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Workers win compensation for illegal closure of Unilever India's Dharwad factory, but cheques bounce

Posted to the IUF website 29-Sep-2008

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Eight years after the illegal closure of Unilever India's factory in Dharwad in Karnataka state, 42 workers finally received compensation in accordance with a Labour Court ruling against the company. But when they went to cash their cheques this month ... they bounced due to "insufficient funds".

This came as a shock to the 42 workers, members of the IUF-affiliated Hindustan Lever Employees Union (HLEU), who had finally won an eight-year battle against the illegal closure of the Dharwad factory.

But this struggle also tells the story of Unilever's systematic abuse of tax concessions in India. Unilever continues to close factories and relocate production from one rural area to another as it chases tax concessions and subsidies from competing local governments. In most cases this involves the destruction of unionized jobs and the creation of precarious, non-unionized jobs in areas where local political interests are more likely to ignore the company's violations of workers' rights.

It also involves the illegal closure of factories in the rush to grab new tax concessions. As we have seen in Dharwad and also in Mumbai, Unilever management is adept at fabricating the conditions for factory closure, involving a complex web of lies and deceit that often takes years to uncover in the courts.

The Dharwad factory was established in 1993 as an independent subsidiary of Hindustan Lever. When the factory first opened in this "backward" rural area in Dharwad it was granted extensive tax concessions.

In January 1999, once the tax concessions ended, management set about secretly closing the factory over the next 12 months. Half the machinery and production was transferred to other Hindustan Lever units, while the workers were rendered "surplus" and given menial manual tasks like cutting the grass and other odd jobs. All supervisors, production officers, technical officers, and accounts officers were transferred to other units of the company.

On 11 March 2000 all operations at the factory ceased. Over the next 8 months the union fought back, finally winning an agreement with management in October 2000. But within 24 hours management undermined the agreement and tried of back out of its responsibility. What followed was a seven-year battle in the courts with the union over the illegal closure of the factory and the illegal termination of employment of the remaining 42 union members.

Finally on 1 September 2007 the Labour Court of Hubli Karnataka ruled in favour of the workers and awarded them full back wages with 8% interest and reinstatement in the other units of Hindustan Lever, preferably nearby in Karnataka state. But a year later when the company finally issued cheques for 7 years of back wages (plus interest), the cheques bounced! After a few days the workers finally got their cash.

In many ways the bounced cheques in Dharwad also tell the story of Unilever today. As Unilever globally liquidates its assets to channel more and more cash to shareholders, its operating capital has fallen to the lowest levels in the company's history. Maybe more workers around the world will soon discover that one of the world's largest home & personal care goods and food companies has "insufficient funds" ....