Labour Disputes Case

Toyota Kirloskar Motor Private Limited (TKM) was a joint venture, established in 1997, between Toyota Motor Corporation (Toyota), Japan’s largest car company and the second-largest car manufacturer in the world, and the Kirloskar Group of India. Toyota holds an 89% equity stake and while the Kirloskar Group holds the remaining 11%. Toyota has over 400 acres of land in its Bidadi plant and less than half of the land has been utilised so far even though its plant's capacity is about 60,000 units per annum.

Toyota has invested nearly 15 billion INR in the plant. Some of its most famous brands such as Camry, Innova and Corolla are the end products of this plant. The plant had a total workforce of 2,378 out of which around 1,550 employees belonged to the Employee Union. Toyota's plant has witnessed labour unrest in 2001 and again in 2002 hitting the production of their vehicles leading to a ban of the strike by the Government. Below, we discuss the various reasons, which led to the clashes between the management and the employees of TKM. This highlights the growing number of instances of clashes between the employees and the management of companies in India, which is often guided by external parties such as trade unions and political parties.

The company claimed to have forced to resort to such a decision following a continuous strike by their employee union for third day in a row. The Toyota-Kirloskar union affiliated to the Center of Trade Union (CITU) Jan 9, 2006 demanded that the Government prosecute the management, which had declared an indefinite lockout of the local unit for violating a section of the Industrial dispute act . On January 06, 2006, the Employee Union went on strike with the demand to reinstate three dismissed employees, ten suspended employees, and improve the work condition at the plant.

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According to company sources, these employees were dismissed and suspended based on disciplinary issues. TKM declared that it would not rehire those employees culminating in the strike and lockout. The company said that the striking workers were threatening to blowup LPG gas cylinders in the company premises, obstructing the outward movement of manufactured vehicles, illegally stopping production, and manhandling other workers, who were not part of the Employee Union, to strike.

The Employee Union said that these employees were dismissed because they were active members of the trade union and the company was unhappy with the union activities. They further added that the working environment at the plant was not conducive and the work hours were longer than the standard. The issue scaled further in the event of the Company representatives failing to appear before the Labor Commissioner on January 09, 2006 for dispute resolution with the union. The company reasoned that they feared adverse reactions from the aggressive union members.

Though, the company appealed for two weeks time to appear before the Labor Commissioner so that situation could become stable, they were given time only till January 12, 2006. The Employee Union with the back up of CITU and other unions demanded the intervention of the state government to help resolve the dispute in their favor. TKM continued with partial production of vehicles with the help of non-unionized workers and the management staff who were specially trained for these kinds of emergencies.

Irrespective of this, the company incurred huge production losses due to reduction in output by 60%. The Employee Union withdrew their strike following a Government Order on January 21, 2006, which was against the strike The Company lifted the lockout on January 21, 2006 stating that it was responding to the request from workers who eager to return to work. Aftermath: The unrest had other impacts as the Toyota spokesperson said that the company would rethink its recent decision to build a second car manufacturing plant in the state.

These sorts of incidents will definitely hamper the Government’s efforts to bring in foreign direct investments to the country. This in turn would affect the growth rate, employability and GDP of the country. Discussion: Industrial disputes are costly and damaging to companies and employees alike. The policy formulations should be such that it is strong enough to avoid conflicts or resolve it successfully. Though it is not possible to avoid conflicts, a system can be built in, which guidelines a proper conflict resolution management.

In the above case, a proper conflict resolution management system would have solved the issue well within the company rather than involving external parties and escalating the problem thereby resulting in huge production losses & wasted mandates. The HR policies and the top management support should be such as to minimise the chance of a grievance turning into dispute, there by avoiding the influence of external parties in disturbing the peaceful working environment.

Either of the parties who participate in a conflict resolution procedure should come with an open mind, without any baggage that hampers the setting. They should be ready to trust each other and believe in the efforts taken by either of them in solving the dispute. The management must give the participating institution its right place in the managerial organisation of the undertaking and implementing the policies of the undertaking. The labour, on the other hand, must also whole heartedly co-operate with the management through its trade unions.

A committee can be formed by the management with the whole hearted co-operation of the workers. The board can involve an equal amount of participation from the employees as well as the management. The board can meet at a timely interval and discuss grievances before them turning into disputes. Issues related to work hours, remuneration, productivity, etc can have a say in the board meetings. Policies are made for all the areas of an organisation at the top level which give impetus for growth, discipline, productivity of an industry or business.

These policies act as management guidelines to the functional heads who can discharge their responsibilities with clarity. Policies cover the areas of human relations like: policies regarding motivation, morale, communication, leadership, styles, grievance procedure, disciplinary procedure employee counseling etc. These policies also cover the areas of industrial relations like Union recognition, union representation, collective bargaining, prevention and settlement of industrial disputes, participative management etc . Voices "Central trade unions are still relevant, mainly for the unorganised sector.

Internal unions should not have a narrow view on this. They should be aware of the problems of their brothers... " -AITUC national secretary D L Sachdev. "An ITI pass-out in TKM gets around Rs 15,000 a month, while outside the company he'll only make Rs 4,000 or so. Not just the money, but even in terms of facilities, we offer the best. " -K K Swamy, deputy managing director, Toyota Kirloskar Motor. “We have requested the government to intervene in the matter immediately and prohibit the lockout declared by the management which is illegal.

The government should prosecute the management for violating labour laws and issue immediate relief to the dismissed employees such as reinstatement and payment of wages during the dismissed period. ” Meenakshi Sundaram, General Secretary, Centre of Indian Trade Union, Bangalore, in 2006. “How long can we put up with unruly behaviour? We would like to restore normalcy as soon as possible, but at the same time, we would not like to compromise on discipline. ” A. R Shankar, General Manager, Corporate Planning Division, Toyota Kirloskar Motor Private Limited, in 2006. There are another 11 people suspended by the management and we fear they may also be dismissed. We are officially supposed to work for eight hours but we are overworked sometimes. And we are treated in such a way, that we can’t even take a bathroom break when we want. ” R. Ravi, Union Joint Secretary, Toyota Kirloskar Motor Employees Unions, in 2006. Conclusion While India boasts the best in class labour irrespective of the colour of the collar, what worries the industry are the regulations in terms of access to this valuable resource.

The trade unions are not favouring the demand of the industry to improve labour legislations. While trade unions are of opinion that it would result in labour mismanagement, the industry states that the labour reforms are essential considering the frequent situational changes in the business scenario. According to Management experts, the success story of the software industry indicates how far our country can achieve if not restricted by controls.

Bibliography

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