Contract Workers' Strike at Hero Honda's Gurgaon Plant

Once again Gurgaon has become the centre of workers' unrest following the strike at Hero Honda's
Gurgaon plant. Around 4,000 casual workers of Hero Honda were on strike from 10 April 2006 against the anti-worker stance of the management that had ignored the demands of the workers for a long time. The main demands placed were wage hike, job regularization, extra casual leave and medical benefits at par with the permanent workers. In fact, around 4000 contract workers of Hero Honda's Gurgaon Plant (owned by Pawan Munjal) were denied regularization for the last 7 to 8 years. A contractual Hero Honda worker is paid between Rs. 4000-6700 per month as against Rs. 40,000, the salary of a permanent worker performing the same job. Rs 10 is deducted daily for food and tea only from the casual workers' salary. The three major contractors who operate in the Hero Honda Gurgaon plant include the Sehgal brothers and workers recruited by them not only get low wages but also do not receive any pay slip or cards. The casual helper at the plant gets a meagre Rs. 2000-2500 at the end of the month. The management and the contractors are equally involved in the exploitation of the contract worker. There is no union in the Hero Honda unit, but the casual workers of the company unanimously decided to protest and braving all kinds of threats and machinations by the management, they determinedly continued with their strike. Finally, the administration and the management were forced to come to the table. On 14th April, a tripartite meeting was held between Haryana's additional labour commissioner, management and worker representatives and they agreed for a settlement, under which some demands were met with and on the rest, talks will continue. It was an important victory for the contract workers, who are otherwise forced to live in miserable conditions. The agreement included a 30% hike in salary, two days of casual leave every month and medical benefits in accordance with the company rules, issuing identity cards and ATM cards and opening bank accounts for the casual workers. The management also agreed to pressurize contractors to address some of the genuine grievances of the contract workers. The management agreed to review the situation at the earliest and look specifically into the demand for abolition of contract labour and their regularization. AICCTU expresses solidarity with the movement waged by the casual workers of Hero Honda's Gurgaon unit and welcomes the fighting initiative taken against the repressive management of Hero Honda especially after the brutality meted out to the struggling Honda Motorcycle (HMSI) workers in the recent past. It is truly commendable that the workers have not lost courage to challenge the hideous nexus of the private entrepreneurs, state administration, and labour contractors, particularly in Gurgaon. Their fight for economic rights and their initiative to unionize reflect the spirit of working class offensive against the shrinkage of workers' rights and democratic space for struggle in the era of liberalization, privatization, and globalization. Ardhendu Roy

Case Details:
Case Code Case Length Period Pub Date Teaching Note : HROB104 : 15 Pages : 2004-2005 : 2008 : Available

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Themes
Human Resources & Industrial Relations/ Labor Unrest/

Organization

: Honda Motorcycle & Scooter India (Private) Ltd. : Automobile : India

Collective Bargaining

Industry Countries

Abstract:
The case study focuses on the HR problems faced by Honda Motor Cycle & Scooters India (HMSI). The case discusses the various reasons which led to the dispute between the management and employees of HMSI. It elaborates the incidents, which led to the strike at the company that resulted in HMSI workers being severely beaten up by the police. Labor strife and the management's inability to deal with it effectively had resulted in huge losses for the company due to the fall in the production level at the plant. In addition to this, the company also received a lot of negative publicity as newspapers and TV channels gave wide coverage to the violence of the action. The case highlights the growing number of instances of clashes between the employees and the management of companies in India, which is often guided by external parties such as trade unions and political parties.

Issues:
Understand the factors that lead to labor unrest at a factory and the impact of such incidents on the employees and the company. Study HR policies adopted by organizations to prevent labor unrest at the workplace. Examine top management's role in maintaining a peaceful working environment. Analyze the role of external parties such as trade unions; political parties etc., in disturbing the working environment in a company

Introduction
On July 25, 2005, the management of the Honda Motorcycle & Scooter India (Private) Limited, (HMSI), a whollyowned subsidiary of Honda Motor Company Limited6 (HMCL), encountered violent protests from workers that disrupted production at their plant in Gurgaon7. HMSI workers were severely beaten up by the police, and newspapers and TV channels gave wide coverage to the violence of the action. The protest followed six months of simmering labor unrest at the HMSI factory in which the workers also resorted to job slowdown8(since December 2004 when the workers' demand for an increase in wages was rejected by the HMSI management).

Introduction Contd...
With their demands being rejected by the management, the workers tried to form a trade union and this resulted in a confrontation with the management. Fifty workers of the production team were suspended and four others dismissed in May 2005. Apparently there was a show of strength between the management and the workers. While the management alleged that the workers were resorting to 'go-slow'9tactics and were threatening not to return to work until their colleagues had been reinstated, the workers alleged that the management was using pressure tactics such as victimization of active union members and a 'lock-out'10to break the back of the union. On July 25, 2005, the workers of the plant were demanding reinstatement of the suspended employees when some workers allegedly attacked policemen on the plant premises. This led to police intervention and a violent tussle ensued between the police and the workers in which workers protesting peacefully were also beaten up. The police were reported to have overreacted and it was alleged that they had been overzealous in protecting the interests of the HMSI management, even without any direct request from the company's management (Refer to Exhibit I for some images of violence during the HMSI protest). For companies, the incident brought to the fore the need to maintain sound industrial relations to ensure productive and profitable operations.

Background Note
HMCL Soichiro Honda, a mechanical engineer, established the 'Honda Technical Research Institute' in Hamamatsu, Japan, in 1946. His idea was to develop and later produce small two-cycle motorbike engines. Honda's first product, an A-type 50cc bicycle engine, was produced in 1947. In 1948, HMCL was incorporated with a capital of 1 million. Thereafter, the company started to design and produce lightweight motorcycles. Honda's first motorcycle, the D-type two-stroke 98cc, was produced in 1949... HMSI HMSI was established on August 20, 1999, and a plant was set up at Manesar to manufacture two-wheelers for the Indian market. HMCL made an initial investment of Rs. 3 billion to establish the plant which had an annual production capacity of 200,000...

Labor Unrest at HMSI

The Gurgaon plant of HMSI had peaceful labor relations for the first few years after it was set up in October 1999. The management entered into labor contracts with individual laborers, which covered the basic wage structure and detailed parameters specifying the work conditions for workers. In December 2004, the workers at HMSI's Gurgaon plant started demanding that the management increase their wages commensurate with the company's growth in the market...

The Blame Game

The management and the workers traded allegations and counter allegations on what the root cause of the dispute was. They blamed each other for the situation that ultimately took an ugly turn on July 25, 2005. The management held the workers responsible for indiscipline and for slowing down production, while the workers insisted that there

had been no indiscipline on their part and that the management was bringing up this issue only to prevent the formation of a trade union at HMSI...

Violation of Laws?
Some analysts charged that the incident was fallout of the long-term oppression and malpractices at the Gurgaon factory by the HMSI management. They alleged that HMSI's management had violated certain laws relating to the welfare of workers (Refer to Exhibit III for laws related to welfare of workers in India). It was reported that a worker had allegedly been kicked by a Japanese manager on the shop floor in December 2004. The services of four other workers who had come to his rescue were allegedly terminated...

The Aftermath
HMSI was established on August 20, 1999, and a plant was set up at Manesar to manufacture two-wheelers for the Indian market. HMCL made an initial investment of Rs. 3 billion to establish the plant which had an annual production capacity of 200,000...

Could this Ugly Situation have been Averted?

Several factors can lead to a conflict between the workers and the management of any company, and as such, companies should be prepared to trace the root cause of the problem and solve it. Industry experts opined that with proper understanding of the industrial laws and causes of disputes, the management and the workers of any company could avoid incidents such as the one at HMSI (Refer to Exhibit IV for the Root Cause Analysis for Labor Unrest)...