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The relationship between Employer and employee or trade unions is called Industrial Relation.
Harmonious relationship is necessary for both employers and employees to safeguard the
interests of the both the parties of the production. In order to maintain good relationship with the
employees, the main functions of every organization should avoid any dispute with them or settle
it as early as possible so as to ensure industrial peace and higher productivity. Personnel
management is mainly concerned with the human relation in industry because the main theme of
personnel management is to get the work done by the human power and it fails in its objectives if
good industrial relation is maintained. In other words good Industrial Relation means industrial
peace which is necessary for better and higher productions.

i. Industrial Relation is that part of management which is concerned with the manpower of the
enterprise – whether machine operator, skilled worker or manager. BETHEL, SMITH &

ii. Industrial Relation is a relation between employer and employees, employees and employees
and employees and trade unions. - Industrial dispute Act 1947

iii. While moving from jungle of the definitions, here, Industrial Relation is viewed as the
“process by which people and their organizations interact at the place of work to establish the
terms and conditions of employment.”

The Industrial Relation relations also called as labor - management, employee-employers


A few notable features pertaining to Industrial Relations are as under:

1. Industrial Relation do not emerge in vacuum they are born of employment relationship in an
industrial setting. Without the existence of the two parties, i.e. labor and management, this
relationship cannot exist. It is the industry, which provides the environment for industrial
2. Industrial Relation are characterized by both conflict and co-operations. This is the basis of
adverse relationship. So the focus of Industrial Relations in on the study of the attitudes,
relationships, practices and procedure developed by the contending parties to resolve or at least
minimize conflicts.
3. As the labor and management do not operate in isolations but are parts of large system, so the
study of Industrial Relation also includes vital environment issues like technology of the
workplace, country’s socio-economic and political environment, nation’s labor policy, attitude of
trade unions workers and employers.
4. Industrial Relation also involve the study of conditions conductive to the labor, managements
co-operations as well as the practices and procedures required to elicit the desired co-operation
from both the parties.
5. Industrial Relations also study the laws, rules regulations agreements, awards of courts,
customs and traditions, as well as policy framework laid down by the governments for eliciting
co-operations between labor and management. Besides this, it makes an in-depth analysis of the
interference patterns of the executive and judiciary in the regulations of labor–managements

In fact the concepts of Industrial Relations are very broad-based, drawing heavily from a variety
of discipline like social sciences, humanities, behavioral sciences, laws etc.

In fact, Industrial Relation encompasses all such factors that influence behavior of people at
work. A few such important factors are details below:

1. Institution: It includes government, employers, trade unions, unions federations or

associations, government bodies, labor courts, tribunals and other organizations which have
direct or indirect impact on the industrial relations systems.
2. 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.
3. Methods : Focus on collective bargaining, workers’ participation in the Industrial Relation
schemes, discipline procedure, grievance re-dressal 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.
4. Contents : 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,

Objectives of Industrial Relation

A. 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.
B. 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.
C. To raise productivity to a higher level in an era of full employment by lessening the tendency
to high turnover and frequency absenteeism.
D. To establish and nurse 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.
E. To eliminate, as far as is possible and practicable, strikes, lockouts and gheraos by providing
reasonable wages, improved living and working conditions, said fringe benefits.
F. To establish government control of such plants and units as are running at a loss or in which
productions has to be regulated in the public interest.
G. Improvements in the economic conditions of workers in the existing state of industrial
managements and political government.
H. Control exercised by the state over industrial undertaking with a view to regulating
production and promoting harmonious industrial relations.
I. Socializations or rationalization of industries by making he state itself a major employer
J. Vesting of a proprietary interest of the workers in the industries in which they are employed.

The main aspect of Industrial Relations are :-

i. Labor Relations, i.e. relations between union and management.

ii. Employer-employees relations, i.e. relations between management and employees.
iii. Group relations, i.e. relations between various groups of workmen.
iv. Community or Public relations, i.e. relations between industry and society.
v. Promotions and development of healthy labor-managements relations.
vi. Maintenance of industrial peace and avoidance of industrial strife
vii. Development of true industrial Democracy.

Effects of poor Industrial Relations

Poor Industrial Relation produces highly disquieting effects on the economic life of the country.
We may enumerate the ill-effects of poor Industrial Relations as under:
1. Multiplier effects: Modern industry and for that matter modern economy are interdependent.
Hence although the direct loss caused due to industrial conflict in any one plant may not be very
great, the total loss caused due to its multipliers effect on the total economy is always very great.
2. Fall in normal tempo : poor Industrial Relations adversely effect the normal tempo of work so
that work far below the optimum level. Costs build up. Absenteeism and labor turnover increase.
Plants discipline breaks down and both the quality and quality of production suffer.
3. Resistance of change : Dynamic industrial situation calls for change more or less continuously.
Methods have to be improved. Economics have to be introduced. New products have to be
designed, produced and put in the market. Each of these tasks involves a whole chain of changes
and this is resisted bitterly if these are industrial conflict.
4. frustration and social cost : every man comes to the work place not only to earn a living. He
wants to satisfy his social and egoistic needs also. When he finds difficulty in satisfying these
needs he feels frustrated. Poor Industrial Relations take a heavy toll in terms of human
frustration. They reduce cordiality and aggravate social tension.

Suggestions to Improve Industrial Relation :-

a. Both management and unions should develop constructive attitudes towards each other
b. All basic policies and procedures relating to Industrial Relation should be clear to everybody
in the organization and to the union leader. The personnel manager must make certain that line
people will understand and agree with these policies.
c. The personnel manager should remove any distrust by convincing the union of the company’s
integrity and his own sincerity and honesty. Suspicious, rumors and doubts should all be put to
d. The personnel manager should not vie with the union to gain workers‘loyal to both the
organization. Several research studies also confirm the idea of dual allegiance. There is strong
evidence to discard the belief that one can owe allegiance to one group only.
e. Management should encourage right kind of union leadership. While it is not for the
management to interfere with union activities, or choose the union leadership, its action and
attitude will go a long way towards developing the right kind of union leadership. “Management
gets the union it deserves” is not just an empty phrase. Managements


The healthy industrial relations are key to the progress. Their significance may be discussed as
under -
1. 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
2. Reduction in Industrial Disputes – Good industrial relation 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.
3. 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.
4. 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.
5. New Programmes – New programmes for workers development are introduced in an
atmosphere of peace such as training facilities, labor welfare facilities etc. It increases the
efficiency of workers resulting in higher and better production at lower costs.
6. 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, from the above discussion, it is evident that good industrial relation 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.


The term “Industrial Relations” is different from “Human Relations”. Industrial relations refer to
the relations between the employees and the employer in an industry. Human relations refer to a
personnel-management policy to be adopted in industrial organizations to develop a sense of
belongingness in the workers improves their efficiency and treat them as human beings and make
a partner in industry.
Industrial relations cover the matters regulated by law or by collective agreement between
employees and employers. On the other hand, problems of human relations are personal in
character and are related to the behavior of worker where morale and social elements
predominated. Human relations approach is personnel philosophy which can be applied by the
management of an undertaking. The problem of industrial relations is usually dealt with a three
levels – the level of undertaking, the industry and at the national level. To sum up the term
“Industrial Relations” is more wide and comprehensive and the term “Human Relations” is a part
of it.

Determining factors of industrial relations –

Good industrial relations depend on a great variety of factors. Some of the more obvious ones are
listed below:
1. History of industrial relations – No enterprise can escape its good and bad history of industrial
relations. A good history is marked by harmonious relationship between management and
workers. A bad history by contrast is characterized by militant strikes and lockouts. Both types
of history have a tendency to perpetuate themselves. Once militancy is established as a mode of
operations there is a tendency for militancy to continue. Or once harmonious relationship is
established there is a tendency for harmony to continue.
2. Economic satisfaction of workers – Psychologists recognize that human needs have a certain
priority. Need number one is the basic survival need. Much of men conducted are dominated by
this need. Man works because he wants to survive. This is all the more for underdeveloped
countries where workers are still living under subsistence conditions. Hence economic
satisfaction of workers is another important prerequisite for good industrial relations.
3. Social and Psychological satisfaction – Identifying the social and psychological urges of
workers is a very important steps in the direction of building good industrial relations. A man
does not live by bread alone. He has several other needs besides his physical needs which should
also be given due attention by the employer. An organization is a joint venture involving a
climate of human and social relationships wherein each participant feels that he is fulfilling his
needs and contributing to the needs of others. This supportive climate requires economic rewards
as well as social and psychological rewards such as workers’ participation in management, job
enrichment, suggestion schemes, re-dressal of grievances etc.
4. Off-the-Job Conditions – An employer employs a whole person rather than certain separate
characteristics. A person’s traits are all part of one system making up a whole man. His home life
is not separable from his work life and his emotional condition is not separate from his physical
condition. Hence for good industrial relations it is not enough that the worker’s factory life alone
should be taken care of his off-the-job conditions should also be improved to make the industrial
relations better.
5. Enlightened Trade Unions – The most important condition necessary for good industrial
relations is a strong and enlightened labor movement which may help to promote the status of
labor without harming the interests of management, Unions should talk of employee contribution
and responsibility. Unions should exhort workers to produce more, persuade management to pay
more, mobilize public opinion on vital labor issues and help Government to enact progressive
labor laws.
6. Negotiating skills and attitudes of management and workers – Both management and workers’
representation in the area of industrial relations come from a great variety of backgrounds in
terms of training, education, experience and attitudes. These varying backgrounds play a major
role in shaping the character of industrial relations. Generally speaking, well-trained and
experienced negotiators who are motivated by a desire for industrial peace create a bargaining
atmosphere conducive to the writing of a just and equitable collective agreement. On the other
hand, ignorant, inexperienced and ill-trained persons fail because they do not recognize that
collective bargaining is a difficult human activity which deals as much in the emotions of people
as in their economic interests. It requires careful preparation and top –notch executive
competence. It is not usually accomplished by some easy trick or gimmick. Parties must have
trust and confidence in each other. They must possess empathy, i.e. they should be able to
perceive a problem from the opposite angle with an open mind. They should put themselves in
the shoes of the other party and then diagnose the problem. Other factors which help to create
mutual trust are respect for the law and breadth of the vision. Both parties should show full
respect for legal and voluntary obligations and should avoid the tendency to make a mountain of
a mole hill.
7. Public policy and legislation: - when Government, regulates employee relations, it becomes a
third major force determining industrial relations the first two being the employer and the union.
Human behavior is then further complicated as all three forces interact in a single employee
relation situation. Nonetheless, government in all countries intervenes in management – union
relationship by enforcing labor laws and by insisting that the goals of whole society shall take
precedence over those of either of the parties. Government intervention helps in three different
ways 1) it helps in catching and solving problems before they become serious. Almost every one
agrees that it is better to prevent fires them to try stopping them after they start; 2) It provides a
formalized means to the workers and employers to give emotional release to their dissatisfaction;
and 3) It acts as a check and balance upon arbitrary and capricious management action.
8. Better education: - with rising skills and education workers’ expectations in respect of rewards
increase. It is a common knowledge that the industrial worker in India is generally illiterate and
is misled by outside trade union leaders who have their own axe to grind. Better workers’
education can be a solution to this problem. This alone can provide worker with a proper sense of
responsibility, which they owe to the organization in particular, and to the community in general.
9. Nature of industry: - In those industries where the costs constitute a major proportion of the
total cast, lowering down the labor costs become important when the product is not a necessity
and therefore, there is a little possibility to pass additional costs on to consumer. Such periods,
level of employment and wages rise in decline in employment and wages. This makes workers
unhappy and destroys good industrial relations.


Today’s professional industrial relations director, or by whatever title he is designated, no longer

views his job as personalizing management, or that of a social worker in a factory, or a union
buster, he looks upon his department as an adjunct to management supervision at all levels; he
keeps other executives informed about new discoveries, programme trends and needs. At the
same time, he provides efficient service in the operation of several centralized services.
A successful industrial relations programme reflects the personnel viewpoint, which is
influenced by three main considerations:
a) Individual thinking
b) Policy awareness and
c) Expected group reaction
Individualized thinking makes if imperative for the administrator to consider the entire situation
in which the affected individual is placed. Policy awareness underscores the idea of the
consistency of treatment and the precedent value of any decision which a management takes;
while expected group reaction balances what we know of human nature in groups against an
individual’s situation in the light of the policy that has been formulated and implemented. In all
these different circumstances, reality demands that all the three aspects of the personnel
viewpoint should be considered at once in terms of the past, the present and the future. This
viewpoint is held at all the levels of management from the top to the bottom, from the top
executives and staff to the line and supervisory personnel.



The class conflict analysis of industrial relations derives its impetus from Marxist social thinking
and interpretation. Marxism is essentially a method of social enquiry into the power relationships
of society and a way of interpreting social reality. The application of Marxian theory as it relates
to industrial relations derives indirectly from later Marxist scholars rather than directly from the
works of Marx himself. Industrial relations, according to Marxists, are in the first instance,
market-relations. To Marxists, industrial relations are essentially politicized and part of the class
struggle. For Marxists industrial and employee relations can only be understood as part of a
broader analysis of capitalist society in particular the social relations of production and the
dynamics of capital accumulation. As Marx himself put it, “the mode of production in material
life determines the general character of the social, political and spiritual process of life.” The
Marxist approach is primarily oriented towards the historical development of the power
relationship between capital and labour. It is also characterised by the struggle of these classes to
consolidate and strengthen their respective positions with a view to exerting greater influence on
each other. In this approach, industrial relations is equated with a power-struggle. The price
payable for labour is determined by a confrontation between conflicting interests. The capitalist
ownership of the enterprise endeavours to purchase labour at the lowest possible price in order to
maximise their profits. The lower the price paid by the owner of the means of production for the
labour he employs, the greater is his profit. The Marxist analysis of industrial relations, however,
is not a comprehensive approach as it only takes into account the relations between capital and
labour. It is rather, a general theory of society and of social change, which has implications for
the analysis of industrial relations within what Marxists would describe as capitalist societies.


Pluralism is a major theory in labour-management relations, which has many powerful
advocates. The focus is on the resolution of conflict rather than its generation, or, in the words of
the pluralist, on ‘the institutions of job regulation.’ Kerr is one of the important exponents of
pluralism. According to him, the social environment is an important factor in industrial conflicts.
The isolated masses of workers are more
strike-prone as compared to dispersed groups. When industrial jobs become more pleasant and
employees’ get more integrated into the wider society, strikes will become less frequent. Ross
and Hartman’s cross national comparison of strikes postulates the declining incidents of strikes
as societies industrialise and develop appropriate institutional framework. They claim that there
has been a decline in strike activity all over the world in spite of an increase in union
membership. The theories on pluralism
were evolved in the mid-sixties and early seventies when England witnessed a dramatic
resurgence of industrial conflicts. However, the recent theories of pluralism emanate from British
scholars, and in particular from Flanders and Fox. According to Flanders, conflict is inherent in
the industrial system. He highlighted the need for a formal system of collective bargaining as a
method of conflict resolution.
Fox distinguishes between two distinct aspects of relationship between workers and
management. The first is the market relationship, which concerns with the terms and conditions
on which labour is hired. This relationship is essentially economic in character and based on
contracts executed between the parties. The second aspect relates to the management’s dealing
with labour, the nature of their interaction,
negotiations between the union and management, distribution of power in the organisation, and
participation of the union in joint decision-making. The major critics of the pluralist approach are
the Marxists according to whom exploitation and slavery will continue unabated in the
institutional structure of pluralism. The only difference is that in such a social structure, the
worker will be deemed to be a better-paid wage slave.


The social action approach of Weber has laid considerable importance to the question of control
in the context of increasing rationalisation and bureaucratisation. Closely related to Weber’s
concern related to control in organisations was his concern with “power of control and
dispersal”. Thus a trade union in the Weber’s scheme of things has both economic purposes as
well as the goal of involvement in political and power struggles. Some of the major orientations
in the Weberian approach have been to analyse the impact of techno-economic and politico-
organisational changes on trade union structure and processes, to analyse the subjective
interpretation of workers’ approaches to trade unionism and finally to analyse the power of
various components of the industrial relations environment – government, employers, trade
unions and political parties. Thus the Weberian approach gives the theoretical and operational
importance to “control” as well as to the power struggle to control work organisations – a power
struggle in which all the actors in the industrial relations drama are caught up.


In the words of Keith Davies, human relations are “the integration of people into a work situation
that motivates them to work together productively, cooperatively and with economic,
psychological and social satisfactions.” According to him, the goals of human relations are: (a) to
get people to produce, (b) to cooperate through mutuality of interest, and (c) to gain satisfaction
from their relationships. The human relations school founded by Elton Mayo and later
propagated by Roethlisberger, Whitehead, W.F. Whyte, and Homans offers a coherent view of
the nature of industrial conflict and harmony. The human relations approach highlights certain
policies and techniques to improve employee morale, efficiency and job satisfaction. It
encourages the small work group to exercise considerable control over its environment and in the
process helps to remove a major irritant in labour-management relations. But there was reaction
against the excessive claims of this school of thought in the sixties. Some of its views were
criticised by Marxists, pluralists, and others on the ground that it encouraged dependency and
discouraged individual development, and ignored the importance of technology and culture in
industry. Taking a balanced view, however, it must be admitted that the human relations school
has thrown a lot of light on certain aspects
such as communication, management development, acceptance of workplace as a social system,
group dynamics, and participation in management.


Gandhiji can be called one of the greatest labour leaders of modern India. His approach to labour
problems was completely new and refreshingly human. He held definite views regarding fixation
and regulation of wages, organisation and functions of trade unions, necessity and desirability of
collective bargaining, use and abuse of strikes, labour indiscipline, workers participation in
management, conditions of work and living, and duties of workers. The Ahmedabad Textile
Labour Association, a unique and successful experiment in Gandhian trade unionism,
implemented many of his ideas. Gandhiji had immense faith in the goodness of man and he
believed that many of the evils of the modern world have been brought about by wrong systems
and not by wrong individuals. He insisted on recognising each individual worker as a human
being. He believed in non-violent communism, going so far as to say that “if communism comes
without any violence, it would be welcome.” Gandhiji laid down certain conditions for a
successful strike. These are: (a) the cause of the strike must be just and there should be no strike
without a grievance; (b) there should be no violence; and (c) non-strikers or “blacklegs” should
never be molested. He was not against strikes but pleaded that they should be the last weapon in
armoury of industrial workers and hence should not be resorted to unless all peaceful and
constitutional methods of negotiations, conciliation and arbitration are exhausted. His concept of
trusteeship is a significant contribution in the sphere of industrial relations. According to him,
employers should not regard themselves as sole owners of mills and factories of which they may
be the legal owners. They should regard themselves only as trustees, or co-owners. He also
appealed to the workers to behave
as trustees, not to regard the mill and machinery as belonging to the exploiting agents but to
regard them as their own, protect them and put to the best use they can. In short, the theory of
trusteeship is based on the view that all forms of property and human accomplishments are gifts
of nature and as such, they belong not to any one individual but to society. Thus, the trusteeship
system is totally different from other
contemporary labour relations systems. It aimed at achieving economic equality and the material
advancement of the “have-nots” in a capitalist society by non-violent means. Gandhiji realised
that relations between labour and management can either be a powerful stimulus to economic
and social progress or an important factor in economic and social stagnation. According to him,
industrial peace was an essential condition not only for the growth and development of the
industry itself, but also in a great
measure, for the improvement in the conditions of work and wages. At the same time, he not
only endorsed the workers’ right to adopt the method of collective bargaining but also actively
supported it. He advocated voluntary arbitration and mutual settlement of disputes. He also
pleaded for perfect understanding between capital and labour, mutual respect, recognition of
equality, and strong labour organisation as the essential factors for happy and constructive
industrial relations. For him, means and
ends are equally important.


The term, human resource management (HRM) has become increasingly used in the literature of
personnel/industrial relations. The term has been applied to a diverse range of management
strategies and, indeed, sometimes used simply as a more modern, and therefore more acceptable,
term for personnel or industrial relations management. Some of the components of HRM are: (i)
human resource organisation;
(ii) human resource planning; (iii) human resource systems; (iv) human resource development;
(v) human resource relationships; (vi) human resource utilisation; (vii) human resource
accounting; and (viii) human resource audit. This approach emphasises individualism and the
direct relationship between management and its employees. Quite clearly, therefore, it questions
the collective regulation basis of traditional industrial relations.

The subject of industrial relations has undergone several changes because of vital contributions
made by a number of disciplines. In developing theoretical models of industrial relations, it
becomes necessary to appreciate the contributions made by various social scientists. Such
models can be used for analysing concrete situations and to build a systematic and
comprehensive theory of industrial relations. The
different perspectives and theories enable us to understand industrial relations institutions,
structures, processes and behaviour of individuals. The practitioners of industrial relations
consider theory as the opposite of practice. Nevertheless, any systematic practice implies some
theory. Basically, there are two main stands in theorising industrial relations. One group
(externalists) lays emphasis on external factors like state of technology, methods of production,
supply and demand in the product market and in the labour market, legalpolitical relationships,
and so on. The environmental theorists have been primarily
economists and to a smaller extent, lawyers, political scientists, and sociologists. They lay
emphasis on the nexus between broad environmental changes and employeremployee relations.
The in-plant theories of internalists have their origin in the “human relations school” propounded
by Elton Mayo and others. These theorists stress on employee motivation, attitude and morale,
styles of supervision, and forms of
management leadership. A.W.J. Craig presented the input-output model of industrial relations
system in the late 1960s. In his model, the actors and the context are similar to those of Dunlop’s
model. The main component of Craig’s model are: (a) the inputs or the goals, and the values and
power of the actors; (b) mechanism for the conversion of inputs into outputs; (c) the outputs of
the system are the financial, psychological and social rewards for the workers. The output is in
the form of the rules, which govern matters such as pay, working conditions, and hours of work.
One of the major objectives of theorising industrial relations is to help the practitioners to
understand what is taking place and causes for the same. Industrial relations theory might be
useful to practitioners if it could help them in three respects: first, to understand the present
industrial relations situation; second, to forecast trends and to predict what will happen under
specific given conditions; and third, to help the practitioners to bring about certain desired
changes and to avoid certain other changes in the present or in the future state of industrial
One of the most difficult attempts in industrial relations is to build up a theory and to generalise
on its activity, which is highly dynamic. A host of factors, both internal and external, and conflict
generating as well as conflict resolving factors, influence the shape of industrial relations
activity. The industrial relations system in an organization works in the context of pressures,
tensions and conflicts, and is mainly related to power politics, economic, cultural and other
differences. An inter-mix of such dynamic factors, and key institutional variables, is necessary in
theorising industrial relations.

The term “industrial relations” refers to the complexity of human relationships, which emerge in
work situations. The subject of industrial relations deals with certain regulated and
institutionalised relationships in industry. The employment relationship in any work situation
provides the setting for industrial relations. With this objective, the workers as a group form
trade unions, the employers form their own associations, and the state provides institutions for
the regulation of relations. The field of industrial relations has a multi-disciplinary base. It draws
upon concepts from the established disciplines in social sciences, such as economics, sociology,
and psychology. These disciplines have developed theories of industrial relations, but they differ
considerably in their theoretical framework and practical application. The theorising in this field
has developed in the direction of (a) environmental or external theories, and (b) internalists or in-
plant theories. The prominent contribution to the industrial relations literature is the ‘systems’
approach developed by John T. Dunlop who views industrial relations system as a sub-system of


The staff employed in the industrial relations department should know the limitations within
which it has to function. The industrial relations director generally has several assistants who
help him to perform his functions effectively, and he usually reports directly to the president or
chairman of the board of directors of an organization.

The functions of the industrial relations staff are -

1. Administration, including overall organization, supervision and co-ordination of industrial
relations policies and programmes.
2. Liaison with outside groups and personnel departments as well as with various cadres of the
management staff.
3. The drafting of regulations, rules, laws or orders and their construction and interpretation.
4. Position classification, including overall direction of job analysis, salary and wage
administration, wage survey and pay schedules.
5. Recruitment and employment of workers and other staff.
6. Employment testing, including intelligence tests, mechanical aptitude tests and achievement
7. Placement, including induction and assignment.
8. Training of apprentices, production workers, foremen and executives.
9. Employee counseling on all types of personnel problems-educational, vocational, health or
behavior problems.
10. Medical and health services.
11. Safety services, including first aid training.
12. Group activities, including group health insurance, housing, cafeterial programmes and social
13. Suggestion plans and their uses in labor, management and production committees.
14. Employee relations, specially collective bargaining with representatives and settling
15. Public relations.
16. Research in occupational trends and employee attitudes, and analysis of labor turnover.
17. Employee records for all purposes.
18. Control of operation surveys, fiscal research and analysis.
19. Benefit, retirement and pension programmes.



The basic requirements on which a successful industrial relations programme is based are :-
a) Top Management Support: - Since industrial relations is a functional staff service, it must
necessarily derive its authority from the line organization. This is ensured by providing that the
industrial relations director should report to a top line authority to the president, chairman or vice
president of an organization.
b) Sound Personnel Policies: - These constitute the business philosophy of an organization and
guide it in arriving at its human relations decisions. The purpose of such policies is to decide,
before any emergency arises, what shall be done about the large number of problems which crop
up every day during the working of an organization. Policies can be successful only when they
are followed at all the level of an enterprise, from top to bottom.
c) Adequate Practices should be developed by professionals: - In the field to assist in the
implementation of the policies of an organization. A system of procedures is essential if intention
is to be properly translated into action. The procedures and practices of an industrial relations
department are the “tool of management” which enables a supervisor to keep ahead of his job
that of the time-keeper, rate adjuster, grievance reporter and merit rater.
d) Detailed Supervisory Training :- To ensure the organizational policies and practices are
properly implemented and carried into effect by the industrial relations staff, job supervisors
should be trained thoroughly, so that they may convey to the employees the significance of those
policies and practices. They should, moreover, be trained in leadership and in communications.
e) Follow-up of Results: - A constant review of an industrial relations programme is essential, so
that existing practices may be properly evaluated and a check may be exercised on certain
undesirable tendencies, should they manifest themselves. A follow up of turnover, absenteeism,
departmental morale, employee grievances and suggestion; wage administration, etc. should be
supplemented by continuous research to ensure that the policies that have been pursued are best
fitted to company needs and employee satisfaction. Hints of problem areas may be found in exit
interviews, in trade union demands and in management meetings, as well as in formal social
sciences research.
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.

The concept of industrial relations has a very wide meaning and connotation. In the narrow
sense, it means that the employer, employee relationship confines itself to the relationship
that emerges out of the day to day association of the management and the labor. In its wider
sense, industrial relations include the relationship between an employee and an employer in
the course of the running of an industry and may project it to spheres, which may transgress
to the areas of quality control, marketing, price fixation and disposition of profits among

The scope or industrial relations is quite vast. The main issues involved here include the

1. Collective bargaining

2. Machinery for settlement of industrial disputes

3. Standing orders

4. Workers participation in management

5. Unfair labor practices

1) What is industrial relations?
2) Discuss the Dunlop’s approach to industrial relations.
3) One of the most difficult attempts in industrial relations is to build up a theory
and to generalise on its activity that is highly dynamic. Discuss.




Collective bargaining has been defined by different experts in different ways. Nevertheless, it is
treated as a method by which problem of wages and conditions of employment are resolved
peacefully and voluntarily between labour and management. However, the term collective
bargaining is opposed to individual bargaining1.

Sometimes, it is described as a process of accommodation between two conflicting interests

Here, power stands against power.

The I.L.O. defines collective bargaining:

"As negotiations about working conditions and terms of employment between an employer, or a
group of employers, or one or more employers' organisations, on the one hand, and one or more
representative workers' organisation on the other with a view to reaching agreement."

This definition confines the term collective bargaining as a means of improving conditions of
employment. But in fact, collective bargaining serves something more.

Perlman aptly stated,"Collective bargaining is not just a means of raising wages and improving
conditions of employment. Nor is it merely democratic government in industry. It is above all
technique, collective bargaining as a technique of the rise of a new class is quite different ......
from the desire to displace or abolish" the "old ruling class"... ... to gain equal rights as a
class ... ... to acquire an excessive jurisdiction in that sphere where the most immediate interests,
both material and spiritual, are determined, and a shared jurisdiction with the older class or
classes in all other spheres.2”

COLLECTIVE BARGANING in India has been the subject matter of industrial

adjudication since long and has been defined by our Law Courts. In Karol Leather Karamchari
Sangathan v. Liberty Footwear Company3 the Supreme Court observed that,“Collective
bargaining is a technique by which dispute as to conditions of employment is resolved amicably
by agreement rather than coercion."

According to the Court, the Industrial Disputes Act, 1947 seeks to achieve social justice on the
basis of collective bargaining. In an earlier judgment in Titagarh Jute Co. Ltd. v. Sriram Tiwari ,
the Calcutta High Court clarified that this policy of the legislature is also implicit in the
definition of ‘industrial dispute'.

In Ram Prasad Viswakarma v. Industrial Tribunal 4the Court observed that, "It is well known
how before the days of ‘collective bargaining', labour was at a great disadvantage in obtaining
reasonable terms for contracts of service from its employer. As trade unions developed in the
country and Collective bargaining became the rule, the employers found it necessary and
convenient to deal with the representatives of workmen, instead of individual workmen, not only
for the making or modification of contracts but in the matter of taking disciplinary action against
one or more workmen and as regards of other disputes."

In Bharat Iron Works v. Bhagubhai Balubhai Patel 5, it was held that “Collective bargaining,
being the order of the day in the democratic ,social welfare State, legitimate trade union
activities, which must shun all kinds of physical threats, coercion or violence, must march with a
spirit of tolerance, understanding and grace in dealings on the part of the employer. Such
activities can flow in healthy channel only on mutual cooperation between the employer and the
employees and cannot be considered as irksome by the management in the best interests of its

Dialogue with representatives of a union help striking a delicate balance in adjustments and
settlement of various contentious claims and issues."

These definitions only bring out the basic element in the concept i.e., civilized confrontation
between employers and employees and the whole process is regulated by statutory provisions.


Collective Bargaining machinery essentially is a reflection of a particular social and political

climate. The history of the trade union movement shows that union are affiliated to one or the
other political parties. As a result most of the trade unions are controlled by outsiders. Critic says
that the presence of outsiders, is one of the important reasons for the failure of collective
bargaining in India.6

Outsiders in the Process of Collective bargaining:-

The Trade Unions Act, 1926, permits outsiders to be the office bearers of a union to the extent of
half the total number of office bearers. So, it permits one to be the leader of the union who does
not actually work in the industry. Sometimes a dismissed employee working as a union leader
may create difficulties in the relationship

between the union and the employer. Nevertheless, experience shows that outsiders who have
little knowledge of the background of labour problems, history of labour movement,
fundamentals of trade unionism and the technique of the industry and with even little general
education assume the charge of labour union and become the self-appointed custodian of the
welfare of workers. The employers, therefore, have been reluctant to discuss and negotiate
industrial matters with outsiders, who have no personal or direct knowledge of day to day affairs
of the industry.

Accordingly employees refuse recognition to the unions which are either controlled by the
politicians or affiliated to a particular political party or controlled by a particular individual.
Government cannot morally compel employers to accord recognition to unions without driving
out the politicians from them. The State must outright ban "outsiders" from the trade union body.
Further, provision for political funds by trade unions should be eliminated, since it invariably
encourages the politicians to prey upon them. The National Commission on Labour has
overlooked this aspect. The Commission does not favour a legal ban on non-employees for
holding the union office. It says that without creating conditions for building up the internal
leadership, a complete banning of outsiders would only make unions weaker. The Commission
hopes that Internal leadership would develop through their education and training. Accordingly
the Commission suggests proportion of the outsiders and the workers in a union executive. On
realising the problems of outsiders in the Union, the Industrial Relations Bill, 1988 proposes to
reduce the number of outsiders to two only.

Politicization of Trade-Union Movement in India:-

It is well known that the trade-union movement in India is divided on political lines and exists
on patronage of various political Parties. Most of the trade-union organizations have aligned
themselves with a political party with whom they find themselves philosophically close. It is
because of this that the Indian National Trade Union Congress is considered to be the labour
wing of congress, whereas H.M.S. is considered to be the labour wing of Socialist party.
Bhartiya Majdoor Sangh pledges its allegiance to B.J.P. and C.I.T.U. has the support of C.P.I.
(M). It is also the case with the AITUC which had started as a national organization of workers
but subsequently came to be controlled by the Communist Party of India and is now it's official
labour wing. Political patronage of trade-unions has given a new direction to the movement
whose centre of gravity is no longer the employees or workmen. The centre has shifted towards
it leadership whose effectiveness is determined by the extent of political patronage and the
consequent capacity to obtain the benefit. This shifting centre of power is the necessary
consequence of political parties search for workers votes, which they seek by conferring benefits
on them. Since the public sector which is really the instrumentality of the State, has emerged as
the biggest employer in this country, the collective bargaining -between the union patronized by
the party-in-power and the employer has become an important methodology. It is because of this
process that agreements conferring benefits are signed even in those units where financial losses
are mounting.

It is also our experience that in spite of wage increase end improved conditions of service, there
has been no corresponding improvement in production or the productivity. Also,most of the
losses are being passed on to the consumers by increasing prices of the products. It is in this
context that Justice Gupta has, in his, 'Our Industrial Jurisprudence" made the following
observations:“If our experience is any guide, it reveals that Ievel of increase in wages etc., ( in
public sector undertaking )is now decided by the Bureau of Public Enterprises which takes into
consideration only the Political impact and 'Consumer resistence' as two dominant factors. This
is the reason why the prices of almost all products of necessity like coal, iron and steel, cement,
sugar etc. have been constantly increasing. A survey of pending and decided industrial disputes
of the last 10 years reveals that there was virtually no industrial dispute regarding wage structure
or bonus in any industry of some significance.

There are also not many collective bargaining agreements which have tried to link wages with
productivity. Clearly,therefore, the basic idea of ‘sharing the prosperity' which developed
because of our commitment to the cause of 'social justice' is no longer current and the expected
end product of the process of ' social justice ' is no longer expected. "7

The process of collective bargaining is not likely to succeed unless the threat of strike/lockout is
there in the back-ground. Strike and lock-out are the weapons used by both the parties daring the
collective bargaining process. Without having these weapons at hands, neither of the party to the
dispute can defeat the claim of the other. The peculiar feature of our country while compared to
the advanced nations of the world is that the economic conditions of the workers is very poor and
as a result they can not afford a long-standing strike.

Critical Evaluation:-

In Indian labour arena we see, multiplicity of unions and Inter-union rivalry. Statutory provisions
for recognizing unions as bargaining agents are absent. It is believed that the institution of
collective bargaining is still in its preliminary and organisational stage. State, therefore, must
play a progressive and positive role in removing the pitfalls which have stood in the way of
mutual, amicable and voluntary settlement of labour disputes. The labour policy must reflect a
new approach.Hitherto the State has been playing a dominant role in controlling and guiding
labour-management relation through its lopsided adjudication machinery. The role of the
industrial adjudicator virtually differs from that of a judge of ordinary civil court. The judge of a
civil court has to apply the law to the case before him and decide rights and liabilities according
to its established laws, whereas industrial adjudicator has to adjust and reconcile the conflicting
claims of disputants and evolve “socially desirable" rights and obligations of the disputants. In
deciding industrial disputes the adjudicator is free to apply the principle of equity and good

However, it is said that the impact of the romantic attitude of the judiciary towards workers has
not proved conducive to the peaceful industrial relations. It is accepted that the end of judicial
proceeding is pain and penalties. It cannot solve the problems of industries.Accordingly it is said
that,"While statutes, rules, regulations, pains and penaltieshave their place in the ordering of
industry, they do not touch the core of the problems of industrial relations."8

Moreover, advocates of adjudication contend that as the collective bargaining procedure might
end in a strike or lockout, which implies a great loss to the parties concerned and the country, so
for the sake of industrial peace, the adjudication becomes necessary.

Industrial peace can be established by the adjudication for the time being. But the conflicts are
driven deeper and it will retard industrial production. In the absence of effective collective
bargaining the anti–productivity tendencies are bound to appear.


For an effective Collective Bargaining in India the following suggestions are made :

Ø Recognition of trade union has to be determined through verification of fee membership

method. The union having more membership should be recognised as the effective bargaining

Ø The State should enact suitable legislation providing for compulsory recognition of trade
union by employers.

Ø Section 22 of the Trade Unions Act, 1926 should be amended.

Ø The provision for political fund by trade unions has to be done away with-since it unvariably
encourages the politicians to prey upon the union.

Ø State has to play a progressive role in removing the pitfalls which stand in the way of mutual,
amicable and voluntary settlement of labour disputes.



• Recognition of unions under the Code of Discipline in respect of industries /

undertakings in the Central Sphere.
• Rendering assistance in securing recognition to unions in multi-state
establishments which are in the State sphere, as and when such requests are
• Verification of membership of unions in Major Ports and Docks for the purpose
of allocation of seats in the Port Trusts and Dock Labour Boards.
• Verification of membership of unions operating in nationalized Banks and SBI for
the purpose of identifying the representative union for appointment of workmen,
Directors on the Boards of Nationalized Banks.
• Rendering advice / clarification in matters of withdrawal / de-recognition of
unions, criteria for recognition of unions, verification procedure rights and
privileges of recognized and unrecognized unions etc.
• General verification of membership of trade unions.
• Implementation of the Code of Discipline.
• Implementation of awards under the Industrial Disputes Act.
• Screening of proposals for appeal against industrial awards under the Industrial
Dispute Act by Public Sector Undertakings.


According to the screening procedure as approved by the Committee of Economic

Secretaries in its meeting held on August 1, 1964, the Public Sector Undertakings are
required to consult the Administrative Ministry concerned whenever they have to file an
appeal challenging the award of the Tribunal etc. The Administrative Ministries are
invariably required to consult the Ministry of Law and Justice and Ministry of Labour
before filing a Writ Petition in the High Court. If the Labour and the concerned
Administrative Ministries do not agree with the decision, the matter is to be taken to the
Committee of Economic Secretaries.


• Where there is more than one union, the union claiming recognition should have been
functioning for at least one year after registration. Where there is only one union, this condition
would not apply.

• The membership of the union should cover at least 15% of the workers in the
establishment concerned. Membership would be counted only of those who had paid their
subscriptions for at least three months during the period of six months immediately preceding the

• A union may claim to be recognized as a representative union for an industry in a local

area if it has a membership of at least 25% of the workers of that industry in that area.

• When a union has been recognized, there should be no change in its position for a period
of two years.

• Where there are several unions in an industry or establishment, the one with the largest
membership should be recognized.

• A representative union for an industry in an area should have the right to represent the
workers in all the establishments in the industry, but if a union of workers in a particular
establishment has a membership of 50% or more of the workers of that establishment it should
have the right to deal with matters of purely local interest, such as, for instance, the handling of
grievances pertaining to its own members. All other workers who are not members of that union
might either operate through the representative union for the industry or seek redress directly.

• In the case of trade union federations which are not affiliated to any of the four central
organizations of labour, the question of recognition would have to be dealt with separately.

• Only union which observe the Code of Discipline would be entitled to recognition.


A. Verification of membership of unions affiliated to the Central Organisation of

Workers in the Country is one of the important functions of this organization.
Representations of Labour on the Tripartite Bodies, Development Councils,
Committees, Boards, etc. at national and international level (including ILO) are
granted on the basis of the results of general verification.
B. The Ministry of Labour & Employment decided to conduct verification of
membership of trade union organizations with December 31, 1997 as the date of
reckoning. However, the matter pertaining to date of reckoning was sub-judice for
long time. The case has recently been disposed off by the Hon’ble High Court of
Delhi by deciding 31.12.2002 as date of reckoning. Accordingly the Ministry has
issued a notification on 1.11.03 calling claims/applications from the Central Trade
Union Organisation by 31.1.04.
C. The position of membership of Central Trade Unions in the earlier general
verification carried out with date of reckoning 31.12.80 and 31.12.89 is as under:-

S.No. Name of Trade Membership with Membership with

Union date of reckoning as date of reckoning as
on 31.12.1980 on 31.12.1989
1. INTUC 22,36,128
2. BMS 12,11,345
3. HMS 7,62,882
4. UTUC(LS) 6,21,359
5. NLO 2,46,540
6. UTUC 1,65,614
7. TUCC 1,23,048
8. NFITU 84,123
9. AITUC 3,44,746
10. CITU 3,31,031
11. HMKP -
12. IFFTU -
13. TOTAL 61,26,816

D. The general verification of Central Trade Unions with date of reckoning as on

31.12.2002 checking of records and sampling is in process/progress.

I. To maintain Discipline in Industry both in public and private sector there has to be (i) a
just recognition by employers and workers of the rights and responsibilities of either
party, as defined by the laws and agreements (including bipartite and tripartite
agreements arrived at all levels from time to time) and (ii) a proper and willing discharge
by either party of its obligations consequent on such recognition.

The Central and State Governments, on their part, are required to examine and set right
any shortcomings in the machinery they constitute for the administration of labour laws.

To ensure better discipline in industry.

II. Management and Union(s) agree

(i) that no unilateral action should be taken in connection with any industrial matter
and that should be settled at appropriate level.

(ii) that the existing machinery for settlement of disputes should be utilized with the
utmost expedition.

(iii) that there should be no strike or lock-out without notice;

(iv) that affirming their faith in democratic principles, they bind themselves settle all
future differences, disputes and grievances by mutual negotiation, conciliation
and voluntary arbitration;

(v) that neither party will have recourse to (a) coercion, (b) intimidation, (c)
victimization or (d) go-slow;

(vi) that they will avoid, (a) litigation, (b) sit-down and stay-in strikes and (c) lock-

(vii) that they will promote constructive co-operation between their representatives at
all levels and as between workers themselves and abide by the spirit of
agreements mutually entered into;
(viii) that they will establish upon a mutually agreed basis, a grievance procedure which
will ensure a speedy and full investigation leading to settlement;

(ix) that they will abide by various stages in the grievance procedure and take no
arbitrary action which would by-pass this procedure; and

(x) that they will educate the management personnel and workers regarding their
obligations to each other.

III. Management Agree.

(i) not to increase work-loads unless agreed upon or settled otherwise;

(ii) not to support or encourage any unfair labour practice such as (a) interference
with the right of employees to enroll or continue as union members, (b)
discrimination, restraint or coercion against any employee because of recognized
activity of trade unions and (c) victimization of any employee and abuse of
authority in any form;

(iii) to take prompt action for (a) settlement of grievances and (b) implementation of
settlements, awards, decision and orders;

(iv) to display in conspicuous places in the undertaking the provisions of this code in
the local language(s);

(v) to distinguish between actions justifying immediate discharge and those where
discharge must be preceded by warning, reprimand, suspension or some other
form of disciplinary action and to arrange that all such disciplinary action should
be subject to an appeal through normal grievance procedure;

(vi) to take appropriate disciplinary action against its officers and members in cases
where enquiries reveal that they were responsible for precipitate action by
workers leading to indiscipline; and

(vii) to recognize the union in accordance with the criteria (Annexure-I) evolved at the
16th Session of the Indian Labour Conference held in May 1958.

IV. Union(s) agree -

(i) not to engage in any form of physical duress;

(ii) not to permit demonstrations which are not peaceful and not to permit rowdyism
in demonstration;

(iii) that their members will not engage or cause other employees to engage in any
union activity during working hours, unless as provided for by law, agreement of

(iv) to discourage unfair labour practices such as (a) negligence of duty, (b) careless
operation, (c) damage to property, (d) interference with or disturbance to normal
work and (e) insubordination;

(v) to take prompt action to implement awards, agreements, settlements and


(vi) to display in conspicuous places in the union offices, the provisions of this Code
in the local language(s), and

(vii) to express disapproval and to take appropriate action against office-bearers and
members for indulging in action against the spirit of this code.