Toyota should know India is a unique market

Toyota has enough reasons to be miffed with its 4,000 unionised workers at its twin plants at Bidadi for disrupting production at a time when business in India is already under severe stress (sales declined over 19 per cent in the first two months of this year).

Also, the company has said that 'indiscipline' on the shop floor has seen the plants’ production capacity dip to 110,000 vehicles from a maximum capacity of 310,000 units. It has just three days of inventory left.

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But it’s debatable whether the company’s insistence on an undertaking for good conduct before allowing workers to resume duty is the ideal solution to the stand-off. Apart from the fact that good conduct bonds are no guarantee for preventing future agitations by workers, the fact is that the Toyota action will not get the approval of local politicians, specially in an election season.

That’s the reason the company’s request for the state government’s intervention has met with a deafening silence so far.

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Maruti had tried to do the same in 2012 and asked workers to sign an undertaking that they would not resort to go slow, intermittent stoppage of work, stay-in strike, work-to-rule, sabotage, and so on.

But Labour Minister Mallikarjun Kharge responded by terming the good conduct bonds an arbitrary act.

Kharge also referred to Schedule 5 of the Industrial Disputes Act which says “to insist upon individual workmen, who are on a legal strike, to sign a good conduct bond, as a pre-condition to allowing them to resume work is an unfair labour practice”. It’s doubtful whether the Karnataka government would say anything to the contrary.

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Kharge was obviously looking at his political constituency before passing his judgement, but what he said was only half the truth.

The legality of good conduct bonds is actually hazy as different judgements have interpreted it differently. While some judges have held such bonds as an act of force and coercion, others had a different view. Here are two examples of the differing perspectives culled from indiakanoon.org

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A Bombay High Court verdict this year said the contract of employment is always bilateral and employees are no longer to be looked upon as bonded slaves.

The court said, “The employees, therefore, cannot be treated as a tribe of delinquents; much less can they be humiliated by asking them to sign undertakings which imply that they had indulged in misdeeds which they had not. One can understand and the employer will be justified, if such undertaking is taken from those workmen who are guilty of the misdeeds.

But to insist on such undertaking from one and all is to subtract from the terms of their employment." 

The court took a dim view of the good conduct undertakings and said it serves no purpose except satisfying the ego of the employer, which is nothing but a display of a feudalistic attitude towards the employees.

The court also termed “perverse” the finding of the enquiry officer that the employer was justified in declining work to the workers because they failed to submit undertaking of good conduct.

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It’s worth noting that unlike the Toyota management which has charged 30 workers with threatening the management staff, in this case, there were no allegations of violence or any other subversive activities against the workers.

z6 6In yet another case, however, the court upheld the management’s right to insist on a good conduct undertaking on grounds that no question of humiliation or victimisation can arise when workmen are found to be bent on indulging in acts of assaults and violence, intimidation, go-slow tactics and other illegal activities in defiance of legal provisions, standing orders, and rules of conduct implicit in accepting jobs by them.

The moot point of the courts has been that the dividing line between justified and unjustified insistence on such bonds is very thin. 

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So, the question of whether the management can demand a good conduct bond from its employees as a pre-condition for the latter’s entry into the factory would depend on the facts of each case and it cannot be postulated that the requirement of the execution of bond of good conduct would apply in all circumstances.  

Either way, it’s going to be a long legal haul for Toyota if the unions challenge the management on the legality of the bonds.  

Some human resources experts say Toyota would do well to avoid that route since that’s hardly going to help its cause of starting operations immediately.  

It is not a Toyota-specific problem alone. Many multinationals in India are prone to replicate the model practised in their home countries without realising that a one-size-fits-all strategy can’t work always.

The mandate of most of their CEOs in India is to execute plans drawn up at the headquarters and they have little freedom to act on their own because the processes are cast in stone.

There is no alternative to proper communication, transparency and the good old skill in industrial relations in India. Politicians or the courts can hardly help in this regard