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.

Definition and Concept of IR

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 elationships.
Therefore, it is in the interest of all to create and maintain good relations between employees
(labor) and employers (management).

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 explain 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 have a broad as well as a narrow outlook.Originally, industrial relations were
broadly defined to include the relationships and interactions between employers and employees. From
this perspective, industrial relations cover 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.

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:
• 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.
• Those employed for wages by or through an immediate employer in the premises of the factory or
establishment in connection with the work thereof
• 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.
• 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, housekeeping contractors etc. come under this category).

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

Labor market:
The market in which workers compete for jobs and employers compete for workers. It acts as the external
source from which organizations attract employees. These markets occur because different conditions
characterize different geographical areas, industries, occupations, and professions at any given time.

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, awardsof court ad the like. It also includes third parties and labor and tribunal
courts

SCOPE
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 others.

The scope or industrial relations are quite vast. The main issues involved here include the following:
1.Collective bargaining
2.Machinery for settlement of industrial disputes
3. Standing orders
4.Workers participation in management
5.Unfair labor practices

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 possibleproduction.
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 there flections 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
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 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.

Objectives of Industrial Relations

The main objectives of industrial relations system are:-
1. 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.
2. 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.
3. To raise productivity to a higher level in an era of full employment by lessening the tendency to high
turnover and frequency absenteeism.
4. 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 gheraos by providing and of the country as well.
5. To eliminate or minimize the number of strikes, lockouts and gheraos by providing reasonable wages,
improved living and working conditions, said fringe benefits.
6. To improve the economic conditions of workers in the existing state of industrial managements and
political government.
7. 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.

Dunlop’s Contribution to IR System

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.

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 affect
search 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.

Approaches to Industrial Relations

The industrial relations scenario and factors affecting it, has been perceived differently by different
practitioner and theorist. Some have viewed it in terms of class conflict; some have viewed it in terms of
mutuality of interest of different groups; some have viewed it as a consequence of interaction of various
factors both within an organization and outside it. Based on these orientations, several approaches have
been developed to explain the dynamics of IR.

UNITARY APPROACH
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 emphasize steam 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 APPROACH
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 inesapable. 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.

RADICAL APPROACH
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.
Tripartite Bodies:

The principals and policies of the tripartite body have been a machinery of consultancy at the
industrial and national levels. The tripartite body was established to make peace and improve
relations between management and unions, and maintain smooth functioning of union
management relations. It began as a statutory organization by the recommendation of the Whitey
Commission to the ILO in 1931. The tripartite body had to be sufficiently large to ensure
sufficient representation of the various interests involved; encourage representatives of
employers, labor and government to meet regularly; and disallow individual members from
making individual contributions to meetings.

The purpose of the tripartite body is to:

a. Bring the aggravated parties together for mutual settlement of differences, and encourage a
spirit of cooperation and goodwill.
b. Promote uniformity in labor laws and legislation.
c. Discuss all matters of All India importance as between employers and employees.
d. Determine a plan for settlement for all disputes.

Bipartite bodies:

With the beginning of industrialization of India, labor relations in Indian industries have also
been largely influenced by Indian democracy. Groups like Works Committee and Management
Council were established to democratize Indian industrial relations. The bipartite consultation
machinery was established around 1920, during the time when a few joint committees were setup
by the Government of India. These joint committees were also introduced in TISCO in
Jamshedpur.

Fundamentals of Industrial Settlement:

1. Both parties have to realize that the country is breaking away from the past, and this is going
to put continuous pressure on the quality of man-power and demands from human resources.
2. Both parties have to realize that to run a successful and profitable business, team work is
extremely important. This gives rise to timely response and supply of goods to the society.
3. Both the parties accept the charters of "Human Resources Policy" summarized below:
a. Individuals must make every effort to improve their job skills through training and
participating in developmental activities.
b. Each employee must keep his/her job skills up-to-date with changing business practices and
operations.
c. Machineries should be used throughout the year with trained staff readily available to operate
it.
d. Indirect employees may be converted to direct employees for increasing business efficiency.
e. Absenteeism and unnecessary delays must be reduced through planning.
f. Short-term employment must be avoided. Long-term employment should be encouraged and
highly trained employees must be hired.
g. The above steps must be utilized to increase company productivity; exploitation of
 employees must be disallowed.
h. High emphasis must be placed upon the quality of work. The Zero Defect policy must be
always followed.
i. (i): Employees must make a stand to follow the "Human Resources Policy" individually or
collectively.
(ii): Both the parties should closely and routinely monitor change in productivity, and take
necessary steps to avoid undesirable consequences.

ANATOMY OF INDUSTRIAL CONFLICT

Concept and Essentials of a Dispute

o According to the Industrial Disputes Act, 1947, Section 2(k); “industrial disputes mean
any dispute or difference between employers and employers, or between employers and workmen
or between workmen and workmen, which is connected with the employment or non-employment or
terms of employment or with the conditions of Labour of any person.
o For a dispute to become an industrial dispute, it should satisfy the following essentials:
o There must be a dispute or a difference

(a) between employers (such as wage-warfare where labour is scarce);

(b) between employers and workmen (such as demarcation disputes): and

(c) between workmen and workmen.

• It is connected with the employment or non-employment or the terms of employment or

with the conditions of labour of any person (but not with the managers or supervisors), or it
must pertain to any industrial matter,
• A workman does not draw wages exceeding Rs. 1,600 per month.
• The relationship between the employer and the workman must be in existence and
should be the result of a contract and the workman actually employed.

Interpretation of disputes by courts

• Some of the principles for judging the nature of a dispute evolved by the courts are as
follows.
• The dispute must affect a large group of workmen who have a community of interest
and the rights of these workmen must be affected as a class. In other words, a considerable
section of employees should necessarily make common cause within the general lot.
• The dispute should invariably be taken up by the industry union or by an appreciable
number of workmen.
• There must be a concerted demand by the workers for redress and the grievance
becomes such that it turns from individual complaint into a general complaint.
• The parties to the dispute must have direct and substantial interest in the dispute, i.e.,
there must be some nexus between the union which espouses the causes of the workmen and
the dispute. Moreover, the union must fairly claim a representative character.
• If the dispute was in the beginning in an individual's dispute and continued to be
such till the date of its reference by the government for adjudication, it cannot be converted
into an industrial dispute by support subsequent to the reference even of workmen interested
in the dispute.
 • By incorporating Section 2A in the Industrial Disputes Act, 1947, a right has been
given to the individual workman himself to raise an industrial dispute with regard to termination,
discharge, dismissal, or retrenchment of his service, even though no other workman or any
trade union of workmen raises it or is a party to the dispute.
• Patterson observes: Industrial strikes/disputes constitute militant and organized
protests against existing industrial conditions. They are symptoms of a discorded system.
• The industrial unrest, thus, takes an organized form when the work people make
common cause of their grievances against employers by way of strikes, demonstrations,
picketing, morchas, gate meetings, gheraos, etc.

Classification of Industrial Disputes

1. The most common practice is to make a distinction between two main types of
disputes relating to terms of employment. They are:
2. disputes that arise out of deadlocks in the negotiations for a collective agreement,
popularly known as interest disputes, and disputes that arise from day-to-day
workersgrievances or complaints, popularly known as grievance disputes.
3. In addition, in various countries, special provisions apply to two other types of disputes
relating to organisational rights, namely:
o those arising from acts of interference with the exercise of the right to organise, or acts
commonly known as unfair labour practicesand
o disputes over the right of a trade union to represent a particular class or category of
workers for purposes of collective bargaining, simply referred to as recognition disputes.

Details of Classification

o Interest Disputes : These disputes are also called conflicts of interest or economic disputes .
They generally correspond to what in some countries are called collective labour disputes .
o In general, they relate to the determination of new terms and conditions of employment for the
general body of workers.
o In most cases, the disputes originate from trade union demands or proposals for improvements
in wages, fringe benefits, job security, or other terms or conditions of employment.
o These demands or proposals are normally made with a view to conclude a collective
agreement.
o Since there are generally no mutually binding standards that can be relied upon to arrive at a
settlement of interest disputes, recourse must be made to bargaining power, compromise, and
sometimes, a test of economic strength before the parties reach an agreed solution.
o As the issues in these disputes are compromisable they lend themselves best to conciliation,
and are a matter of give-and-take and bargaining between the parties.
o Grievance or Rights Disputes : These disputes are also known as conflicts of rights or legal
disputes.
o They involve individual workers only or a group of workers in the same group and correspond
largely to what in some countries are called individual disputes.
o They generally arise from day-to-day working relations in the undertaking, usually as a protest
by the worker or workers concerned against an act of management that is considered to violate their
rights.
o The grievances typically arise on such questions as discipline and dismissal, the payment of
wages and other fringe benefits, working time, over-time, time-off entitlements, promotion, demotion,
transfer rights of seniority, rights of supervisors and union officials, job classification problems, the
relationship of work rules to the collective agreement and the fulfillment of obligations relating to safety
and health laid down in the agreement.
o In some countries, grievances arise especially over the interpretation and application of
collective agreements. The grievance disputes are, therefore, also called interpretation disputes.
o Such grievances, if not dealt with in accordance with a procedure that is respected by the
parties, often result in· embitterment of the working relationship and a climate of industrial strife.
o There is a definite standard for setting a grievance dispute - the relevant provision of the
collective agreement, employment contract, works rules or law, or custom or usage.
o In many countries, Labour Courts or Tribunals adjudicate over grievance disputes. In other
words, government encourages voluntary arbitration for their settlement.
o Disputes Over Unfair Labour Practices : The most common unfair labour practices in industrial
relations parlance are attempts by the management of an undertaking to discriminate against workers
on the ground that they are trade union members or participate in trade union activity.
o In most cases, the objects of this discriminatory treatment are union officials or representatives
employed in the undertaking, and trade union members who have actively participated in strikes.
o Other unfair labour practices are generally concerned with interference, restraint or coercion of
employees when they exercise their right to organise, join or assist a union, establishment of employer-
sponsored unions, refusal to bargain collectively, in good faith, with the recognized union; recruiting
new employees during a strike which is not an illegal strike; failure to implement an award, settlement
or agreement; indulging in acts of force or violence, etc.
o These unfair labour practices are also known in various countries as trade union victimisation.
In many countries, a special procedure exists under the law for the prevention of such practices. Such
a procedure obviates or precludes conciliation.
o In the absence of such procedure, disputes are settled according to the normal procedure laid
down under the Disputes Act.
o Recognition Disputes: This type of dispute arises when the management of an undertaking or
employer organisation refuses to recognise a trade union for the purpose of collective bargaining.

o Issues in recognition disputes differ according to the cause which has led the management to
refuse recognition.
o It may be that the management dislikes trade unions and will not have anything to do with a
trade union; the problem is then of attitude, as in the case of trade union victimisation.
o However, the management’s refusal may be on the ground that the union requesting
recognition is not sufficiently representative, or that there are several unions in the undertaking making
conflicting claims to recognition.
o In such a case, the resolution of the issue may depend on the existence or non-existence of
rules for determining the representative character of a trade union for the purpose of collective
bargaining.
o Such rules need not necessarily be laid down by law; they may be conventional or derived
from prevailing practices in the country.
o In many countries, guidelines for trade union recognition have been laid down in voluntary
Codes of Discipline or Industrial Relations Charters accepted by employers’s; and workers’s;
organisations.

Impact of Industrial Disputes

1. The consequences of industrial disputes are very far-reaching, for they disturb the
economic, social and political life of a country.
2. The workers, the employers, the consumers, the community and the nation suffer in
more than one way.

Various impacts
 1. Industrial disputes result in a huge wastage of mandays and dislocation in the
production work. A strike in a public utility service disorganizes public life and throws the
economy out of gear; and consumers are subjected to untold hardships.
2. the short supply of consumer goods results in sky-rocketing prices, and leads to their
non-availability in the open market.
3. The workers are also badly affected in more than one ways.
4. The employers suffer heavy losses, not only through stoppages of production,
reduction in sales and loss of markets but also in the form of huge expenditure incurred on
crushing strikes, engaging strike-breakers and blacklegs maintaining a police force and
guards;
5. Apart from these losses, the loss of mental peace, respect and status in society cannot
be computed not in terms of money.
6. The public/society, too, is not spared, industrial unrest creates law and order problems,
necessitating increased vigilance on the part of the state.
7. Further, even when disputes are settled, strife and bitterness continue to linger,
endangering social relations.
8. Industrial disputes also affect the national economy.
9. Prof. Pigou has observed:
10. When labour and equipment in the whole or any part of an industry are rendered idle
by a strike or lockout, national dividend must suffer in a way that injures economic welfare .... It
may happen in two ways.
11. On the one hand, it impoverishes the people actually involved in the stoppage, it
lessens the demand for the goods the other industries make;
12. on the other hand, if the industry in which the stoppage has occurred is one that
furnishes a commodity or service largely used in the conduct of other industries, it lessens the
supply to them of raw material or equipment for their work.
13. This results in a loss of output, ultimately reducing the national income.

TRADE UNION ACT 1926

A trade Union may be defined as an organisation of employees formed on a continous basis for the
purpose of securing diverse range of benefits. Sec (h) of Indian Trade Unions Act, 1926 defines trade
union as any combination, whether temporary or permanent, formed primarily for the purpose of
regulating the relations between workmen and employers or between workmen and workmen, or between
employers and employers or for imposing restrictive conditions on the conduct of any trade or business,
and includes any federation of two or more trade unions.”

According to Edwin.B.Filippo, “ A trade union is an organisation of workers formed to promote, protect

and improve, through collective action, the social, economic and political interests of its members.”

Features of trade Unions:-

1. They are voluntary association of workers in one or more occupations.

2. They are formed for the pursuit of common interests of members. They protect the economic
interests of members and also promote their welfare.
3. They always act collectively i.e. through united action of members.
4. They are concerned with economic, cultural, political and social life of their members.

The industrial disputes act 1947

“ According to Sec 2 of Industrial Disputes Act 1947, Industrial dispute means any dispute or difference
between employers & employers or between employers and workmen or between workmen and
workmen, which is connected with the employment or non-employment or terms of employment or with
the conditions of labour of any person.”

Industrial disputes are symptoms of industrial unrest. Industrial unrest may take either unorganized or
organized from. When it is unorganized it is manifested inform of low morale, low productivity, frustraton
etc. organized from of industrial unrest includes strikes, demonstration, gheraos, boycotts etc.

Forms:-

(a) Strikes- is a very powerful weapons to get its demand accepted by a trade union. It means quitting
work by a group of workers for the purpose of bringing pressure on their employers to accept their
demands.

There are may types of strikes.

(a) Economic Strike:- Under this type of strike, members of trade Union stop work to enforce their
economic demands such as increase in wages, bonus & other benefits.
(b) Sympathetic Strike:- When members of a Union collectively stop work to support or express their
sympathy with the members of other union who are on strike

(1) General Strike:- Means a strike by numbers of all or most of unions in a region or an industry. If may
be strike of all workers in a particular region to force demands common to all workers.
(2) Sit Down Strike:- When workers do not leave their place of work but cases work, they are said to be
on sit down or stay in strike
(3) Slow Down Strike:- Employers remain on their jobs under this type of strike. They do not stop work
but restrict rate of output in an organized manners.

Lock-Out:- Is declared by employers to put pressure on their workers. It is an act on the part of the
employers to close down the place of work until workers agree to resume work on terms & conditions
specified by employers.

Gherao:- Denotes a collective action initiated by a group of workers under which members of
management of an industrial establishment are prohibited from leaving their business or residential
promises by workers who block their through human barricade.

The Payment of Wages Act, 1936

The Payment of Wages Act, 1936 is a central legislation which has been enacted to regulate the payment
of wages to workers employed in certain specified industries and to ensure a speedy and effective
remedy to them against illegal deductions and/or unjustified delay caused in paying wages to them. It
applies to the persons employed in a factory, industrial or other establishment, whether directly or
indirectly, through a sub-contractor.

The Central Government is responsible for enforcement of the Act in railways, mines, oilfields and air
transport services, while the State Governments are responsible for it in factories and other industrial
establishments.

The Payment of Wages Act, 1936 is a central legislation which has been enacted to regulate the payment
of wages to workers employed in certain specified industries and to ensure a speedy and effective
remedy to them against illegal deductions and/or unjustified delay caused in paying wages to them. It
applies to the persons employed in a factory, industrial or other establishment, whether directly or
indirectly, through a sub-contractor.

The Central Government is responsible for enforcement of the Act in railways, mines, oilfields and air
transport services, while the State Governments are responsible for it in factories and other industrial
establishments.

The Minimum Wages Act, 1948

Introduction:

Wages means all remuneration capable of being expressed in terms of money, which Would, if the terms
of contract of employment, express or implied, were fulfilled, be payable to a person employed in respect
of his employment or of work done in such. Employment it includes house rent allowance but does not
include the value of any house accommodation, supply or light, water, medical attendance or other
amenity or service excluded by general or special order of appropriate Government; contribution paid by
the employer to Pension/ Provident Fund or under scheme of social insurance; traveling allowance or
value of traveling concession; sum paid to the person employed to defray special expenses entailed on
him by the nature of his employment; or any gratuity payable on discharge.

As of now there is no uniform and comprehensive wage policy for all sectors of the economy in India.
Wages in the organized sector are determined through negotiations and settlements between employer
and employees. In unorganized sector, where labor is vulnerable to exploitation, due to illiteracy and
having no effective bargaining power, minimum rates of wages are fixed/ revised both by Central and
State Governments in the scheduled employments falling under their respective jurisdictions under the
revisions of the Minimum Wages Act,1948.

The concept of Minimum Wages was first Evolved by ILO in 1928 with reference to Remuneration of
workers in those industries Where the, level of wages was substantially Low and the labor was vulnerable
to Exploitation, being not well organized and Having less effective bargaining power. The Need for a
legislation for fixation of minimum Wages in India received boost after World War – II when a draft bill was
considered by The Indian Labor Conference in 1945.

On the recommendation of the 8th Standing Labor Committee, the Minimum Wages Bill was introduced in
the Central Legislative assembly on 11.4.1946 to provide for fixation of minimum wages in certain
Employments. The Minimum Wages Bill was passed by The Indian Dominion Legislature and came into
Force on 15th March, 1948. Under the Act both State and Central Government are “Appropriate
Governments” for fixation/revision of minimum Rates of wages for employments covered by The
Schedule to the Act. The Central Government is responsible for fixation and revision of minimum wages
for the unskilled workers in scheduled employments of Central Sphere Scheduled Employments of
Central Sphere are given in

The minimum rates of wages also include Special Allowance (Variable Dearness Allowance) linked to
Consumer Price Index Number which are revised twice a year effective from April and October. The rates
of minimum wages including VDA in different scheduled employments in Central Sphere are at

The rates of wages once fixed are revised at an interval not exceeding of five years. The minimum wages
were last revised in 1994, under Central sphere. The minimum wages in various mines as well as
constructions, laying of underground cables etc. in the central sphere have been revised vide gazette
notifications S.O. no. 9(E) dated 3.1.2002 and S.O. no. 113(E) dated 28.1.2002respectively.
The Payment of Bonus Act, 1965

The practice of paying bonus in India appears to have originated during First World War when certain
textile mills granted 10% of wages as war bonus to their workers in 1917. In certain cases of industrial
disputes demand for payment of bonus was also included. In 1950, the Full Bench of the Labour
Appellate evolved a formula for determination of bonus. A plea was made to raise that formula in 1959.
At the second and third meetings of the Eighteenth Session of Standing Labour Committee (G. O.I.) held
in New Delhi in March/April 1960, it was agreed that a Commission be appointed to go into the question
of bonus and evolve suitable norms. A Tripartite Commission was set up by the Government of India to
consider in a comprehensive manner, the question of payment of bonus based on profits to employees
employed in establishments and to make recommendations to the Government. The Government of India
accepted the recommendations of the Commission subject to certain modifications. To implement these
recommendations the Payment of Bonus Ordinance, 1965 was promulgated on 29 th May, 1965. To
replace the said Ordinance the Payment of Bonus Bill was introduced in the Parliament.

The Bonus Formula:

The Bonus Formula was first evolved in the case of Mill Owners Association, Bombay v. Rashtriya Mill
Mazdoor Sangh, Bombay, (1950). The formula, which came to be known as ‘the Full Bench Formula or
the Available Surplus Formula is as follow:

“As both labour and capital contribute to the industrial concern it is fair that labour should derive some
benefit if there is surplus after meeting prior or necessary charges. These first charges on gross profit are:

• Provision for depreciation

• Reserve for rehabilitation
• A return of six percent on the paid-up capital, and
• A return on the working capital at a lower rate than the return on paid-up capital.

Bonus Commission:

The government of India appointed a commission by the suggestion given by the associated cement
company’s known as the bonus commission, by its resolution dated 6 th Dec, 1961. The bonus
commission submitted its report to the government on 18 th Jan, 1964. Then the government accepted the
report with slight modification by their resolution dated 2nd Sept, 1964, and in order to give statutory effect
to the recommendation made by the bonus commission an, ordinance known as the payment bonus
ordinance was promulgated in may 1965. The ordinance was later replaced by the payment of bonus act
1965 in September of that year. The act came into operation with effect from 25th Sept, 1965.

To review the operation of the payment of bonus act 1965 the governments setup in 1972 a bonus review
committee. As a result of the recommendation of this committee, the payment of bonus (Amendment)
act, 1972 was passed. This amendment increases the minimum compulsory payment of bonus from 4%
to 8 1/3%.

Payment of Bonus (Amendment) Act 1977:

Presidential ordinaries was promulgated on 3rd Sept, 1976 to give statutory effect to the government’s
decision taken on 18th August, 1977 for restoring the payment of a minimum bonus of 8.33%, the legal
right for which had been taken away from the employees during emergency.

The ordinance was replaced by the payment of bonus (Amendment) act, 1977 which was come into force
retrospectively from the 3rd of September, 1977. The important provisions of the Amendment Act have
been discussed at relevant places.
The Act does not preclude “employees employed in any establishment or class of establishment from
entering into agreement with their employer for granting them an amount of bonus under a formula which
is different from that under this Act”. But no such agreement shall have effect unless it is entered into with
the previous approval of appropriate government. This is subject to stipulations which among other
things, provide that such employees shall not be entitled to be paid bonus in excess of—

• 8.33% of the salary or wage earned by them during the accounting year if the employer has no
allocable surplus in the accounting year or the amount of such allocable surplus is only so much
that, but for the provisions of Sec. 10(2-A), it would entitle the employees only to receive an
amount of bonus which is less than the aforesaid percentage; or,
• 20% of the salary or wage earned by them during the accounting year.” (Sec.34 as substituted by
the Amendment Act of 1977).

FACTORIES ACT, 1948

INTRODUCTION
In common parlance, invariably factory and industry are understood as interchangeable. This is incorrect.
The term industry refers to a steady and systematic activity in which a trade is organised, whereas a
factory is the place where such activities are being carried on.
The entire day-to-day administration of the factories is governed by the principal Act of 1948 amended
Act, which is an improvement of 1934 Act. This Act extends to the whole of India, including Jammu and
Kashmir. Unless otherwise provided, it also applies to factories belonging to the Central and State
Governments. (Section 116)
The Bhopal tragedy of 1984 has created an awareness among the public for preventing pollution and this
has made the government to take steps in amending the present 1948 Act by incorporating Chapter IV A
from Sections 41
A to 41 H, pertaining to provisions as regards hazardous processes.

OBJECT OF THE ACT

The object of the Factories Act of 1948 is
(a) To improve health, welfare and safety of the workmen.
(b) To regulate by imposing restriction as to hours of work including rest and provisions for availing of
leave.
(c) To make stringent provisions as regards employment of women and young persons and duration of
their work.
291
MEANING OF THE TERM ‘FACTORY’
Factory means any premises including the precincts therefore –
(i) Wherein ten or more workers are working or were working on any day of the preceding twelve months,
and in any part of which a manufacturing process is being carried on with the aid of power, or is ordinarily
so carried on, or
(ii) Whereon twenty or more workers are working or were working on any day of the preceding twelve
months, and in any part of which a manufacturing process is being carried on without the aid of power,
or is ordinarily so carried on.
Factory does not include a mine as it is covered by Indian Mines Act, 1952 or a mobile unit belonging to
the armed forces of the Union, a railway running shed or a hotel, restaurant or eating place. To put it in a
nutshell, factory means (i) any premises including precincts (ii) where ten or more persons are engaged in
manufacturing process with the aid of power or (iii) twenty or more persons are engaged in manufacturing
process without the aid of power.

Collective bargaining- Definition & Features

Collective bargaining involves discussions and negotiations between two groups as to the terms and
conditions of employment. It is called ‘collective’ because both the employer and the employee act as a
group rather than as individuals. It is known as ‘bargaining’ because the method of reaching an
agreement involves proposals and counter proposals, offers and counter offers and other negotiations.

Thus collective bargaining:

• is a collective process in which representatives of both the management and employees

participate.

• is a continuous process which aims at establishing stable relationships between the parties
involved.

• not only involves the bargaining agreement, but also involves the implementation of such an
agreement.

• attempts in achieving discipline in the industry is a flexible approach, as the parties involved have
to adopt a flexible attitude towards negotiations.

The main characteristics of collective bargaining are:

Collective Process: The representatives of both the management and the employees participate in it.
Employer is represented by its delegates and , on the other side, employees are represented by their
trade union. Both the groups sit together at the negotiating table and reach at some agreement
acceptable to both.

Continuous Process : It is a continuous process. It does not commence with negotiations and end with
an agreement. It establishes regular and stable relationship between the parties involved. It involves not
only the negotiation of the contract, but also the administration or application of the contract also.It is a
process that goes on for 365 days of the year.

Flexible and Mobile: It has fluidity. There is no hard and fast rule for reaching an agreement. There is
ample scope for compromise. A spirit of give-and-take works unless final agreement acceptable to both
the parties is reached.

Bipartite Process: Collective bargaining is a two party process. Both the parties—employers and
employees—collectively take some action. There is no intervention of any third party. It is mutual give –
and –take rather than a take-it-or-leave it method of arriving at the settlement of a dispute.

Dynamic: Collective bargaining is a dynamic process because the way agreements are arrived at, the
way they are implemented, the mental make-up of parties involved keeps changing. As a result, the
concept itself changes, grows and expands overtime. It is scientific, factual and systematic.

Industrial Democracy: It is based on the principle of industrial democracy where the labour union
represents the workers in negotiations with the employer or employers. It is a joint formulation of company
policy on all matters affecting the labour.
Complementary Process : Collective bargaining is essentially a complementary process, i.e., each party
needs something which the other party has, namely, labour can put greater productive effort and
management has the capacity to pay for that effort and to organize and guide it for achieving the
organizational objectives.

It is an Art: Collective bargaining is an art , an advanced form of human relations.

Discipline in Industry: Collective bargaining is an attempt in achieving and maintaining discipline in the
industry.

Industrial Juris prudence: It is an effective step in promoting industrial jurisprudence.

Methods of Workers Participation In Management

1. Participation at the Board level:This would be the highest form of industrial democracy. The workers’
representative on the Board can play a useful role in safeguarding the interests of workers. He or she can
serve as a guide and a control element.

• He or she can prevail upon top management not to take measures that would be unpopular with
the employees.
• He or she can guide the Board members on matters of investment in employee benefit schemes
like housing, and so forth.

The Government of India took the initiative and appointed workers’ representatives on the Board of
Hindustan Antibiotics (Pune), HMT (Bangalore), and even nationalized banks. The Tatas, DCM, and a
few others have adopted this practice.

Problems associated with this method:

• Focus of workers’ representatives is different from the focus of the remaining members of the
Board.
• Communication and subsequently relations between the workers’ representative and the workers
suffers after the former assumes directorship.
• He or she tends to become alienated from the workers.
• As a result, he or she may be less effective with the other members of the Board in dealing with
employee matters.
• Because of the differences in the cultural and educational backgrounds, and differences in
behaviour and manners, such an employees’ representative may feel inferior to the other
members, and he or she may feel suffocated. Hence, his or her role as a director may not be
satisfying for either the workers or the management.
• Such representatives of workers’ on the Board, places them in a minority. And the decisions of
the Board are arrived at on the basis of the majority vote.

2. Participation through ownership: This involves making the workers’ shareholders of the company by
inducing them to buy equity shares.

• In many cases, advances and financial assistance in the form of easy repayment options are
extended to enable employees to buy equity shares. Examples of this method are available in the
manufacturing as well as the service sector.
• Advantage: Makes the workers committed to the job and to the organization.
• Drawback: Effect on participation is limited because ownership and management are two different
things.
3 . Participation through complete control: Workers acquire complete control of the management
through elected boards. The system of self-management in Yugoslavia is based on this concept. Self-
management gives complete control to workers to manage directly all aspects of industries through their
representatives.

Advantages:

• Ensures identification of the workers with their organization.

• Industrial disputes disappear when workers develop loyalty to the organization.
• Trade unions welcome this type of participation.

Conclusion: Complete control by workers is not an answer to the problem of participation because the
workers do not evince interest in management decisions.

4. Participation through Staff and Works Councils : Staff councils or works councils are bodies on
which the representation is entirely of the employees. There may be one council for the entire
organization or a hierarchy of councils. The employees of the respective sections elect the members of
the councils. Such councils play a varied role.

• Their role ranges from seeking information on the management’s intentions to a full share in
decision-making.

Such councils have not enjoyed too much of success because trade union leaders fear the erosion of
their power and prestige if such workers’ bodies were to prevail.

5. Participation through Joint Councils and Committees : Joint councils are bodies comprising
representatives of employers and employees. This method sees a very loose form of participation, as
these councils are mostly consultative bodies.

Work committees are a legal requirement in industrial establishments employing 100 or more workers.
Such committees discuss a wide range of topics connected to labour welfare.

Examples of such committees are welfare committee, safety committee, etc. Such committees have not
proven to be too effective in promoting industrial democracy, increasing productivity and reducing labour
unrest.

6. Participation through Collective Bargaining : Through the process of CB, management and workers
may reach collective agreement regarding rules for the formulation and termination of the contract of
employment, as well as conditions of service in an establishment. Even though these agreements are not
legally binding, they do have some force. For CB to work, the workers’ and the employers’
representatives need to bargain in the right spirit. But in practice, while bargaining, each party tries to take
advantage of the other. This process of CB cannot be called WPM in its strongest sense as in reality; CB
is based on the crude concept of exercising power for the benefit of one party. WPM, on the other hand,
brings both the parties together and develops appropriate mutual understanding and brings about a
mature responsible relationship.

7. Participation through Job Enlargement and Job Enrichment: Excessive job specialization that is
seen as a by-product of mass production in industries, leads to boredom and associated problems in
employees.

Two methods of job designing – job enlargement and job enrichment – are seen as methods of
addressing the problems.
 • Job enlargement means expanding the job content – adding task elements horizontally.
• Job enrichment means adding `motivators’ to the job to make it more rewarding. This is WPM in
that it offers freedom and scope to the workers to use their judgment. But this form of participation
is very basic as it provides only limited freedom to a worker concerning the method of performing
his/her job.

The worker has no say in other vital issues of concern to him – issues such as job and income security,
welfare schemes and other policy decisions.

8. Participation through Suggestion Schemes: Employees’ views are invited and reward is given for
the best suggestion. With this scheme, the employees’ interest in the problems of the organization is
aroused and maintained. Progressive managements increasingly use the suggestion schemes.
Suggestions can come from various levels. The ideas could range from changes in inspection procedures
to design changes, process simplification, paper-work reduction and the like. Out of various suggestions,
those accepted could provide marginal to substantial benefits to the company. The rewards given to the
employees are in line with the benefits derived from the suggestions.

9. Participation through Quality Circles: Concept originated in Japan in the early 1960s and has now
spread all over the world. A QC consists of seven to ten people from the same work area who meet
regularly to define, analyze, and solve quality and related problems in their area. These circles require a
lot of time and commitment on the part of members for regular meetings, analysis, brainstorming, etc.
Most QCs have a definite life cycle – one to three years. Few circles survive beyond this limit either
because they loose steam or they face simple problems. QCs can be an excellent bridge between
participative and non-participative approaches. For QCs to succeed in the long run, the management
needs to show its commitment by implementing some of the suggestions of the groups and providing
feedback on the disposition of all suggestions.

Training in problem-solving techniques is provided to the members. QCs are said to provide quick,
concrete, and impressive results when correctly implemented.

Advantages:

• Employees become involved in decision-making, acquire communication and analytical skills and
improve efficiency of the work place.
• Organization gets to enjoy higher savings-to-cost ratios.
• Chances of QC members to get promotions are enhanced.

10. Empowered Teams: Empowerment occurs when authority and responsibility are passed on to the
employees who then experience a sense of ownership and control over their jobs. Employees may feel
more responsible, may take initiative in their work, may get more work done, and may enjoy the work
more. For empowerment to occur, the following approach needs to be followed as compared to the
traditional approach:

Element Traditional Organization Empowered Teams

Organizational structure Layered, individual Flat, team

Job design Narrow, single task Whole process, multiple tasks

Management role Direct, control Coach, facilitate

Leadership Top-down Shared with the team

Information flow Controlled, limited Open, shared

Rewards Individual, seniority based Team-based, skill-based

Job process Managers plan, control, improve Teams plan, control, and improve

Features of empowered or self-directed teams:

• Empowered to share various management and leadership functions.

• Plan, control and improve their work.
• Often create their schedules and review their performance as a group.
• May prepare their own budgets and co-ordinate their work with other departments.

o Usually order materials, keep inventories and deal with suppliers.

o Frequently responsible for acquiring any new training they might need.

o May hire their own replacement to assume responsibility for the quality of their products or services

Titan, Reliance, ABB, GE Plastics (India), Wipro Corporation and Wipro InfoTech are empowering
employees – both frontline as well as production staff, and are enjoying positive results.

11. Total Quality Management : TQM refers to the deep commitment, almost obsession, of an
organization to quality. Every step in company’s processes is subjected to intense and regular scrutiny for
ways to improve it.

Some traditional beliefs are discarded.

• High quality costs more.

• Quality can be improved by inspection.
• Defects cannot be completely eliminated.
• Quality in the job of the QC personnel.

New principles of TQM are:

• Meet the customer’s requirement on time, the first time, and 100% of the time.
• Strive to do error-free work.
• Manage by prevention, not correction.
• Measure the cost of quality.
• TQM is called participative because it is a formal programme involving every employee in the
organization; making each one responsible for improving quality everyday.

12. Financial Participation: This method involves less consultations or even joint decisions.
Performance of the organization is linked to the performance of the employee. The logic behind this is
that if an employee has a financial stake in the organization, he/she is likely to be more positively
motivated and involved.