Page 247 - DCOM404_CORPORATE_LEGAL_FRAMEWORK

Corporate Legal Framework

Notes major cause for weakening the Trade Union Movement in India. Multiple unionism
also results in the small size of the unions, poor fi nances, etc.
(c) Union Rivalry: The formal basis for Trade Union Organisation is provided by the
Indian Trade Union Act, 1926. The relevant article reads as follows:

“Any seven or more members of a trade union may be subscribing their name to the
roles of the trade union and by otherwise complying with the provisions of this Act
with respect to the registration, apply for registration of the trade union under this
Act.”
This provision has led to the formation of multiple unions and resulted in inter-union
rivalry in different industries. But the inter-union rivalry breaks the very purpose of
the trade unions by weakening the strength of collective bargaining. On the other
hand, the existence of a single, strong union not only protects the employee interests
more effectively but also halts the various unproductive activities of the unions and
forces the leaders to concentrate on the strategic issues. Further, it helps to bring
about congenial industrial relations by bringing about a system of orderliness in
dealing with the employees and by facilitating expeditious settlement of disputes.

The state of rivalry between two groups of the same union is said to be inter-union
rivalry. Inter and intra-union rivalries have been a potent cause of industrial disputes
in the country. They are responsible for weak bargaining power of trade unions in
collective bargaining. These rivalries are responsible for slow growth of trade union
movement in the country.
(d) Finance: Sound financial position is an essential ingredient for the effective functioning

of trade unions, because in the process of rendering services or fulfilling their goals,

trade unions have to perform a variety of functions and organise programmes which

require enormous financial commitments. Hence, it is imperative on the part of a
trade union to strengthen its fi nancial position.
But it is felt that the income and expenditure of the trade unions in India over the
years is such, with few exceptions, that the financial position of the unions is generally

weak, affecting their functioning. It is opined that the “… trade unions could be
more effective, if they paid more attention to strengthening their organisations and
achieving higher degree of fi nancial solvency.”
The primary source of income to the unions is membership subscription. The

other sources of union finances are donations, sale of periodicals, etc. The items

of expenditure include: allowances to office bearers, salaries to office staff, annual

convention/meeting expenses, rents, stationery, printing, postage, telegrams, etc.

Did u know? Most of the trade unions in India suffer from inadequate funds. This unsound
financial position is mostly due to low membership and low rate of membership fee. The

Trade Union Act, 1926, prescribed the membership fee at 25 paise per member per month.
But the National Commission on Labour recommended the increase of rate of membership
subscription from 25 paise to Re. 1 in the year 1990. But the Government did not accept this
recommendation.
As the National Commission on Labour observes, “an important factor limiting the
effective functioning of unions in our country has been their fi nancial weakness.
In most unions, poor finances are the result of inadequate membership strength.

This, in turn, can be traced to the small size of units. In a majority of unions, the
rate of contributions required of members is also small. With a relatively low rate
of unionisation, total funds collected are small. The general picture of fi nances of
unions is disappointing.”

242 LOVELY PROFESSIONAL UNIVERSITY