PART - III - Udyog Bandhu

CHAPTER - VEMPLOYEES' ISSUESA general fear among the employees at the time of disinvestment is that they may beretrenched or their pay scales and services conditions may be adversely affected. Globalexperience shows that if the privatised companies grow rapidly, labour restructuring may notbe required. A number of protections are available to the employees under various labour laws.These labour laws are applicable to the company irrespective of whether it is in the PublicSector or in the Private Sector. Besides this, employee protection is ensured by incorporatingsuitable clauses in the Shareholders' Agreement.5.1 Applicability of Industrial Disputes Act 1947The provisions of Industrial Disputes Act, 1947 are applicable to the company even afterdisinvestment. Under the Industrial Disputes Act, "Industrial establishment or undertaking" hasbeen defined under Section 2(Ka). The Section reads as follows:2(Ka) "Industrial establishment or undertaking" means an establishment or undertaking inwhich any industry is carried on:Provided that where several activities are carried on in an establishment or undertaking andonly one or some of such activities is or are an industry or industries, then,a) if any unit of such establishment or undertaking carrying on any activity, being anindustry, is severable from the other unit or units of such establishment or undertakingsuch, unit shall be deemed to be a separate industrial establishment or undertaking;b) if the predominant activity or each of the predominant activity carried on in suchestablishment or undertaking or any unit thereof is an industry and the other activity oreach of the other activities carried on in such establishment or undertaking or unitthereof is not severable from and is, for the purpose of carrying on, or aiding thecarrying on of, such predominant activity or activities, the entire establishment orundertaking or, as the case may be, unit thereof shall be deemed to be an industrialestablishment or undertaking.In view of the above definition the company will remain an industrial establishment even afterthe disinvestment and all the provisions of Industrial Disputes Act will automatically apply tothe company. The trade unions may have an apprehension that workers of a PSU enjoy moreprotection under the law of the land than those in the private sector. As a matter of fact, as longas venture is "industrial establishment", the provisions of Industrial Disputes Act are applicableto that venture, irrespective of it being in public sector or private sector.5.2 Provisions governing service conditionsThe companies normally have "Certified Standing Orders" for their workmen. The StandingOrders have been certified under the Industrial Employment (Standing Orders) Act, 1946. Theservice conditions of the workmen of the company are normally governed by the said"Certified Standing Orders". If, after disinvestment, the prospective buyer proposes to makeany change in the service conditions applicable to the workmen, he has to give a notice in theprescribed manner under Section 9-A of the Industrial Disputes Act which reads as follow:106