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BARRIERS TO JUSTICE Workers’ struggle in Gurgaon ANIBIESIADA | DAVEHALES

I. EXECUTIVE SUMMARY This report documents how the Indian textile company, Modelama’s Exports, violates Indian labour laws without repercussion. First, Modelama shields itself from liability by imploring anti-union tactics. This practice secures and enlargesthe power disparity between workers and Modelama’s management. Without the collective bargaining power of a union, workers lack the power to shield themselves from Modelama’s illegal termination and wage theft practices. Second, Modelama recruits government officials to engage in corrupt practices that inhibit Modelama’s workers from accessing the justice system. And while the focus of this report is on Modelama, the deplorable and illegal practices they engage in are used throughout Haryana’s garment industry. Thus, it is imperative that this cyclical quagmire of injustice end, otherwise the labour conditions in India will continue to deteriorate.

This report makes recommendations for the Indian government steps that would strengthen the protection of workers in the garment industry and rectify theflaws in the presentsystem.

THE GRIM REALITY

In Gurgaon, workers face apathetic, biased, and dysfunctional justice systems.

Barriers to justice for workers in Gurgaon are legendary, demonstrate institutionalized anti-worker and pro-business practices, and flourish in a culture of impunity.

- Gunjan Singh

“The truest test of civilization, culture, and dignity is character, not clothing.”

– Mahatma Gandhi

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CONTENTS

I. Executive summary .............................................................................................................................................................. 1

II. Methodology ........................................................................................................................................................................ 3

III. legal framework .................................................................................................................................................................. 5

A. International Laws ........................................................................................................................................................... 5

B. National Labour Laws ..................................................................................................................................................... 7

1. India’s Constitution ...................................................................................................................................................... 7

C. Domestic Labour Laws .................................................................................................................................................. 7

1. Applicable Domestic Laws in Haryana, India .............................................................................................................. 7

2. Additional State Laws Implicated by Modelama’s Violation ...................................................................................... 12

IV. Modelama’s Union Busting Practices .............................................................................................................................. 14

A. Workers’ struggle to form a union ................................................................................................................................. 14

B. Modelama’s targets unions to stifle their collective bargaining power .......................................................................... 16

C. Modelama’s exploitative hiring process deceives and disadvantages its workers. ...................................................... 17

D. Modelama’s fear campaign. .......................................................................................................................................... 19

E. Modelama’s use of contract workers ............................................................................................................................ 20

VIII. BARRIERS TO JUSTICE CREATED BY MODELAMA ................................................................................................ 28

X. BARRIERS TO JUSTICE CREATED BY THE LEGAL SYSTEM .................................................................................... 30

XI. KEY TAKEAWAYS .......................................................................................................................................................... 31

XII. RECOMMEDATIONS The synthesis of the report has yielded the following recommendations: ................................. 32

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Modelamawas selected as the focus this reportbecause it is an industry leader in the garment sector. As such, other Indian garment manufacturers mold their management practices after Modelama’s management practices. With a fleet of garment factories in India: six in Haryana, and a factory in both Delhi and Chennai, Modelama’s practices are widespread throughout India. Moreover, Modelama is funded by some of the most notable United States’ brand names: Pottery Barn, Banana Republic, Nordstrom, Hollister, William-Sonoma, Abercrombie & Fitch, Macy's, JCPenney’s. In total, Modelama’s client list includes twenty-two top U.S. clothing companies. Modelama secures these high profile U.S brands by touting its support of its workers’ rights. Unfortunately, the “workers first” slogan that Modelama claims to have is in stark contrast to the labour law violations that Modelama Gurgaon garment factory workers report.

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III. LEGAL FRAMEWORK India has an expansive catalogue of labour laws. Thus, India’s labour laws are not at issue.Rather, the issue here is that Modelama has identified two major ways to exploit its workers while remaining immune to justice.

First, Modelama incites the workers’ fear of termination and retaliation to createan anti-union sentiment among the workforce. This method cripples the unions’ strength to bargain with, or protest against management.

Second, Modelama impairs workers’ access to justice by withholding employment documentation. Thus, the worker is unable to establish that they worked for Modelama. The absence of this documentation makes it near impossible for the worker to establish a labour dispute claim against Modelama. Moreover, without the requisite proof, the worker cannot trigger the protections of Indian labour laws. Consequently, workers are offered no job security. Without job security, workers that are already financially unstable are immobilized by the fear of termination if they should assert their rights against Modelama. Modelama has fashioned a system that does not hold them accountable for their labour violations.

That Modelama violates are outlined below. This section is intended to provide a legal framework Indian labour laws that will then be incorporated into the following section: theanalysis of how Modelama uses illegal practices to oppress workers’ rights.

A. International Laws

Modelama’s workers are in a gridlock: they must risk their incomes in order to enjoy the

laws’ protections.

P a g e | 6 1. The Universal Declaration of Human Rights

2. International Covenant on Economic, Social and Cultural Rights (ICESCR):

The UN created the International Covenant on Economic, Social, and Cultural Rights treaty (ICESCR). The ICESCR provisions ensures fundamental human rights, such as labour rights. In 1979, India ratified the ICESCR, which obligates India to adhere to the ICESCR. Because the UN must maintain an amicable relationship with all of its member-states, enforcement of international treaties is delicate balance. But this document guides member-states with the creation of its own laws.

Article 6: right to [decent] work, which includes the right of everyone to the opportunity to gain his living by work which he freely chooses or accepts, and will...safeguard this right…

Article 7: right of everyone to the enjoyment of just and favorable conditions of work, with livable wages, equal pay for equal work, equal promotional opportunities solely based on seniority and competence...and limitation of working hours..

Article 8: the right of everyone to form trade unions, join the trade union of his choice, and the right to strike

3. International Covenant on Economic, Social and Cultural Rights (ICSCR):

Likewise, The United Nations adopted the ICCPR in 1966, and India ratified the treaty in 1979. The ICCPR is a treaty that derives its provisions from the principles that the UDHR sets forth. The ICCPR uses social, civil, and political assurances to achieve the fundamental rights that the UDHR sets forth.

Article 2: The law, as provided by the ICESCR, applies to all individuals within the member states' territory. The member state must adopt laws or other measures to give effect to the rights contained in the ICESCR, and provide an effective remedy to those who have been violated. Member states must ensure those alleging a violation have access to a competent judicial authority to provide an adequate remedy for the victim.

Article 14: Everyone has a right to access the justice.

Article 16: Everyone is protected equally under the law.

The United Nations is an international organization comprising 52 member-states, which promotes human rights. In 1948, the UN adopted the Universal Declaration of Human Rights (UDHR)into the UN charter. The UDHR embodies the international communities’ consensus of fundamental human rights. This document sets forth a legal framework, which the international community uses as a legal touchstone to shape its laws.

Article 20: Everyone has the freedom to peaceful assembly and association…No one may be compelled to belong to an association.

Article. 23: Everyone has the right to work…Everyone has the right to equal pay for equal work…Everyone has the right to human dignity…Everyone has the right to form and join trade unions. Article 24: Everyone has the right to reasonable working hours, holidays with pay. Article 25: Everyone has the right to a standard of living adequate for the health and well-being of himself and of his family, including food, clothing, and housing and medical care and necessary social services, and the right to security if unemployment.

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B. National Labour Laws 1. INDIA’S CONSTITUTION The Indian Constitution4 provides the government with the power to create laws. The Constitution has divided the legislative branch into three sections, or lists: Union List, State List, and Concurrent List. Each of these lists contains subjects that grant the central government, state government, or both the central and state governments the power to make laws regarding that subject. Labour is on the Concurrent List, which gives the state and the central government the power to create laws regarding this topic.

Additionally, the Indian Constitution is the highest legal authority in India; however, a portion of the Constitution has no legal effect: the state directive principles. However, if the state enacts the directive principle, the law takes effect. Because Haryana, where the Modelama Exports’ Gurgaon factory is located, has enacted the following Constitutional provisions, such provisions are legally enforceable.5

C. Domestic Labour Laws

1. APPLICABLE DOMESTIC LAWS IN HARYANA, INDIA

The State of Haryana has enacted a list of domestic

labour laws that are designed to protect its

workforce from exploitive labour practices.

One law, in particular, is especially relevant to

addressing Modelama’sworkers’ chiefcomplaints6:

The Contract Labour (Regulations and Abolition)

Act of 1970.7

The discussion of this law begins

requires an understanding of the employment

dynamic that contract workers

have with their employercompared to the

employment relationship that permanent workers

have with their employer. The image below

illustrates the structural difference between

these two classifications.

4 Indian Const. Art. 14, 16, 19. 5 Contract Labour Act (Regulations & Abolition) Haryana State Government, Ch. I Rules (1971). 6 Modelama Union Workers (2015) 7 Contract Labour Act (Abolition & Regulation) of 1970 § 37, Central Government (1971).

Article 14: Promises to treat all citizens equally under the law.

Article 16: Equal opportunities for employment for all citizens.

Article 19: Everyone has an enforceable right to form associations or unions

WHY PRINCIPAL EMPLOYERS PREFER CONTRACT WORKERS OVER PERMANET EMPLOYEES?

First, using a labour contractor to manage the principal employers’ workforce frees the principal employer to focus on garment production. Second, a principal employer hires third party contractors based on their companies’ production needs, and the labour contractors hire contract workers based on a fixed rate per unit produced. Whereas, permanent workers are paid per hour. Thus, a principal employer must pay the permanent worker an hourly wage regardless of their output, whereas the principal employer only pays the contract workers based on their output. The contract worker allows the principal employer the ability increase its production while regulating its labour costs. Third, the principal employer may hire contract worker to complete an impermanent task. Once the contract worker completes the task, the principal employer lays them off. The economic benefits of using contract labour makes this group especially vulnerable to exploitation

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However, the Act was created to extend the same protections that permanent workers have, to contract workers.Moreover, as the name implies, the Act was created with the intent “to regulate the employment of contract labour in establishments and to provide for its abolition in certain circumstances.”8The Act’s regulatory scheme is detailed below.

a. Government oversight of contract labour

As previously noted, the State of Haryana has adopted the Act. Thus, it has legal effect in Haryana. More to the point, the Act applies to Modelama’s Gurgaon garment factory, as highlighted below:

The Act applies to “every establishment where twenty or more workmen are employed or where the workmen were employed on any day of the preceding twelve months as contract labour.” In addition, the Act applies to “every contractor (labour contractors) who employs or who employed on any day of the preceding twelve months twenty or more workmen.”9

Retu Singh,10 Modelama’s Union representative, reported that there are over two-thousand workers at Modelama’s Gurgaonestablishment; this factdemonstrates that the Act applies to Modelama. 8 Contract Labour (Regulation & Abolition) Central Government, Ch. VII Misc. (1971). 9Id., Ch. I Prelim. (1971). 10 (Singh, 2015)

CONTRACT WORKER

PERMANENT EMPLOYEE

Principal Employer

Labour Contractor

Contract Worker

Principal Employer

Permanent Employee

P a g e | 9 Importantly, this provision does grant this establishment the right to use contractor labour. Rather the Act creates a government approval process that principal employers must comply with in order to hire contract labour.

Because the intent of the Act is to abolition contract labour, the local government has the discretion to prohibit contract labour in certain instances.11 However, the Act grants the government the ability to permit contract labour when it is necessary: when permanent positions are not economically viable.12 The Act provides factors that the government should consider when determining whether the establishment should be permitted or prohibited from using contract labour, as follows:

(a) whether the process, operation or other work is incidental to, or necessary for the industry, trade, business, manufacture or occupation carried out on in the establishment; (b) whether it is of perennial nature it is of sufficient duration having regard to the nature of industry, trade, business, manufacture or occupation carried on in that establishment; (c) whether it is done ordinarily through regular workmen in that establishment or an establishment similar thereto; and (d) whether it employs considerable number of whole-time workmen.13

The permanency of these factors weighs in favor of prohibition.

In addition, contract labour should be prohibited if the work is performed for four consecutive months; or, if the work is seasonal but is performed for more than sixty consecutive days, subject to governmental discretion.14

However, despite the factors mentioned above weighing in favor of prohibition, the government often permits contract labour.15This is the case here; Modelama is permitted to use contract labour.

b. Principal employers must register their establishments

When the government permits contract workers, the government uses a registration system.

Thus, principal employers (1) who seek to employ contract workers and (2) whose establishment exceeds twenty workers must register their establishment with the Office of the Registering Officer in that local area.16

Part of this registration process requires that the principal employer acknowledge that all of its labour contractors are its employees. The principal employers’ acknowledgement of its labour contractors means that the principal employer is legally responsible to ensure that their labour contractors comply with the Act.17

11Id., Ch. I Prelim. § 5b, (1971). 12Id. Art. 37 (1970). 13Id. Ch. III Regis. Of Establishments Employing Contract Labour § 10, 2b (1971). 14Id., Ch. I Prelim. § 5a (1971). 15Id., Ch. I Prelim. § 5b, (1971). 16Id., Ch. III Regis. & Licensing § 19 (1971). 17Id., Ch. V Welfare & Health § 20-1 (1971).

P a g e | 10 Because the Act applies to Modelama, Modelama is required to register its factory-establishment in order to use contract workers. This registration process evinces that Modelama acknowledges it is required to oversee its labour contractors comply with the Act. Moreover, Because Modelama is required to audit its labour contractors’ compliance with the Act, any noncompliance the labour contractor perpetrates is imputed to Modelama.

c. Labour contractors must be licensed to contract labour

To guarantee that principal employers are imputed with the liability of their labour contractors, the Act requires that principal employers may only hire licensed labour contractors.18

The local government approves the licensure of the labour contractor after the labour contractor has provided the following documentation that:19

“contains such conditions including, in particular, conditions as to hours of work, fixation of wages…amount of workers to be employees, and other essential amenities in respect of contract labour as the appropriate government may deem fit.”20

In addition, the labour contractor is required to comply with all conditions of the license. Labour contractors that hire contract workers without a license and/or fail to comply with the conditions of their license are in direct violation of the law.21 Moreover, the principal employer is in violation of the law if they hire an unlicensed labour contractor.

d. Principal employers and labour contractors must maintain records

The registration mentioned above and licensure requirementscreate a regulatory scheme that holds the principal employer and labour contractor liable for labour violations. However, workers must have evidence to demonstrate they were, in fact, violated. Thus, the Act requires that theprincipal employer must maintain records of their labour contractors and contract workers, and the labour contractor must maintain records of their contract workers22. The relevant provision states:

“Records of contract labour employed the nature of work performed by the contract labour, the rates of wages paid to the contract labour and such other particulars in such form as may be prescribed.” As well as a posting notice of “particulars about the hours of work, nature of duty and such other information as may be prescribed23.”

In addition to these records, labour contractors must provide an employment card to each new worker within threedays from their hiredate24. Moreover, labour contractors must maintain a Muster Roll25and a Register of Wages26.Additionally, when a labour contractor discharges a worker, the contractor must

18 Contract Labour (Regulation & Abolition) Haryana State Government, Ch. III Regis. & Licensing (1971). 19Id., Ch. IV Licensing of Contractor § 12 (1971). 20Id. 21Id. 22Id. 23Id. Ch. VII Misc. § 29 (1971). 24Id. Ch. VII Regis. & Records & Collection of Statistics § 76 (1971). 26Id. § 78 (1971).

P a g e | 11 issue a Service Certificate27.These records must be maintained and updated; and upon government request28, principal employers and the labour contractor are obligated to produce these records.

e. Principal employers and labour contractors must pay wages

As noted above, principal employers and labour contractors must maintain adetailed record of wage payment29.

Specifically, the labour contractor must maintain a Register of Wages, Register of Deductions, and Register of Overtime.

For every worker entry in the Register of Wages, the labour contractor must obtain the workers’ thumbprint or signature to validate those entries. In addition, the labour contractor must submit wage slips to the workers one day before wages are disbursed if the pay period is for over one week30.

Notably, when the labour contractor disburses wages to his workers, the principal employer or their authorized representative must be present and sign all entries on the Register of Wages. Because of this documentation process, workers have a record of their wages. This record is essential for a worker to be able to establish wage theft claims.

In addition, because principal employers or their agent must be present, the principal employer can be liable wages if the contractor does not pay its workers. The relevant provision states in part:

In case the contractor fails to pay wages within the prescribed period or makes short payment, then the principal employer shall be liable to pay wages in full or the unpaid balance due to the contract labour employed by the contractor and recover the amount so paid from the contractor either by deduction from any amount payable to the contractor under any contract or as a debt payable by the contractor31.

Thus, this provision acts as a “built-in safety valve” that assures workers they will be paid their wages, even if the contractor fails to pay them on time or in full. Moreover, this provision is a procedural safeguard that forces principal employers to continue to audit the labour contractors that they hire32,or be held liable for payment33.In addition, this provision allows workers to expect reasonably to be paid and paid on time34. However, there are limits to the remedies that this provision can offer workers. For example, courts narrowly interpret the Act’s definition of “wages.” Thus, they often determine that this provision does not require principal employers to pay bonuses35, as provided by the Payment Bonus Act, 1965.36

27Id. § 77 (1971). 28Id. § 83, 1-2 (1971). 29Id. Ch. VII Misc.§ 29 (1971). 30 Id. 31Id. Ch. V Welfare & Health§ 21 (1971). 32Secretary Haryana Electricity Board v. Suresh, 1999 LLR 433 (SC): AIR 1999 SC 1160: 1999 AIR SCW 892. 33Senior Regional Manager, Food Corporation of India, Calcutta v. Tulsi Das Bauri, 1997 LLR 601 (SC): AIR 1997 SC 2446: AIR SCW 2364. 34Id. Ch. V Welfare & Health§ 21 (1971). 35Cominco Benani Zinc Ltd. v. Pappacham, 1989 LLR 123 (Ker HC). 36 The Payment of Bonuses Act, Haryana State Government (1952).

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Workers are entitled to the financial security

As this example illustrates, the Contract Labour Act works within a web of labour laws. The additional state laws that are triggered by Modelama’s actions are briefly detailed below.

2. ADDITIONAL STATE LAWS IMPLICATED BY MODELAMA’S VIOLATION

a. Payment of Bonuses Act, 1965

The Payment of Bonuses Act37 applies to contract workers. Thus, workers in the garment industry are entitled to an annual bonus of 8.33 percent of the total wages they earned in the previous year. However, it important to note that if the contractor fails to pay such bonuses the principal employer cannot be held liable.38 This law is meant to award contractor workers with the same benefits that are available to permanent employees.

b. The Minimum Wage Act of 1948

Contract workers are entitled to be paid at least the legally required minimum wage. The Minimum Wage Act of 194839 applies to all wages paid to contract workers, and, therefore, the wages paid to contract workers must meet the state minimum wage levels. Notably under the Contract Labour Act, contract workers are entitled to the similar pay for similar work carried out by regular employees.40 This means that contract workers may be entitled to wages above the minimum wage laws. Similarly, the Act requires that any deductions to wages paid to employees are registered. This practice ensures that improper wage deductions do not contribute to wage theft or wages below the minimum wage. This law nullifies any immediate economic incentive to hire contract workers by paying them lower wages.

c. Payment of Wages Act, 1936

The Payment of Wages Act of 193641 provides that if the establishment is covered by the Contract Labour Act, the Payment Wages Act of 1936 also applies. Thus, the Payment of Wages Act stipulates the terms in which a labour contractors disburse wages. As previously discussed, if the labour contractor fails to make payments, the principal employer is liable. This law stifles the economic incentive of employing contract workers while offering workers a sense of financial stability.

37 The Payment of Bonuses Act, Haryana State Government (1952). 38Cominco Benani Zinc Ltd. v. Pappacham, 1989 LLR 123 (Ker HC). 39The Minimum Wage Act, Haryana State Government (1948). 40 Contract Labour Act (Regulations & Abolition) Haryana State Government § 25 (1971). 41 Payment of Wages Act, Haryana State Government (1936).

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Workers are entitled to the financial security

d. The Employees’ Provident Funds and Miscellaneous Provisions Act, 1952

Contract workers are also entitled to the full benefits of Provident Fund contributions paid either by the labour contractor or principal employer. Under section 2(f) of The Employees’ Provident Funds and Miscellaneous Provisions Act of 195242, all contract workers must be covered and receive all benefits outlined in the Act43.It is the responsibility of the principal employer to ensure that contributions are paid for all contract labour employed, and Form 12 of the Act contains a column for “employees engaged through the contractor” for the purposes of record keeping44. Principal employers must make all required contributions under the Act or ensure that the contractor is making such contributions. Such provisions are critical because if employers are making contributions to workers’ Provident Fund accounts those workers have a financial safety net if they are injured or terminated from their employment.

f. The Employees’ State Insurance Act, 1948

Employers or labour contractors are also responsible for making contributions to the State Insurance programs on behalf of contract workers. In all factories required to comply with The Employees’ State Insurance Act of 1948 contract workers is eligible for all benefits provided by the Act.Section 2(9) of the Act defines an employee as any person “employed by or through an immediate employer on the premises of the factory or establishment or under the supervision of the principal employer or his agent” and any person “whose services are temporarily lent or let on hire to the principal employer by the person with whom the person whose services are so lent or let on hire has entered into a contract of service.” Contract workers are entitled to benefits and protections offered by the Employees’ State Insurance Act. The principal employer ensures that all contributions for contract workers are made.45 These provisions are important in protecting workers who might become injured on the job and to ensure that such workers have financial security in the event of an industrial accident.

42The Employees’ Provident Funds and Miscellaneous Provisions Act, Haryana State Government (1952). 43D.C.M. Limited v. Regional Provident Fund Commissioner, 1998 LLR 532 (Raj HC). 44Central Provident Fund Commissioner v. Modern Transportation Consultancy Service Ltd. 2009 LLR 324 (Cal HC). 45Standard Fabricators (India) Ltd. v. Regional Director Employees’ State Insurance Corps., Bombay, 1994 LLR 869 (Bom HC): 1994 Supp (3) SCC 690: AIR 1994 SC 521.

P a g e | 14 g. Industrial Employment (Standing Orders) Act, 1946

In addition, if the Industrial Employment (Standing Orders) Act applies to an establishment that uses contract labour, the protections of this law extend to the contract worker.46 This law “defines with sufficient precision the conditions of employment… and to make the said conditions known to workmen.” Employers must set forth specific criteria of offenses that could lead to discipline and/or termination, among other criteria. The trade unions must be provided an opportunity to reviewed the drafted criterion and be permitted to suggest modifications to the orders. Finally, the Certifying Officer of the government approves the policy. This law promises the worker that they cannot be arbitrarily punished or terminated without cause. Such provisions are meant to provide workers with job security and transparency by ensuring that the nature of the employment relationship and obligations between employer and employee are clearly defined.

h. The Industrial Disputes Act, 1947

Under the Industrial Disputes Act of 194747, contract workers are provided with the same protections as permanent workers. Particularly pertinent protections that the Industrial Disputes Act offer contract workers are as follows:

Under the Section 25(F) of the Act, employers must provide thirty-day termination notice to employees who have worked at the establishment for over a year. In addition, the employer must provide the employee with fifteen days of average pay.

In addition, contract workers have the right to bring labour dispute claim against a principal employer and/or labour contractor.Moreover, contract workers are entitled to all procedural mechanisms to resolve industrial disputes as outlined in the Act, including the conciliation process. The conciliation process is an alternative dispute resolution method, where the labour commission acts as a mediator between the company and the worker. Finally, contract workers can bring claims to recover wages from their principal employer under the Contract Labour Act or the Industrial Disputes Act.

IV. MODELAMA’S UNION BUSTING PRACTICES

The above-outlined labour laws provide a legal framework for the analysis of Modelama’s violations. However, before that analysis begins, the history of Modelama’s union struggle must be recounted: because the effects of that incident are apparent present day.

A. Workers’ struggle to form a union

46 Industrial Employment (Standing Orders), Haryana State Government (1946). 47 Industrial Disputes Act, Haryana State Government (1948).

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P a g e | 16 The Union felt the backlash from terminated workers, who blamed their layoffs on the Union.

B. Modelama’s targets unions to stifle their collective bargaining power

The present day effects of the GAP debacle are prevalent throughout Modelama’s workforce. Interest in union membership has dwindled,because workers fear retaliation and/or termination; this fear locks workers into a perpetual cycle of exploitation.

1. No union equals no justice for workers

Without a union, workers are stripped of any power they could gain with collective bargaining. In India, the power gap between workers and management is massive, and unionizing is the only way for workers to bridge this gap. Thus, when this practice succeeds, workers are not only barred from the right to unionize; workers are barred from accessing the protection that the labour laws afford them.

As Ahuja50 explained, union-busting practices are used throughout the garment industry. Companies use this practice because they are fearful that management will be overpowered by the union. Management is afraid that they will be controlled by union demands, rather than production necessities.

This anti-union practice alone violates Article 20 of the Universal Declaration of Human Rights (UDHR); Article 8 of the International Covenant on Economic, Social and Cultural Rights (ICESCR); and Article 9 of the Indian Constitution, as adopted by the State of Haryana. Each law echoes a promise to Indian workers: that they are free to form a union.

50Ahuja, R. K. (2015) ‘Assistant Labour Commissioner.’

Modest request for justice

The power workers seek to gain, is merely the ability to request that their employers adhere to the law, and the ability to seek redress if their rights are violated.

P a g e | 17

MODELAMA BREAKS THIS PROMISE. MODELAMAAREECONOMIC TERRORISTS THAT EXPLOIT ITS WORKERS FINANCIAL INSTABILITY TO PREVENT THEM FROM ASSERTING THEIR RIGHTS. THE PROCESS OF TERROR, UNBEKNOWNST TO THE WORKER BEGINS WHEN THE WORKER IS HIRED.

C. Modelama’s exploitative hiring process deceives and disadvantages its workers. When Modelama hires workers, it coerces its workers into signing fraudulent resignation forms and sham contracts that hidden within its “hiring” packets and withholds any employment documentation that would prove an employment relationship ever existed.

One worker stated that if we try to read the documents, Management pressures us. They tells us to hurry up or we will be replaced by the line of workers that are waiting to

sign these forms.

Because workers are financially insecure, they comply with managements request to “hurry up or be replaced.” Later, these fraudulent resignation forms and sham contracts are held over the heads of workers to so that these workers are forced to submit to unfair labour practices. Likewise, Modelama withholds employment documentation to shields itself from liability. Without documentation, the worker is unable to demonstrate that they have an employment relationship to Modelama and/or labour contractor.

For example, an employee requested a copy of his employment letter, but management ignored him. One worker explained that

unless you have an inside connection you will never get copies of documents. He went on to explain that he had filed a labour

dispute at conciliation. He had been successful. However, he explained that his success was only because he has “connections” that helped him get the appropriate documents to demonstrate his

employment relationship to Modelama.51

As previously mentioned, the Act provides that labour contractors must issue an employment card to all new hires within three days.52 Moreover, principal employers are liable for the noncompliance of 51 (Modelama Union Worker, 2015) 52 Contract Labour Act (Abolition & Regulation), Ch. VII Regis. & Records & Collection of Statistics § 29 (1971).

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P a g e | 19 discipline. In addition, it begs the question: but for illegal practices, why is Modelama resistant to making simple copy of these records for the worker?

D. Modelama’s fear campaign.

Because workers were induced into signing documents that allow Modelama to termination these workers at will and/or control these workers with the economic fear of termination, Modelama can effectively prevent unionization.

1. Modelama uses preemptive terror to prevent union membership

Modelama hires “helpers.”57 These “helpers” are essentially bullies. Their sole purpose is to harass and intimidate workers. Moreover, these bullies effectively end conversations about workers’ rights, by slapping the workers.58 Women workers are slapped and pushed while men encounter serious physical violence.

In addition to this violence, these bullies strip the workers of even their most basic right: using the restroom. This act violates the Health and Welfare provision of the Contract Labour Act. This provision reads in part:

Employers are required to maintain latrines and washrooms which are ‘convenient and accessible’ to contract workers.59

Another method that Modelama uses to prevent unionization is by arbitrarily firing union workers. The union members are illegally terminated as an example to the rest of the workforce. In addition, this method shakes the workers’ confidences. These unjust terminations demonstrate to the workforce that they may be fired at any time, for any reason.

During a union meeting, workers reported that union membership is dangerous. The workforce is stricken with the fear of management retaliation if they join the union.60

This practice is inconsistent with Article 23 of the UDHR, which states that each Indian worker has the fundamental right to be treated with dignity and respect. Modelama terrifies its workers in efforts to prevent unionizing, where workers are too afraid to stand up for themselves. These workers are being deprived of this fundamental right to be treated with dignity and respect. In addition to the UDHR.

2. Modelama aggressively targets union workers.

If Modelama’s management discovers that the employee has joined the union, these employees are mercilessly targeted. These employees are verbally and physically assaulted not only at work, but at their homes as well.61 Management unreasonably increases their productivity quotas. 57 Singh, R. (2015) ‘Modelama Union Representative.’ 58 (Singh, 2015) 59 Contract Labour Act (Regulations and Abolition) Haryana State Government, Ch. V, Welfare & Health (1971). 60 Garment workers made this comment from Modelama, as well as other companies.

P a g e | 20

One Modelama employee explained, “I had worked at Modelama for a long time and had no issues. After they found out I was working with the Union, management

continually threaten and harassed me62.”

Known union members are routinely passed up for job promotions, salary raises, bonuses, and other beneficial treatment from management63. Meanwhile, Modelama awards these benefits to pro-management employees. Modelama uses sham criteria to justify promoting these anti-union workers. This practice violates Article 7 of the International Covenant on Economic, Social and Cultural Rights (ICESCR), which promises that each Indian worker has an equal opportunity to be promoted based merits alone. However, here, Modelama promotes employees who refrain from exercising their legal right to join a union. Moreover, Modelama punishes those who simply refuse to be exploited. To combat this practice, the Union has repeatedly requested that Modelama create objective promotional criteria. However, Modelama has denied each request64.

The interviewed workers said that they will not discuss their membership or even inform other workers of their

union membership out of fear of retaliation.65 Modelama’s practices have effectively silenced these workers.

E. Modelama’s use of contract workers

Modelama prefers the inherently temporary nature of contract workers because they do not have to work to prevent these workers from joining the union. Because these temporary workers will not see the benefits of their unionized efforts, they do not have an incentive to join the union.

As another worker explained, “workers don’t risk joining unions because they will be fired before they can see any

benefits or changes.”66

Modelama’s management identified this inherent benefit that temporary workers offer, after its previous regime of permanent workers successfully unionized.

61 (Singh, 2015) 62 Modelama Union Worker, (2015) 63 (Singh, 2015) 64 (Singh, 2015) 65 Garment workers from Modelama, as well as other companies, made this comment. 66 Modelama Contract Worker, (2015)

P a g e | 21 1. The aftermath of Modelama Union’s efforts: the benefit of contract workers

Before workers unionized in 2012, Modelama offered more positions that were permanent.67Because contract workers are temporary and less likely to protest and unionize, Modelama shifted the vast majority its positions to contract work.Currently, Modelama employs around 500 permanent employees and 1,500 contract workers.68 This shift to using primarily contract workers where permanent employees should be used undermines the provisions and purposes of the Contract Labour Act. The Act was intended to provide protections to ensure that contract workers were not used unless necessary.69

2. Modelama uses illegal labour contractors to side-step justice.

Recently, Modelama has shifted from using contract labor sanctioned by government licenses and permits to using illegal labour contracting. Modelama uses illegal labour contractors to supply workers on a short-term basis, where illegal contract workers are employed for a week or even one day before they are paid wages and released. Using contract workers on a weekly or even daily basis without permits for such workers directly violates the Contract Labour Act, which requires permits which identify which workers are employed and the terms of their employment as contract laborers. Using illegal labour contractors without proper licenses or permits is lucrative for labour contractors and minimizes the risk of labour disputes. First, using illegal contract labour alleviates the burden of record keeping for labour contractors as required under the Act.

Additionally, not having to comply with record keeping requirements also ensures there will be no relevant records of the worker performed by the contract workers or their employment at Modelama. This ensures that such workers must simply take whatever wages the labour contractor will pay them, even if such wages are below the required minimum wage. Such practices cause wage theft to be rampant and ensure that workers have no way to raise or substantiate labour disputes. Without documentation of a work relationship or wages paid to an employee there is no way that a labour dispute can be brought in the legal system. This is why illegal labour contracting is preferred, because there is less documentation of the workers and work performed. Accordingly, employers know that using illegal contract workers will ensure that they will not be liable for the rampant labour abuses which take place. Furthermore, using illegal contract labour is economically lucrative for principal employers who do not have to provide Provident Fund or Employee State Insurance contributions for such employees. Lastly, with such a large pool of surplus labour Modelama can continue to hire illegal labour contractors and ensure that the workforce turnover is quick enough to ensure that no unions form and labour disputes do not materialize.

The use of illegal labour contractors is not only a direct violation of the Contract Labour Act, but it is a source of concern for Modelama’s union as well. After Singh70 discovered that Modelama was hiring illegal labour contractors, she received threatening phone calls from an illegal contractor. The contractor threatened to kidnap and beat her, if Singh tried to stop the illegal labour contracting. Singh filed a police report about the incident. Singh explained that illegal labour contractors make a huge profit from wage theft. In addition to the Act’s requirement that labour contractors are licensed, the Act requires that contractors must pay their

67Id. 68 (Singh, 2015) 69 Contract Labour Act (Regulations & Abolition), Haryana State Government Art. 37 (1970). 70 (Singh, 2015)

P a g e | 22 workers, and pay them on time.71 Moreover, Modelama, as the principal employer, is liable for its labour contractors’ noncompliance with the Act.72 However, Modelama has identified another way to benefit from breaking the law. Because illegal labour contractors are not issued government licenses, there is no record of employment; Modelama can simply deny the relationship existed. Thus, when Modelama deny the existence of this relationship, it releases itself from any principal employer obligations it has. This effectively silences the contract workers who attempt to complain of wage theft. Modelama’s continued use of illegal labour contractor ensures that workers have no proof of employment. Because the lack of employment documentation allows Modelama to ignore workers complaints, Modelama actively seeks to convert its permanent employees into contracted workers. 3. Modelama’s illegal conversion of permanent employees to contract workers

a. Illegal termination

To counteract the 2012 union efforts, Modelama undertook to convert its permanent employees into contract workers. Modelama fires its permanent employees that refuse to convert to contract workers, and then offer to rehire them as contract workers. For employees who refuse to become contract workers Modelama, the company will engage in abusive language and threats of physical violence. Alternatively, Modelama tells permanent workers they must become contract workers for a temporary period due to work conditions. Unfortunately, if the permanent worker accepts this request they will never be converted back to a permanent employee after the short time period ends. This treatment violates workers’ rights to feel safe and secure in their employment and undermines their long-term job security.

At union meeting, one Modelama worker explained how management harassed and threatened her because she would not become a contract worker. When the abuse

became extreme, she told management they could fire her but she would never become a contract worker.

Modelama also will fire permanent employees without justification in violation of the Industrial Disputes Act, which requires that workers are given notice.Similarly, Modelama will increase production quotas for permanent employees until the production quotas are impossible to meet. Once the employee fails to meet the production quotas, Modelama will inform the employee they can only stay employed if they become a contract worker. In addition to these repugnant practices, Modelama offers incentives to permanent workers in order to have them voluntarily convert them into contract workers. One tactic is that Modelama will refuse to offer overtime to permanent employees and only provide such overtime hours to contract workers. 71 Contract Labour Act (Regulations & Abolition), Haryana State Government, Ch. VII Misc.§ 29 (1971). 72Id.

P a g e | 23 Even if a permanent employee has worked overtime in the past such overtime hours are cut so the employee will be forced to convert to being a contract worker to make enough money to support their family. Modelama will offer more lucrative wages to permanent workers to induce them into becoming contract workers. However, these tactics hardly make sense if Modelama were following the Contract Labour Act, as permanent workers and contract workers are entitled to the same pay, bonuses, benefits, and protections under the law. The reason that Modelama tries to coerce permanent employees into becoming contract workers is that contract workers lack job security which causes them to accept conditions such as wage theft, abuse, and other violations of their rights. Unfortunately, Modelama will illegally terminate workers if they are unable to get permanent employees to convert to being contract workers through harassment, intimidation, and coercion. These workers will be stripped of many of the benefits they had when they were permanent employees and they will be forced to accept work as contract workers. Modelama engages in illegal termination practices which violate the Industrial Disputes Act, by terminating employment under false pretenses or with fraudulent documents, not providing appropriate compensation to employees when terminated, and forcing workers to resign under threat of physical violence. Such practices are common and used to eliminate permanent workers and force them to be rehired as contract workers. Under the Industrial Disputes Act,73 termination of employees working for the establishment for over one year must include notice of termination one month in advance, the employee must be provided fifteen days average pay, and notice of the termination or retrenchment must be submitted to the proper government agency. Because Modelama fails to follow such protocol, workers live in a constant state of fear that they will lose their job without notice. Additionally, when the worker is terminated they will not have the resources to survive which ensures they will not pursue labor dispute cases against their employers, as they must find new work immediately. Lastly, there are no records submitted to the government to document the termination of the worker. One advantage of using contract workers and not permanent employees is that contract workers are unlikely to work for the establishment for over 1 year, and therefore can be terminated without notice and additional payments as required by the Act. Illegal termination of workers is also a violation of the Industrial Employment (Standing Orders) Act,74 which requires definitive procedures for termination of employees. By failing to have such procedures in place employers can arbitrarily terminate employees for any reason and employees have no way to prove in court that their termination was arbitrary or violated company policies. The illegal tactics used to hire and fire employee ensures that workers will permit practices such as wage theft and violations of their labour rights out of fear that their employment might be terminated for any trivial reason. Illegal termination and hiring practices help contribute to wage theft, as employees hired back lose all seniority benefits, including bonuses based on the number of years they have worked with a company. The termination of employees under such conditions is a form of wage theft which strips workers of benefits they have earned and compensation they are legally entitled to. Furthermore, when employers or labour contractors terminate employees they delay wage payments to ensure that workers cannot pursue labour dispute claims due to a lack of financial resources.

73 Industrial Disputes Act, Haryana State Government (1948). 74 Industrial Employment (Standing Orders) Act, Haryana State Government (1948).

P a g e | 24 2. Wage theft

Modelama and its labour contractors continually engage in wage theft because it is lucrative. Modelama and its contractors execute wage theft in a variety of ways, in this report; the term encompasses termination and underpayment of wages, failure to pay bonuses, payment below minimum wages, and failure to pay overtime as required by law. Modelama’s labour contractors underpay their contract workers, and keep the remaining funds for themselves. Unfortunately, many workers reported that wage theft common. However, they have no choice but to accept the wages that the contractor pays them or they will be fired.75 As previously mentioned, The Act requires that principal employers provide workers a Wage Slip at least one day before wages are paid.76 Typically, the Wage Slip form requires the labour contractor must provide the following information about the worker: days worked, hours worked, units produced, wages paid, overtime paid, and any deductions.77 The principal employer or the agent of the principal employer is responsible for verifying the payment of wages to contract workers.78 However, Modelama’s labour contractors refuse to provide contract workers with wage slips, which is a direct violation of the Act. Modelama, as the principal employer, is also violating the Act each time its labour contract fails to comply. Moreover, the workers lack of documentation makes it nearly impossible for workers to prove the wage theft. A former study79 illustrates the “big business” of wage theft in the Gurgaon garment industry. SLD compiled the semi-annual reports that labour contractors submit to licensing officers every six months. This semi-annual report provided a baseline for SLD to estimate the amount of money that labour contractors were stealing.

As demonstrated by the table below, even the most conservative estimate of wage theft was Rs 8,309,478.80 Similarly, the estimated wage theft by another labour contractor for the same period ranges from Rs 7,419,482 to Rs 18, 205,807.81

Tables of wage theft by Labour contractors

Table 1: Wage Theft by Contractor A in company A

Half-year period ending

Daily Minimum Wage for

“Unskilled” (In INR)

Total man days of

work reported

Total wages paid (In

INR)

Average daily wage

paid (In INR)

Unpaid daily

amount per worker (In INR)

Total wages not

paid (In millions

INR) June 2010 162.08 141,219 19,783,287 140.10 21.99 3.1

Dec. 2010 167.23 136,634 19,733,567 144.43 22.80 3.1

75 (Modelama Union Workers, 2015) 76The Contract Labour Act (Regulations & Abolitions)Ch. VII Misc.§ 29 (1971). 77Id. 78Id. 79 A Study of the Contract Labour System in the Garment Industry in Gurgaon. Society for Labour & Development New Delhi, September 2012, The National Forum against Contract Labour, Printed at: Arya Offset Printers, Delhi 80Id.,Based on the semi-annual reports between Jan. 2010 to Jun. 2011. 81Id.

P a g e | 25 June 2011 173.19 105,437 16,172,381 153.38 19.80 2.1

Total Wage Theft by Contractor A in company A: 8.3 Table 2: Wage Theft by Contractor B in company A

Half-year period ending

Daily Minimum Wage for

“Unskilled” (In INR)

Total man days of

work reported

Total wages paid (In

INR)

Average daily wage

paid (In INR)

Unpaid daily

amount per worker (In INR)

Total wages not

paid (In millions

INR)

June 2010 162.08 132,751 17,319,579 148.40 13.67 1.8

Dec. 2010 167.23 152,751 20,976,834 156.20 11.02 1.7 June 2011 173.19 145,951 19,188,805 146.30 26.86 3.9

Total Wage Theft by Contractor B in company A: 7.4

Table 3: Wage Theft by Contractor C in company A

Half-year period ending

Daily Minimum Wage for

“Unskilled” (In INR)

Total man days of

work reported

Total wages paid

(In INR)

Average daily wage

paid (In INR)

Unpaid daily

amount per worker (In INR)

Total wages not

paid (In millions

INR)

June 2010 162.08 45,138 5,866,003 148.40 13.67 0.6

Dec. 2010 167.23 51,982 6,353,030 125.47 41.75 2.2 June 2011 173.19 46,010 5,389,562 133.24 39.94 1.8

Total Wage Theft by Contractor C in company A: 4.6

In addition, if Modelama’s labour contractors are not putting these funds directly into their pockets, they are reporting inflated numbers to Modelama. These contractors inflate their numbers with the stolen proceeds in order to appear more efficient to Modelama. In return for their efficient work, Modelama gives the contractor a bonus/and or promotion. 82 Further, Modelama’s labour contractors do not pay contract workers the same wages that permanent employees are paid for similar work.

Ahuja83 conceded that this is an economic reality. Principal employers use contract workers because they will

accept less wages to secure work. Ahuja recommended

82 (Singh, 2015) 83 (Ahuja, 2015)

P a g e | 26

that contract workers should receive at least seventy-five percent of the wages paid to permanent employees.

However, Ahuja’s position ignores the fact that this practice violates the Universal Declaration of Human Rights,84 the International Covenant on Social and Cultural Rights,85 and the Act that protects workers from this unfair treatment. In fact, the Act specifically enacted to ensure that contract workers received equal pay and benefits. Because the Act ultimately intends to abolition contract labour, this provision disincentivize the use of contract workers.86 Thus, if this provision is not enforced against Modelama, then Modelama will continue to use contract labour to increase economic efficiency and profits. Similarly, labour contractors withhold the back wages and bonuses owed to illegally terminated contract workers.

One employee explained that after working for three years at Modelama, Modelama fired here under the pretense that she had failed to meet production quotas. They refused to pay

her wages upon termination. Eventually, they paid her some of the wages due but they did not pay her in full for the hours

she worked. They never paid her any of her bonuses required due to the time she worked with the employer.87

Modelama routinely terminates workers without pay. This practice violates the Industrial Disputes Act, which requires that notice and payment of fifteen days wages at terminations for all employees employed over one year. In addition, this practice violates the Payment of Bonuses Act88 and Contract Labour Act, which requires that contractors pay all bonuses due to the employees.89 In addition, labour contractors change the hiring date of workers to prevent the worker from earning bonuses.

One employee explained that after he was wrongfully terminated at Modelama, he won a conciliation case and was rehired, but lost all seniority benefits and bonuses for the past

years he worked with Modelama.90

84United Nations, The Universal Declaration of Human Rights, Art. 25. (1948) 85United Nations, International Covenant on Social and Cultural Rights, Art.7. (1979). 86 The Contract Labour (Regulations & Abolition) Haryana State Government, Art. 37. 87 (Modelama Union Worker, 2015) 88The Payment of Bonuses Act, Haryana State Government (1952). 89The Contract Labour Act (Regulations & Abolition), Haryana State Government (1952). 90 (Modelama Union Worker, 2015)

P a g e | 27 Additionally, failing to pay employees wages at the time of termination ensures they must look for new work and lack resources to pursue an industrial dispute claims. Moreover, even if the contract worker can prove that a wage theft violation occurred, the courts have often held that workers are not entitled to the bonuses that the labour contractor failed to pay.91 The courts reason that the Act’s definition of “wages” does not include the bonuses, despite that fact that employees have earned them. Under the Contract Labour Act, employees not properly paid their wages can seek compensation from the principal employer, who must have an agent present to verify that all wages have been properly paid. However, contract workers have trouble to recover lost wages from their employers. First, the contract workers have no proof of their employment or the hours they worked for the labour contractor because they are not given wage slips as required by law. This is why labour contractors refuse to provide employees with documentation regarding their employment.

Ahuja92 stated that these documents can be obtained during a labor dispute filed in the court system. However,

this is problematic requests for documents are not mandatory during the conciliation process, and many labor commissioners will not force labour contractors or principal

employers to produce this information for conciliation.

This is because many labour commissioners receive significant bribes for favorable treatment from major companies. Unfortunately, even if workers had the documentation needed to prove their claims, many workers do not have the time or resources to file court claims against the principal employer due to the time and resources required to obtain documents through the court process to prove a wage theft claims. Because Modelama does not adequately compensate its workers, when Modelama fires them, these workers are not in a position to adjudicate their claim against Modelama. In addition, Modelama’s labour contractors break the law when they do not make the required monetary contribution to their contract workers Provident Fund and Employee State Insurance program. The Act holds principal employers accountable for their labour contractors’ noncompliance. However, because individual workers do not have the resources, workers rarely bring the principal employer or contractor to task.

As one former Modelama worker stated, he did not discovered that Modelama had not made the required

contributions to his Provident Fund or the Employee State Insurance programs, until after Modelama fired him. This

former Modelama worker stated that he would not pursue a

91Cominco Benani Zinc Ltd. v. Pappacham, (1989). 92 (Ahuja, 2015)

P a g e | 28

claim against Modelama because he did not have the time or money to do so.

Because workers do not pursue these claims, this provision is not enforced against Modelama. Unfortunately, this profit-without-legal-repercussion practice makes contract labour attractive and lucrative to other principal employers.

One contract worker explained that when he tried to talk with the principal employer about the contributions, the principal employer told him to take the issue up with the

labour contractor. The labour contractor sent the employee back to the principal employer to resolve the dispute.The

issue was never resolved. 93

This highlights another issue with the relationship between labour contractors and principal employers. Despite the Act outlined the specific duties of each party, when labour disputes arise, the principal employer and the labour contractor point the finger at each other. Because neither party takes responsibility, the worker cannot address seek justice. Moreover, the principal employer and/or labour contractor can steal from their contract worker without consequences. Because of the above-mentioned hurdles that a worker must overcome to file a complaint, very few workers even attempt to recover unpaid wages from the principal employer. This unchecked system allows illegal labour contractors to thrive on the stolen wages of their contract workers.

VIII. BARRIERS TO JUSTICE CREATED BY MODELAMA When the totality of labour violations, which take place at Modelama, are examined, it is clear that the company engages in a scheme of labour rights violations which ensure that there is no documentation of workers or the work conditions and workers will live with financial and job instability. Such a scheme of labour violations ensures that workers will not be able to assert their rights within the Indian justice system, which effectively renders progressive worker friendly labour laws invalid. Specifically, the biggest barrier that prevents contract workers and permanent workers from raising labour disputes is there is no documentation to support claims that workers’ rights have been violated. One of the main purposes for enacting the Contract Labour Act was to ensure that using contract labour was well documented and regulated to ensure that contract workers are not exploited. Modelama uses contract workers in violation of the Contract Labour Act in ways that undermine the purpose and spirit of the Act. By failing to document, the labour agreement between workers and the labour contractors Modelama and the labour contractors they employ ensure there is no documentation available to substantiate claims for wage theft and other labour abuses. Without such

93 (Gurgaon Garment Factory worker, 2015)

P a g e | 29 documentation, workers have no way to access justice, especially because the government fails to enforce or check for employer compliance with the Contract Labour Act. The Contract Labour Act contains specific, detailed requirements to ensure that where contract labour is used the conditions, terms of the employment of contract workers are documented, and the workers are treated fairly. The Act requires that labour contractors maintain proper records of all the employees they hire, wages paid, and termination of any employees. The act requires that the labour contractors provide employees with documentation to prove the terms at the time of hiring, wages paid to employees, and termination. Failure to provide such documents deprives workers of their right to bring labour disputes against Modelama and access the courts. Unfortunately, in labour disputes the worker had to prove that an employment relationship existed and the terms of their employment agreement were violated. With no documentation many contract workers cannot prove that an employment relationship even existed, let alone that the terms of the employment agreement were violated. These workers are denied any practical access to the court system to resolve labour disputes. While employees have the right to bring labour dispute cases, such rights are effectively stripped from workers due to Modelama’s actions which prevent employees from having the resources or documentation to bring labour dispute cases. International human rights laws emphasize that one off the most important rights that citizens have is the right to access the law and to be treated equally before the law. Due to the labour violations at Modelama, workers are unable to access the law, let alone be treated fairly before the law. The Supreme Court of India explained:

The equality clause in the Constitution does not speak of mere formal equality before the law but embodies the concept of real and substantive equality which strikes at inequalities arising from vast social and economic differentials and is consequently an essential ingredient of social and economic justice.94

Clearly, when the Indian government enacted such laws and provisions to protect contract and permanent workers they meant for such laws to ensure that workers have an actual opportunity to bring legal claims and labour dispute cases. The work conditions and wage theft at Modelama strips workers of these rights and denies them equal treatment and justice before the law. The practices by labour contractors who deny contract workers the right to documentation regarding their hiring, wages paid for work, and termination operate as a complete barrier to accessing the justice system and deny workers any ability to fight meaningfully against labour violations. The denial of such rights only further empowers the labour contractors and enables them to engage in even more rampant abuses of the contract labour system. That contract workers have a right to bring labour disputes to conciliation and the court system means nothing if these workers are denied even the most minimal of documentation required to substantiate their claims and verify the abuses taking place. Hiring labour contractors is advantageous for the principal employers, as they can claim they have no awareness of the violation perpetrated by the labour contractors, and limit their liability if labour contractors engage in abusive practices. Unfortunately, even if labour violations are proven against a labour contractor, the principal employer will fire that labour contractor and find a new one who will engage in the same labour violations and illegal labour contracting practices. However, the principal employers can hardly claim ignorance of the violations of the Contract Labour Act perpetuated by their labour contractors, as the principal employer must have an authorized agent to verify that all wages are being paid in full. Modelama is complicit in the wage theft that labour contractors

94Minerva Mills Ltd vs. Union Of India, 1980 AIR 1789, 1981 SCR (1) 206.

P a g e | 30 perpetuate, or they are actively involved in such wage theft. In either situation, Modelama is liable for all wage theft occurring. Unfortunately, as previously stated workers have no documentation to support or bring claims of wage theft against the labour contractors. This ensures that wage theft will continue to be rampant and Modelama will not be held accountable. This undermines the provision of the Contract Labour Act, which requires the principal employer to pay all wages if a labour contractor fails to disperse wages to employees. Section 21(4) were an “inbuilt safety valve” to ensure employees are compensated and that principal employers are not disinterested in the practices of the contractors they hire.95 However, this provision has been rendered null and void because the principal employers fully know that such claims will not be brought specifically due to the actions of the labour contractors which deny workers any documentation regarding their employment.Modelama cannot claim ignorance as to their hiring of illegal labour contractors, as they must obtain a license and list all labour contractors they will use and the terms of the agreement they have with the labour contractor. Modelama’s failure to comply with the Contract Labour Act and failure to monitor labour contractor actions ensures that contract workers cannot access the legal system. In such an environment Modelama is free to continue to engage in rampant and more severe human rights violations without fear of consequences. Additionally, by breaking unions and limiting union activity the company has also ensured that the employees are unable to collectively fight against the labour violations that take place. The reality is that Modelama has created work conditions in which workers have completely been stripped of their rights, and workers have no way to hold Modelama accountable before the law.

X. BARRIERS TO JUSTICE CREATED BY THE LEGAL SYSTEM Even if workers have documentation which is sufficient to support claims that will give rise to a legal dispute, the legal process is too lengthy and costly to allow workers to bring claims against their principal employers and labour contractors. The legal system is already overwhelmed with too many cases and claims that need to be heard. Combine this with delay strategies and tactics that employers use in litigating, and court cases to drag on in excess of 4 years. During this time workers must find a way to support themselves and their families. This creates a huge disincentive for workers to actually bring a labour dispute even if there is sufficient proof of labour violations. However, the conciliation program is much quicker and takes around 3 to 4 months. However, the conciliation process is about leverage between employer and employee and involves a great deal of compromise between both parties. Additionally, while labour commissioners are capable of forcing companies to provide documents and additional information during the conciliation process, this rarely happens. Many individuals we interviewed noted that companies provide significant bribes and “gifts” to labour commissioners so that they will have an ally during the conciliation process. Ahuja denies that such practices take place, and claims that the conciliation process works well if the unions and employees are willing to be reasonable. According to Mr. Ahuja, the issue is that unions and employees only focus on their legal rights, but ignore the duties that workers owe to employers. However, such statements ignore that often times conciliation disputes are brought only for severe labour rights violations like wage theft and illegal termination. Despite such facts, generally the conciliation process can successfully resolve a dispute between workers and employers 70 to 80 95Secretary Haryana Electricity Board v. Suresh, 1999 LLR 433 (SC): AIR 1999 SC 1160: 1999 AIR SCW 892.

P a g e | 31 percent of the time. However, workers who win their cases at conciliation will still be subject to abuse and harassment upon their return to employment. Even where workers are able to win a case at conciliation or in the legal system there is no way to provide the employees with actual compensation. This is especially true in cases where contract labour is employed, as labour contractors will simply find a new establishment to work with and close down their business operations when a significant labour dispute is likely to be resolved in favor of the contract worker. This means that an employee may have an enforceable judgment, but be unable to find the labour contractor to enforce the judgment. In such cases the worker can seek to obtain compensation from the principal employer, but again this will take sufficient time and resources. Additionally, even if the employee can obtain their wages from the principal employer, they are not able to recover any bonuses or gratuity owed, because such compensation is not within the definition of “wages” under the Contract Labour Act. Based on these realities workers are unlikely to file a case knowing that even if they are able to obtain a valid judgment it might not be enforceable. This is just another of the many disincentives that prevent workers from using the justice system to fight against labour violations. Consequently, the court process is too lengthy and costly for employees to bring claims against their employers. This is especially true due to the fact that Modelama ensures that when employees are illegally terminated they are not paid wages and lack financial stability or the benefit of economic safety net programs like the Provident Fund. Given that employees lack proper documentation to substantiate their claims against the employer, the chances of collecting on a judgment are unlikely, and the process may take years, many employees do not think filing a claim is worth their time. Similarly, many workers have no choice but to go and find new work immediately due to their economic circumstances which means they have no choice but to forgo filing a labour dispute claim. Modelama knows that the legal process to litigate disputes takes years, and by ensuring that employees lack financial stability at the time of termination, they have ensured that no labour dispute claims will be brought against the company.

XI. KEY TAKEAWAYS When the totality of the labour law violations at Modelama are examined, it is clear that Modelama engages in systematic human rights violations in an effort to ensure that workers lack access to the justice system. Specifically, Modelama exploits contract workers to limit job security, drive down costs of doing business, and ensure that workers do not remain employed long enough to form unions or protest labour conditions. Similarly, Modelama engages in a variety of tactics to ensure that there is no documentation of workers or records of their activities while they are employed. However, Modelama engages in abusive and coercive contracting practices to ensure that they have proper documentation of forced resignations or other similar sham agreements to be used if there is a future labour dispute. Furthermore, Modelama engages in rampant wage theft from contract workers to ensure that such employees lack the financial stability to permit them to protest unfair labour conditions and practices. When all of these circumstances combine, along with the extremely long process of litigating court case due to inefficiencies in the legal system, workers are completely denied any meaningful access to the justice system. In such an environment, workers’ only hope of justice is through collective bargaining and unionization. Because workers are barred from accessing the justice system, unionization and collective bargaining is the only way for Modelama workers to fight against unfair labour practices. Unfortunately, Modelama knows this is the case and actively fights against unionization at all costs. Modelama will

P a g e | 32 take any steps necessary including physical violence, government bribes, and illegal termination to ensure that workers are afraid to form unions. As the labour dispute involving GAP illustrates, even when workers form strong unions Modelama will find a way to undermine the collective bargaining process and ensure that work conditions do not change. Similarly, the labour dispute involving GAP illustrates that brand pressure to address working conditions can be a valuable way to address labour conditions. However, brands like GAP need to take active steps to ensure that labour violations are actually corrected, and not just terminate contracts and find new garment manufacturing companies who engage in the same abusive management practices. Now it is critical that workers form unions and recognized to fix the labour conditions, which prevent workers from being able to access the justice system. Without the collective bargaining power of unions, employees will continue to suffer abuse at the hands of Modelama, and it is likely that the working conditions will continue to deteriorate. Lastly, progressive laws with significant worker protections are in place but enforcement of such laws is nonexistent, which makes accessing the justice system that much more critical for workers. Corruption is rampant in the government and it is unlikely that the government has the time or resources to ensure that companies like Modelama are properly following the provisions of the Contract Labour Act. Therefore, those protections and provisions will only be able to help workers if they have access to the justice system. It would be ideal if the government properly monitored and regulated the use of contract labour according to the laws in place. However, it is not practical to expect that this will occur in the near future. Conciliation offers a great legal dispute resolution process in which workers can quickly and effectively settle legal disputes with employers. However, as previously stated, the conciliation process involves leverage between parties and there is corruption and bribery of conciliation officers. For these reasons, it is critical that employees can form unions to collectively put pressure on employers during the conciliation process to obtain more favorable outcomes. Without such collective action the benefits of the conciliation process will not be fully realized by workers who bring claims against Modelama.

XII. RECOMMEDATIONS THE SYNTHESIS OF THE REPORT HAS YIELDED THE FOLLOWING RECOMMENDATIONS:

The burden of proof to establish an employment relationship and labour violation should not be placed on the employees bringing such claims. These legal provisions should be changed in the laws, and judges should force employers and labour contractors to prove that violations have not occurred. Employers and labour contractors are required by law to provide employment cards and wage slips to workers. Additionally, employers and labour contractors are required to maintain registers of records regarding hours worked, wages paid, and actions taken against employees. Therefore, it should be the employers and labour contractors who have the burden of proving that labour violations did not take place. It is impractical to expect an employee to provide documentation to prove a labour dispute, as employers like Modelama know that without documentation no such claims can be brought. If companies like Modelama have the burden of proving that no violations have taken place and wages have been paid there will be no incentive to not provide wage slips and employment ID cards. These simple changes will alter the balance of power between companies and employees who are seeking to bring labour disputes.

P a g e | 33 While the Contract Labour Act provides that employers must pay equal wages for equal work, contract workers are almost never paid the same wage as permanent employees. Employers and contractors circumvent the law by claiming the work is not similar to constitute equal work. Because similar and equal are not objectively quantifiable, the recommendation is that contract workers must be paid at minimum 80 percent of the rate the permanent worker is being paid. In addition, piecework payment must be eliminated. The federal government should enact a minimum floor at which a percentage of the wages earned by permanent employees must be paid to contract workers who are engaged in the same or similar work. The Industrial Employment (Standing Orders) Act, section 13 provides that employers are not required to give termination notice to workers classified as either probationer or temporary. Employers abuse these classifications by extending probationary periods. Therefore, the recommendation is that the federal government should enact legislation in which probation periods are limited to six months without extension. The rubric for evaluation of the probationer’s performance should be provided to the probationer and based on fair and objective criteria. The evaluation chart should have a two-part component, where both management and the worker’s co-workers evaluate the probationer’s work performance. Such practices will ensure that workers have The federal government should abolish contract labour for all manufacturing jobs, or in the alternative, they should monitor compliance with the Contract Labour Act and enforce all provisions with severe fines and penalties for employers who abuse the contract labour system. Manufacturing work is not the type of temporary work for which contract labour is ideal or necessary. While unions and workers might be more successful challenging the validity of permits granted to companies like Modelama to use contract workers, litigation is expensive and the legal process take too much time. The federal government has the power to ensure that contract labour is not used in permanent jobs in manufacturing facilities. The issue is simply one of enforcement or in the alternative, a change in laws which prohibits contract workers in manufacturing positions. Last, workers are barred from accessing the justice system because corruption within the government structure is unbridled and the time for court cases can drag on for years. Corruption is not unique to India, and power abuses take place all over the world. However, government corruption does not appear to be stigmatized, but an accepted practice. Unfortunately, this report cannot identify an answer to the question: how to eradicate government corruption? However, the strength and determination in the workers promotes optimism that there is an answer. Through collective action, workers can unite and fight for a fair and accessible justice system in which all citizens are treated equally before the law. So long as workers do not let companies like Modelama break their spirit, through collective action workers in India can bring about change and justice.