Labour Rights Case Study – Shahi Exports Pvt. Ltd.

By Sumant Shekhar, Sharvari Saraf, Shubham Chaudhary, Disha Dhawan PGDRM Batch July’19-20 and Jan’20-21)

Introduction & Some Core Labour Standards

• Labour Rights or Worker’s Right are both Legal Rights and Human Rights relating to labour relations between labour and employees.
• These rights are codified in national and international labour and employment law.
• In the Constitution of India from 1950, articles 14,16,19(1) (c), 23, 24, 38, 41 & 43A directly concern labour rights
• The International Labour Organization (ILO) was formed in 1919 as part of the league of nations to protect workers rights and later it became incorporated into the United Nations.

Some of the core labour standards:

• Freedom of association.
• The right to collective bargaining.
• The prohibition of all forms of forced labour.
• Elimination of worst forms of child labour.
• Non-discrimination in employment.

Some Important Labour Laws in India

• The Factories Act, 1948 – Imprisonment max 2 yrs Or fine 1L Or Both
• The Employee Provident Fund Act, 1947
• The Apprentice Act, 1961.
• The Maternity Benefit Act, 1961
• The Workmen’s Compensation Act, 1923
• The Payment of Gratuity Act, 1972
• The Payment of Wages Act, 1936
• The Industrial Disputes Act, 1947
• The Payment of Bonus Act, 1965
• The Employee State Insurance Act, 1948

Importance of Labour Laws

Some Common Labour Rights Violations

• Not paying required overtime wages
• Paying subminimum wages
• Not ensuring a safe workplace
• Not covering workers injuries on the job
• Misclassification of a worker

Note: It is important for all employers, no matter the size of the business, to be aware of the legal obligations they have in adhering to labour laws.

Shahi Exports – Introduction

• Established in 1974 by Mrs Sarla Ahuja.
• It has grown to become India’s largest apparel manufacturer, operating 65 factories and 3 processing mills across 9 states.
• They have over 100,000 employees, including 67,000 women.
• Turnover crossed 500 crores in 2018
• They make university logo apparel for Columbia Sportswear and apparel for Benetton, H&M and Abercrombie & Fitch
• They are committed to serving their customers through design-led innovation and vertically integrated operations.

Workers grievances

Workers grievances relating to:

• Quality of drinking water
• Sanitation issues○Company-supplied transportation service
• Monthly wages they received from the company
• Sexual harassment at the workplace

These issues were being informed by the employees who were members of the union to KOOGU union.

• They also distributed leaflets to create awareness amongst other employees of the factory of these issues

Violations by the managers

• Interrogation and Threats of Adverse Treatment for Associational Activities by Shahi Managers and Supervisors – a clear violation of workers freedom of association
• Surveillance, Attempted Bribery, Interrogation, and Other Interference with Associational Activities by Production Manage
• Threats of Mass Termination, Interrogation, and Incitement of Workers Concerning Associational Activities, by Shahi Production Manager to the other employees who signed the Unions document
• Sex-based Verbal Abuse and Harassment, and Attempt to Suborn False Testimony by Shahi Managers

Violations by the managers

• Death Threats, Threat of False Imprisonment, Incitement of Violence, Physical Assaults and Battery, and Verbal Abuse, including on Account of Sex, Caste and Religion, by Shahi Managers.

1. Caste-based Verbal Abuse, Death Threat of False Imprisonment Against Employee by Shahi Human Resources Manager

2. Assaults and Batteries Incited, Organized and Committed by Shahi Production Managers and Human Resources Managers Against Two Employees

3. Religion and Sex-based Verbal Abuse and Physical Assault Directed by Shahi Human Resources Manager Against Employee, theft of personal property, gender-based verbal assault and battery was being committed by the managers

• Besides the managers beaten and thrown out the employees who were part of the union and a threat in the mind of other employee was being created.
• They suppressed the media coverage (Deccan Herald) reporting its management’s responsibility for the violence of the factory.

Recommendations from WRC and Compliance

• Workers who have been physically assaulted and suspended from their jobs must be returned to work with full back pay. – Complied
• Compensation for their injuries, pain and suffering, and loss of personal property. – Complied
• A written apology from the company. – MOU Signed with workers.
• Termination of all the managers identified in the report as directing or perpetrating physical violence or death threats against workers. – Terminated only after foreign pressure.

Cause Analysis

• Lack of practicality of SOPs in HR and management communication
• Policies not practiced
• Top-down communication
• Problems of family-owned businesses
• Where does the buck stop? Top Management, Owners?
• Tone at the top

Impact

●Reputational loss ●Widely covered in foreign media – The Guardian. ●Indian media had to be managed – Deccan Herald ●PR expense

Read the full case study here: Case study on Labour Rights, Shahi Exports Pvt. Ltd.

Disclaimer

This report has been produced by students of Global Risk Management Institute for their own research, classroom discussions and general information purposes only. While care has been taken in gathering the data and preparing the report, the student’s or GRMI does not make any representations or warranties as to its accuracy or completeness and expressly excludes to the maximum extent permitted by law all those that might otherwise be implied. References to the information collected have been given where necessary.

GRMI or its students accepts no responsibility or liability for any loss or damage of any nature occasioned to any person as a result of acting or refraining from acting as a result of, or in reliance on, any statement, fact, figure or expression of opinion or belief contained in this report. This report does not constitute advice of any kind.