The HMSI Manesar plant was witness to unrest among workers, that was largely the result of weak labour laws, giving rise to several unplugged loopholes. There was a disproportionately large number of contract workers compared to the permanent workers, and there were no protective laws to support these contract workers during distressed times, such as the economic slowdown.
Benefits such as medical insurance and paid leave, available for permanent employees, were not provided for the contract labourers. There were also no provisions for a contract labourer working for a very long time to become a permanent employee; hence, there were protests when they were asked to leave in August and not reinstated in November again.
Prevention of the labour unrest
An environment of transparency should always be maintained in a labour-intensive organisation. When forecasts were predicting economic slowdown and significantly reduced production, large meetings should have been held making everyone conscious of the situation and the likely repercussions.
Even after weighing all other options, like cutting other costs, pay cuts, reducing overtime pay, etc., if it was decided that the layoffs were necessary, a notice period of around 30 days should have been given to the contract workers and contractors, so that they had sufficient time to find jobs for themselves / the workers.
Depending on the situation, the employees could be given a choice between quitting, in exchange for a few benefits, or getting assistance from the company in finding new jobs.
These alternatives could have resulted in a better sense of understanding because it involved the decision of the employees too, thus promoting trust and goodwill. As a result, fewer workers would have questioned the necessity for the layoffs.
Ensuring smooth operation
At this moment, the reinstating of the union leaders might not be a wise decision as it can reignite antipathy to the company among the workers. This might hamper the employability of the permanent employees too. Nevertheless, some of the contract workers have to be reinstated to ensure smooth operation.
A better defined scenario
The company can put up a list of workers who need to be reinstated. This list will be purely based on workers who have been working as contract labour for more than 10 years and have been very productive for the company. If that doesn’t suffice, those working for more than eight years will be looked into, and so on.
For others, the under-mentioned policy may be implemented. Sufficient compensation should be provided based on the amount of salary received and the number of remaining days in the contract. If the contract remaining was:
· for less than three (3) months, compensation for two (1) weeks should be offered
· between three (3) and six (6) months, compensation for four (2) weeks
· between six (6) months and one (1) years, compensation for six (3) weeks
· for over one (1) year, compensation for four weeks ought to be provided.
The following are a few steps which can be taken by Honda to address the demands of the aggravated workers and restart a smooth operation
- A code of conduct should be created which will allow contract workers to be able to join a permanent workforce after continuous 10 years of working in the company.
- Reinstating these contract labourers as permanent workers will help convince the protesting contract workers that the company is working towards a fairer treatment policy. A minimum wage policy will be implemented.
- Compensation for bad faith should be paid as and when the contract employees are terminated based on bad faith. The compensation will be triple the amount during the notice period.
- Because the contract labour work is similar to that of the permanent labour, they are to be provided same wage rates, holidays, hours of work and social security provisions
After the restructuring and downsizing of the company and rounds of layoffs, it will be crucial to improve the stability of the company’s employees for an efficient work environment. This can be achieved by the following:
- Channels for open communication between the higher management officials and employees should be put in place to improve morale and give some assurance about the steadiness of the company and that the company will work to avoid any such crisis in the future
- All the plans of hiring or reinstating to reduce the load on the present workers shall also be communicated.
- Office counselling should be provided, to help the employees cope with any personal or professional issues as also to boost morale and empower the employees to do their best.
- All the policy changes and the code of conduct changes should be announced in a collaborative meeting to ensure that the company takes care of the employees and their well-being.
Shreya Das
(The Fourth Runner-Up is a student of 1st Year PGDM at TAPMI, Manipal.)