Why Workers Combined: The Historical Reasons

The workers' answer was arithmetic. One worker who refuses to work loses his job. A thousand workers who refuse to work at the same time stop the mill. Individually the worker has nothing the employer needs; collectively they have the only thing he needs. Combination converts a worthless bargaining position into a real one, and that, and nothing more elevated, is why trade unions exist.

Some words this chapter uses

Combination means an association of persons acting together. It is the word the statutes use, and it is deliberately wide: section 2(zl) of the Code still defines a Trade Union as "any combination, whether temporary or permanent".

Collective bargaining is negotiation between an employer and a body representing the workers, about wages and conditions, in place of negotiation with each worker separately.

Bargaining power is the capacity to make the other side worse off by refusing to agree. It is not a moral idea; it is a description of leverage.

Master and servant is the older name for the law governing employment, when it was treated purely as a contract between two individuals.

Industrial establishment is the Code's expression for the place where the work is done. It is defined in section 2(r).

How this happened in India

The Indian story runs about a century behind England's and it has its own causes.

Factory industry in India begins in the 1850s, with the cotton mills of Bombay and the jute mills near Calcutta. The workforce was drawn from villages, was largely illiterate, worked twelve or more hours, and had no security of any kind. There was no minimum wage, no limit on hours for adults, no compensation for injury and no notice of dismissal.

The earliest responses were not unions but philanthropy and agitation. Individual reformers pressed for factory legislation, and the first Indian Factories Act was passed in 1881, followed by another in 1891. Those Acts were about hours and the employment of children. They were something done for workers, not by them, and they left the bargaining position untouched.

Combinations proper appear at the end of the nineteenth century and grow rapidly after the First World War. The war years produced high prices, hard conditions and large profits, which is the classic combination of circumstances for organised labour. What follows is a period of intense strike activity, and the emergence of unions that were organisations with officers, funds and rules rather than temporary strike committees.

Two outside forces then pushed in the same direction. The International Labour Organisation was created in 1919 and India was a founder member, which committed India to a continuing international conversation about labour standards; that is the subject of two chapters of its own later in this Module. And the national movement drew labour into politics, so that unions grew up alongside political parties rather than apart from them.

That last point has a long consequence, and the Supreme Court itself has described it. In Balmer Lawrie Workers' Union v. Balmer Lawrie & Co. Ltd. the Court explained that the trade union movement representing organised labour "developed as an adjunct of political party", that every political party set up its labour wings to control the vote banks that organised labour represented, and that the combination and fragmentation of political parties therefore produced a matching multiplicity of trade unions in a single undertaking. That case is worked in the chapter on recognition, where its holding belongs, but the historical observation is what explains why India ends up with several unions competing inside one factory rather than one.

The point at which history becomes law

Combination on its own is not enough, because a combination that the law treats as a criminal conspiracy or as an unlawful restraint of trade is worse than useless to its members. The workers' arithmetic works only if the law lets them do the arithmetic.

That is the whole of the next chapter, and it is the second half of MU's topic 1.1. In India the answer came with the Trade Unions Act 1926, which for the first time gave a registered union a legal existence, a protected fund and immunity from certain civil and criminal proceedings. That Act was repealed on 21 November 2025 by section 104(1)(a) of this Code, and its work is now done by Chapter III of the Code, sections 5 to 27.

The case that explains what the Constitution did NOT do

A student who has read about the freedom of association naturally assumes that the Constitution of India solved this problem in 1950. It did not, and the leading case says so in terms.

All India Bank Employees' Association v. National Industrial Tribunal, AIR 1962 SC 171, (1962) 3 SCR 269.

Facts. Section 34A of the Banking Companies Act 1949, inserted in 1960, allowed a banking company to refuse to produce or disclose documents that would reveal reserves not shown as such in its published balance sheet, and provided instead for the Reserve Bank to certify what amount an industrial adjudicator might take into account. The Association argued that this infringed the fundamental right guaranteed to trade unions by Article 19(1)(c) of the Constitution, because it shut out evidence that was important and relevant to the union's bargaining over wages and bonus before industrial tribunals, and that it also violated Article 14 because it applied only to banks operating in more than one State.

Held. Section 34A was constitutionally valid and infringed neither Article 19(1)(c) nor Article 14. The right guaranteed by Article 19(1)(c) does not carry with it a concomitant right that a union formed to protect the interests of labour shall achieve its object. The right extends only to the formation of an association or union. So far as the activities of the union are concerned, and the steps it may take to achieve its objects, those are subject to such laws as may be framed, and such laws are not tested against Article 19(4).

Why it matters here, and it matters more than any other case in this Module. The Constitution gives a worker the right to form a union. It gives no right to strike, no right to be recognised, and no right to bargain collectively. Everything a union can actually do comes from the statute. That is why Chapter III of the Code is the substance of this subject rather than a formality, and why the immunities in sections 16 to 18 are not technicalities: they are the source of the union's operative freedom, because the Constitution is not.

A worked example

The facts. Two hundred workers at a garment unit in Bhiwandi are paid below the rate paid at comparable units. Ravi, one of them, asks the manager for an increase. He is told that the rate is the rate, and that anyone who does not want the work need not come tomorrow. Ravi has a written contract of employment which he signed and which fixes his wage.

Ravi alone. His contract is valid, he agreed to the wage, and the law of contract gives him nothing. He may resign. His resignation costs the employer one day of one machine and costs Ravi his income. That is the whole of his bargaining power.

Ravi with the other one hundred and ninety-nine. If all of them decline to work until the rate is discussed, the unit stops. The employer's loss is now large and immediate, and the workers' collective loss, though real, is spread. For the first time there is something to negotiate about. That change, from nothing to something, is what combination produces, and it is why the workers organise.

But notice what the combination needs from the law before it is any use. The employer's first response will not be to negotiate. It will be to say that the two hundred have conspired to injure his business, that they have induced each other to break their contracts of employment, and that their own agreement to act together is void as a restraint of trade. Each of those is a real legal argument, each of them was once a winning argument, and each is answered by a section of this Code. That is the next chapter.

What this does NOT mean

It does not mean a trade union is only for strikes. The definition in section 2(zl) is about regulating the relations between workers and employers, and a union's ordinary work is negotiation, representation in disciplinary proceedings, and grievance handling. The capacity to withdraw labour is what makes the negotiation real, not what the union is for.

It does not mean combination is only of workers. Section 2(zl) covers a combination formed to regulate relations "between employers and employers" as well. Employers' associations are trade unions under this Code. Students routinely lose a mark by defining the term as though only workers could form one, and the chapter on the definition returns to this.

It does not mean the history is optional background. MU sets it directly, and the reason it can be examined is that the history explains the structure: it tells you why registration exists, why there are immunities, why recognition became necessary, and why the Code deals with strikes and lock-outs in the same breath.

Quick revision

• Workers combined because the individual contract of employment assumed two equal parties and the factory system made that assumption false.
• Three causes of the inequality: the worker owns nothing in the workplace; labour cannot be stored, so he must settle now; and there are many workers and few employers, so he is replaceable.
• Combination changes the arithmetic: one worker's refusal costs the employer a day, a thousand workers' refusal stops the mill.
• India: factory industry from the 1850s in Bombay and Calcutta; Factories Acts 1881 and 1891, done for workers not by them; combinations grow strongly after the First World War; ILO 1919, India a founder member; unions grew alongside political parties, which is why one factory can have several.
• The first statute to give unions legal existence was the Trade Unions Act 1926, repealed on 21 November 2025 by section 104(1)(a); its work is now Chapter III, sections 5 to 27.
• All India Bank Employees' Association, AIR 1962 SC 171: Article 19(1)(c) protects only the formation of a union, not the achievement of its objects. Everything else comes from the statute.

Test yourself

1. Why could the law of contract not protect an industrial worker? Because it assumes two parties of equal bargaining power freely negotiating terms. In a factory the worker owns none of the means of production, cannot store his labour and so must settle immediately, and is one of many competing for few positions. The employer therefore sets the terms and the worker accepts or leaves, yet the law of contract sees only a signed agreement and can find nothing wrong with it.

2. State the arithmetic that makes combination worth anything. Individually a worker has nothing the employer needs, because he is replaceable and his refusal costs the employer a single day. Collectively the same workers control the only thing the employer needs, because a simultaneous withdrawal of labour stops production. Combination converts a worthless bargaining position into a real one.

3. Trace the growth of combinations of workers in India in outline. Factory industry begins in the 1850s with the Bombay cotton mills and the Calcutta jute mills, drawing an illiterate village workforce into long hours without security. The first responses are protective statutes made for workers rather than by them, the Factories Acts of 1881 and 1891. Combinations proper appear at the end of the nineteenth century and grow rapidly after the First World War, when high prices, hard conditions and large profits produced sustained strike activity and permanent organisations with officers, funds and rules. Two external forces reinforced this: the founding of the International Labour Organisation in 1919, of which India was a founder member, and the national movement, which drew labour into politics so that unions grew as adjuncts of political parties. Legal recognition came with the Trade Unions Act 1926, whose work is now done by Chapter III of the Industrial Relations Code 2020.

4. Does Article 19(1)(c) of the Constitution give a trade union the right to bargain collectively? Give authority. No. In All India Bank Employees' Association v. National Industrial Tribunal, AIR 1962 SC 171, the Supreme Court held that the right under Article 19(1)(c) extends only to the formation of an association or union, and carries no concomitant right that the union shall achieve its objects. The union's activities, and the steps it may take to achieve its objects, are subject to such laws as may be framed, and those laws are not tested under Article 19(4).

5. Why does the Supreme Court's observation in Balmer Lawrie about political parties matter to this subject? Because it explains why a single Indian undertaking commonly has several competing unions. The Court noted that the trade union movement developed as an adjunct of political parties, that parties set up labour wings to control vote banks, and that the multiplicity and fragmentation of parties produced a matching multiplicity of unions. That multiplicity is the problem that recognition under section 14 of the Code exists to solve.

6. A friend says "a trade union means an organisation of workmen." What is wrong with the definition? It is too narrow in two ways. Section 2(zl) defines a Trade Union as any combination, whether temporary or permanent, formed primarily for regulating the relations between workers and employers, between workers and workers, or between employers and employers, or for imposing restrictive conditions on the conduct of any trade or business, and it includes a federation of two or more Trade Unions. So a combination of employers is a Trade Union, and a temporary combination is a Trade Union.