Major Issues with Trade Union Act (1926)

Although there is a right to form an association or form a trade union; yet in our country, there is no nationwide law recognizing the trade union. For an employer, there is no compulsion to enter into a collective bargaining with laborers and it is also not mandatory to recognize it.

The Trade Union Act was enacted in 1926 and it legalizes the trade unions. Any seven workers could form a trade union and seek registration to take part in collective bargaining negotiations. This act allowed unionization in both organized and unorganized sector. By various amendments it is now established that:

  • A minimum of 10% of the labour workforce, or 100 workers are required to form a trade union.
  • 75% of the officers in a trade union must be employed in the corresponding industry.

The second condition mentioned above makes it sure that 25% officers of the Trade Union are permitted to be members of unions despite being outsiders. This implies that the workers who are not directly employed under a particular employer also can stand against that employer in case of a dispute.

The concept of outsiders poking their nose in the matters of an organization exists in India only. The implications of such provisions include:

  • Hampers productivity and economic growth.
  • Lack of democracy in trade unions, leading to inexplicable behaviour of the unions and their office bearers.
  • Loss of person days in strikes and lock outs
  • Management needs to discuss with those who have nothing to do with the organization.
  • The process of registration of a trade union is not transparent. The right to register a trade union was at the heart of the Maruti strike, which went on for more than a month.


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