The devious practice is unpardonable, and cannot be justified on any ground, including that of business expediency.
Secondly, Unions have failed to raise a voice. The jury is out on whether they are hand in glove with the managements of the companies. This also could be due to unions losing power. But unions are mostly run by permanent workers and they are oblivious to the wider issues of labour in general. Prevalence of employing 70% [sometimes more] contract labour tells the same story.
Thirdly, the sheer insensitivity or negligence of the Government is shocking. There is a merit in the employers’ case that given the current business scenario with its frequent ups and downs and with international competition, unlike in the past, they need greater flexibility in managing workforce. Even the so called permanent workers lose their jobs through VRS when industry suffers long periods of recession. Laws have become irrelevant. They make little sense given the realities of business and will get flouted, such is the experience everywhere. Pontificating ‘Industry must abide by the law of the land’ without showing appreciation of the genuine problems of the industry will not work.
Having said that I would like to put some more thoughts for consideration. Is it okay for so called ‘professionally managed’ companies which show [?] concern about governance issues, like MSL, to indulge in such objectionable practice? Can MSL claim this to be a practice conforming to ‘ethical values?’
Reverting to the newspaper story [you can read it here] which claims that Maruti is winning the trust of its employees, one can only say that one would have expected an innovative and legally compliant way from Maruti Suzuki.
Vivek
This article makes one reflect whether companies really 'care' about their employees be it workers or managerial cadre…Under the guise an evolved organization, are we running a more advanced albeit subtler version of Scientific Management? Good article, Sir.
You have demolished Suzuki's claims in very simple and effective language. There is not a change of heart or honest learning from the past experience but an exercise of blatantly camouflaging unethical practice through stupid smartness of management jargons. On background of what has been happening in last one year, a sobering thought comes to mind: Are we seeing a beginning of the decline of Suzuki in India?
Excellent article Mr. Patwardhan. We all reap what we sow. I completely agree with you that we cannot use contract labour or temping for arbitrage in labour cost. The contract labour act's intent is not this. All our arguments that our labour laws are unfriendly is the biggest mis-information. In no country anyone can flout labour laws as in India. in no country there is the absolute right for firing without a fair compensation. In no country the labour can be used or should I say abused through contract labour or temping system as ours. In our system the intermediaries breed the corruption. Even the delivery of wages as contracted in full rarely happens. Add to this the level of denial of the social security measures it all makes the argument that our labour laws are constraining laughable. Thanks for a brutally frank piece.
You have demolished Suzuki's claims though a simple and effective language. Far from being a change of heart or an honest learning from the past experience it is a blatant camouflaging of an unethical practice through stupid smartness of management jargons. Going by what is happening over last one year, a sobering thought comes to mind: Are we witnessing a beginning of decline of Suzuki?
Companies seem to be utilizing more of the loopholes than the law itself nowadays!
– Aruna Gopi
Thanks Rohan, Vilas, Ramkumar, Amit and Aruna.
Vivek
I think so called "Professionally qualified" HR colleagues are giving these "innovative" ideas to Management. My personal experience says when we present our ideas to management with our own conviction on any proposal (ethical or unethical), management reciprocates. Hence, we must draw line between "Employee friendly" and "Employer friendly" practices. Sometimes, even at the cost of our own job.
I think so called "Professionally qualified" HR colleagues are generating these "innovative ideas". We as part of Management system must highlight these issues at appropriate levels in the hierarchy. Sometimes, even putting our own jobs at Risk. My personal experience says that when we do this with conviction (for ethical Or unethical practices), Management also reciprocates accordingly.