Case Study on the Bonus Dispute Neha

8/2/2019 Case Study on the Bonus Dispute Neha

1/21

CASE STUDY

ON

THE BONUSDISPUTE


2/21

FACTS OF THE CASE

JAY JEEPS is a Public Ltd companyemployed in the manufacture of jeepswith the manpower of 3000 employees;

most of them are part of jay jeepsemployees 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 butleaders of all shades of political opinion

shared their leadership.


3/21

CONT.

The company was a subsidiary of amultinational organization and was undera legal obligation to pay royalty on a

fixed percentage of the turnover.


4/21

CONTI

Royality payment by Jay Jeeps

0

10

20

30

40

Rs

(inl

acs)

Series2 22 26 32 28

1972 1973 1974 1975


5/21

CONTI.

After the introduction of bonus act ,1965company decided to give bonus as persection 34(3) of Bonus act , linking it to netprofit disclosed.

Bonus paid by the company upto 1971 was19% of the net profit. And from 1972 to 74was 20.4%.

This formula used for giving bonus to theworkers was not advantageous to employeesconsidering the big capital base of thecompany.


6/21

CONTI.

Union leader changed in 1975.Hedemanded change in the bonus formula

He claim 4 months total emolument(33%) as bonus for the year ending1975.

Management informed union that theyare not in position to give such a hugeamount,(Rs 30 lakhs) and agreed to payRs 12.42 lakhs as per existing formulaof 20.04% of the net rofit.


7/21

Conti..

Union immediately reduced the claim to Rs18 lakhs on an ad hoc basis and askedmanagement that the claim could be met bynot paying royalty to foreign collaborators.

Workers of material department reduced thesupply to various departments of themanufacturing, which resulted in decrease inthe normal production by 50%.

On 7th Nov management bought it to thenotice of departmental committee member ofthe union and he requested the workers toget back to normal work. But the state of

affairs remains the same.


8/21

CONTI..

On 11th Nov memo was issued against nineworkers of material control dept. advising

them to attend to work otherwise disciplinaryaction would be taken against them.

In response to this,vise president of theunion threw the memos and asked the

material controller to persuade themanagement to settle the bonus issue.


9/21

CONTI

Management maintained a close liaison withthe other labour department officer and theassistant commissioner of labour tried toconvince worker to get back to work butemployees paid no heed to them.

Because of no work in the chassis assembly200 workers of this department were laid off.

On 1st January 1976 union requested themanagement to withdrew the lay off.


10/21

CONTI

On 3rd Jan discourse took place betweenunion and management but all in vein.

On 10th again union representative met themanagement to lift the lay off andmanagement showed their concern to lift thelayoff immediately if the workers resume to

normal production. The response from theunion was unfavorable.


11/21

CONTI

The production went down drastically invarious department and management found itdifficult to provide work to employees whichforced them to lay off employees as per Sec(E )(iii).

On March 2 cabinet minister also hailedasking management and union to settledispute immediately and criticized the go-slow tactics adopted by union.

On 12th march again the meeting held andneither the employees nor the managementwere ready to compromise on the issue.


12/21

CONTI

The MD and 2 two senior managerswere gheraoed by 100 militant group

workers on the same day and very nextday 200 executive were gheraoed.

On 14th there was lockout.

After the appeal made by the chiefminister factory was reopened on 31stmarch.


13/21

CONTI.

April 1976 new president was selectedand the union signed a settlement

agreeing to receive22.25% of the netprofits as bonus for the years 1976-1977 in full and final settlement of all

their claims.


14/21

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 thenormal production level.

Production declined by 50%, which adverselyaffected the final assembly operations.

Workers of the other departments sent tolayoff; because the production went downdrastically.


15/21

CONTI..

The company could not manufacture anyjeeps 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 monthsthat affected the company image immenselyand also it had to incur huge losses.


16/21

CONTI..

Despite of the intervention by variousgovernment official to try and resolve the

issue leads to no constructive outcome. Controversy leads to Industrial unrest, as MD,

senior managers and other executives weregheraoed by the militant group.


17/21

ISSUE OF THE CASE.

Conflict regarding the payment ofbonus. Union demanded 4 months total

emoluments 33%. (Rs 30 lakhs but lateron ad hoc basis Rs 18 lakhs) Where asManagement wanted to distribute bonus

on the basis of the net profit ie 20.4%(Rs 12.42 lakh) which resulted in a lot ofcontention among them.


18/21

SUGGESTED SOLUTIONS

Management adopted a lopsided approach inresolving a conflict by just being adamantand not withdrawing the layoff unless normal

production level maintained .

Disciplinary action should have taken placeby issuing charge sheet against the workers

not performing their duty. There should have been reduction in the

wages of workers in material controldepartment to counter the go-slow strategy.


19/21

Management should have realized thatit was the New President who werecreating problem; so to counter back

him they should have win the trust ofother union members by giving thejustification on the bonus issue.


20/21

CONTI

Proper Negotiation must have beenheld with union to try bargain with them

and find out solution to the problemrather than just sticking to one stance.The reason for this was pretty clearbecause if the union can reduced the

price from 30 lakhs to 18 lakhs then littlemore negotiation they might haveagreed to reduce the price further.


21/21

THANK YOUCOMPILED BY

NEHA VADEHRA

Case Study on the Bonus Dispute Neha

Documents