The Statutory Silence and the Practical Expectation
The Companies Act, 2013 does not contain a provision requiring consultation with trade unions before a scheme is sanctioned. The NCLT’s scheme jurisdiction is focused on the company’s affairs, not on labour relations. However, the NCLT has repeatedly directed companies to address the employees’ concerns, and a scheme that ignores the workforce is likely to attract objections.
The Trade Union’s Standing
A trade union may not have a direct standing before the NCLT in a scheme petition, but it can influence the process through: representations to the NCLT; objections filed by the employees; industrial action; and political pressure. The company should engage with the trade union early, rather than waiting for the NCLT to direct consultation.
The Consultation Process
The consultation should cover: the impact of the scheme on employment; the continuity of service; the terms and conditions of transfer; the recognition of prior service; and the treatment of accrued benefits. The company should document the consultation, including the minutes of the meetings and the employees’ responses.
The NCLT’s Direction
The NCLT may direct the company to file an affidavit on the employees’ position, or to convene a meeting with the employees’ representatives. The Tribunal may also require the transferee to undertake to honour the employees’ rights. A company that resists the NCLT’s direction on employee consultation risks an adverse order.
The Industrial Dispute Risk
A scheme that is implemented without addressing the employees’ concerns can lead to an industrial dispute under the Industrial Disputes Act. The dispute may result in strike, lock-out, or litigation, and it can disrupt the scheme’s implementation. The company should treat the employee consultation as a risk-management exercise, not merely as a compliance formality.
Call to Action: For scheme trade union consultation, employee communication strategy, or industrial dispute prevention, contact office@anujdesaiassociates.com or 9619456656. Website: https://anujdesaiassociates.com. LinkedIn: linkedin.com/in/ca-anuj-desai-122547230.
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