Case on Air Products Corporation

seceded from the federation. Over the years, the

AIAPEF and the management developed a fairly
smooth working relationship with each other. In
the year 1999, a five-year agreement was
concluded between the federation and the
management, revising the pay scales of the
employees represented by the federation. The
management concluded similar agreements with
individual unions that were outside of the
federation.

AIR PRODUCTS
CORPORATION
AIR PRODUCTS CORPORATION IS A
MULTI-PLANT ORGANIZATION with units in
several industrial centres of the country. It
produces industrial and medical gases and the
special equipment for using them. Due to the vital
importance of the products to industry in general,
and to hospitals and defence services in particular,
the organization has been declared a "public
utility service", "essential service", and "protected
place" under the respective legislations. The
Corporation, started three decades ago in a small
way, occupies a place of prominence among the
comparable Indian companies. It is reputed for its
high quality products and for the efficient services
it renders to its customers. It maintains cordial
industrial relations; and good service conditions
and high wages are its special features. These are
the outcome of negotiated settlements in most
cases, and of court awards in others.

The five unions so far functioning independently

at the Jamshedpur, Madras, Bombay (office staff
only), Bangalore, and Visakhapatnam plants
constituted in 2002 another federation called the
National Federation of Air Product Workers
(NFAPW) and affiliated it to the Indian National
Trade Union Congress (INTUC). The union representing the workers of the Bombay unit,
however, did not join either of the federations, and
remained as an affiliate of a local federation. The
new federation had its first round of negotiations
with the management in 2003 over the issue of
bonus for the year 2001-02. As the issue being
discussed was common to all units and
employees, the management invited the AITUC
federation to join the negotiations. But the INTUC
federation refused to sit with the AITUC
federation representatives on ideological grounds.

The chief executive of the Corporation is the

Managing Director at its head office at Calcutta.
The head office lays down the policies and
coordinates their implementation in the different
units. The Managing Director is assisted by a
Personnel Executive in matters of personnel
administration and industrial relations.

The 1999 agreement with the AIAPEF was due to

expire in early 2004. The unions affiliated to the
AIAPEF started submitting fresh charters of
demands regarding the revision of pay scales and
general conditions of service of the employees.
Each union submitted its charter separately as a
strategy, so that the negotiations could be unitbased and the pay scales revised keeping in view
the industry/regional differences. The federation
favoured this move with the hope that should
negotiations be held first in respect of a unit
where the region-cum-industry considerations
would justify higher revised pay scales and
attractive fringes, then it could adopt the same as
base-index in its negotiations with respect to the
other units on grounds of uniformity. Towards the
end of 2003, the affiliates of the NFAPW also
started submitting identical charters of demands
for the revision of pay scales and dearness
allowance.

The Corporation is heavily unionized. The

management recognizes only one union in a given
unit. In the year 1994-95, there were ten registered
and recognized unions functioning at the various
units. Besides these, there were four unions which
were registered and not yet recognized. Of these,
two were operating as rival unions to the recognized ones, and the other two had come into
existence at two new units of the Corporation. The
rival unions were by and large ineffective. The
management at the head office, along with the
concerned Plant General Manager, negotiated
with individual unions and concluded settlements
on terms and conditions of employment, which
followed generally a uniform pattern in the
different units. The agreements, however,
provided for differentials to reflect the regional
disparities in wages and customary practices.

Preparatory to the negotiations on the charters of

demands, the Corporation started conducting
surveys of wages and service conditions obtaining
in comparable firms in the respective areas so that
negotiations could be held on the basis of known
facts and in proper perspective. The survey
revealed that

Five unions representing the units at Delhi,

Kanpur, Ahmedabad, Calcutta, and Jamshedpur
formed an All India Air Products Employees'
Federation (AIAPEF) and affiliated it to the All
India Trade Union Congress (AITUC). After a
few years, however, the Jamshedpur union
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Case on Air Products Corporation

were quite reasonable and, therefore, there was no

necessity to revise them. It, however, agreed to
sign a joint application with the federation
recommending reference of some of the items of
the charter to a tribunal for adjudication. Initially,
the management experienced some difficulty in
getting the affiliates of the federation agree to the
negotiations being held with the federation as the
representative body. Later on, however, it was
agreed that two representatives of each of the
recognized unions and two representatives of 1he
federation would participate in the negotiations
that were to be held jointly in respect of the units
constituting the federation. The federation's
demand for the inclusion of the representatives of
the unrecognized unions was not conceded.

1. Even after taking into account the

incentive payments made in comparable
establishments, the emoluments paid by
the Corporation in all its units were higher
than those of others;
2. The service conditions in the Corporation
were more attractive than those obtaining
in the respective regions;
3. The Corporation had a large number of
competitors striving for higher labour
productivity; and
4. With mounting competition, the prospects
of the Corporation netting higher profits
were dim.
The findings of the survey received serious
attention of the top management. From his
assessment of the industrial relations climate in
the various units, the Personnel Executive felt that
if some concession was not granted to the demand
for higher wages and that if a rigid attitude was
taken, there would be widespread and continued
industrial unrest and loss of production, which the
Corporation could ill afford at that juncture. After
a careful examination of the problem, the
management thought that the pay scales could be
revised if only production went up with the
existing work force. It desired, therefore, that any
agreement with the unions regarding revision of
pay scales should be coupled with an undertaking
by the concerned union that the workers would
ensure a certain minimum level of productivity
which should be decided on the basis of the
results of the work study carried out in the units
during the past two years. It decided that, as far as
possible:

The negotiations resulted in a five-year

settlement. The settlement covered the Delhi,
Calcutta, Ahmedabad, and Kanpur units. Some of
the more salient provisions of the agreement were:
1. Upward revision of pay scales and mode of
placement of the existing employees in the revised
grades.
2. An undertaking by the federation and its
constituent units that the workmen would give an
average overall productivity of 65 per cent of the
standard which would be decided by the
management for the various units. This would be
done in agreement with the unions concerned, on
the basis of work study conducted by the
management. In case of disagreement on the
question of fixation of standard, the matter would
be referred to arbitration.
3. The findings of the work study reports in the
different units would be discussed by the
management with the concerned union prior to
their implementation. There would be no
retrenchment. Reduntant employees would be redeployed without loss in emoluments.

1. the number of classifications and grades

should be reduced by amalgamating some of the
existing classifications;
2. the time span of the grades should be enlarged
without upsetting their inter-relationship and
without reducing the grade increments; and
3. more emphasis should be placed on upward
revision of the grades of the skilled jobs than of
the semiskilled or unskilled jobs.

Negotiations were next held in April 2004 with

the Air Products Employees' Union, Bombay,
which was affiliated to the NFAPW. This union
represented only the office staff. A five-year
settlement was reached on the revision of pay
scales and other conditions of service. There was
not much difficulty in concluding the settlement.
The pay scales of the Bombay employees were
traditionally higher than those of the other units of
the Corporation, and a gap still remained although
the previous margin was narrowed down
considerably.

Keeping these broad principles in mind, the

management initiated negotiations with the two
federations separately. Negotiations with the
AIAPEF commenced in November 2003 and went
on till February 2004. The management made it
clear that the negotiations would be with respect
only to their demand for revision of pay scales.
On the demand for a review of service conditions,
the management informed the federation that the
service conditions obtaining in the Corporation

Negotiations were then held in May-June with the

NFAPW and its remaining affiliates. The
demands of the employees of the Madras,
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Case on Air Products Corporation

Bangalore, and Visakhapatnam units were taken

up first. The management faced a number of
hurdles in carrying out negotiations with this
federation. First, the affiliates of the federation
wanted the management to hold negotiations with
each of them separately and not with the
federation on their behalf. This controversy
delayed the commencement of negotiations, and
the workers became restless. The Personnel
Executive of the Corporation paid a "scouting"
visit to south India and Jamshedpur to convince
the workers of the desirability of joint
negotiations. As a result of his persuasion, the
unions at Madras, Visakhapatnam, and Bangalore
agreed to hold joint negotiations with the management, not so much as affiliates of the
federation as independent unions. Ultimately, two
representatives from each union participated. The
federation president was also present.

management, the main reason for such an attitude

was the personality of the person who was the
general secretary of the Jamshedpur union as well
as of NFAPW. He was an employee of the
Corporation. He held a law degree and a diploma
in industrial relations. At one time he was hoping
to be promoted to the post of Personnel Officer in
the plant. The management- attributed his
aggressive posture in union negotiations to the
non-realization of his ambition in service.
Quite some time was spent merely in deciding
upon the date for the commencement of
negotiations as well as upon the items that could
be taken up at the negotiations. The general
secretary of the union wanted the management to
discuss a number of other items concerning service conditions, besides wage revisions. He
further insisted that an agreement on wage
revision should not be conditional on an
agreement on productivity, re-deployment,
implementation of work study recommendations,
etc. On account of this stand taken by the union,
the first round of discussions ended in stalemate.
Thereafter, efforts made by the other officebearers of the NFAPW to resume negotiations did
not fructify. It was only- in December 1964 that
the union agreed to drop its opposition to the
productivity agreement and that tripartite
negotiations
started,
with
the
Labour
Commissioner of the State taking part in them.

Second, the management could not change or

improve upon the pattern of the terms and
conditions as negotiated with the AIAPEF in the
case of the NFAPW. The representatives of the
unions and the president of the NFAPW, no
doubt, felt that the terms of settlement as reached
with the AIAPEF were fair and reasonable, but
they wanted better terms only to outwit the rival
federation.
Third, the pay scales in south India had
traditionally been lower than those in Calcutta,
Delhi, etc. In line with the industry-cum-region
consideration, the management had to try to
maintain the differential, though the unions
clamoured for uniformity.

During the negotiations, the union demanded for

the unit higher salary grades than those agreed
upon for the other units. While the negotiations
were in progress, the workmen, instigated by the
union, went on a lightning strike. The Labour
Commissioner took a serious view of the matter
and advised the workers against continuing the
illegal strike which was later called off on the
intervention of the Labour Minister of the State.
Ultimately, the union signed a settlement covering
wages, productivity, re-deployment, etc., on 20
December 2004. The terms of this agreement were
identical to those settled with the AIAPEF and its
affiliate unions.

In spite of these difficulties, settlements on the

revision
of
pay
scales,
productivity,
interchangeability of personnel, and redeployment of surplus hands were signed in June
2004 with individual unions. The settlements were
endorsed by the NFAPW. With regard to pay
scales, however, the terms were slightly different,
but remained lower than those agreed upon for the
northern region.
The next rounds of discussions were held in June
2004 with the union of the Jamshedpur unit. The
president of the NFAPW was present. These
negotiations proved to be the most difficult. It was
this union that had created problems earlier at the
time of the bonus negotiations. It had first joined
the AIAPEF and later left it and joined the
NFAPW. It was also the union which had taken a
lead in insisting at the time of wage negotiations
that each union affiliated to the NFAPW must
negotiate
separately.
According
to
the
3