Article (October-2017)


Rift over a gift: Role of precedents and practices

P. Soma Raju

Designation : -   Specialist HR, IR and Labour Laws

Organization : -  Management Consultant, Hyderabad


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The HR Manager had just joined the organisation in the month of August of that year: It is the month that heralds beginning of festival season. Festivals form part of our culture. Human beings after all are always curious. It is said humanity requires festivals that are food for thought, for the intellect and for the mind. A lot of rituals and celebrations will take place during festivals and the employees in every organisation pray their god with great reverence. The celebrations in any organisation will certainly help build culture. John abele founder of the multibillion dollar Boston Scientific once told "that you get what you celebrate'' Rituals on the other hand shape culture and keep it special. In all most all organisations the employees immensely get involved in the festivities and celebrate with Joy to enjoy festivals. The HR department in such a situation plays a vital role in arranging and organizing these festivals that come one after the other i.e. Ganesh Navaratri, Dusserah, Deewali and Pongal etc. The celebrations besides having positive impact if not handled properly would also breed discontent and conflicts in the organisations.

Durga Pooja at the Factory :  
Vijaya Dasami, Durga Pooja is one of the important festivals in Telangana and Andhra Pradesh and West Bengal. The festival and Pooja fervor starts even much before the actual event. It is the practice in the company that Pooja is performed separately in each department by the employees. As usual the HR department made all arrangements for procuring and distribution of Pooja items to respective departments. The organisation being massive one with eight production blocks and two administrative offices, procurement and distribution of Pooja items is a gigantic task and no scope should be given to point out any partiality. The employees clean up and decorate the Pooja Mandir, other machines, tools and tackles. The employees see Godess Durga in machines and other tools and tackles they operate day in and day out. Therefore, they give utmost prominence and priority to perform Pooja to the machines, tools and tackles besides Godess Durga. The Pooja day began with hectic activity and while the Pooja was going on, the HR department made arrangements for distribution of sweets and gifts to the employees as per usual practice in the company. After completion of ceremonial Pooja, the employees gathered at the time office near the factory main gate and when the HR department personnel offered sweets and gifts to the employees, there was a total and unanimous refusal from the employees to receive sweets and gifts. It was the first in the history of the company that employees refused sweets and gifts given on the occasion of Dusserah. The staff of HR department initially stunned and the refusal of employees in toto is in fact a rude shock. There were whispers and murmurs among employees but no wild and violent protests are noticed. The HR Manager was informed of the development by the staff.

Practice and Precedent : 
The HR Manager being the seasonal professional with cool and composed temperament did not get perturbed over the development. A quick recap of the events that preceded the Dusserah Pooja enabled him to understand the reasons for refusal of employees to accept sweets and gifts. There was a practice in the company that every year the management and workers union bargain on the gift to be given on the occasion of Dusserah. The HR Manager being new to the company thought this practice ridiculous. After all gifts is thing given or a present from the management to the employees as a token at the time of Dusserah Pooja.

It has become a precedent or practice that every year management and union bargain and come to an agreement on a particular item or present to be given as gift on the occasion of Dusserah. It is noticed that the unions demand for gift and value of it was going up year after year. As usual the union demanded that this year gift should be so and so with so much value. They thought that particular gift as demanded by the union will be given to the employees. In fact the unions demand on the gift every year and negotiations over it has become a big headache to the management and the management was thinking somehow to put a full stop to this practice of unions' demand and bargaining over a gift. It is a known fact that practices and precedents over a period of time acquire the status of right and any change contemplated meets with stiff resistance. That is what exactly happened in this case. The management set a target to the newly joined HR Manager to stop the practice of negotiations and bargaining on the gift. The HR Manager advised the management to prepare for a showdown if necessary, for change of the existing practice. The management as whole prepared mentally for a showdown and gave a green signal to go ahead with the HR Managers' plan. The HR manager never gave scope for the union to negotiate and not involved them in selection and purchase of gift. The gifts stainless steel utensils were procured as per the instructions and directions of the management and without the involvement of union at any stage. Of course sweets were procured from a best sweets shop available and therefore the main reason for refusal of sweets and gifts is their non involvement. The refusal of employees to accept sweets and gifts is not a surprise and HR manager is excepting some kind of this resistance.

The task of resolving the issue :
The HR Manager immediately conducted the meeting of all managers and discussed the issue threadbare and the strategy to be adopted to sort out the issue and requested their co-operation. One should remember that line managers' influence over the workmen is definitely a useful tool and should be utilized to neutralize and soften the stand of workmen. A meeting with union was also conducted on the next working day of Dusserah. The line managers in the meanwhile played their role and persuaded the workmen and union leaders not to make the gift an issue of dispute. The union and the workmen were initially not convinced. It was in the meeting with the union office bearers that the HR Manager brought a sentimental issue before them stating sweets offered to the workmen are nothing but Prasadam of Durgastama and refusal of Prasadam is against the religious diktat. It is further informed that the dispute is on the issue of gift but not on the sweets. The union leaders are also informed that if not accepted, the sweets become stale and should be thrown into gutter that result in wastage of money spent on sweets. A few sensible union leaders are convinced with the argument of the HR Manager and sought time to discuss among themselves and come back. Finally after two hours the union leaders came back and informed that the HR Manager about the workers, willingness to accept the sweets. Sweets distribution was at once completed after the union and workmen green signal to it. The issue over gift remained unsolved and the steel, utensils have been kept in the stores for the time being. The HR manager having won the battle halfway concentrated on the strategy to solve the dispute over gift.

Legal dimension to the issue :
While HR Manager was making efforts to sort out the issue of gift a section of the workmen pressurized the union to raise a dispute over gift and file an application before Labour Authorities alleging violation of section 9A of the Industrial Disputes Act. The HR Manager also received a copy of the complaint filed by the union before Labour Authorities. Being a seasoned, shrewd HR professional equipped with adequate legal acumen, the HR Manager had dug deep into the details and collected information on the practice of giving gift to the workmen. Fortunately there is a nothing on record to show that there is agreement or understanding between management and union on the issue of gift. Nowhere in the previous wage settlements before the labour authorities, the issue of gift is mentioned. The HR Manager after thorough home work submitted a detailed reply to the labour authorities marking a copy to the union. It was explained in the reply to the union allegation on section 9A violation that giving gift cannot and should not be brought under 9A. Under no stretch of imagination it forms part of terms and conditions of employment. There is no custom in the area to give gifts on the occasion of Dusserah. Gifts are presents given by one to another and cannot be demanded by any party. It is voluntary and given out of pleasure and affection. Demanding gifts and making it a bargain able issue is beyond the scope of Industrial Disputes Act and invoking section 9A on the issue of gift is nothing but expanding the definition "Industrial Dispute" beyond legal contours and Industrial Jurisprudence.

In his reply the HR Manager referred to section 9A of the Industrial Disputes Act and schedule IV that stipulates 21 days notice to the workmen to change any items listed there in. While explaining the legal position, the HR Manager submitted that the gift given to the workmen does not fall under item 8 of the schedule-IV and it cannot be termed as withdrawal of any customary concession nor it is a privilege or change in usage. Neither the gift is a customary concession nor is it a privilege or change in usage. The HR Manager further emphasized that the dispute over a gift can never be considered industrial dispute and invoking Section 9A and make allegation against the management by the union of workmen amounts to raising dispute that will not fall under definition of Industrial Dispute and misuse of the legal process provided by law to settle the Industrial Disputes. The HR Managers' reply containing the essence with the above argument kept the Labour Authorities in "wait and watch'' state. Labour Authority did not initiate any proceedings immediately on the compliant of the union raising dispute over gift.

Tact and act of HR Manager :
The HR Manager is determined to somehow resolve the dispute over gift to prove his mettle before the management as employee relations specialist. Subsequent to the Dusserah, the next important festival is Deewali. Every year bonus is paid to the employees on this occasion. As usual negotiations commenced on the quantum of bonus to be paid to the employees, the shrewd HR Manager used the bonus negotiations to his advantage and strategically ensured that bonus negotiations reached a stage of deadlock. The union leaders requested the HR Manager to arrange a meeting with the CEO and Managing Director for further negotiations on bonus. The HR Manager tactically informed the union leaders that CEO is quite unhappy and angry with the employees and union since the employees refused the gift given by the company. The HR Manager further said that he does not have any face to approach the CEO and MD to request on employees' behalf for a meeting on bonus. It was impressed on the union leaders that gift refusal has really changed the attitude of the CEO towards employees welfare otherwise being generous and magnanimous. The union leaders thought over the matter and after elaborate discussions and deliberations among themselves finally came forward to accept the gift. The distribution of gift went of peacefully.

A meeting with CEO and Managing Director was convinced wherein union negotiated and also requested for twenty percent bonus. Discussions had taken place in a cordial atmosphere and finally MD agreed to twenty percent bonus to the workmen with a clear and stern warning that no negotiations or demand over gift will be entertained. It is agreed by the union to a clause in the agreement that gift should not be allowed or permitted to be an issue of dispute or bargain able item in future.

So, it is time to beware of the consequences of precedents and practices in Industrial Relations.