CASE STUDY ON

THE BONUS DISPUTE

FACTS OF THE CASE

JAY JEEPS is a Public Ltd company employed in the manufacture of jeeps with the manpower of 3000 employees; most of them are part of jay jeeps employees union. Every year union members elects a president from Outside as per the laws. Union was not affiliated to any militant union at all India or state level but leaders of all shades of political opinion shared their leadership.

CONT.
The company was a subsidiary of a

multinational organization and was under a legal obligation to pay royalty on a fixed percentage of the turnover.

CONTI
Royality payment by Jay Jeeps
40
Rs (in lacs)

30 20 10 0 Series2 1972 22 1973 26 1974 32 1975 28

CONTI.
After the introduction of bonus act ,1965

company decided to give bonus as per section 34(3) of Bonus act , linking it to net profit disclosed. Bonus paid by the company upto 1971 was 19% of the net profit. And from 1972 to 74 was 20.4%. This formula used for giving bonus to the workers was not advantageous to employees considering the big capital base of the company.

CONTI.
Union leader changed in 1975.He

demanded change in the bonus formula He claim 4 months total emolument (33%) as bonus for the year ending 1975. Management informed union that they are not in position to give such a huge amount,(Rs 30 lakhs) and agreed to pay Rs 12.42 lakhs as per existing formula of 20.04% of the net profit.

Conti..
Union immediately reduced the claim to Rs

18 lakhs on an ad hoc basis and asked management that the claim could be met by not paying royalty to foreign collaborators. Workers of material department reduced the supply to various departments of the manufacturing, which resulted in decrease in the normal production by 50%. On 7th Nov management bought it to the notice of departmental committee member of the union and he requested the workers to get back to normal work. But the state of affairs remains the same.

CONTI..
On 11th Nov memo was issued against nine

workers of material control dept. advising them to attend to work otherwise disciplinary action would be taken against them. In response to this,vise president of the union threw the memos and asked the material controller to persuade the management to settle the bonus issue.

CONTI
Management maintained a close liaison with

the other labour department officer and the assistant commissioner of labour tried to convince worker to get back to work but employees paid no heed to them. Because of no work in the chassis assembly 200 workers of this department were laid off. On 1st January 1976 union requested the management to withdrew the lay off.

CONTI
On 3rd Jan discourse took place between

union and management but all in vein. On 10th again union representative met the management to lift the lay off and management showed their concern to lift the layoff immediately if the workers resume to normal production. The response from the union was unfavorable.

CONTI
The production went down drastically in

various department and management found it difficult to provide work to employees which forced them to lay off employees as per Sec (E )(iii). On March 2 cabinet minister also hailed asking management and union to settle dispute immediately and criticized the goslow tactics adopted by union. On 12th march again the meeting held and neither the employees nor the management were ready to compromise on the issue.

CONTI
The MD and 2 two senior managers

were gheraoed by 100 militant group workers on the same day and very next day 200 executive were gheraoed. On 14th there was lockout. After the appeal made by the chief minister factory was reopened on 31st march.

CONTI.
April 1976 new president was selected

and the union signed a settlement agreeing to receive22.25% of the net profits as bonus for the years 19761977 in full and final settlement of all their claims.

PROBLEMS OF THE CASE.

Material control department adopted a go-

slow strategy that halted the work of other department and they were unable to meet the normal production level. Production declined by 50%, which adversely affected the final assembly operations. Workers of the other departments sent to layoff; because the production went down drastically.

CONTI..
The company could not manufacture any

jeeps after 22nd Dec 1975 and so the delivery schedules could not be met. Both the union and the management were rigid in their stance and didnt want to compromise. There was no production for three months that affected the company image immensely and also it had to incur huge losses.

CONTI..
Despite of the intervention by various

government official to try and resolve the issue leads to no constructive outcome. Controversy leads to Industrial unrest, as MD, senior managers and other executives were gheraoed by the militant group.

ISSUE OF THE CASE.

Conflict regarding the payment of

bonus. Union demanded 4 months total emoluments 33%. (Rs 30 lakhs but later on ad hoc basis Rs 18 lakhs) Where as Management wanted to distribute bonus on the basis of the net profit ie 20.4% (Rs 12.42 lakh) which resulted in a lot of contention among them.

SUGGESTED SOLUTIONS
Management adopted a lopsided approach in resolving a conflict by just being adamant and not withdrawing the layoff unless normal production level maintained . Disciplinary action should have taken place by issuing charge sheet against the workers not performing their duty. There should have been reduction in the wages of workers in material control department to counter the go-slow strategy.

 Management should have realized that

it was the New President who were creating problem; so to counter back him they should have win the trust of other union members by giving the justification on the bonus issue.

CONTI
Proper Negotiation must have been

held with union to try bargain with them and find out solution to the problem rather than just sticking to one stance. The reason for this was pretty clear because if the union can reduced the price from 30 lakhs to 18 lakhs then little more negotiation they might have agreed to reduce the price further.

THANK YOU
COMPILED BY NEHA VADEHRA