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A Case on Contract Labour: M/s. ABC Chemicals Limited*

CASELET, HUMAN RESOURCE MANAGEMENT
ET Cases - GSMC, 3 Pages
AUTHOR(S) : Esrafil Ali and Shashank Mittal

Case Preview

A Case on Contract Labour: M/s. ABC Chemicals Limited

 

M/s ABC Chemicals Limited located at Thane – Belapur Road, Maharashtra is engaged in manufacturing of various chemicals since 1991. The total manpower of the Company is 450. The employee canteen at M/s ABC Chemical Ltd was contracted to Mr. Ram Shetty. The canteen contract was registered by the company under The Contract Labour (Regulation & Abolition) 1970. An agreement was also signed by Rama Shetty as a canteen contractor and a Mr. Kulkarni, factory manager on behalf of company.

The said contract was renewed every year and rates of the contract also were renewed every year with the consent of both the parties. In the canteen Mr. Shetty had  employed about 10 workers and they were provided with uniforms, attractive wages and accommodation.

Mr. Shetty had another canteen contract in a neighbouring company where he had employed about 15 canteen boys. In both the companies, the canteen worked smoothly. After every three months, Mr. Shetty would rotate these canteen boys on rotation between the two companies, so that there would be no continuity of job in  either of the companies for the canteen boys. This practice continued for a long time........................

The Event

In the month of October 1995, Mr Mohite on his regular round in the company, observed that outside the canteen Mr Ramesh Bhoir along with canteen boys was discussing something when they all saw Mr Mohite coming towards the canteen they immediately disbursed from canteen area except for Mr Ramesh Bhoir who remained outside the canteen. Mr Mohite ignored him and went back to his office. Mr Ramesh followed him and went to the office of Mr Mohite...........

Industrial Relations Issues

Mohite, along with the Works Manager and other departmental heads jointly decided on terminating the contract of the Canteen with immediate effect and intimated Mr. Shetty, the contractor to remove his men and material and clear whatever compensation was due to him from the management. Mr Mohite appreciated Mr Ramesh Bhoir and union committee members for the work done by Mr. Ramesh........

Union Pressure on Management

The matter did not end here. Keeping a day’s gap, the canteen workers approached Mr. Ashok Mahatre, VP of “Maharashtra Shramik Sena” based at Turbhe village. The canteen workers enlisted themselves as members of that union and approached the Labour Commissioner Office, Thane along with Mr. Mahatre..........

Case to Labour Commission

Because of pressure from local leaders Mr. Mahatre, The Labour Commissioner Office accepted their letter of complaint and orally told them that action will be taken against company within few days, and till that time, the removed workers and union should maintained discipline. Thereafter, next day, Mr Mahatre along with canteen workers and other local people approached the company’s gate along with the copy of the letter which was submitted in the Labour Commissioner’s Office..........

Endless Conciliation

Mr. Mahatre and others at the same time started giving slogans against the company and further they used abusive language against the management. Every day in the morning, they used to gather at the gate and hurled slogans against the management of M/s. ABC Company Ltd. They continued for further 8 days with this activity.........

Teaching Note Preview

A Case on Contract Labour: M/s. ABC Chemicals Limited

 

Synopsis

This Case is about M/s ABC Chemicals Limited, which is located at Thane – Belapur Road, Maharashtra. The Company is engaged in manufacturing of various  chemicals since 1991. The total manpower of the Company is 450. It had provided canteen for the employees and it was running on contract basis. Mr Rama Shetty was a canteen contractor. The canteen contract was registered by the company under The Contract Labour (Regulation & Abolition) 1970. An agreement  was also signed by Rama Shetty as a canteen contractor and on behalf of company a factory manager, Mr. Kulkarni.

The case focuses on the issues related to making contract labours ‘permanent’ in the Canteen of ABC Chemicals Limited. The Canteen employees who were on contract, with the pressure of internal union, demanded the Management to make them permanent employee of the Company. Retaliating, management issued a letter of termination of canteen contract which was delivered to the Canteen Contractor immediately. The issue was raised to the Labour Commissioner’s Office by the canteen employees. The Canteen Employees started giving slogans against the company. Further they used abusive language against the management. They were doing the same activity every day..............

Pedagogical Objectives

The case aims at preparing budding HR Managers to avoid such situations beforehand by clear understanding of the root cause of such crisis. Even then, if the crisis occurs, the case prepares them on how to face such real life situations by sensitizing them towards the sensitive handling of Labours and their problems keeping in mind the interest of management and jurisdiction.

Assignment Questions

  • I. Why management took the decision of terminating the canteen contract?
  • II. What role was played by union leader in this issue?
  • III. What is the IR issue involved in this case?
  • IV. ........................

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Product code: HRM-2-0029, HRM-2-0029A

Abstract

This Case Study's objective is to shed light on issues related to making contract labours 'permanent' in organizations. The Government of India enacted the Contract Labour (Regulation & Abolition) Act 1970 in order to regulate establishments wherein contract labour has been employed by the contractors. The Act regulates that the contractors or principal employer has to provide and maintain the health, safety and welfare of contract labours. A Central and State Advisory Board has also been  formed in order to implement the provisions of the Act. Through the experience of the canteen of ABC Chemicals Limited, post the enactment of the Act, the Case tries to elucidate the roles and jurisdictions of the Union, the management and the Canteen Contractor and how unorganized Unionism can lead to fruitless wastage of time and productivity.



Pedagogical Objectives

  • To understand what pitfalls may happen in a Labour Contract and how to envisage issues before they go out of control
  • To be able to manage crisis in real life by sensitizing participants towards the sensitive handling of Labours and their problems keeping in mind the interest of management and jurisdiction
  • Case Positioning and Setting

    The Case Study can be used for MBA and executive MBA for the following course

    • MBA in HR with specialization in IR- This case provides the unique situation, in which the roles, responsibilities and actions of all the arms of the tripod, formed by Principal Employer-ABC Chemicals, Canteen Contractor and Contractual Labours working in canteen, are at cross-roads.

    • GSMC 2014, IIM Raipur

      This Case Pack Includes:
      - Abstract
      - Caselet
      - Teaching Note (**ONLY for Academicians)
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