History of Labour Law and Trade Unions Act, 1926 notes — Unit 1

Labour law is the body of law that governs the relationship between workers, employers, trade unions, and the government. Its evolution is a story of struggle against exploitation.

⇒The Laissez-Faire Era

During the 18th and 19th centuries (Industrial Revolution), the dominant economic philosophy was 'Laissez-Faire' (let them do as they will). The state did not interfere in business. Employment contracts were considered purely private matters.

• Result: Complete exploitation. 16-hour workdays, child labour, no safety standards, no job security. The legal maxim was 'Hire and Fire'.
• Workers who tried to form groups to demand better wages were prosecuted for 'Criminal Conspiracy' under the common law.

⇒Shift to a Welfare State

The horrors of industrialization led to the realization that the bargaining power between an employer and an individual worker is inherently unequal. The State had to step in to protect the weaker party.

The Indian Constitution guarantees social and economic justice. Labour is a subject in the Concurrent List (Entry 22, 23, 24), meaning both the Parliament and State Legislatures can make laws on it.

⇒Fundamental Rights

• Article 19(1)(c): Freedom to form associations or unions. (The bedrock of the Trade Unions Act).
• Article 23: Prohibition of traffic in human beings and forced labour (Begar).
• Article 24: Prohibition of employment of children in factories, mines, or hazardous jobs.

⇒Directive Principles of State Policy (DPSP)

• Article 39(a): Right to an adequate means of livelihood.
• Article 39(d): Equal pay for equal work for both men and women.
• Article 41: Right to work, to education, and to public assistance in cases of unemployment or old age.
• Article 42: Provision for just and humane conditions of work and maternity relief.
• Article 43A: Participation of workers in the management of industries.

Before 1926, trade union activities in India were severely restricted. A major turning point was the Buckingham and Carnatic Mills Case (1920).

⇒The Catalyst: B&C Mills Case

B.P. Wadia, a labour leader, organized a strike at the B&C Mills in Madras demanding better wages. The British management sued him in the Madras High Court. The Court held that organizing a strike to induce workers to break their employment contracts was an actionable wrong (civil conspiracy) and issued an injunction against Wadia.

This judgement caused an uproar in India and Britain. It made it impossible to run a trade union legally. Due to massive political pressure, the British Indian Government was forced to enact the Trade Unions Act in 1926.

⇒Objective of the Act

To provide for the registration of Trade Unions and in certain respects to define the law relating to registered Trade Unions (granting them specific immunities).

A Trade Union is not just an association of workers. The legal definition is specific.

⇒Statutory Definition

'Trade Union' means any combination, whether temporary or permanent, formed primarily for the purpose of:

• 1. Regulating the relations between workmen and employers, OR
• 2. Regulating the relations between workmen and workmen, OR
• 3. Regulating the relations between employers and employers, OR
• 4. Imposing restrictive conditions on the conduct of any trade or business.

Registration under the Act is not compulsory, but an unregistered union does not get the vital legal immunities provided by the Act.

⇒Who can apply? (Section 4)

Any 7 or more members of a Trade Union may, by subscribing their names to the rules of the Trade Union, apply for registration.

⇒The 10% / 100 Rule (Section 4 Proviso - Added in 2001)

To prevent the mushrooming of fake or micro-unions, a strict condition was added:

• No Trade Union of workmen shall be registered unless at least 10% or 100 of the workmen (whichever is less), engaged or employed in the establishment/industry, are its members on the date of making the application.
• AND, it must always have at least 7 members who are actual workers in that establishment.

⇒The Application (Section 5)

The application is made to the Registrar of Trade Unions. It must be accompanied by:

• Names, occupations, and addresses of the members making the application.
• The name of the Trade Union and address of its head office.
• Titles, names, ages, addresses, and occupations of the office-bearers.
• A copy of the Rules of the Trade Union.

⇒Rules of a Trade Union (Section 6)

A union cannot be registered unless its rulebook explicitly provides for certain mandatory matters, including:

• The name and object of the union.
• The purposes for which general funds can be spent.
• Maintenance of a list of members.
• Admission of ordinary members (who must be actual workers) and honorary members.
• Payment of a minimum subscription (₹1 per month for rural workers, ₹3 for unorganized sectors, ₹12 for others).

⇒Certificate of Registration (Section 9)

If the Registrar is satisfied that all requirements are met, they issue a Certificate of Registration. This certificate is conclusive evidence that the union is duly registered.

Registration is not permanent. The Registrar can withdraw or cancel the registration certificate under specific circumstances.

⇒Grounds for Cancellation

• 1. Voluntary: On the application of the Trade Union to be verified in such manner as may be prescribed.
• 2. Fraud/Mistake: If the Registrar is satisfied that the certificate was obtained by fraud or mistake.
• 3. Ceased to Exist: If the union has ceased to exist.
• 4. Violation of Act: If the union has wilfully and after notice from the Registrar, contravened any provision of the Act (e.g., failure to submit annual returns).
• 5. Unlawful Rules: If it has allowed any rule to continue which is inconsistent with Section 6.
• 6. Loss of Minimum Membership: If the union no longer has the requisite number of members (less than 10% or 100, or less than 7 workers).

⇒Procedural Safeguard

Except in the case of a voluntary application, the Registrar must give not less than 2 months' previous notice in writing specifying the grounds on which it is proposed to cancel the certificate.

Once registered, a Trade Union undergoes a legal transformation.

⇒Incorporation (Section 13)

Every registered Trade Union becomes a Body Corporate by the name under which it is registered. This means:

• Perpetual Succession: The union lives on even if its founding members die or leave.
• Common Seal: It has an official signature.
• Right to hold property: It can acquire and hold both movable and immovable property in its own name.
• Right to Contract: It can enter into contracts.
• Right to Sue: It can sue others, and be sued by others, in its own registered name.

(An unregistered union is just an AOP; it cannot sue in its own name or hold property easily).

The entire reason the Trade Unions Act was passed (post the B&C Mills case) was to protect workers from being dragged to court for going on strike. Sections 17 and 18 are the absolute core of this Act.

⇒Immunity from Criminal Conspiracy (Section 17)

No officer or member of a registered Trade Union shall be liable to punishment under Section 120B of the Indian Penal Code (Criminal Conspiracy) in respect of any agreement made between the members for the purpose of furthering any object of the Trade Union.

• The Exception: This immunity ONLY covers agreements to do legal acts (like going on a peaceful strike). It does NOT grant immunity if the union members agree to commit an actual offence (like murder, assault, or destroying factory property).

This section directly overrides the B&C Mills judgement. No civil suit can be filed against a registered Trade Union or its members in respect of any act done in contemplation or furtherance of a trade dispute on the ground that:

• 1. Such act induces some other person to break a contract of employment (e.g., Union leader convincing workers to go on strike instead of showing up for work).
• 2. It is an interference with the trade, business, or employment of some other person.

⇒Immunity for Tortious Acts of Agents

A registered Trade Union shall not be liable in any suit for any tortious (civil wrong) act committed by an agent acting on behalf of the union, IF the union proves that the agent acted without the knowledge of, or contrary to express instructions given by, the executive of the Trade Union.

The Act strictly regulates how a union can spend the money it collects from workers.

⇒General Fund (Section 15)

The general fund can ONLY be spent on objects specified in the Act. These include:

• Payment of salaries to union officers.
• Expenses for the administration of the union (rent, stationary).
• Legal proceedings involving the union or its members.
• Conducting trade disputes.
• Compensation to members for loss arising out of trade disputes.
• Allowances to members or their dependents on account of death, old age, sickness.

Crucially, General Funds CANNOT be spent on political activities.

While General Funds cannot be used for politics, the Act recognizes that unions need political representation.

⇒Creation of a Separate Fund

A registered Trade Union may constitute a separate fund, from contributions separately levied, specifically for the promotion of civic and political interests of its members.

⇒What can it be spent on?

• Paying expenses of a candidate for election to any legislative body.
• Holding political meetings.
• Distributing political literature.

⇒Voluntary Contribution

The most important rule: No member can be compelled to contribute to the political fund. A member who refuses to contribute cannot be excluded from any benefits of the union or placed under any disability. Contribution to the political fund cannot be made a condition for admission to the union.

⇒Minors as Members (Section 21)

Any person who has attained the age of 15 years may be a member of a registered Trade Union (subject to the rules of the union). However, they cannot hold the position of an office-bearer until they reach 18 years.

⇒Proportion of Office-Bearers (Section 22)

Historically, politicians ran trade unions without ever working in the factory. To ensure unions are run by actual workers, the law limits 'outsiders':

• In an unorganized sector: At least 50% of office-bearers must be persons actually engaged or employed in the industry.
• In organized sectors: The government can prescribe that outsiders cannot exceed 1/3rd of the total number of office bearers, or a maximum of 5, whichever is less.

⇒Disqualification of Office Bearers (Section 21A)

A person cannot be an executive or office-bearer if:

• They have not attained the age of 18.
• They have been convicted by a court in India of any offence involving moral turpitude and sentenced to imprisonment (unless 5 years have elapsed since their release).

⇒Summary of Master Concepts

• Genesis: Shift from Laissez-faire to Welfare State. B&C Mills case necessitated the Act.
• Registration: Min 7 members + (10% or 100 workers). Registration grants Body Corporate status.
• Immunities (Sec 17 & 18): Protection from criminal conspiracy and civil suits for inducing breach of contract during a trade dispute. Does NOT protect against violence.
• Funds: General fund strictly for union activities. Political fund is strictly voluntary.
• Office Bearers: Outsiders are limited; 50% must be actual workers. Minors >15 can join, >18 can lead.

⇒University Exam Tips for this Unit (Premium Advice)

• The 'Immunity' Question: "A registered trade union is completely immune from civil and criminal liability. Discuss." This is a trick question. They are NOT completely immune. You must explain Sec 17 & 18, and clearly state that immunity does not extend to illegal strikes, violence, or offences involving moral turpitude.
• Political Fund: Be sure to emphasize that contributing to the political fund MUST be completely voluntary.
• Definition of Trade Union: Don't forget that employers' associations can also be registered as Trade Unions under the Act.