Unit-1

Industrial Relations

Industrial relations is used to denote the collective relationships between

management and the workers. Traditionally, the term industrial relations is used

to cover such aspects of industrial life as trade unionism, collective bargaining,

workers’ participation in management, discipline and grievance handling,

industrial disputes and interpretation of labor laws and rules and code of conduct.

In the words of Lester, "Industrial relations involve attempts at arriving at

solutions between the conflicting objectives and values; between the profit motive

and social gain; between discipline and freedom, between authority and industrial

democracy; between bargaining and co-operation; and between conflicting

interests of the individual, the group and the community”.

The National Commission on Labor (NCL) also emphasize on the same

concept. According to NCL, industrial relations affect not merely the interests of

the two participants- labor and management, but also the economic and social

goals to which the State addresses itself. To regulate these relations in socially

desirable channels is a function, which the State is in the best position to

perform.In fact, industrial relation encompasses all such factors that influence

behavior of people at work. A few such important factors are below:

Institution: It includes government, employers, trade unions, union federations

or associations, government bodies, labor courts, tribunals and other

organizations which have direct or indirect impact on the industrial relations

systems.

Characters: It aims to study the role of workers unions and employers’

federations officials, shop stewards, industrial relations officers/ manager,

mediator/conciliators / arbitrator, judges of labor court, tribunal etc.

Methods: Methods focus on collective bargaining, workers’ participation in the

industrial relations schemes, discipline procedure, grievance redressal

machinery, dispute settlements machinery working of closed shops, union

reorganization, organizations of protests through methods like revisions of

existing rules, regulations, policies, procedures, hearing of labor courts, tribunals

etc.

Contents: It includes matter pertaining to employment conditions like pay, hours

of works, leave with wages, health, and safety disciplinary actions, lay-off,

dismissals retirements etc., laws relating to such activities, regulations governing

labor welfare, social security, industrial relations, issues concerning with workers’

participation in management, collective bargaining, etc.

Introduction to Industrial Relations: Industrial relations has become one

of the most delicate and complex problems of modern industrial society.

Industrial progress is impossible without cooperation of labors and harmonious

relationships. Therefore, it is in the interest of all to create and maintain good

relations between employees (labor) and employers (management).

Concept of Industrial Relations: The term ‘Industrial Relations’

comprises of two terms: ‘Industry’ and ‘Relations’. “Industry” refers to “any

productive activity in which an individual (or a group of individuals) is (are)

engaged”. By “relations” we mean “the relationships that exist within the industry

between the employer and his workmen.”

The term industrial relations explains the relationship between employees

and management which stem directly or indirectly from union-employer

relationship. Industrial relations are the relationships between employees and

employers within the organizational settings. The field of industrial relations looks

at the relationship between management and workers, particularly groups of

workers represented by a union. Industrial relations are basically the interactions

between employers, employees and the government, and the institutions and

associations through which such interactions are mediated.

The term industrial relations has a broad as well as a narrow outlook. Originally,

industrial relations was broadly defined to include the relationships and

interactions between employers and employees. From this perspective, industrial

relations covers all aspects of the employment relationship, including human

resource management, employee relations, and union-management (or labor)

relations. Now its meaning has become more specific and restricted. Accordingly,

industrial relations pertains to the study and practice of collective bargaining,

trade unionism, and labor-management relations, while human resource

management is a separate, largely distinct field that deals with nonunion

employment relationships and the personnel practices and policies of employers.

The relationships which arise at and out of the workplace generally include the

relationships between individual workers, the relationships between workers and

their employer, the relationships between employers, the relationships employers

and workers have with the organizations formed to promote their respective

interests, and the relations between those organizations, at all levels. industrial

relations also includes the processes through which these relationships are

expressed (such as, collective bargaining, workers’ participation in decision-

making, and grievance and dispute settlement), and the management of conflict

between employers, workers and trade unions, when it arises.

Glossary Of Industrial Relations: Related Terms

For better understanding of industrial relations, various terms need to be defined

here:

Industry:

Industrial Disputes Act 1947 defines an industry as any systematic activity

carried on by co-operation between an employer and his workmen for the

production, supply or distribution of goods or services with a view to satisfy

human wants or wishes whether or not any capital has been invested for the

purpose of carrying on such activity; or such activity is carried on with a motive to

make any gain or profit. Thus, an industry is a whole gamut of activities that are

carried on by an employer with the help of his employees and labors for

production and distribution of goods to earn profits.

Employer

An employer can be defined from different perspectives as:-

A person or business that pays a wage or fixed payment to other person(s) in

exchange for the services of such persons.

A person who directly engages a worker/employee in employment.

Any person who employs, whether directly or through another person or

agency, one or more employees in any scheduled employment in respect

of which minimum rates of wages have been fixed.

As per Industrial Disputes Act 1947 an employer means:-

In relation to an industry carried on by or under the authority of any

department of [the Central Government or a State Government], the

authority prescribed in this behalf, or where no authority is prescribed, the

head of the department;

In relation to an industry carried on by or on behalf of a local authority, the

chief executive officer of that authority;

Employee: -

Employee is a person who is hired by another person or business for a

wage or fixed payment in exchange for personal services and who does

not provide the services as part of an independent business.

An employee is any individual employed by an employer.

A person who works for a public or private employer and receives

remuneration in wages or salary by his employer while working on a

commission basis, piece-rates or time rate.

Employee, as per Employee State Insurance Act 1948, is any person

employed for wages in or in connection with work of a factory or

establishment to which the act applies.

In order to qualify to be an employee, under ESI Act, a person should belong

to any of the categories:

o Those who are directly employed for wages by the principal employer

within the premises or outside in connection with work of the factory or

establishment.

o Those employed for wages by or through an immediate employer in the

premises of the factory or establishment in connection with the work

thereof

o Those employed for wages by or through an immediate employer in

connection with the factory or establishment outside the premises of such

factory or establishment under the supervision and control of the principal

employer or his agent.

o Employees whose services are temporarily lent or let on hire to the

principal employer by an immediate employer under a contract of service

(employees of security contractors, labor contractors, house keeping

contractors etc. come under this category).

Employment: The state of being employed or having a job.

Industrial Relation System

An industrial relations system consists of the whole gamut of relationships

between employees and employees and employers which are managed by the

means of conflict and cooperation.A sound industrial relations system is one in

which relationships between management and employees (and their

representatives) on the one hand, and between them and the State on the other,

are more harmonious and cooperative than conflictual and creates an

environment conducive to economic efficiency and the motivation, productivity

and development of the employee and generates employee loyalty and mutual

trust.

Actors in the IR system:

Three main parties are directly involved in industrial relations:

Employers: Employers possess certain rights vis-à-vis labors. They have the

right to hire and fire them. Management can also affect workers’ interests by

exercising their right to relocate, close or merge the factory or to introduce

technological changes.

Employees: Workers seek to improve the terms and conditions of their

employment. They exchange views with management and voice their grievances.

They also want to share decision making powers of management. Workers

generally unite to form unions against the management and get support from

these unions.

Government: The central and state government influences and regulates

industrial relations through laws, rules, agreements, awards of court ad the like. It

also includes third parties and labor and tribunal courts.

Importance of Industrial Relations

The healthy industrial relations are key to the progress and success. Their

significance may be discussed as under –

Uninterrupted production – The most important benefit of industrial relations is

that this ensures continuity of production. This means, continuous

employment for all from manager to workers. The resources are fully utilized,

resulting in the maximum possible production. There is uninterrupted flow of

income for all. Smooth running of an industry is of vital importance for several

other industries; to other industries if the products are intermediaries or

inputs; to exporters if these are export goods; to consumers and workers, if

these are goods of mass consumption.

Reduction in Industrial Disputes – Good industrial relations reduce the

industrial disputes. Disputes are reflections of the failure of basic human

urges or motivations to secure adequate satisfaction or expression which are

fully cured by good industrial relations. Strikes, lockouts, go-slow tactics,

gherao and grievances are some of the reflections of industrial unrest which

do not spring up in an atmosphere of industrial peace. It helps promoting co-

operation and increasing production.

High morale – Good industrial relations improve the morale of the employees.

Employees work with great zeal with the feeling in mind that the interest of

employer and employees is one and the same, i.e. to increase production.

Every worker feels that he is a co-owner of the gains of industry. The

employer in his turn must realize that the gains of industry are not for him

along but they should be shared equally and generously with his workers. In

other words, complete unity of thought and action is the main achievement of

industrial peace. It increases the place of workers in the society and their ego

is satisfied. It naturally affects production because mighty co-operative efforts

alone can produce great results.

Mental Revolution – The main object of industrial relation is a complete mental

revolution of workers and employees. The industrial peace lies ultimately in a

transformed outlook on the part of both. It is the business of leadership in the

ranks of workers, employees and Government to work out a new relationship

in consonance with a spirit of true democracy. Both should think themselves

as partners of the industry and the role of workers in such a partnership

should be recognized. On the other hand, workers must recognize employer’s

authority. It will naturally have impact on production because they recognize

the interest of each other.

Reduced Wastage – Good industrial relations are maintained on the basis of

cooperation and recognition of each other. It will help increase production.

Wastages of man, material and machines are reduced to the minimum and

thus national interest is protected.

Thus, it is evident that good industrial relations is the basis of higher

production with minimum cost and higher profits. It also results in increased

efficiency of workers. New and new projects may be introduced for the welfare of

the workers and to promote the morale of the people at work. An economy

organized for planned production and distribution, aiming at the realization of

social justice and welfare of the massage can function effectively only in an

atmosphere of industrial peace. If the twin objectives of rapid national

development and increased social justice are to be achieved, there must be

harmonious relationship between management and labor.

Objectives of industrial relations

The main objectives of industrial relations system are:-

To safeguard the interest of labor and management by securing the highest

level of mutual understanding and good-will among all those sections in

the industry which participate in the process of production.

To avoid industrial conflict or strife and develop harmonious relations, which

are an essential factor in the productivity of workers and the industrial

progress of a country.

To raise productivity to a higher level in an era of full employment by

lessening the tendency to high turnover and frequency absenteeism.

To establish and promote the growth of an industrial democracy based on

labor partnership in the sharing of profits and of managerial decisions, so

that ban individuals personality may grow its full stature for the benefit of

the industry and of the country as well.

To eliminate or minimize the number of strikes, lockouts and gheraos by

providing reasonable wages, improved living and working conditions, said

fringe benefits.

To improve the economic conditions of workers in the existing state of

industrial managements and political government.

Socialization of industries by making the state itself a major employer.

Vesting of a proprietary interest of the workers in the industries in which

They are employed.

Role of State in Indian Industrial Relations

India is socialist democratic republic state. Every elected government of the

country has as its bounden duty to secure upliftment of all citizen and to that

extent the constitution provides for rules and regulations through a system of

laws that would facilitate progress, redress of grievances and thereby would

maintain peace and harmony in the society!

As regards "labour" while the State is committed to promote industrial growth

through bilateral relations between employers and employees for mutually

healthy existence, cooperation and progress, the state is NOT oblivious to the

fact that despite best intentions and efforts, sometimes the issues between the

parties may not get resolved at bilateral level and unless a way ro resolve is

sanctified through the constitution of the country and the system of law, there

would be impediments to progress and the expected peace and harmony may

get vitiated. Against this backdrop, it is simple to accept and apreciate that the

State has reserved a a role of an "Umpire or a Referee" in the game of industrial

relations in the country. Its provides all kinds of mechanisms to parties through

law to resolve their own problems bilaterally and has further taken care to provide

a quasi judicial/judicial system for determination of disputes.

Personally and professionally, one feels that this is an ideal system.

Unfortunately, the experience shows that corrupt administration, adventurous

unionism, sluggish judiciary and tight fisted managements have made a virtual

mockery of the concept. But the idea essentially is excellent in the State

becoming an Umpire and to help parties become mature in resolving problems

amongst themselves! The role of the State in Indian Industrial Relations is that of

an Umpire, Elder brother andwell-wisher! That the concerned parties have

vitiated the golden thought is the country's misfortune!!!

Employers' organization

An employers' organization, employers' association or employers' federation is

an association of employers. A trade union, which organizes employees is the

opposite of an employers' organization. The role and position of an employers'

organization differs from country to country, dependent on the economic system

of a country. In countries with a pluralist or anglo-saxon economic system (such

as the United Kingdom and the United States), where there is no institutionalized

cooperation between employers' organizations, trade unions and government, an

employers' organization is an interest group or advocacy group that through

lobbying tries to influence government policy. In these countries, employers'

organizations tend to be weak, with many of their functions taken over by

industry trade groups, which are basically public relations organization.

In countries with a social market economy, such as Austria, Sweden and the

Netherlands, the employers' organizations are part of a system of institutionalized

deliberation, together with government and the trade unions. In tri-partite

bargaining the so-called social partners strike agreements on issues like price

levels, wage increases, tax rates and pension entitlements. In these countries

collective bargaining is often done on a national level not between one

corporation and one union, but national employers' organizations and national

trade unions.

INDUSTRIAL RELATIONS MACHINERY

Today we are going to study the means and ways to resolve industrial disputes.

We should understand that whenever there is some problem in our professional

or personal life, we should not get disturbed by the problem .We should look for

solutions. Please remember that Go d helps those who help themselves! At this

encouraging note let us get into the technicalities of resolving conflicts in

organisations.

INDUSTRIAL RELATIONS MACHINERYCordial industrial relations and lasting industrial peace require that the causes of

industrial disputes should be eliminated. In other words, preventive steps should

be taken so that industrial disputes do not occur. But if preventive machinery fails

then the Government should activate the industrial Settlement machinery

because non-settlement of disputes proves to be harmful not only for the

workers, but also the management and the society as a whole. The machinery

for handling the industrial disputes has been shown in the following figure:

MACHINERY FOR HANDLING INDUSTRIAL DISPUTES

Preventive Machinery

(Voluntary or Non-statutory)

Settlement Machinery (Statutory)

This is sure that all of us would have heard the saying that prevention is better

than cure. Keeping that in mind let us discuss the prevention machinery before

the settlement machinery. I hope all of you have understood the difference

between the two. If you have not, let me explain it to you. The preventive

machinery ensures that there are no disputes. It aims at creating an environment

in which the employees are allowed to participate and there are very less

chances of conflicts. It is thus proactive in nature. Now don’t tell me that you

don’t understand the meaning of pro activity…Anyhow, pro activity means that

actions are taken before there is a problem. The settlement machinery on the

other hand is reactive in nature. After there is a problem or a dispute, the

settlement machinery comes into the picture.

Prevention of industrial disputes:

The preventive machinery has been set up with a view to creating harmonious

relations between labour and management so that disputes do not arise. It

comprises the following measures:

a) Schemes of workers’ participation in management such as works committees,

joint management councils and shop councils and joint councils.

b) Collective bargaining.

c) Tripartite bodies

d) Code of discipline.

The schemes of workers’ participation and collective bargaining will be discussed

in greater detail as a separate topic. As of now, please read something on these

schemes and we will discuss it in the due course.

Rests of the preventive measures are discussed below:

• Tripartite Bodies

Industrial relations in India have been shaped largely by principles and policies

evolved through tripartite consultative machinery at industry and national levels.

The aim of the consultative machinery is “to bring the parties together for mutual

settlement of differences in a spirit of cooperation an goodwill” Thus these bodies

play the role of consultants!!

Indian Labour Conference (ILC) and Standing Labour Committee (SLC) have

been constituted to suggest ways and means to prevent disputes. The

representatives of the workers and employers are nominated to these bodies by

the Central Government in consultation with the All-India organisations of

workers and employers.

The Labour Ministry settles the agenda for ILC/SLC meetings after taking into

consideration the suggestions sent to it by member organisations. These two

bodies work with minimum procedural rules to facilitate free and fuller

discussions among the members. Please note that the ILC meets once a year,

whereas the SLC meets as and when necessary. I am sure you would have read

in the newspapers that the ILC meet is being organized.

The functions of ILC are:

(a) To promote uniformity in labour legislation

(b) To lay down a procedure for the settlement of industrial disputes

(c) To discuss matters of All-India importance as between employers and

employees. The ILC advises the Government on any matter referred to it for

advice, taking into account suggestions made by the States and representatives

of the organisations of workers and employers.

The Standing Labour Committee’s main function is to consider and determine

such questions as may be referred to it by the Plenary Conference or the Central

Government and to render advice, taking into account the suggestions made by

various governments, workers and employers.

• Code of Discipline

The Code of Discipline is a set of self-imposed mutually agreed voluntary

principles of discipline and relations between the management and workers in

the industry.In view of growing industrial conflict, the Fifteenth Indian Labour

Conference agreed that there should be a set of general principles of discipline,

which should be adopted by labour and management voluntarily. To evolve such

a set of principles, a tripartite sub-committee was set up. The resulting draft was

discussed at Standing Labour Committee meeting in October 1957. At the

Sixteenth Indian Labour Conference held in 1958, the final form of the Code of

Discipline was approved. The details of the code are discussed later.As of now

please understand that there are three sets of principles in the Code Of

Discipline. The first set of principles is for the management and the union. The

second set is for the Management and the third one is for the union

Central Industrial Relations Machinery (CIRM)

The Chief Labour Commissioner’s (Central) [CLC(C)] Organisation, also known

as Central Industrial Relations Machinery, is an attached office of the Ministry.

The CIRM is headed by the Chief Labour Commissioner (Central). It has been

entrusted with the task of maintaining Industrial Relations, enforcement of Labour

Laws and verification of Trade Union Membership in central sphere. CIRM has

complement of 25 officers at the Head Quarters and 253 Officers in the field.

The offices of these Officers are spread over different parts of the country with

zonal, regional and unit level formations.

Functions of the organisation:

The functions of CIRM broadly are given as under:

Prevention and settlement of Industrial Disputes, in central sphere;

Enforcement of Labour Laws and Rules made thereunder in central

sphere;

Implementation of awards.

Quasi-Judicial functions.

Verification of the membership of the Trade Unions.

Welfare.

Dunlop's Contribution to Industrial Relations

Dunlop's Model One of the significant theories of industrial labor relations was

put forth by John Dunlop in the 1950s. According to Dunlop industrial relations

system consists of three agents – management organizations, workers and

formal/informal ways they are organized and government agencies. These actors

and their organizations are located within an environment – defined in terms of

technology, labor and product markets, and the distribution of power in wider

society as it impacts upon individuals and workplace. Within this environment,

actors interact with each other, negotiate and use economic/political power in

process of determining rules that constitute the output of the industrial relations

system. He proposed that three parties - employers, labor unions, and

government-- are the key actors in a modern industrial relations system. He also

argued that none of these institutions could act in an autonomous or independent

fashion. Instead they were shaped, at least to some extent, by their market,

technological and political contexts.

Thus it can be said that industrial relations is a social sub system subject to

three environmental constraints- the markets, distribution of power in society and

technology.

Dunlop's model identifies three key factors to be considered in conducting an

analysis of the management-labor relationship:

1. Environmental or external economic, technological, political, legal and

social forces that impact employment relationships.

2. Characteristics and interaction of the key actors in the employment

relationship: labor, management, and government.

3. Rules that are derived from these interactions that govern the employment

relationship.

Dunlop emphasizes the core idea of systems by saying that the arrangements in

the field of industrial relations may be regarded as a system in the sense that

each of them more or less intimately affects each of the others so that they

constitute a group of arrangements for dealing with certain matters and are

collectively responsible for certain results”. In effect - Industrial relations is the

system which produces the rules of the workplace. Such rules are the product of

interaction between three key “actors” – workers/unions, employers and

associated organizations and government The Dunlop’s model gives great

significance to external or environmental forces. In other words, management,

labor, and the government possess a shared ideology that defines their roles

within the relationship and provides stability to the system.

Industrial Relation Policy

Prior to 1991, the industrial relations system in India sought to control conflicts

and disputes through excessive labor legislations. These labor laws were

protective in nature and covered a wide range of aspects of workplace industrial

relations like laws on health and safety of labors, layoffs and retrenchment

policies, industrial disputes and the like. The basic purpose of these laws was to

protect labors. However, these protectionist policies created an atmosphere that

led to increased inefficiency in firms, over employment and inability to introduce

efficacy. With the coming of globalization, the 40 year old policy of protectionism

proved inadequate for Indian industry to remain competitive as the lack of

flexibility posed a serious threat to manufacturers because they had to compete

in the international market.

With the advent of liberalization in1992, the industrial relations policy began to

change. Now, the policy was tilted towards employers. Employers opted for

workforce reduction, introduced policies of voluntary retirement schemes and

flexibility in workplace also increased. Thus, globalization brought major changes

in industrial relations policy in India. The changes can be summarized as follows:

Collective bargaining in India has mostly been decentralized, but now in

sectors where it was not so, are also facing pressures to follow

decentralization.

Some industries are cutting employment to a significant extent to cope

with the domestic and foreign competition e.g. pharmaceuticals. On the

other hand, in other industries where the demand for employment is

increasing are experiencing employment growths.

In the expansionary economy there is a clear shortage of managers and

skilled labor.

The number of local and enterprise level unions has increased and there

is a significant reduction in the influence of the unions.

Under pressure some unions and federations are putting up a united front

e.g. banking.

Another trend is that the employers have started to push for internal

unions i.e. no outside affiliation.

HR policies and forms of work are emerging that include, especially in

multi-national companies, multi-skills, variable compensation, job rotation

etc. These new policies are difficult to implement in place of old practices

as the institutional set up still needs to be changed.

HRM is seen as a key component of business strategy.

Training and skill development is also receiving attention in a number of

industries, especially banking and information technology.

Perspective of IR

Unitary Perspective: In unitarism, the organization is perceived as an

integrated and harmonious system, viewed as one happy family. A core

assumption of unitary approach is that management and staff, and all

members of the organization share the same objectives, interests and

purposes; thus working together, hand-in-hand, towards the shared

mutual goals. Furthermore, unitarism has a paternalistic approach where it

demands loyalty of all employees. Trade unions are deemed as

unnecessary and conflict is perceived as disruptive.

From employee point of view, unitary approach means that:

Working practices should be flexible. Individuals should be business

process improvement oriented, multi-skilled and ready to tackle with

efficiency whatever tasks are required.

If a union is recognized, its role is that of a further means of

communication between groups of staff and the company.

The emphasis is on good relationships and sound terms and conditions of

employment.

Employee participation in workplace decisions is enabled. This helps in

empowering individuals in their roles and emphasizes team work,

innovation, creativity, discretion in problem-solving, quality and

improvement groups etc.

Employees should feel that the skills and expertise of managers supports

their endeavors.

From employer point of view, unitary approach means that:

Staffing policies should try to unify effort, inspire and motivate employees.

The organization's wider objectives should be properly communicated and

discussed with staff.

Reward systems should be so designed as to foster to secure loyalty and

commitment.

Line managers should take ownership of their team/staffing

responsibilities.

Staff-management conflicts - from the perspective of the unitary

framework - are seen as arising from lack of information, inadequate

presentation of management's policies.

The personal objectives of every individual employed in the business

should be discussed with them and integrated with the organization’s

needs

Pluralistic-Perspective : In pluralism the organization is perceived as being

made up of powerful and divergent sub-groups - management and trade

unions. This approach sees conflicts of interest and disagreements

between managers and workers over the distribution of profits as normal

and inescapable. Consequently, the role of management would lean less

towards enforcing and controlling and more toward persuasion and co-

ordination. Trade unions are deemed as legitimate representatives of

employees. Conflict is dealt by collective bargaining and is viewed not

necessarily as a bad thing and if managed could in fact be channeled

towards evolution and positive change. Realistic managers should accept

conflict to occur. There is a greater propensity for conflict rather than

harmony. They should anticipate and resolve this by securing agreed

procedures for settling disputes.

The implications of this approach include:

The firm should have industrial relations and personnel specialists who

advise managers and provide specialist services in respect of staffing and

matters relating to union consultation and negotiation.

Independent external arbitrators should be used to assist in the resolution

of disputes.

Union recognition should be encouraged and union representatives given

scope to carry out their representative duties

Comprehensive collective agreements should be negotiated with unions

Marxist Perspective: This view of industrial relations is a by product of a

theory of capitalist society and social change. Marx argued that:

Weakness and contradiction inherent in the capitalist system would result in

revolution and the ascendancy of socialism over capitalism.

Capitalism would foster monopolies.

Wages (costs to the capitalist) would be minimized to a subsistence level.

Capitalists and workers would compete/be in contention to win ground and

establish their constant win-lose struggles would be evident.

This perspective focuses on the fundamental division of interest between capital

and labor, and sees workplace relations against this background. It is concerned

with the structure and nature of society and assumes that the conflict in

employment relationship is reflective of the structure of the society. Conflict is

therefore seen as inevitable and trade unions are a natural response of workers

to their exploitation by capital.