Unilever India: Support the Union Struggle against Bogus Factory Sale and Illegal Closure

Posted to the IUF website 13-Sep-2006

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For many years Unilever has been restructuring its operations in India to take advantage of tax concessions and eliminate jobs as cheaply as possible. Since July of last year, the Hindustan Lever Employees Union (HLEU), a member of the IUF-affiliated All India Council of Unilever Unions (AICUU) has been struggling against the fraudulent sale and closure of the Hindustan Lever Mumbai (Bombay) factory which manufactures soaps, toothpaste and shampoos. In July 2005 Unilever's subsidiary in India, Hindustan Lever, sold the factory to a company called Bon Limited. Two months later Bon Limited made an application to the Government to close the factory and retrench over 900 members of HLEU (some 100 workers have since opted for formal retirement). The sale of the Bombay factory by Hindustan Lever was financed through a loan of USD2.17 million by Hindustan Lever to Bon Limited. The purchase price was 1.8 million. At the time of the purchase, Bon Limited had a capitalization of only USD 10,800! The fraudulent transfer of ownership from Hindustan Lever to Bon Limited - which is the subject of a criminal complaint filed by HLEU - is an attempt by the Unilever management to break the union's collective bargaining power and transfer production to areas where there are greater tax concessions.

Through mass mobilizations and a series of legal challenges over the past year HLEU has finally secured a High Court decision to halt the closure while both the transfer of ownership and the application to close are investigated by an Industrial Tribunal. In a clear victory for the union the High Court also ordered that the two core issues - the legality of the ownership transfer, and whether the closure is justified - be resolved within 6 months.

In an attempt to break the power of the union, the management launched an aggressive campaign to force workers to accept a "voluntary retirement scheme" (VRS) by misinforming workers about the amount of VRS and claiming that workers risk getting nothing after the closure is finalized. Despite the management's use of direct pressure on individual workers and their families, only 100 out of 902 workers opted for VRS. This means that 90% of union members remain committed to fighting against the illegal closure and demand that the factory be reopened.

This attack on the union comes after nearly two decades of management refusal to bargain in good faith. In fact, every year for the past 20 years (since 1986) management has refused to reach any settlement in annual collective bargaining negotiations. As a result all wage increments in line with inflation were achieved only through court orders. It is also significant that during the 1988-89 lockout the management of the Hindustan Lever Bombay factory transferred machinery to other factories: a criminal act under Indian law for which four senior managers were found guilty and are currently out on bail.

In a last attempt to escape its legal obligation to negotiate with the union over restructuring, the Hindustan Lever management has now flagrantly violated yet more laws and launched what it thought would be its final offensive against the union. But through HLEU's organizing efforts and the incredible commitment of its members and their families, together with the solidarity extended by unions throughout the state of Maharashtra under the umbrella of the Trade Unions Joint Action Committee, HLEU continues to resist this attack.

On 11 September the HLEU held a press conference in Mumbai to expose Hindustan Lever's illegal actions in closing the facility, including the company's lies regarding compensation to workers and its exercise of undue influence on the Commissioner of Labour in attempting to secure legal approval of the closure. The union also announced that a major demonstration will be held on 18 September 2006.

As the campaign escalates over the next 6 months even greater local and international solidarity will be needed to pressure Unilever to stop its illegal actions and meet HLEU's demands, which are that:

• Unilever's subsidiary Hindustan Lever must reverse the bogus transfer of ownership of the factory to Bon Limited, re-open the factory and resume the direct employment of 802 union members and fulfill its legal obligations as the real employer;


• Any plans regarding restructuring or closure must be negotiated in good faith with the union and must be carried out according to the law.

International union support for the HLEU's struggle is more important now than ever. At stake is Unilever's ability to flout the law wherever it seeks to avoid legal requirements on union recognition and collective bargaining, particularly in the context of restructuring. You can support the HLEU by (sentence continues by merging with paragraph below)writing to Hindustan Lever, to the parent company Unilever's CEO and to the state authorities to demonstrate international support for the union's demands, to demand that Unilever abide by the court decision to halt the closure and to insist that the future of the plant be negotiated with the union in good faith and with full respect for the law.

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We thank you in advance for your solidarity and support.