Outsourcing of Drivers and Conductors Struck Down!
“Unions are always looked upon with contempt as if they exist to hamper smooth functioning. But it is untrue. It is essential to have union like a strong opposition party in a democratic set up. The conscience of the ruling party or the management would always remain alert.”
The Madras High Court has recently passed an important judgment on 15.11.2023 in a case filed by Tamil Nadu State Transport Employees' Federation (affiliated to CITU) challenging tender notification issued by the Metropolitan Transport Corporation Limited (MTCL) whereby posts for drivers and conductors were sought to be outsourced.
A. Arguments of the Parties
The union argued that recruitments are governed by a 1992 settlement between the union and the MTCL, wherein it had been agreed that direct recruitment would be done through the employment exchange, with the sole exemption of compassionate appointment. The Union also argued that a number of vacancies had yet to be filled and outsourcing of these terms amounted to breach of settlement, and would lead to industrial disharmony and discrimination.
On the other hand, the government argued that it had taken the policy decision to outsource these posts in view of a severe shortage of drivers and conductors, stated to be due to prolonged absence by those holding posts. The government also pointed out that the contract tenure was one year only, and there had been substantial changes in the 3 decades since the settlement.
B. Findings of the Court
1. Discrimination and inequality in outsourced employment
In a vital recognition of inherent inequalities with the introduction of contract system, the court accepted the argument of the union and held “The one inevitable consequence in outsourcing is that when two categories of drivers are created, the equality as enshrined in the Constitution of India goes for a toss”
The court went on to state that having different salaries and different service conditions for different drivers would amount to discrimination and unfair labour practice. The court illustratively argued that the discrimination would have a cascading effect, by noting that the Transport corporation could evade liability under the Employees Compensation Act in respect of accidents involving outsourced drivers.
In fact, the practice of paying, identically placed workers, highly disparate wages on the basis of employment status is rampant. Though equal pay for equal work is made a condition of the contractor’s licence under the Contract Labour (Regulation and Abolition) Central Rules, 1971, this is not the actual practice in most work places. With contractualisation of public employment, workers are paid only minimum wages and not civil servant scales of pay, despite performing the same work. Not only this, but payment of minimum wage is not properly monitored, and very few contract workers are able to fight a legal battle to ensure even bare minimum statutory entitlements.
2. Impact of contractualisation on system of Reservation
Another vital aspect that was considered by the court in quashing the notification for outsourcing was that reservation policy would not be required to be implemented by the contractor.
The fact that contractualisation of labour substantively and inherently dilutes reservation has been repeatedly raised – and judicial recognition of this is crucial. The promotion of insecure labour conditions by the BJP government at Centre and the DMK government at the State must be viewed as a direct assault on the system of reservations that seeks to ameliorate the effect of historical social inequalities of caste. Similarly, horizontal reservations for women, persons with disabilities etc would all be rendered obsolete when the posts no longer exist.
3. Importance of Unions
The Court also discussed the role of unions in the context of the argument of the State that there was perennial labour unrest. It was noted that the general contempt with which unions are seen as if they hamper smooth functioning is untrue. The Court went on to hold: “It is essential to have union like a strong opposition party in a democratic set up. The conscience of the ruling party or the management would always remain alert.”
The Court also noticed that new employees could also always form a union. In this, the court perhaps failed to recognise that forming effective trade Unions of unorganised / outsourced workers is close to impossible. With a hire and fire regime and reducing accountability of the principal employer, workers who unionise are often victimised and removed from employment. Many of them do not have resources or ability to pursue their remedies. However, the court was right in noting the importance of unions: strong unions lessen the hugely uneven power imbalance and enable workers to fight for statutory rights and beyond.
4. Role of Public Sector Units
Another aspect that was considered by the court was that though private players have thrived in the transportation sector, their motive was profit, and the employees were unorganised with no control over hours of duty or timely wage disbursement. The court differentiated the role of public sector and noted that the sector was organised and in the service of the public, with prescribed code of conduct.
With growing privatisation of public sector, an open disinvestment policy, and the introduction of profit-motivation in welfare services, the judgement is a timely reminder of the role of the public sector.
5. Recourse for Indiscipline amongst Employees
The Court also rejected the argument of the corporation that justified outsourcing due to alleged rampant absenteeism. It was noted that any misconduct could be dealt with through the disciplinary measures laid down in the Standing Orders. The Court also noted that despite the clear standing Orders, a large number of industrial disputes were filed by drivers and conductors. The court came to the conclusion: “Respondents 5 to 12 may save much through such contractual labour but at what cost is a million dollar question. In my opinion the respondents 5 to 12 are advised to adopt a more transparent and easier process to recruit drivers instead of venturing into the outsourcing mode through manpower agencies.”
C. Conclusion
Neo-liberal policies adopted by the BJP government have clearly revealed the deliberate creation of insecurity of employment, in the name of ease of doing business. This was exacerbated by the attack on working class through amendment of labour laws in the COVID period. The labour codes passed in the parliament are also hugely anti-worker. In fact, even though the Supreme Court has held that payment of less than minimum wages amount to begar (forced labour) and bonded labour, the Government, through Codes, has sought to implement a floor wage, which is less than minimum wage.
The policy has also been clearly in favour of informalisation of employment, while making bizarre arguments to portray such changes to be in favour of workers. For example, a 2021 report issued by the V.V.Giri National Labour Institute and the Indian Institute of Public Administration, titled ‘Impact Assessment Study of the Labour Reforms undertaken by the States’ argued that the increasing contractualisation of labour would increase formalisation.
It is well reported that economic inequality is at an all-time high. Policies towards insecure employment only exacerbate this inequality. The corporate friendly policies have extended from private employers to the government – with insecure tenures extending even to the army with the Agnipath scheme. We see reducing number of permanent posts, a failure to recruit towards vacant posts and an urge towards contractualisation. In this context, we remember where the Supreme Court noted that “Sanctioned posts do not fall from heaven. State has to create them by a conscious choice on the basis of some rational assessment of the need.” The state policy now, however, is antithetical to Article 39 of the Constitution which mandates that “The State shall, in particular, direct its policy towards securing—
(a) that the citizens, men and women equally, have the right to an adequate means of livelihood;
(b) that the ownership and control of the material resources of the community are so distributed as best to subserve the common good;
(c) that the operation of the economic system does not result in the concentration of wealth and means of production to the common detriment;
(d) that there is equal pay for equal work for both men and women”
In this context of state sanctioned insecurity of employment, the High Court judgement in Tamil Nadu State Transport Employees' Federation v. Government of Tamil Nadu is an important reiteration of how labour issues are to be construed – by keeping the best interests of workers in mind.