K R Shyam Sundar
The Essential Defence Services Bill, 2021, prohibits workers engaged in essential defence services from striking work especially in light of the decision to corporatise the Ordnance Factory Board. The Bill, 2021, violates two resolutions of the International Labour Conference, which provides guidelines for ILO’s policy, and emphasise the recognition of the right to strike. ILO’s Committee on Freedom of Association considers the right to strike as one of the essential means available to workers for the protection of their interests and explains how trade unions will be rendered powerless.
The decision to corporatise the Ordnance Factory Board (OFB) and make strikes illegal has pitted the staff of the ordnance factories and civilian defence employees against the Centre.
he OFB, under the Department of Defence Production (DDP) of the Ministry of Defence (MoD), comprises 41 ordnance factories producing arms, explosives and ammunition. Besides, there are nine central public sector undertakings (PSUs), like HAL and BEL, which are under the administrative control of the department.
The decision to dissolve the OFB and replace it with seven government-owned corporate entities was rejected by the employees, who fear eventual privatisation and losing the security of their service and retirement conditions.
On June 27, the 80,000-strong workforce of the ordnance factories and 4,00,000 civilian defence employees, under the banner of three recognised unions, declared that an indefinite strike would start on July 26.
Subsequently, the Essential Defence Services Ordinance, 2021—which prohibited strikes, lockouts, and lay-offs in units engaged in essential defence services—was promulgated on June 30. On July 22, the Essential Defence Services Bill, 2021, which replaced the Ordinance, was introduced in the Lok Sabha
Corporatisation and OFB
Successive governments have sought to corporatise the OFB. The UPA-1 government contemplated corporatisation of the OFB following the recommendations of the TKA Nair Committee (2000) and Vijay Kelkar Committee (2006).
Corporatisation of the OFB is expected to result in economic efficiency, improve corporate governance and enable access to market funds, among others.
In 2001, the Centre opened up the defence sector to the private sector with foreign direct investment (FDI) up to 26%, both subject to licensing. In 2016, it allowed FDI under the automatic route up to 49% and above 49% through the government route wherever it was likely to lead to access to modern technology.
In May 2020, FDI in the sector was increased from 49% to 74%, and up to 100% through the government route as part of the reforms in the defence sector to boost self-reliance. In the same month, the quest for self-reliance was rechristened as Atmanirbhar package.
On May 16, 2020, Union finance minister Nirmala Sitharaman announced structural reform measures for several sectors, including defence. She proposed two measures to enhance self-reliance, viz. ‘Make in India’ for self-reliance in defence production, and improve autonomy, accountability and efficiency in ordnance supplies by corporatisation of the OFB. This was followed by the constitution of an empowered group of ministers (EGoM) in September 2020 to oversee and take the measures forward.
On June 15, 2021, the Union Cabinet approved the policy measure to corporatise the OFB and bundle them into seven corporate entities. Critics have questioned the operational validity of the corporatisation process.
Apprehensions and Views of Trade Unions
The government has assured that all employees belonging to groups A, B, and C would be transferred to the corporatised entities on deemed deputation initially for two years without changing their service conditions. Further, their pension liabilities would be borne by the Central government.
However, workers have some grave concerns. Trade unions have contested the very process and logic of corporatisation and pointed out some serious implications for employees and even for the defence sector.
All India Defence Employees Federation (AIDEF) Secretary C Srikumar observed that ‘the government is converting the OFB into a corporation only to privatise it (later)”. This apprehension is supported by the fact that Sitharaman announced in May that there would be a maximum of four PSUs in the strategic sector and all others would be privatised.
Even if the entities are declared part of the strategic sector, there is no guarantee they will not be privatised. The main contention of the unions is that economic efficiency can be achieved even staying within the government-regulated framework. On November 21 2020, the trade unions had submitted their reform proposals to enhance economic efficiency to the government. The government has not considered the proposal.
Besides, there is no guarantee that the service conditions of the employees will not change after two years. The service conditions of OFB staff are on par with that of Central government employees. Post-corporatisation, their service conditions would become the same as that of Central PSU employees, the OFB workers argue.
The unions further argue that the decision to corporatise the OFB is arbitrary, and violates the previous commitment by various governments and also the settlement reached with the Centre in October 2020.
Trade unions were always against corporatisation of the OFB. In fact, one of the issues of the general strike called by a majority of CTUs in the 2010s concerned allowing FDI and privatisation of defence, the railways and insurance.
In August 2019, the three recognised union federations—AIDEF, Indian National Defence Workers’ Federation and even the RSS-affiliated Bharatiya Pratiraksha Mazdoor Sangh—struck work. As a result, the Ministry of Defence constituted a high-level committee of the DDP on June 2, 2020, to address the concerns of the trade unions regarding corporatisation of the OFB. The committee assured the trade unions that it would engage with them as per their request.
When the government started pushing for the corporatisation of the OFB aggressively even during the pandemic last year, the federations called for an “indefinite strike” to be held from October 12, 2020. However, it was deferred as a result of a conciliated settlement between the Centre and the unions that the service conditions would remain the same and the federations can express their concerns to the EGoM.
However, the government and the unions made little headway for two reasons. First, while the government asserts that corporatisation is a “policy decision” and non-negotiable, the trade unions contest its very validity and legitimacy. Second, the workers want their service conditions to remain unchanged.
Emergency Powers
Corporatisation measures had been shelved for several years thanks to the agitations and strikes by trade unions. However, the current regime has assumed ‘emergency powers’ to prohibit strikes in the defence sector to thwart any attempts to block corporatisation. The Bill is similar to the Essential Services Maintenance Act (ESMA), 1968. The Central and the state governments have often used ESMA to prohibit strikes.
The use of emergency powers was typically a colonial strategy. State intervention in industrial disputes became very severe during the Second World War, when the British introduced the Essential Services Act, 1941, and the Defence of India Rules (Rule 81-A, introduced in 1942, and Rule 56-A, introduced in 1943) to ban strikes and lockouts and other forms of industrial protests. General and political strikes were also prohibited.
In the neo-liberal dispensation, governments, irrespective of the party in power, have used ESMA to secure reform objectives. In this sense, the ‘globalisation logic’ drives the state to acquire extraordinary powers, as in the defence sector now. From a welfare state, India is becoming a hard reform state which would use all the strategies up its sleeve to drive reforms even if they are antithetical to the ethos of our pluralistic democratic state.
The government should not introduce laws that have a colonial hangover. In a democracy, workers have the right to strike if their legitimate demands are either not met or new laws endanger their job security.
The Lok Sabha has passed the Essential Defence Services Bill, 2021, with a sunset clause, by a voice vote without any debate. Defence Minister Rajnath Singh has assured the House that after parliamentary assent and presidential nod, the Act will be effective for only a year and come into force only when invoked.
The Bill, which bans strikes and agitation by employees engaged in essential defence services, aims to ensure “an uninterrupted supply of ordnance items to the armed forces for the defence preparedness of the country” and that “ordnance factories continue to function without any disruptions, especially given the prevailing situation on the northern front of the country”, according to the government.
Though the Act prohibits strikes, lockouts and lay-offs “in the interest of sovereignty and integrity of India and security of any state”, the government’s real intention is to frustrate and thwart attempts by trade unions to disenable the corporatisation of the Ordnance Factory Board (OFB). This is evident from the comment of a senior defence official made to a prominent news website that “it is a good Bill which has been brought considering the past strikes carried out by defence PSUs and others”.
Contents of the Bill
The Bill intends “to provide for the maintenance of essential defence services to secure the security of nation (sic) and the life and property of public at large ….” The definition of ‘defence services’ is wide enough to apply to not only those directly engaged in this sector but also “any service … if its cessation would affect” the production of defence equipment or goods, operation or maintenance of defence establishments and repair of defence products. It could include even major ports and docks or any manufacturing establishment.
The Bill covers not only strikes but also lockouts and lay-offs by employers. Strikes include not only the conventional temporary stoppage of work but also mass casual leaves, coordinated refusal to work or accept employment, refusal to work overtime deemed to be necessary by the government, and “any other conduct which results in or is likely to result in disruption of work.…”
The government may prohibit strikes for six or more months on grounds of sovereignty and integrity of India, security of any state, public order, public decency or morality.
To make strikes virtually impossible, the Bill has declared essential defence services as “public utility service” (PUS) under the Industrial Disputes Act, 1947. Striking unions in PUS must provide a six-week notice and conciliation would kick in compulsorily. If it fails, the government can refer the matter to compulsory adjudication. During this period and the prescribed cooling-off period (post-conciliation or adjudication), it is illegal to strike work.
The punishment for starting or participating in or instigating, inciting or providing financial assistance to illegal strikes is imprisonment (one-two years) or fine (Rs10,000-Rs15,000) or both. The offences are punishable and both cognisable and non-bailable. Most worryingly, the Bill provides for disciplinary action, including dismissal for the aforementioned deeds.
What are the Implications of the Bill?
The implications of the Bill are wide enough to cause concern. Strikes/lockouts/lay-offs cannot be declared. Employers cannot lay off a single worker even if necessary for genuine economic reasons. Workers cannot protest in any form given the stringent punishment prescribed in the Bill.
Collective bargaining or negotiations will be rendered meaningless because actions like protests or strikes are complementary to these processes. Trade unions will be virtually disempowered and cannot challenge any managerial practice hurting labour welfare and rights.
Even if the government wishes to engage with trade unions at the macro level, any dialogue will be meaningless considering the adversarial and threatening measures in the Bill. Put simply, the Bill disenables the free conduct of industrial relations.
Response of Trade Unions
As expected, trade unions have denounced the Bill as “brutal” and “draconian”. Central trade unions, fearing the possibility of extension of ‘emergency’ provisions to other sectors as well, have held protests and demonstrations calling for the withdrawal of the Bill.
In July, the Centre of Indian Trade Unions (CITU) had decided to approach the Supreme Court and the International Labour Organization (ILO) against the Bill. The CITU has complained to the ILO stating that the Bill is a “flagrant violation of ILO’s fundamental rights provisions described in ILO conventions, including the Core Conventions, resolutions and policies declared on freedom of associations”.
ILO and Right to Strike in Essential Services
“Flagrant violation” of ILO’s fundamental rights refers to two Core Conventions, viz. C. 87, Freedom of Association and Protection of the Right to Organize Convention, 1948, and C.98, Right to Organize and Collective Bargaining Convention, 1949. Both the conventions directly or indirectly prohibit any interference from public authorities to restrict the exercise of the rights of freedom of association and collective bargaining. Therefore, the right to strike is derived from these two conventions (see especially Article 3 of C.87).
Labour Relations (Public Service) Convention, 1978 (No. 151) is an important instrument in this context. Article 4(1)(2) offers protection to employees against anti-union discriminatory activities. Article 4(2) offers protection from dismissal for participation in the organisation’s normal activities (emphasis added). Strikes could be said to be a part of the normal activities of a trade union.
Article 9 provides that “public employees shall have, like other workers, the civil and political rights which are essential for the normal exercise of freedom of association” subject to some legitimate conditions. Therefore, even public employees enjoy some critical labour rights and protection.
No ILO convention directly provides for or denies the right to strike. Its supervisory body, viz. the Committee on Freedom of Association, has a huge body of jurisprudence from which principles relating to the right to strike are derived by analysts.
The committee considers the right to strike as one of the essential means available to workers and their unions for the protection of their economic and social interests. Over the years, the supervisory bodies have taken the view that “the right to strike is an intrinsic corollary of the right to organise, protected by Convention No. 87”.
Their jurisprudence has clearly stated that the right to strike will not apply to armed forces and the police, public servants acting as agents of public authority, workers engaged in essential services, and in conditions of “acute national emergency”. However, there must be in place a compensatory regulatory framework to resolve the grievances and disputes of these employees—for example, via mediation/conciliation or compulsory arbitration.
The laws have laid down the criterion to determine ‘essential services’: “… the existence of a clear and imminent threat to the life, personal safety or health of the whole or part of the population.”
However, a non-essential service may become an essential service if the strike lasts long enough to comply with the said criterion. Also, what is essential will depend “to a large extent on the particular circumstances prevailing in a country.”
It, in fact, mentions what are essential services, viz. hospitals, electricity, water supply, telephones, the police and the armed forces, fire-fighting services, prisons, the provision of food to school students and cleaning of schools, and air traffic control, and what is not.
No Grounds for Introducing the Bill
Therefore, the Centre must establish a case that a strike by the OFB staff and/or other civilian defence employees constitutes a clear and imminent threat to the life, personal safety or health of people in India to justify their classification under “essential services” and not a violation of their legitimate right to strike.
While the government can defend the Bill only on grounds of border tensions, it has failed to present a moral, military, institutional and economic case for imposing stringent restrictions on the exercise of freedom of association and allied rights. Border tensions have been an ongoing affair for a long time and hence do not call for such stringent measures.
The Bill hurts the normal industrial relations in the establishments covered by it. The ILO jurisprudence and its conventions offer little support for the justification of the Bill. On the other hand, some commentators have questioned the economic and organisational case supporting corporatisation of the OFB.
Trade unions have argued that all the stated objectives of corporatisation in the defence sector can be achieved within the government framework and, in fact, reportedly submitted proposals regarding the same. The government should consider whether the proposals stand economic scrutiny by referring them to a body of experts. Meanwhile, as per the Tripartite Consultation (International Labour Standards) Convention, 1976 (No. 144), the government must continue to engage with the agitating trade unions for there is no alternative to social dialogue in a pluralistic democracy like India.
The article first appeared in The Leaflet Is Essential Defence Services Bill a colonial practice to ban strikes? on May 02, 2021.
Also read by K R Shyam Sundar International Workers’ Day 2021 on IMPRI Insights.
About the Author:
K R Shyam Sundar, Professor, HRM Area, Xavier School of Management (XLRI), Jamshedpur, Jharkhand.
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