The document discusses the violent labor unrest at Honda Motorcycle & Scooter India (HMSI) on July 25, 2005, stemming from the management's rejection of workers' wage increase demands and subsequent retaliation against union efforts. The conflict escalated when police intervention resulted in violent clashes, highlighting the need for improved industrial relations and updated labor laws in India. The situation raised concerns over India's image as a foreign investment destination due to the negative portrayal of Japanese management practices amidst the unrest.

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Labor Unrest at Honda Motorcycle & Scooter India (Private) Limited
"The violence near the Honda plant at Gurgaon was instigated by outside forces who had misled the workers."
1
- Spokesperson, Honda Motorcycle & Scooter India Pvt. Ltd., in 2005.
"The incident was a disadvantage for India's image as a foreign investment destination
2
and also gave a negative
image of Japanese management."
3
- Yasukuni Enoki, Japanese Ambassador to India, in 2005.

2. "This incident has brought to light the need to look at labor laws afresh. We cannot have archaic labor laws in a
liberalized economy."
4
- Surinder Kapur, Chairman, Sona Group,
5
in 2005.
Introduction
On July 25, 2005, the management of the Honda
Motorcycle & Scooter India (Private) Limited, (HMSI),
a wholly-owned subsidiary of Honda Motor Company
Limited
6
(HMCL), encountered violent protests from
workers that disrupted production at their plant in
Gurgaon
7
.
HMSI workers were severely beaten up by the police,
and newspapers and TV channels gave wide
coverage to the violence of the action. The protest
followed six months of simmering labor unrest at the
HMSI factory in which the workers also resorted to
job slowdown
8
(since December 2004 when the
workers' demand for an increase in wages was
rejected by the HMSI management).
Labor Unrest at Honda Motorcycle & Scooter India (Private) Limited - Next Page>>
1] "Outsiders Instigated Labor Unrest: Honda Management," www.indiacar.net, July 27, 2005.
2] As of 2005, Japanese investment in India was around US$ 2 billion and there were around 250 Japanese companies
operating in India.
3] Kushal Jeena, "Labor Unrest at Honda May Hurt India," www.news.monstersandcritics.com, July 26, 2005.
4] S. Kalyana Ramanathan, "India: Is Labor Trouble Resurfacing?" www.rediff.com, August 6, 2005.
5] Sona Group is an India-based automotive component manufacturer.
6] HMCL, headquartered in Tokyo, Japan, was the largest manufacturer of two-wheelers in the world. As of 2005, it had
more than 120 manufacturing facilities in 30 countries worldwide and its comprehensive range of business had brought the
company over 17 million customers annually.
7] Gurgaon is a satellite town near New Delhi, India.
8] Job slowdown refers to slowing down of operations by employees.

3. With their demands being rejected by the
management, the workers tried to form a trade union
and this resulted in a confrontation with the
management. Fifty workers of the production team
were suspended and four others dismissed in May
2005. Apparently there was a show of strength
between the management and the workers.
While the management alleged that the workers were
resorting to 'go-slow'
9
tactics and were threatening not
to return to work until their colleagues had been
reinstated, the workers alleged that the management
was using pressure tactics such as victimization of
active union members and a 'lock-out'
10
to break the
back of the union.
On July 25, 2005, the workers of the plant were demanding reinstatement of the suspended employees
when some workers allegedly attacked policemen on the plant premises.
This led to police intervention and a violent tussle ensued
between the police and the workers in which workers
protesting peacefully were also beaten up.
The police were reported to have overreacted and it was
alleged that they had been overzealous in protecting the
interests of the HMSI management, even without any direct
request from the company's management (Refer to Exhibit I
for some images of violence during the HMSI protest).
For companies, the incident brought to the fore the need to
maintain sound industrial relations to ensure productive and
profitable operations.
Excerpts >>
9] In industrial relations, 'go-slow' is a term used to define a slowing down of production by a labor force during an
industrial dispute or grievance, instead of disrupting production totally by resorting to a strike.
10] The withholding of work from employees and closing down of a workplace by an employer during a labor dispute. It is
also called shutout.
Background Note

4. HMCL
Soichiro Honda, a mechanical engineer, established
the 'Honda Technical Research Institute' in
Hamamatsu, Japan, in 1946. His idea was to develop
and later produce small two-cycle motorbike
engines.
Honda's first product, an A-type 50cc bicycle engine,
was produced in 1947. In 1948, HMCL was
incorporated with a capital of ¥ 1 million. Thereafter,
the company started to design and produce
lightweight motorcycles. Honda's first motorcycle, the
D-type two-stroke 98cc, was produced in 1949...
HMSI
HMSI was established on August 20, 1999, and a plant was set up at Manesar to manufacture two-
wheelers for the Indian market. HMCL made an initial investment of Rs. 3 billion to establish the plant
which had an annual production capacity of 200,000...
Labor Unrest at HMSI
The Gurgaon plant of HMSI had peaceful labor relations for
the first few years after it was set up in October 1999.
The management entered into labor contracts with individual
laborers, which covered the basic wage structure and
detailed parameters specifying the work conditions for
workers. In December 2004, the workers at HMSI's Gurgaon
plant started demanding that the management increase their
wages commensurate with the company's growth in the
market...
The Blame Game
The management and the workers traded allegations and counter allegations on what the root cause of the dispute
was. They blamed each other for the situation that ultimately took an ugly turn on July 25, 2005. The management
held the workers responsible for indiscipline and for slowing down production, while the workers insisted that there
had been no indiscipline on their part and that the management was bringing up this issue only to prevent the
formation of a trade union at HMSI...
Excerpts Contd...>>

5. Violation of Laws?
Some analysts charged that the incident was fallout
of the long-term oppression and malpractices at the
Gurgaon factory by the HMSI management.
They alleged that HMSI's management had violated
certain laws relating to the welfare of workers (Refer
to Exhibit III for laws related to welfare of workers in
India).
It was reported that a worker had allegedly been
kicked by a Japanese manager on the shop floor in
December 2004. The services of four other workers
who had come to his rescue were allegedly
terminated...
The Aftermath
HMSI was established on August 20, 1999, and a plant was set up at Manesar to manufacture two-
wheelers for the Indian market. HMCL made an initial investment of Rs. 3 billion to establish the plant
which had an annual production capacity of 200,000...
Could this Ugly Situation have been Averted?
Several factors can lead to a conflict between the workers
and the management of any company, and as such,
companies should be prepared to trace the root cause of the
problem and solve it. Industry experts opined that with
proper understanding of the industrial laws and causes of
disputes, the management and the workers of any company
could avoid incidents such as the one at HMSI (Refer to
Exhibit IV for the Root Cause Analysis for Labor Unrest)...
Exhibits
Exhibit I: Some Images of Violence during the HMSI Protest
Exhibit II: Some More Glimpses from the HMSI Incident

6. Exhibit III: Laws Related to Welfare of Workers in India
Exhibit IV: Root Cause Analysis for Labor Unrest
Case Details: Price:
Case Code : HROB011 For delivery in electronic format: Rs. 300;
For delivery through courier (within India): Rs. 300 + Rs.
25 for Shipping & Handling Charges
Themes
HR Problems
Case Length : 11 Pages
Period : 1997 - 2001
Pub Date : 2001
Teaching Note : Available
Organization : Microsoft Corporation
Industry : Information Technology
Countries : USA
Abstract:
The case examines the charges of gender/racial discrimination and sexual
harassment against leading IT company Microsoft. It explores in detail the
treatment meted out to female employees in the company's initial years and
the measures Microsoft took to improve the work culture of the organization.
The case also discusses the lawsuits against Microsoft that allege racial
discrimination, and analyzes the implications of such changes for the
company.
Issues:
» Factors that contribute to discrimination and harassment, and the impact of such behavior on the company and its
employees
Contents:
Page No.
Charges of Discrimination 1
Background Note 2
About Racial/Gender Discrimination & Sexual Harassment 3
The Charges Against Microsoft 4
In Trouble - Again 7
Exhibits 9
Key Words:

7. charges, gender, racial, discrimination, sexual harassment, IT, company, Microsoft, treatment, meted, female
employees, initial years, Microsoft, improve, work culture, organization, lawsuits
Microsoft - Discrimination at the Workplace
"How is Microsoft responsible for my stress disorder? Simple, 12 years of subjecting me to unequal and contradictory
treatment, debasement, sexual harassment and outright illegal practices in its hiring, management, and disabilities
protocols."
- A former female Microsoft employee, in December 1997.
"There are glass ceilings and glass walls in place for African Americans at Microsoft. We are stunned and
disappointed in their treatment of Black employees."
- Willie Gary, lawyer of an ex-Microsoft African American employee, in January 2001.
Charges of Discrimination
In January 2001, seven of Microsoft's former and
current African-Americans employees filed a
discrimination suit against the company. One of the
largest discrimination suits ever filed in the US, it
alleged racism and plantation mentality
1
at their
workspace and sought $ 5 billion in damages.
Microsoft was accused of discriminating against its
employees through performance evaluations, pay
packages, promotions, wrongful terminations and
retaliation. This suit consolidated all the
discriminatory suits filed separately by the seven
employees.
The suit was subsequently given the status of a class
action,
2
extending its reach to Microsoft's vast base
of former and current African-American employees.
Thus, all the former and current African-American salaried employees employed by Microsoft (in the US)
on or after October 4, 1997 and all the former and present female salaried employees employed by
Microsoft on or after February 23, 1999 were included in the suit. The filing was primarily based on the
existing case of Rahn Jackson,3
one of the first Microsoft employees to take legal action against
Microsoft for racial discrimination.

8. The plaintiff claimed that Microsoft's employment
policies and practices permit its managers to
exercise discretion when deciding on evaluations,
pay packages, promotions and job selections,
resulting in decisions that reveal a race/gender bias.
During the early 1990s, many discrimination related
suits had been filed against Microsoft. In the
Donaldson
4
Vs. Microsoft case, the plaintiff alleged
that Microsoft discriminated against the Black and
female workers by paying them smaller salaries,
bonuses and stock options than it paid white males
performing the same work. The suit also alleged that
Microsoft had even retaliated against Black and
female employees who protested against this
discrimination
Charges of Discrimination Contd...
Reacting to increasing media coverage of lawsuits
filed against it, Microsoft claimed that the company
did not tolerate employee discrimination and was
focused on offering unbiased treatment to employees
and promoting women and members of minority
groups in its organization. However, few people
bought their story. Willie Gray, one of the leading
attorneys dealing in discrimination suits, argued that
Microsoft showed plantation attitude when it came to
dealing with African-American workers. Gray
remarked that in 1999, only 2.6% of the Microsoft's
employees and only 1.6% of its managers were
Black. Throughout the 1980s and early 1990s,
Microsoft remained in the news for discriminating
against women and African-Americans.
Many cases of both sexual harassment and discrimination against female employees were reported.
Though the issue of racial discrimination arose in the late 1990s, it was only in 2000 that the employees
initiated legal proceedings against Microsoft, demanding equality and justice.
Background Note
William H. Gates (Bill Gates), along with his friend

9. Paul Allen, established Microsoft Corporation in
1975. Bill Gates initially focused on software instead
of hardware. Over the next two decades, Microsoft
emerged as one of the richest and most influential
companies in the world. In 1998, the company
became the world's most highly valued company,
reporting a market capitalization value of $466 billion.
Microsoft is engaged in developing, manufacturing,
licensing and supporting an extensive range of
software products and services for a multitude of
computing devices.
Microsoft sells software to over a 180 million people. Its products are available in over 30 languages and are used in
more than 50 countries. The company is also involved in developing highly advanced, robust technologies for next
generation software products. Microsoft's success was attributed to (among other things) its effective recruitment and
employee retention strategies. Microsoft had always attempted to attract the best talent.
According to a press report, "Microsoft seeks a particular type of smart person, one who is pragmatically inclined,
verbally agile and able to respond deftly when challenged." Because of its efficient performance appraisal system and
work culture Microsoft had a very low employee turnover rate. Microsoft gave incentives to employees on the basis of
their performance appraisal. Employees underwent a performance review every year...
About Racial/Gender Discrimination & Sexual Harassment
Racial and gender discrimination may be described as any verbal or physical act which is intended to cause or could
reasonably be expected to cause individuals or groups to feel intimidated, demeaned, or abused because of their
racial, ethnic, gender or national background.
Sexual Harassment may be explained as an illegal
form of gender discrimination, which is void under
Title VII of the United States' Civil Rights Act of 1964.
The state and federal laws of the United States
prohibit specific kinds of discrimination.
Title VII of the Civil Rights Act of 1964 states that
"managers can't hire, fire, pass over for promotion,
deny a vacation request, do anything surrounding the
terms and conditions of employment because of
someone's protected characteristics. This means you
can't make decisions or take employment actions

10. because of an employee's race, color, gender,
religion, or national origin."...
The Charges Against Microsoft
Instances of gender/racial discrimination and sexual harassment were common in Microsoft since the
1980s. The company was even said to be the 'most disdainful place for women to work' during the
1980s. In its initial years, Microsoft had only a few hundred employees, most of them male. The only
women employed in Microsoft were those who edited technical manuals. The work culture in the
company was by and large undisciplined. According to analysts, all the manners, attributes and traits
that were not acceptable in conventional society were highly prevalent in the company.
According to a report, "Microsoft was a geeks paradise, where issues such as interpersonal skills and
personal hygiene had no importance and the presence of women was barely tolerated. It was the base
of newly evolved computer nerds, who prided themselves on being masters of their fields where women
had yet to take active part and were highly skeptical of the abilities of their female counterparts."...
In Trouble - Again
While the number of plaintiffs complaining of
discrimination at Microsoft kept mounting in 2001,
Microsoft claimed that it was committed to diversity
and did not tolerate discrimination of any type in its
employment practices. The company announced that
it had made considerable progress in increasing the
number of minorities working at Microsoft and had
demonstrated its commitment to diversity and
equality by promoting women and minorities.
According to company sources, as of October 2000,
minorities accounted for 16.5% of total managerial
positions in Microsoft and 22% of the domestic
workforce of the organization as against only 17% in
1997...
Exhibits
Exhibit I: Microsoft's Failure in Preventing/ Remedying Discrimination
Exhibit II: Eliminating Discrimination in Organizations