MODULE – 1: INTRODUCTION TO INDUSTIRAL REALATIONS

UNIT-1 INDUSTRIAL RELATIONS – AN OVERVIEW - PART - 1

Structure:
1.0 Objectives
1.1 Introduction
1.2 Meaning and Definition of Industrial Relations
1.3 Concept of Industrial Relations
1.4 Need for industrial relations
1.5 Importance of industrial relations
1.6 Check Your Progress
1.7 Notes
1.8 Summary
1.9 Key words
1.10 Self Assessment Questions
1.11 References

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1.0 OBJECTIVES:

After studying this unit, you will be able to

 Give the meaning of industrial relations
 Describe the need of industrial relations
 Analyze the importance of industrial relations
 Highlight the concept of industrial relations

1.1 INTRODUCTION:

The concept of Industrial relations has been defined using various

terminologies, but in the strictest sense, it is essentially the relationship between
management and labour. The full concept of industrial relations is the organization
and practice of multi-pronged relationships between labour and management,
unions and labour, unions and management in an industry. Dale Yoder defines it
as a "whole field of relationships that exists because of the necessary collaboration
of men and women in the employment process of an industry."

Industrial relations has become one of the most delicate and complex problems
of modern industrial society. Industrial progress is impossible without cooperation
of labours and harmonious relationships. Therefore, it is in the interest of all to
create and maintain good relations between employees (labour) 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

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 employees and management which stem directly or indirectly from union-
employer relationship.

The evolution of industrial relations in India began a long time ago. The caste
system greatly influenced the ancient industries and their development. Due to
successive foreign invasions in India, the living conditions of slave and artesian
couldn't be differentiated. Furthermore, under the autocratic regime of Muslim
rulers, the conditions of employees worsened. Wages were not guaranteed, the
living conditions of workers were harsh, and there was no proper management.
The coming of the British didn't improve the working conditions. After some time,
however, most Indian industries were modeled after the British system of business,
and this led to growth in various sectors.

1.2 MEANING AND DEFINITION OF INDUSTRIAL RELATIONS

―Industrial relationship is about the relationship between an employee and

management. This page carries information about Industrial relations and its concept
through definition and description of industrial relation.‖

Industrial relations has become one of the most delicate and complex problems
of modern industrial society. Industrial progress is impossible without cooperation of
labours and harmonious relationships. Therefore, it is in the interest of all to create
and maintain good relations between employees (labour) and employers
(management).

Industrial relation is defined as relation of Individual or group of employee and

employer for engaging themselves in a way to maximize the productive activities.

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.
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 ILO defines ―industrial relations deal with either the relationships between the
state and the employers and the workers‘ organization or the relation between the
occupational organizations themselves‖. The ILO user the expression to denote such
matter as ―freedom of association and the protection of the right organize, the
application of the principles of the right to organize, and the right of collective
bargaining, collective agreements, conciliation and arbitration and machinery for
corporation between the authorities and the occupational organizations at various level
of the economy.

1.3 CONCEPT OF INDUSTRIAL RELATIONS

The term ‗Industrial Relations‘ comprises of two terms: ‗Industry‘ and

‗Relations‘. ―Industry‖ refers to ―any productive activity in which an individual (or a
group of individuals) is (are) engaged‖. By ―relations‖ we mean ―the relationships that
exist within the industry between the employer and his workmen.‖ The term industrial
relations explains the relationship between employees and management which stems
directly or indirectly from union-employer relationship.

Industrial relations are the relationships between employees and employers

within the organizational settings. The field of industrial relations looks at the
relationship between management and workers, particularly groups of workers
represented by a union. Industrial relations are basically the interactions between
employers, employees and the government, and the institutions and associations
through which such interactions are mediated.

The term industrial relations has a broad as well as narrow outlook. Originally,
industrial relations was broadly defined to include the relationships and interactions
between employers and employees. From this perspective, industrial relations covers
all aspects of the employment relationship, including human resource management,
employee relations, and union-management (or labour) 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 labour-management

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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 and the relationships between employees. The relationships employers and
workers have with the organizations are 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.

1.4 . NEED FOR INDUSTRIAL RELATIONS

Need of Industrial Relation has arisen to defend the interest of workers for
adjusting the reasonable salary or wages. It also helps the workers to seek perfect
working condition for producing maximum output. Workers/employees are concerned
with social security measures through this. Industrial Relations are also needed for
achieving the democracy by allowing worker to take part in management, which helps
to protect human rights of individual. Salaries in India are much more attractive in
Indian subcontinent. As India is having flourishing economy, the job opportunities are
emerging and there is huge scope of expansion. The salary pattern of India is also
growing. Even, the seventh pay commission is also spreading the way to coming soon.
The Salaries of private sector is also in the upswing mode with the increase of 11%
annually. Although, Inflation is one of the major factor which nullify the increase in
the salary. But still, the inflation is lower than the increase in the salary. So, this can
be seen as increase in the salary.

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

concept. According to NCL, industrial relations affect not merely the interests of the
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two participants- labour 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 behaviour of people at
work. A few such important factors are below:

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

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 labour court, tribunal etc.

Institution

It includes government, employers, trade unions, union federations or

associations, government bodies, labour courts, tribunals and other organizations
which have direct or indirect impact on the industrial relations systems.

Methods

Methods focus on collective bargaining, workers participation in the industrial

relations schemes, discipline procedure, grievance redressel 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 labour 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 labour welfare,
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social security, industrial relations, issues concerning with workers participation in
management, collective bargaining, etc.

1.5 IMPORTANCE OF INDUSTRIAL RELATIONS

Productive industrial relations are always the key for the progress and success
of any organization as well as for its employees (Schuler, 1989). The need and
importance of IR has been discussed with specific points as below:

1. Smooth Running of Operations: One of main benefit is ensuring smooth

running of operations in the plant. It ensures continuous production which
serves continuous employment to all the employees in the company.
Continuous running of operations ensure optimum utilization of resources and
improvement in efficiencies and productivity which directly impacts the
companies bottom lines positively.
2. Improvement in Product Quality: In view of good industrial relations
employees and workers are more motivated and take increased ownership for
their jobs on the floor. They take full ownership of the jobs which reflects in
timely delivery of quality products. This not only reflects better quality product
and services to customer but also help in reducing waste and saving the cost in
the process.
3. Reduction in Industrial Disputes: Good industrial relations reduce the
industrial disputes. Because disputes are reflections of 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, 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.
4. Increase in Employee Morale: The harmonious industrial relations impact
employees morale directly across levels be it workers or officer of the
company. In this scenario, there is increased teaming among employees and
they work with great enthusiasm with the feeling in mind that the interest of

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 employer and employees is one and the same. Every worker gets the feeling of
being a co-owner of the gains of industry. All employees take full ownership of
their respective targets and there is complete unity of thought and action is the
main achievement of industrial peace. This increases the place of workers in
the society and their need of recognitions gets satisfied.
5. Employee Engagement and Mental Revolution: Good industrial relations
impact employees‘ engagement positively. Consequently, the industrial peace
lies ultimately in a transformed outlook on the part of workers and employees.
Hence it‘s imperative on the part of company leadership, employees and
Government to work out a new relationship in consonance with a spirit of true
democracy. They should think themselves as partners of the industry and the
role of workers in such a partnership should be recognized. This above
partnership and relationship becomes mutual rewarding for all of them and
further contributes to good industrial relations.

Industrial relations are maintained on the basis of cooperation and recognition

of each other. This help to increase production. Wastage of man, material and
machines are reduced to the minimum and thus national interest can be protected.
Thus, it is seen that good industrial relations are basis of higher production with
minimum cost and higher profits. It also results in increased efficiency of workers.
New changes can be initiated in the company easily. It also facilitates introducing new
things 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.

Further we can exhibit the importance of industrial relations as given below:

Uninterrupted production:
a. It is the most important benefit of industrial relations.
b. It ensures continuity of production.
c. It provides continuous employment to all.
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 d. Optimum use of available resources in order to gain maximum possible
production.
e. Continuous flow of income for all.
Reduction in Industrial Dispute:

a. Cordial Industrial relations helps in reducing industrial disputes, disputes

are reflections of the failure of basic motivation in order secure
satisfaction among employees. Some reflections of industrial unrest
include strikes, lockouts, gheraos and grievances.

b. It promotes industrial peace with cordial industrial relations; disputes can

be settled through co-operation.

High morale - Industrial relation improves the morale of employees

a. Employee feels that he is co-owner of the profits of industry.

b. High morale induces employees to work with high energy as they feel that
their interest co-ordinates with organizational interest.
c. In order to maintain good Industrial relations employer need to realize
and share equally the profits of industry generously with employees
d. Unity of thought and action against workers and management is main
achievement of industrial peace.
e. Effective industrial relations boost morale of workers which leads to
positive effect in production

Mental revolution

a. Effective Industrial Relations brings mental revolution among employees

which bring complete overhaul in the outlook of employees.
b. Employees, employer and government need to work out a new
relationship in consonance with spirit of true democracy where each
thinks of themselves as partners in industry.
c. Industrial peace ultimately lies in transformed outlook.
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 Economic growth and Development

It promotes economic growth and development, effective industrial relations

lead to increase efficiency and higher productivity, which ultimately results in
economic development.

Discourages unfair practices

Cordial industrial relations discourage unfair practices on part of both

management and unions. Industrial relations leads to formation of machineries in
order to solve problems confronted by management, employees and unions through
mutual understanding and negotiations to which both parties are bound; this results in
banning of unfair labour practices.

Enactment of statutory provisions

Industrial relations enable essential use of certain labour laws in order to

protect and promote the welfare of employees and safeguards interests of all parties
against unfair means or practices.

1.6 CHECK YOUR PROGRESS

1) The need and importance of industrial relations includes

a) Employee Engagement and Mental Revolution

b) Reduction in Industrial Disputes

c) Improvement in Product Quality

2) The full form of NCL

a) National Commission on Labour

b) National Capitalist on Labour

c) National Communist on Labour

Answers for check your progress: 1) all the three 2) a

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1.7. NOTES

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1.8. SUMMARY

The term industrial relations refer to the complexity of human

relationships, which emerge in work situations. IR deals with certain regulated
and institutionalized relations in industry. The employment relationship in any
work situation provides the setting for industrial relations. The employment

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 relationship in any work situation provides the setting for industrial relations.
With this objective, the workers as a group form trade unions, the employers
from their own associations, and the state provides institutions for the
regulation of relations. The major participants in industrial relations are the
workers and their organizations, the managements and their associations, and
the agencies of the government.

1.9 KEY WORDS

Industrial Relations: Pertain to the relations between the management and the
workers or between the representatives of employees and the representatives of
employers.

Employee relations: Implies the relations between the employer and

employees as individuals.

Employment relations: Implies the relations between parties in an

employment context, either as individuals or collectively. Employment
relations cover relations between people at work both in unionized and non-
unionized situations.

1.10 SELF ASSESSMENT QUESTIONS

1. Explain the meaning of industrial relations

2. Mention the concept of industrial relations

3. Discuss the needs and importance of industrial relations

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1.11 REFERENCES:

 A.M. Sarma, Industrial Relations (conceptual and Legal Framework),

Himalaya Publishing House, 10thEdition, 2013.

 C.S. Venkata Ratnam, Industrial Relations, Oxford University Press,

15th impression, 2011.

 [Link], Satish Mamoria, S.V Gankar – Dynamics of Industrial

Relations, 14th revised edition (reprint) 2004, Himalaya Publishing
House 2004.

 S.C Srivastava- Indistrial Relations, 5th edition, published by Vikas

publishing house.

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UNIT-2 INDUSTRIAL RELATIONS – AN OVERVIEW PART - 2

STRUCTURE
2.0 Objectives
2.1 Introduction
2.2 Essentials for Good Industrial Relations
2.3 Scope of Industrial Relations
2.4 Objectives of Industrial Relations
2.5 Factors affecting Industrial Relations
2.6 Check Your Progress
2.7 Notes
2.8 Summary
2.9 Key words
2.10 Self Assessment Questions
2.11 References

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2.0 OBJECTIVES
After studying this unit, you will be able to
 Give the meaning of industrial relations
 Explain the objectives of industrial relations
 Bring out the essentials for good industrial relations
 Highlight the scope of industrial relations
 Analyze the various factors effecting Industrial Relations

2.1 INTRODUCTION:
As per J. Henry Richardson
"Industrial Relation is an art, the art of living together for purposes of
production."
In broader sense industrial relations means all such relationships that a business
enterprise maintains with various sections of society including employee, state,
customers and public in industries contact.

In narrow sense it refers to all types of relationships between employer and

employee, trade union and management, workers and union and between
employee and employee. It also includes all sorts of relationships at both
formal and informal levels in the organization.

The parties involved in industrial relations i.e. employees and the employers
have a common purpose of production. They willingly bind themselves to work
together. Economic interest brings employees for wages and employers hire
their services as a factor of production. It highlights interpersonal relations but
ignores conflicts of interest. It is an art which two parties learn by acquiring the
skills of adjustment.

Industrial relations are associated with labour, management, labour unions, and
the state. The scene of industrial relations has grown tremendously, and cannot
be represented merely by relations between management and labour. It has
become a comprehensive and total concept embracing the sum total of
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 relationship that exists at various levels of the organizational structure.
Additionally, it connotes relationships between workers themselves within the
labour class, and relations among the management within the managerial class.
In an open sense, industrial relations denote all types of relations within a
group and outside a group - both formal and informal relations.

Industrial Relations essentially comprise market relations and managerial

relations. The idea of market relations is that labour, like any other commodity,
may have its own schedules of demand and supply. Thus, labour has a market
price associated with it and unless the labour market is able to mobilize wages
which are just and fair, these is always a degree of discounted that labour
carries along with it. At the same time, labour is unlike any other commodity,
in that it cannot supply be put to use once it has been accessed from the market.
The difference between labour and other commodities is that labour is
embodied in the people who are supposed to work for organizations. Thus, the
managerial relations one of the component of industrial relations use the
managerial tactics employed by managers to persuade labour to give its consent
to work. In this unit, concepts and theories associated with these twin relations
that constitute industrial relations, have been touched upon.

2.2 ESSENTIALS FOR GOOD INDUSTRIAL RELATIONS

Good Industrial Relations implies peaceful, harmonious, fruitful relations

between labour and management. The following steps may help achieve good
industrial relations:

1. Strong and Stable Union: Management needs to recognize the fact that a
sound and strong union is essential for ensuring good industrial relations. A
strong union would have it easy to carry forward company plans and get then
implemented from all the workers. The employees ignore weak union as they
think that it hardly represents the workers and cannot defend their case in front
of the management. Strong and stable union represents workers and can
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 effectively negotiate (Tickner, 2002) with management about the terms and
conditions of the service for workers
2. Mutual trust: Trust is the backbone for any relationship. Management and
union should help in development of atmosphere of cooperation, confidence
and respect for each other. The management must adopt a progressive outlook
and should recognize the rights of workers. Also labour unions should persuade
their members to work for the common objectives of the organization. Both the
management and the unions must have faith in collective bargaining and other
peaceful methods of settling disputes among themselves. Mutual trust also
leads to mutual respect between the parties
3. Employees’ Participation in Management: The relationship between workers
and employer will more impactful when they listen to each other and resolve
issues mutually. The management must ensure that the participation of workers
in the management of the industrial unit should be encouraged by making
effective use of works committees, joint consultation and other methods. This
improves communication between managers and workers, increase productivity
and lead to greater effectiveness as team.
4. Effective Employees Communication: Communication plays an important
role in any organization to run it smoothly. A proactive, effective and objective
communication helps remain employees focus on their jobs than falling prey to
grapevines. Hence communication not only plays a significant role, getting
employees know about company plans etc but it also helps curbing any rumors
and confusions among employees. The company must build effective
structured communication plans, and role it out regularly to keep employees
informed about the various developments. Hence regular communication is
plays an important role and contributes directly to maintain good Industrial
Relations.
5. Mutual Appreciation and Accommodation: Industrial will be sound only
when the bargaining power of the employees‘ union is equal to that of
management. The employers must recognize the right of collective bargaining

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 of the trade unions. There must be a great emphasis on mutual accommodation
rather than conflict or uncompromising attitude. There is a need to appreciate
and understand that conflicting attitude does not lead to amicable labour
relations; it may foster union militancy as the union reacts by engaging in
pressure tactics. The approach must be of mutual give and take rather than take
or leave. The management should be willing to co-operate and always look for
WIN – WIN resolutions.
6. Implementation of Agreements: Unions are helpful for the promotion and
maintenance of uniform policies in the company and they play a role in
implementing many policies pertaining to shop floor and other wise. The
management should also sincerely implement the settlements reached with the
trade unions. The agreements between the management and the unions should
be enforced both in letter and spirit by both the parties. In case, the agreements
are not implemented, then both parties - union and management stop trusting
each other. An environment of uncertainty is created. To avoid this, efforts
should be made at both ends to ensure the follow up of the agreements.
7. Sound Personnel Policies: The points should be noted regarding the
personnel policies. Policies should be formulated in consultation with the
workers and their representatives if they are to be implemented effectively. It
needs to be clearly stated so that there is no confusion in the mind of people.
Implementation of the policies should be uniform throughout the organization
to ensure fair treatment to each worker.
8. Role of Management: There should be progressive outlook of the
management of each industrial enterprise (Kochan, 1984). It should be
conscious of its obligations and responsibilities to the owners of the business
(Jensen, 1983), the employees, the consumers and the nation. The management
must recognize the rights of workers to organize unions to protect their
economic and social interests.
9. Role of Government: The Government should play an effective role for
promoting industrial peace. It should be provided with requite authority for

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 settling the industrial disputes. It should help make law for the compulsory
recognition of a representative union in each industrial unit. It should intervene
to settle disputes if the management and the workers are unable to settle their
disputes. This will restore industrial harmony in the companies.

2.3 SCOPE OF INDUSTRIAL RELATIONS

There is no unanimity on the meaning and scope of industrial relations since

different terms, such as labour-management relations, employer-employee relations,
union management relations, personnel relations, human relations, are in use and are
used synonymously. In its stricter sense, the term ―industrial relations‖ means
relationship between management and workmen in a unit or an industry. In its wider
connotation, it means the organization and practice of multi-pronged relationships
between workers and management, unions and workers, and the unions and
managements in an industry. Dale Yoder defines it as a ―whole field of relationship
that exists because of the necessary collaboration of men and women in the
employment process of an industry.‖

Tead and Metcalfe observed that ―industrial relations are the composite result
of the attitudes and approaches of employers and employees towards each other with
regard to planning, supervision, direction and coordination of the activities of an
organization with a minimum of human efforts and frictions with an animating spirit
of cooperation and with proper regard for the genuine well-being of all members of
the organization.‖

According to Allan Flanders, ―the subject of industrial relations deals with

certain regulated or institutionalized relationships in industry. Personal or in the
language of sociology, ―unstructured‖ relationships have their importance for
management and workers, but they lie outside the scope of a system of industrial
relations.‖

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 Professor Clegg defines industrial relations in the broadest terms as
encompassing the rules governing employment together with the ways in which the
rules are made and changed and their interpretation and administration.‖

To put it simply, industrial relations is that part of management which is

concerned with the manpower of the enterprise. It is, thus, the relation created at
different levels of the organization by the diverse, complex and composite needs and
aspirations and attitudes and approaches among the participants. It is a highly complex
and dynamic process of relationships involving not only employees and managements,
but also their collective forums and the State. In an organization, these relationships
may be personal and informal at one end, and may be highly institutional with legally
prescribed structures and procedures, at the other end.

The four main parties who are actively associated with any industrial relations
system are the workers, the managements, the organisations of workers and
managements, and the State. Fundamentally, the term industrial relations refer to an
organized relationship between two organised parties representing employers and
employees regarding matters of collective interest. With the growth of professional
management, the industrial relations scene is being represented by the representatives
of both the employers and the employees. But the scope of industrial relations cannot
merely be confined to common labour-management relations or employer-employee
relations. It is a comprehensive and total concept embracing the sum total of
relationships that exists at various levels of the organizational structure. More
specifically, it connotes relations among workers themselves within the class of
employees, relations among the managements within the managerial class, and
relations between the two distinct classes of workers and management. It denotes all
types of inter-group and intra-group relations within industry, both formal and
informal. It consists of a complex network of relations that arise out of functional
interdependence between workers and managements and between industrial
organizations and society. Industrial relations is a social concept because it deals with

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social relationships in different walks of life. It is also a relative concept because it
grows and flourishes or stagnates and decays in accordance with the economic, social
and political conditions prevailing in a society and the laws made by the state to
regulate them. The advances made in the field of science and technology also
influence the state of industrial relations. There is greater divergence in industrial
relations systems as a result of the divergent economic, social, political and cultural
environments.

2.4 OBJECTIVES OF INDUSTRIAL RELATIONS

Apart from the primary objective of bringing about sound and healthy relations
between employers and employees, industrial relations aim:

1. To facilitate production and productivity;

2. To safeguard the rights and interests of both labour and management by
enlisting their co-operation
3. To achieve a sound, harmonious, and mutually beneficial labour management
relations;
4. To avoid unhealthy atmosphere in the industry, especially work, stoppages, go
slows, gherao‘s, strikes, lockouts; and
5. To establish and maintain industrial democracy.

The state endeavors to correct, through effective industrial relations, an

imbalanced, disordered and maladjusted social and economic order with a view to
reshaping the complex socio-economic relationships following technological and
economic progress. It also controls and disciplines the parties concerned and adjusts
their conflicting interests. In this process, it protects some and restrains others,
depending upon the situation.

According to Kirkaldy industrial relations in a country are intimately connected

with the form of its political government; and the objectives of an industrial
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organization may vary from purely economic to purely political ends. He divides the
objectives of industrial relations into four categories:

1. Improvement in the economic conditions of workers in the existing state of

industrial management and political government;
2. Control exercised by the state over industrial undertakings with a view to
regulating production and promoting harmonious industrial relations;
3. Socialization or rationalization of industries by making the state itself a major
employer; and
4. Vesting of a proprietary interest of the workers in the industries in which they
are employed.
5. Protect management and labour interests by securing mutual relations between
the two groups.
6. Avoid disputes between management and labour, and create a harmonizing
relationship between the groups so productivity can be increased.
7. Ensure full employment and reduce absenteeism, hence, increasing
productivity and profits.
8. Emphasize labour employer partnership to establish and maintain industrial
democracy. This is done to ensure the sharing of profit gains, and personal
developmental of all employees.
9. Provide better wages and living conditions to labour, so misunderstandings
between management and labour are reduced to a minimum.
10. To bring about government control over plants where losses are running high,
or where products are produced in the public interest.
11. To bridge a gap between various public factions and reshape the complex
social relationships emerging out of technological advances by controlling and
disciplining members, and adjusting their conflicts of interests.

The industrial relations objectives must follow the determination of business

objectives which they should be intended to facilitate. In this context, the industrial
relations policies and practices should not negate its intentions in other areas. For
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instance, if a company wishes to encourage voluntary retirement, its salaries,
pensions, and working conditions should not encourage its employees to stay at all
costs.

2.5 FACTORS AFFECTING INDUSTRIAL RELATIONS

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.
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

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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 labour movement which may help to
promote the status of labour 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 labour issues and help Government to enact progressive labour 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

24
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 labour 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 labour 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.

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2.6 CHECK YOUR PROGRESS

3) Mention the factors affecting industrial relations

d) History of industrial relations
e) Economic satisfaction of workers
f) Social and Psychological satisfaction
2. Mention the objectives of industrial relations in the given below options
a) To maintain industrial harmony
b) To avoid disputes
c) Grievance redressel
Answer to check your progress: 1) all the three 2) a, b

2.7. NOTES

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 2.8 SUMMARY

Industrial relations are the relations which are the outcome of the employment
relationship in an industrial enterprise. Every industrial relations system creates a
complex of rules and regulations to govern the work place and work community.
The main purpose of this complex is to maintain harmonious relations between
labour and management by solving their problems through collective bargaining.
The government/state shapes industrial relations with the help of law, rules,
agreements, and awards of the courts.

2.9 KEY WORDS:

 Collective Bargaining: is a method by which trade unions protect and improve

the conditions of their members working lives.

 Negotiation: is a process in which two or more parties that has common and
conflicting interests come together and talk with a view to reaching an
agreement.

2.10 SELF ASSESSMENT QUESTIONS

1. Explain the meaning of industrial relations

2. Mention the essentials for good industrial relations

3. Discuss the scope of industrial relations

4. Explain in detail about the objectives of industrial relations

5. Mention the scope of industrial relations

27
2.11 REFERENCES

 A.M. Sarma, Industrial Relations (conceptual and Legal Framework),

Himalaya Publishing House, 10thEdition, 2013.

 C.S. Venkata Ratnam, Industrial Relations, Oxford University Press,

15th impression, 2011.

 S.C Srivastava- Indistrial Relations, 5th edition, published by Vikas

publishing house.

 [Link], Satish Mamoria, S.V Gankar – Dynamics of Industrial

Relations, 14th revised edition (reprint) 2004, Himalaya Publishing
House 2004.

28
UNIT –3 APPROACH`S TO INDUSTRIAL RELATIONS

STRUCTURE:
3.0 Objectives
3.1 Introduction
3.2 Components of Industrial Relations System
3.3 Functional Approaches to Industrial Relations
3.3.1 Dunlop‘s Approach
3.3.2 The Oxford Approach
3.3.3 The Industrial Sociology Approach
3.3.4 The Action Theory Approach
3.3.5 The Marxist Approach
3.3.6 The Pluralist Approach
3.3.7 Weber‘s Social Action Approach
3.3.8 The Human Relations Approach
3.3.9 The Gandhian Approach
3.3.10 Human Resource Management Approach
3.4 Check Your Progress
3.5 Notes
3.6 Summary
3.7 Key words
3.8 Self assessment Questions
3.9 References

29
3.0 OBJECTIVES
After studying this unit, you will be able to
 Understand the components of industrial relations system
 Explain The Action Theory Approach
 Analyze the Functional Approaches to industrial relations
 Bring out the Oxford Approach
 Identify the Human Relations approach
 Highlight the Gandhian approach

3.1 INTRODUCTION
The problems posed in the field of industrial relations cannot be solved within
the limits of a single discipline, and hence it is bound to be inter-disciplinary in
approach. It is an interdisciplinary field that includes inputs from sociology,
psychology, law, history, politics, economics, accounting and other elements of
management studies. Industrial relations, then, has a dual character, it is both an
interdisciplinary field and a separate discipline in its own right (Adams 1988). It is
much more of an art than it is a science. Industrial relations is largely an applied field
concerned with practice and the training of practitioners rather than with theory and
measurement. It is thus related to the basic social sciences as engineering is to the
physical sciences or medicine is to the biological sciences.

Any problem in industrial relations has to be approached on a multi-

disciplinary basis, drawing from the contributions of the above disciplines. The causes
of an industrial dispute may be, by nature, economic, social, psychological or political
or a combination of any of them. Labour economics provides an economic
interpretation of the problems growing out of employer-employee relationship.
Industrial sociology explains the social background of the workers, which is essential
for the understanding\ of industrial relations. Industrial psychology clarifies certain
concepts and provides empirical tools in areas such as recruitment, placement,
30
training, fatigue and morale. For instance, attitudes and morale surveys are powerful
tools to discover causes of industrial strife and to evolve methods for their prevention.
Labour laws and their interpretation by tribunals and courts contribute to the growth
of industrial jurisprudence. Application of quantitative analysis and labour statistics
throws light on the exact state of industrial relations during a particular period.
Political aspects also assume importance in industrial relations, particularly in a
developing economy dominated by centralized planning. In fact, the growth of
industrial relations as a scientific discipline depends upon the extent to which it
integrates the contribution of established disciplines in the social sciences.

There is no country where industrial relations is entirely a matter of tradition or

custom nor is there a country where the employers, the workers or their organizations
and the government do not at all interact to build up the country‘s industrial relations
system. It has been a mixture of traditions, customs and a web of action, reaction and
interaction between the parties. The industrial relations system may be conceived at
different levels, such as national, regional, industrial and workplace. The concept of
the system has been influential in establishing industrial relations as a discipline in its
own right. The concepts of the system approach are operationally definable.

An industrial relations system may be defined as comprising the totality of

power interactions of participants in a workplace, when these interactions involve
industrial relations issues. It is viewed as an integral and non-separable part of the
organizational structure and its dynamics. An industrial relations system includes all
the individuals and institutions that interact at the workplace. Regardless of the level
at which the system exists, an industrial relations system can be viewed as having
three components:
(1) A set of individuals and institutions that interact;
(2) A context within which the interaction takes place; and
(3) An output that serves to govern the future relationship of the parties.

31
3.2 COMPONENTS OF INDUSTRIAL RELATIONS SYSTEM
The components of industrial relations system are mentioned below:
i) Participants:
The participants in the industrial relations sphere are composed of duly
recognized representatives of the parties interacting in several roles within the
system.

ii) Issues:
The power interactions of the participants in a workplace create
industrial relations issues. These issues and the consequences of power
interactions find their expression in a web of rules governing the behavior of
the parties at a workplace

iii) Structure:
The structure consists of all forms of institutionalized behaviour in a
system. The structure may include collective procedures, grievances, and
settlement practices. Legal enactments relevant to power interactions may also
be considered to be a part of the structure.

iv) Boundaries:
In systems analysis, it is possible to find an issue which one participant
is totally indifferent to resolving while, at the same time, the other participant is
highly concerned about resolution of the same. These issues may serve to
delimit systems boundaries.

32
At least there are three marked features of the systems approach. They are:

1. Inter-disciplinary Character: Some theorists regard the systems approach to

be universally applicable to all human relationships, in small or large units. Its
flexibility of application in the behavioral sciences has been aptly
demonstrated.
2. Suitability to Work Organization and their Sub-systems: The adaptability
of the systems approach to organization is also a frequently discussed trait.
This springs from the fact that organizations, and to some extent their sub-
systems, are rational and purposeful.
3. Dynamic Aspects: A systems approach is oriented towards the study of
interactions and changing relations. Based on various components and features
of industrial relations, a number of writers have attempted to produce various
functional approaches to industrial relations, which are given below:

3.3 FUNCTIONAL APPROACHES TO INDUSTRIAL RELATIONS

3.3.1 DUNLOP’S APPROACH
Among the contributions, the most outstanding has been that of Prof. John T.
Dunlop of Harvard University. His systems treatment deserves special mention in
view of its wider applicability. His book Industrial Relations Systems (1958) was a
pioneering volume in which he presented an analytical framework of industrial
relations. The stated purpose of this book is to present a general theory of industrial
relations and ―to provide tools of analysis to interpret and gain understanding of the
widest possible range of industrial relations facts and practices.‖

Dunlop defines an industrial relations system in the following way:

An industrial relations system at any one time in its development is regarded as
comprised of certain actors, certain contexts, an ideology, which binds the industrial
relations system together, and a body of rules created to govern the actors at the

33
workplace and work community. There are three sets of independent variables: the
‗actors‘, the ‗contexts‘ and the ‗ideology‘ of the system.

The principal groups identifiable in the system and which constitutes the
structure of an industrial relations system are as follows:

1. The Actors in a System: The actors are: (a) hierarchy of managers and their
representatives in supervision, (b) a hierarchy of workers (non-managerial) and
any spokesmen, and (c) specialized governmental agencies (and specialized
private agencies created by the first two actors) concerned with workers,
enterprises, and their relationships. These first two hierarchies are directly
related to each other in that the managers have responsibilities at varying levels
to issue instructions (manage), and the workers at each corresponding level
have the duty to follow such instructions. The hierarchy of managers need have
no relationship to the ownership of the capital assets of the workplace, the
managers may be public or private or a mixture in varying proportions. The
formal hierarchy of workers may be organised into several competing or
complementary organizations, such as, works councils, unions, and parties. The
specialized government agencies as actors may have functions in some
industrial relations systems so broad and decisive as to override the hierarchies
of managers and workers on almost all matters. In other industrial relations
systems, the role of the specialized governmental agencies, at least for many
purposes, may be minor or constricted.

2. The Contexts of a System: In an industrial relations system, the contexts or

the determinants are of greater importance. The significant aspects of the
environment in which the actors interact are the technological characteristics of
the workplace and work community, the market or budgetary constraints that
impinge on the actors, and the locus and distribution of power in the larger
society.

34
The technological features of the workplace have a very far-reaching
consequence for an industrial relations system influencing the form of
management and employee organization, the problems posed for supervision,
many of the features of the required labour force and the potentialities of public
regulation. For instance, the mining industry has a different technological
context as compared to the manufacturing industry. Their place of work, the
methods of work, and the mode of living, have profound influence on evolving
a particular pattern of industrial relations system. The mining communities
have frequently been isolated from important urban areas and create special
problems in human relations. Historically, this raises a range of questions
concerning housing, community services and welfare activities which are
frequently beyond the rules of workplace in many other sectors. Apart from the
characteristics of the workplace, the development of technology also affects
industrial relations by way of not only disturbing the existing employment
patterns, but also by determining the size of the work force employed.

The market or budgetary constraints are a second feature of the environmental

context, which is fundamental to an industrial relations system. These
constraints often operate, in the first instance, directly upon the managerial
hierarchy, but they necessarily condition all the actors in a particular system.
The context may be a market for the output of the enterprise or a budgetary
limitation or some combination of the two. The product market may vary in the
degree and character of competition through the full spectrum from pure
competition, monopolistic competition, to oligopoly and monopoly. These
constraints are no less operative in socialist than in capitalist countries. The
relevant market or budgetary constraints may be local, national, or
international, depending on the industrial relations system.

The locus and distribution of power in the larger society, of which the
particular industrial relations complex is a sub-system, is a third analytical
35
 feature of the environmental context. The relative distribution of power among
the actors in the larger society tends to a degree to be reflected within the
industrial relations system. At this juncture, the concern is not with the
distribution of power within the industrial relations system, but also outside the
system. The function of one of the actors in the industrial relations system, the
specialized governmental agencies, is likely to be particularly influenced by the
distribution of power in the larger society

3. The Ideology of an Industrial Relations System: The ideology is a

philosophy or a systematized body of beliefs and sentiments held by the actors.
An important element that completes the analytical system of industrial
relations is the ideology or a set of ideas and beliefs commonly held by the
actors that help to bind or to integrate the system together as an entity. Each
industrial relations system contains its ideology or shared understandings. The
ideology defines the role and place of each actor and the ideas, which each
actor holds towards the place and function of the others in the system. Each of
the actors in an industrial relations system may be said to have its own
ideology. An industrial relations system requires that these ideologies be
sufficiently compatible and consistent so as to permit a common set of ideas
and an acceptable role for each actor.
4. The Establishment of Rules: The actors in a given context establish rules for
the workplace and the work community, including those governing contracts
among the actors in an industrial relations system. This network or web of rules
consists of procedures for establishing rules, the substantive rules, and
procedures for deciding their application to particular situations. The
establishment of these procedures and rules is the centre of attention in an
industrial relations system. Thus, the establishment and administration of these
rules is the major concern or output of the industrial relations system. The
actors who set the web of rules interact in the context of an industrial relations
system taken as a whole. These rules are broadly grouped into three categories:

36
 (i) rules governing compensation in all its forms; (ii) the duties and
performance expected from workers, including rules of discipline for failure to
achieve these standards; and (iii) rules defining the rights and duties of
workers. The rules change in response to change in the contexts and relative
status of the actors. The actors who set the rules may be workers and their
unions representing one category; employers, managers and their associations
constituting a second category; and government in the third category consisting
of civil servants concerned with the administration of labour matters.
3.3.2 THE OXFORD APPROACH
According to this approach, the industrial relations system is a study of
institutions of job regulations and the stress is on the substantive and procedural rules
as in Dunlop‘s model. Flanders, the exponent of this approach, considers every
business enterprise as a social system of production and distribution, which has a
structured pattern of relationships. The ―institution of job regulation‖ is categorized by
him as internal and external – the former being an internal part of the industrial
relations system such as code of work rules, wage structure, internal procedure of joint
consultation, and grievance procedure. He views trade unions as an external
organization and excludes collective agreements from the sphere of internal
regulation. According to him, collective bargaining is central to the industrial relations
system.

The ―Oxford Approach‖ can be expressed in the form of an equation:

r = f (b) or r = f (c)
Where, r = the rules governing industrial relations
b = collective bargaining
c = conflict resolved through collective bargaining.

The ―Oxford Approach‖ can be criticized on the ground that it is too narrow to
provide a comprehensive framework for analyzing industrial relations problems. It
overemphasizes the significance of the political process of collective bargaining and

37
gives insufficient weight to the role of the deeper influences in the determination of
rules. Institutional and power factors are viewed as of paramount importance, while
variables such as technology, market, status of the parties, and ideology, are not given
any prominence. This narrowness of approach constitutes a severe limitation.
3.3.3 THE INDUSTRIAL SOCIOLOGY APPROACH
G. Marge Rison, an industrial sociologist, holds the view that the core of
industrial relations is the nature and development of the conflict itself. Marge Rison
argued that conflict is the basic concept that should form the basis of the study of
industrial relations. The author criticized the prevalent approach to industrial relations,
which was more concerned with studying the resolution of industrial conflict than its
generation; with the consequences of industrial disputes than on their causes.
According to this school of thought, there are two major conceptual levels of
industrial relations. One is the intra-plant level where situational factors, such as job
content, work task and technology, and interaction factors produce three types of
conflict – distributive, structural, and human relations. These conflicts are being
resolved through collective bargaining, structural analysis of the socio-technical
systems and man-management analysis respectively. The second level is outside the
firm and, in the main, concerns with the conflict not resolved at the intra
organizational level. However, this approach rejects the special emphasis given to rule
determination by the ―systems and Oxford models‖. In its place, it suggests a method
of inquiry, which attempts to develop sociological models of conflicts.
3.3.4 THE ACTION THEORY APPROACH
Like the systems model, the action theory approach takes the collective
regulation of industrial labour as its focal point. The actors operate within a
framework, which can at best be described as a coalition relationship. The actors, it is
claimed, agree in principle to cooperate in the resolution of the conflict, their
cooperation taking the form of bargaining. Thus, the action theory analysis of
industrial relations focuses primarily on bargaining as a mechanism for the resolution
of conflicts. Whereas the systems model of industrial relations constitutes a more or

38
less comprehensive approach, it is hardly possible to speak of one uniform action
theory concept.
3.3.5 THE MARXIST APPROACH
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 characterized 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
endeavors 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.

39
3.3.6 THE PLURALIST APPROACH
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 industrialize 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
organization, 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

40
is that in such a social structure, the worker will be deemed to be a better-paid wage
slave.
3.3.7 WEBER’S SOCIAL ACTION APPROACH
The social action approach of Weber has laid considerable importance to the
question of control in the context of increasing rationalization and bureaucratization.
Closely related to Weber‘s concern related to control in organizations 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 analyze the impact of techno-economic and politico-organizational changes on
trade union structure and processes, to analyze the subjective interpretation of
workers‘ approaches to trade unionism and finally to analyze 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
organizations – a power struggle in which all the actors in the industrial relations
drama are caught up.
3.3.8 THE HUMAN RELATIONS APPROACH
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

41
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 criticized 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, and acceptance of workplace as a
social system, group dynamics, and participation in management

3.3.9 THE GANDHIAN APPROACH

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, organization and functions
of trade unions, necessity and desirability of collective bargaining, use and abuse of
strikes, labour indiscipline, and 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 recognizing 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 the
armoury of industrial workers and hence should not be resorted to unless all peaceful

42
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 realized 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 organization as the
essential factors for happy and constructive industrial relations. For him, means and
ends are equally important.

3.3.10 HUMAN RESOURCE MANAGEMENT APPROACH

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

43
modern, and therefore more acceptable, term for personnel or industrial relations
management.
Some of the components of HRM are:
(i) human resource organization
(ii) Human resource planning
(iii) Human resource systems
(iv) Human resource development
(v) Human resource relationships
(vi) Human resource utilization
(vii) Human resource accounting
And (viii) human resource audit.
This approach emphasizes individualism and the direct relationship between
management and its employees. Quite clearly, therefore, it questions the
collective regulation basis of traditional industrial relations.

3.4 CHECK YOUR PROGRESS

4) Mention the components of industrial relations system

g) Participants
b) Issues
c) Structure
5) The equation for the Oxford approach is

a) r = f (b) or r = f (c) b) r = f (b) or r = f (b)

b) r = f (a) or r = f (c) c) r = f (c) or r = f (c)
Answers: 1) All the three 2) a

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3.5 NOTES

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 3.6 SUMMARY

The field of IR has a multi-disciplinary base that draws upon concepts from the
established disciplined 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 theorizing in this field has developed in the direction of a) environmental or
external theories, and b) externalists 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 systems as a sub-
system of society.

3.7 KEY WORDS

Human relations Approach: The integration of people into a work situation

that motivates them to work together productively, cooperatively and with
economic, psychological and social satisfactions.

Oxford Approach: According to this approach, the industrial relations system

is a study of institutions of job regulations and the stress is on the substantive
and procedural rules as in Dunlop‘s model.

3.8 SELF ASSESSMENT QUESTIONS

1. Explain the various approaches to industrial relations

2. Mention the components of industrial relations system

3. Discuss Human Relations approach

4. Explain Dunlop‘s approach to industrial relations

5. Mention the Gandhian approach

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3.9 REFERENCES:

 A.M. Sarma, Industrial Relations (conceptual and Legal Framework),

Himalaya Publishing House, 10thEdition, 2013.

 C.S. Venkata Ratnam, Industrial Relations, Oxford University Press,

15th impression, 2011.

 S.C Srivastava- Indistrial Relations, 5th edition, published by Vikas

publishing house.

 C.B. mamoria, Satish Mamoria, S.V Gankar – Dynamics of Industrial

Relations, 14th revised edition (reprint) 2004, Himalaya Publishing
House 2004.

47
UNIT-4 HISTORY AND GENESIS OF INDUSTRIAL
RELATIONS

STRUCTURE:
4.0 Objectives
4.1 Introduction
4.2 Industrial Revolution
4.3 Democratic Revolution
4.4 Capitalist Revolution
4.5 Period 1930-1955 of industrial relations
4.6 Period 1950-1970 of industrial relations
4.7 History of industrial relations in India
4.8 Code of conduct of industrial harmony
4.9 Check your progress
4.10 Notes
4.11 Summary
4.12 Key words
4.13 Self Assessment Questions
4.14 References

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4.0 OBJECTIVES
After studying this unit, you will be able to
 Give the meaning of history of industrial relations
 Explain the code of conduct for industrial harmony
 Describe the history of industrial relations in India
 Bring out the pre independence era of industrial relations
 Identify the post independence era of industrial relations
 Highlight the revolutions of industrial relations.

4.1 INTRODUCTION
Industrial Relations are the most primitive form of Personnel Management,
which goes back to the eighteenth century. It has relevance right from the 1769, when
James Watt fought for the patent of the steam engine. Industrial Relations borrows its
basic principles from various disciplines e.g. Economics such as wages, bonus,
monetary benefits; Law as labour laws; sociology which includes trade unions and
their social framework.

In the last two centuries, there have been three inter related revolutions which
marked the evolution of industrial relations into its present form. The three revolutions
are:
 Industrial Revolution
 Democratic Revolution
 Capitalist Revolution

Pre industrial revolution era:

This period refers to the prior to industrial revolution in the world. This was the
time while there was no formal way of establish relationship between employers and
employees. This era is marked basically with the following features:

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  In this time period, economic activity was restricted to agriculture,
craftsmanship, trademanship and domestic service.
 The workforce was largely illiterate and not professionally qualified.
 There were no defined work hours rather working hours were long.
Consideration of human fatigue and its impact on efficiency was missing.
 There was no structured relationship rather it was based on master and the
craftsman basis. There was more focus on personal rather than professional.
 The work place, work environment and conditions were improper did not
receive any attention.

4.2 INDUSTRIAL REVOLUTION

Industrial revolution brought about a transformation in the economic and social
life. It began in the UK and then soon spread to France, Germany, and the USA. This
period was extensively marked by the studies made by Taylor and his principles of
scientific management. The salient features of the industrial revolution are:

 It was driven by a series of connected events, which brought about innovation

and technology in the factory premises, replacing manual labour and redefining
the Man-Machine relationship.
 The concept of factory came to existence and a lot of experiments were
conducted to increase productivity. The focus was mainly on efficiency.
 Brought about the concept of free labour market i.e. commoditizing labour.
Before, the supply side was governed by some groups and unions and the
markets were generally held by master craftsmen.
 Formalization of contract based relationship.
 Different countries experienced industrial revolution at different times. It
started at UK, and then spread to USA, France, Germany, Japan, and China.
These countries had a regulated market protected by the government. Industrial
revolution greatly impacted some countries and towards its end, 80% of the

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 production was dominated by 20% of the countries, which contributed to 20%
of the world‘s population.

4.3 Democratic revolution:

Democratic revolution refers to giving consideration for involvement of people
in things which matter to them. Democratic revolution is the next important event in
industrial relations which impacted industrial revolution. It started in 1750 in UK and
then spread to USA and then France. This revolution brought about a change in the
political governance of the countries and focused on labour. These Countries moved
from colonialism to different arrangements. The salient features of the democratic
revolution are:

There was an increase in social concerns for human rights. During the
industrial Revolution as human rights were suppressed and workers were not allowed
to voice their opinions. The Democratic revolution changed the way workers were
treated.

It impacted trade unionism positively. The countries where unionization was

banned and considered a sin, changed and took to the new norms e.g. In Germany,
Trade Union was not accepted before the democratic revolution and the same goes for
USA, where trade unions were banned in certain sectors.

4.4 CAPITALIST REVOLUTION

Capitalist revolution is the next phase in the course of industrial relations. This
revolution changed industrial relations significantly. There were certain changes in the
society after the capitalist revolution. Some of the features of capitalist revolution are
given as below:
 It initiated the provision for private ownership of means of production in
industries and their use for personal benefits
 Building freedom of contract for employment conditions
 Employment relation is natural outgrowth of Capitalist

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  Capitalist revolution in industrial relation unequal authorities between the
parties

This Capitalism caused a divide in society between rich and poor and between
employer and the employee. Infact, the capitalism added a negative flavor to the social
structure and thus arose certain conflicts. The effects of Capitalism can be categorized
as follows. Capitalism has both positive and negative impacts; some of the key
features are given below:

 Capitalism has increased the basic indicators of well-being such as life

expectancy, real per-capita income, working hours, and working Conditions

 Growth and emergence of working class consciousness

 Worker led protests and strikes

 Worker created trade unions which tried to become economic oriented bodies

 Public attention to labour problems and social question

4.5 PERIOD 1930-1955 OF INDUSTRIAL RELATIONS

During this phase of industrial relations the industries had already faced
depression. This period caused a shift from crafts union towards industries unions.
Infact, crafts union were opposed to the idea of organizing workers on industries
basis. This period marked the new generation of academicians. It marked new reforms
and introduction of government regulations which redefined industrial relations as till
this time government was not playing an active role. 1932 witnessed highest
unemployment and this period continued till 1944 which reflected in, extreme trends
of unemployment.

Some of the features of this era were that the economists studied new market
fractions and operation of labour markets. The academicians focused on the concept
of wage recognition for employees. The government role came in picture in the form

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of government regulations by way of involvement and participation in labour market.
All these above aspects helped shaping up the industrial relations.

The new features emerged from this were:

1. Inter wage structure was adopted for labour force.
2. Wage differentiation among the different workers of different sectors. This was
a boon for workers to get the wages according to their nature of work.
3. The field of benefits was introduced such as bonus, leaves, medical facility in
some cases.
4. Internal pattern and rules for the movement of workers formulated.
5. During this phase, formulation of various systems came in place in the form of
job discipline and capturing attendance and employee performance etc.
6. Procedure for dispute resolution adopted the way of formulating and adopting
various labour legislations.
7. Legal status of government regulations.
8. Collective bargaining system between employer and employee evolved.

Thus today‘s industrial relations have evolved from what emerged during this period.

4.6 PERIOD 1950-1970 OF INDUSTRIAL RELATIONS

After the Second World War, there has been significant reforms happened
across the globe. The country has taken initiatives in these reforms.
 New ways of dealing with human resources given a concern.
 New Generation of labour economists seems to have evolved where
quantification of economics was done which wasn‘t seen before; the use of
numbers became important, so did the use of tools such as HR Matrix, HR
Scorecard, econometrics etc.
 Expansion of Business Schools (Harvard B Schools, Other Schools in US) and
a new pool of management thoughts emerged.
 Industrial Relations are seen as a Systems Approach.

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4.7 HISTORY OF INDUSTRIAL RELATIONS IN INDIA

The history of industrial relations, in India, can be seen in the following Context:
 Pre independence Era
 Post-independence era.
 Post Liberalization Era
Pre independence era -

In India, following are the key issues about industrial relations at that time:

 Workers used to have faced hired and fired policy. Employer used to fire
workers at any stage of work for any reason. Worker was not having
right to ask for explanation.
 Employer was in commanding position over all workers. Workers have
to do a work assigned by the employer.
 The wages were very poor according to the nature of work and time of
work.
 Till the end of First World War trade unions movement had not emerged
in India.
There were hardly any laws were present to protect the rights of workers
except that of Employers and Workmen Dispute Act 1860 which was used
to settle wage disputes. As results it has following implications from IR
point of view:
 Workers started resorting to violence and employers resorted to
lockouts
 Numerous strikes and disturbances happened the great depression
during 1928 and 1929
As a result to above Government enacted Trade Disputes Act 1929 to enhance
early settlement of industrial dispute based on British Industrial Courts (Act) 1919.
But it did not provide for any standing machinery to settle industrial disputes and also
state and central government made no adequate use of this law. In 1938, to meet acute
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industrial unrest prevailing then, Bombay Industrial Relations (BIR) Act was enacted
by Bombay Government. For the first time permanent machinery called Industrial
Court was established for settling disputes. This was replaced by BIR Act 1946, which
was amended in 1948, 1949, 1953 and 1956 and so on. Soon after the Second World
War, India faced many problems like rise in cost of living, high population, scarcity of
essential commodities, unemployment and turbulent Industrial relations situation.

Post Independence Era :

After independence significant steps were taken to protect the rights of labour
and provided a formal mechanism to settle their disputes. These enactments not only
served as a machinery to settle industrial disputes but also to make these awards
binding and legally enforceable on the parties. Constitution of India came into
existence giving many rights to the citizens of India. Besides this Industrial
Conference in December 1947 was held in India where an appeal was made to labour
and management India in form of Industrial Truce Resolution to maintain industrial
peace and harmony. The points are:

 Setting up of Indian Labour Conference, a tripartite body with an objective

to ensure Co-operation between employers, trade Unions and Government.
 The above body met to discuss problems relating to labour-management
relations and recommended and formulated the legislations

However Indian Labour Conference met sporadically depending upon the

concerns and issues of Labour Ministry. Main characteristic feature of industrial
relation during this period was a change in Government‘s attitude towards labour and
their problems in the form of continuous focus on labour laws enactment. These
labour laws cover many issues concerning labour, such as seniority, wage rates, paid
holidays, disciplinary matters, social security. To protect the interest of workers and
regulate their employment many acts came into existence: Some of the important
labour enactments took place in post-independence era were:
 Factories Act - 1948Industrial Disputes Act - 1947

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  Employees State Insurance Act - 1948

 Employees Provident Fund Act - 1952

 Model Standing Orders Act – 1946

 Payment of Minimum Wages Act - 1948

 Payment of Bonus Act – 1965

 Payment of Gratuity Act – 1972

 Equal Remuneration Act - 1976

Despite all the above legal enactments and focus IR reforms through
legislations, formations of different bodies to facilitate Industrial Relations in India,
IR Scenario during 1970‘s to late 1980‘s was characterized by violence in Indian
Industry. Bombay Textile IR unrest took place during this phase. And there was
industrial unrest across the country in many other companies. This unrest IR unrest
caused many violent incidents in the Indian industry and as a result of these incidents;
workers were losing confidence and getting impatient due to weaker prevailing
collective bargaining situations. Other reasons for this continuous unrest in the Indian
industry include government‘s inability to maintain price levels, inability to provide
effective settlement machinery, plethora of controls on manufacturing and its rigid
licensing procedures, high rate of taxation, restriction on imports that affected the
profits. All these were not only putting pressure on workers as well as the employers
to run the business smoothly. The whole of above was having its impact on the Indian
IR scenario and business performance in the country.

Post Liberalization Era:

Liberalization came in India in 1990s and it has caused a huge change in the
Indian Industry. It opened the door for MNC companies in India which attracted
foreign investment in the country. This has increased employment opportunity in
India, increased flexibility for investment, import of new technology, and new ways of
doing business, automation, added new infrastructure and creation of world class

56
facilities in the country. It also leveled up the quality of products, delivery and service
standards in the industry.

Employees and workers were exposed to different world class technologies and
work environment. Industry has witnessed unprecedented increase in salaries and
benefits. Talent in Indian Industry received international exposure through visits to
parent companies and their work culture and practices. The Liberalization had impact
on IR in terms of reduction in labour disputes in the1990s.

However it has also caused stress in terms of increased competition, and

pressure on maintain low costs. Increase in outsourced or contract manpower to main
employee related cost to the minimum level and also to ensure flexibility in company
operations. This has caused a divide among the blue collar and contract manpower.
Due to increased automation employment growth has also slowed down in 1991 from
1.6 to 1.1 in 1998 (Gupta‘s 1999, comparative study of the period). Employment
insecurity among the labour has increased. And all this reflects in resurgence of IR in
Indian Industry, frequent instances of agitations ( some of them being violent in
nature) in companies – Baxter, Maruti, Toyota, Baja, Coca Cola, Nokia, Shriram
Piston and Hyundai etc.

4.8 CODE OF CONDUCT FOR INDUSTRIAL HARMONY

What is the Code of Conduct for Industrial Harmony?

The Code of Conduct for Industrial Harmony (the Code) is an agreement made
between the Ministry of Human Resources (then known as the Ministry of Labour and
Manpower) and the Malaysian Council of Employers‘ Organisations (the predecessor
to the Malaysian Employers Federation and the Malaysian Trades Union Congress.

Aim
The aim of the Code is ―to lay down principles and guidelines to employers
and workers on the practice of industrial relations for achieving greater
industrial harmony”. Under clause 7 of the Code, the central employer and
employee organizations have agreed to endorse and recommend employers and

57
workers to observe and comply with the industrial relations practices agreed upon and
accepted by the Ministry of Human Resources.

What the Law States

The Code provides useful guidelines in the area of industrial relations practice.
There is no legal obligation on the part of the employer to adhere to the contents of the
Code. However, the Code has been given its legal ―teeth‖ by virtue of sec 30(5A) of
the Industrial Relations Act 1967. It states

―In making its award, the Court may take into consideration any agreement or
code relating to employment practices between organizations, representative of
employers and workmen respectively where such agreement or code has been
approved by the Minister.‖

Where an employer does not follow the procedures set out in the Code, the
employer in fact commits an unfair labour practice. The Industrial Court has been very
consistent in its reliance of the Code in retrenchment cases. Failure to follow the Code
can result in a retrenchment being declared an unfair dismissal.

Contents of the Code

The Code lists 50 specific industrial relations practices under four broad areas for
cooperation, namely:
 responsibilities
 employment policy
 collective bargaining and
 Communication and consultation.

Responsibilities
At the level of establishment or undertaking
1. As employers and workers and trade unions representing them are jointly and
severally responsible for good industrial relations, the first step is for both
management and trade unions to accept, at the highest level, the same degree of

58
 responsibility for industrial relations as for other functions within their respective
organizations.

Good industrial relations need to be developed within the framework of

efficiency of the
Establishment or undertaking. As such, a major objective of management must
be to develop just and effective personnel and industrial relations policies
which engender the confidence of all employees, subject to the purpose for
which the establishment or undertaking was established and its social
obligation to the nation.

Equally, trade unions should ensure that the policies and practices that they
adopt are not only fair in relation to the function and purpose for which they
have been formed but also take into consideration national interests

2. Good industrial relations depend upon good organization of work. Management

should therefore take all reasonable steps to ensure that:

 All management personnel understand their responsibilities and what is

required of them, and have the training and authority necessary to discharge
such duties and responsibilities efficiently
 Duties and responsibilities for each group of employees are stated with
clarity and simplicity in the organizational structure
 Individual employees or work-groups know what their objectives are and
are regularly kept informed of progress made towards achieving them
 Where possible, work is organized in such manner so that the individual
employee has the chance to achieve a sense of job satisfaction

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3. Where a trade union has been recognized:

 Management should take the initiative in seeking to establish, jointly with

the trade union concerned, effective procedures for negotiation, consultation
and the settlement of grievances and disputes.
 Management and the trade union should take all reasonable steps to ensure
that both the management and union personnel observe agreements reached
and use agreed procedures.
 Management should not discourage employees from joining the recognized
union and from taking an active part in its legitimate activities.

4. The supervisor is management‘s first ―contact‖ man with the employees and
special attention should be given to his appointment and his needs on the job.
The employer should ensure that he:

 is technically proficient and adequately trained and possesses the personal

qualities required to exercise supervision
 Has charge of a work-group of a size that he can supervise effectively
 Is an effective link in the interchange of information and views between
senior management and members of his work group
 Is briefed about innovations and changes before they occur so that he can
explain management‘s policies and intentions to his work-group. At
national or industry level

5. Employers’ association should:

 Co-operate with the trade unions in establishing effective procedures at

industry or national level for the negotiation of terms and conditions of
employment and for the settlement of disputes
 Encourage the establishment of effective procedures among member
organizations for the settlement of grievances and disputes at the level of
the establishment or undertaking
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  Take all reasonable steps to ensure that member organizations observe
agreements and agreed procedures
 collect, analyze and distribute information to its members concerning
industrial relations matters
 Identify trends and new developments in industrial relations and help its
members to anticipate and keep abreast of change
 Provide an efficient and realistic advisory service to its members on all
matters of industrial relations.

6. A trade union can promote the interests of its members effectively only if it
accepts that, in common with management, it has an interest in and a
responsibility for the success of the undertaking and for the national, economic
and social well-being of the country as a whole. This involves co-operation with
the employer in promoting efficiency and good industrial relations.

7. To secure these aims, a trade union should:

 Co-operate with employers‘ association in establishing effective procedures
at industry level for the negotiation of terms and conditions of employment
and for the settlement of disputes that arise
 Co-operate with individual management in establishing effective
procedures for negotiation, consultation, communication and the settlement
of grievances and disputes
 Take all reasonable steps to ensure that their officials and members observe
agreements and use agreed procedures
 Make full use of the established procedures for the settlement of disputes.

61
8. To ensure that its organization is effective, a trade union should also:
 Have enough officials, full time or otherwise, to maintain regular contacts
not only with union members but also with management of establishments
or undertakings where the union has been recognized
 Maintain a communications system which secures the interchange of
information and views between different levels in the union and ensures
that members are systematically and regularly kept informed, factually and
objectively, of the progress of negotiations for a collective agreement
 Encourage its members to attend union meetings and to participate fully in
union activities by holding branch meetings at times and at places
convenient to the majority; and, where there is a large enough membership,
consider forming the branch organisation of the establishment
 Establish effective procedures for the settlement of disputes among
members of the union.

9. The trade union should also ensure that all its officials:
 Clearly know and understand the nature and extent of their responsibilities
and authority
 Are adequately trained to look after members‘ interests in a responsible and
efficient way
 Wherever possible and practicable, hold regular dialogues with officials of
employers‘ association and its members.

10. As the basic relationship between an employer and the individual employee is
defined in the individual contract of employment, it should be expressed in clear
and precise language. It is the employee‘s responsibility to satisfy himself that he
or she understands the terms of the contract and to abide by them.

62
 11. The employer and relevant trade union should ensure that procedures for dealing
with questions that arise on the individual contract of employment are clearly
laid down. But it is the responsibility of the employer himself to:
 Familiarize himself with these procedures and
 Make use of them when the need arises

12. Employment policy

A sound employment policy is a prerequisite to good employer-employee
relations. It should also reflect the Government‘s policy requirements, announced
from time to time. Good planning and efficient use of manpower are important both
for the success of the establishment and for the security of those employed in it. The
employer should, therefore:
 Keep fluctuations in manpower requirements to a minimum by means of
advance planning
 Make changes, wherever necessary, with as little disruption as is necessary
 Where practicable, maintain, in consultation with the employees or their
representatives or trade union, as appropriate, a scheme for transferring
employees from one job to another within the establishment or undertaking so
that unavoidable changes in manpower requirements can be handled smoothly.

13. Recruitment
Recruitment and selection policy can help good industrial relations by ensuring
that workers are engaged for jobs suited to their abilities. The employer should,
therefore:
 Define the qualifications and experience needed for the vacant job
 Ensure that selection is based on suitability for the job
 Consider filling the vacancy by transfer or promotion before trying to recruit
from outside
 Explain the terms and conditions of employment to applicants before they are
engaged

63
  Ensure that those who carry out recruitment and selection are competent to do
so and that the recruitment and selection methods are regularly checked to be
effective.

14. Training
 Adequately trained employees are essential for the success of the undertaking.
Training appropriate to his work also helps the individual to develop his
potential, to increase the satisfaction he finds in his work and to improve his
earning capacity.
 Newly recruited employees should be given initial instruction covering:
 The organization, its employment policy and welfare and social facilities that
are available
 Specific training in the job to supplement previous training and experience.
 Younger persons entering employment or the first time should be given broader
basic instructions covering a general introduction to working life.
 In appropriate cases, further training should be provided when there is a
significant change in the content of the job or in the level of the job being
performed.

15. Payment system

Although payment systems vary according to the nature and organisation of the
work, local conditions and other factors, the following principles should be observed
so as to ensure that the system of payment is soundly based and thereby reduces the
incidence of disputes arising:
 Payment systems should be as simple as possible
 Differences in rates should be related to the requirements of the job which
should, wherever possible, be assessed by agreed as well established methods
 piece-work rates, incentive bonuses, etc should be determined by agreed or
well established methods
 Rates of payment should be jointly negotiated where a recognized trade union
exists.
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 16. Security of employment
Insecurity of employment and fear of the consequences of redundancy and
retirement have a major influence on attitudes to work and good industrial relations.
Consistent with the efficiency and success of the undertaking, the employer should
provide greatest possible stability in terms of job tenure. The employer should also,
where practicable:
 Offer prospects for advancement and promotion within the undertaking with
opportunities for any necessary training
 Provide retirement, retrenchment and sick pay schemes to supplement statutory
provisions.

17. Redundancy and retrenchment

In circumstances where redundancy is likely an employer should, in consultation with
his employees‘ representatives or their trade union, as appropriate, and in consultation
with the Ministry of Labour and Manpower, take positive steps to avert or minimize
reductions of workforce by the adoption of appropriate measures such as:
 Limitation on recruitment
 Restriction of overtime work
 Restriction of work on weekly day of rest
 Reduction in number of shifts or days worked a week
 Reduction in the number of hours of work
 Re-training and/or transfer to other department/work.

The ultimate responsibility for deciding on the size of the workforce must rest
with the employer, but before any decision on reduction is taken, there should be
consultation with the Workers or their trade union representatives on the reduction.

If retrenchment becomes necessary, despite having taken appropriate measures,

the employer should take the following measures:

65
  Giving as early a warning, as practicable, to the workers concerned
 Introducing schemes for voluntary retrenchment and retirement and for
payment of redundancy and retirement benefits
 Retiring workers who are beyond their normal retiring age
 Assisting, in co-operation with the Ministry of Human Resources, the
workers to find work outside the undertaking
 Spreading termination of employment over a longer period
 Ensuring that no such announcement is made before the workers and their
representatives or trade union has been informed.

The employer should select employees to be retrenched in accordance with

objective criteria. Such criteria, which should have been worked out in advance with
the employees‘ representatives or trade union may include:
 The need for the efficient operation of the establishment or undertaking
 Ability, experience, skill and occupational qualifications of individual workers
required by the establishment or undertaking under part
 Consideration for length of service and status (non-citizens, casual, temporary,
permanent)
 Age
 Family situation
 Such other criteria as may be formulated in the context of national policies.
 Employees, who are retrenched, should be given priority of engagement/re-
engagement, as far as is possible, by the employer when he engages workers.
 The appropriate measures and objective criteria should comprise part of the
establishments or undertaking‘s employment policy.

18. Working conditions

Good physical working conditions help to achieve good industrial relations.
The first need is for the employer to ensure that the standards laid down by law are
fully complied with. But this is not enough by itself, for most work-places could be
66
made safe, healthier and more pleasant to work in if more care were taken about the
working environment — like improving the cleanliness, tidiness and general
appearance of the work-place; reducing strain and monotony involved in the work;
encouraging workers and their representatives to co-operate in improving working
conditions and providing for consultation with workers on their representatives on
these matters. Workers or their trade union representatives should co-operate with
employers in making the best use of the arrangements for consultation in this field.

4.9 CHECK YOUR PROGRESS

6) Mention three revolutions of Industrial relations

h) Industrial revolution, democratic revolution, capitalist revolution

i) Industrial revolution, communist revolution, capitalist revolution

j) Communist revolution, management revolution, consultative revolution.

7) The history of industrial relations include

d) Post-independence era, pre-independence era, post-liberalization era.

e) Post-independence era, post-independence era, post-liberalization era.

f) Pre-independence era, pre-independence era, pre-liberalization era.

Answers to check your progress: 1) a 2) a

4.10 NOTES

……………………………………………………………………………………

……………………………………………………………………………………

……………………………………………………………………………………

……………………………………………………………………………………

……………………………………………………………………………………

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4.11 SUMMARY

The concept of industrial relations was developed with the industrial

revolution. Prior to this it was considered master and servant relationship. The
workers were considered and treated like any other commodity which could be easily
purchased and replaced. Wages and conditions of services were poor and this situation
was not only in India but also in England and other European countries. The term
Industrial Relations comprise Industry and relations. Industry means and productive
activity in which an individual is engaged and relations mean the relation that exists in
the industry between employer and its workman.

4.12 KEY WORDS

Code of Conduct: A code of conduct is a set of rules outlining the social norms and
rules and responsibilities of, or proper practices for, an individual, party or
organization. Related concepts include ethical, honor, moral codes and religious laws.

Industrial harmony: it is the ideal state of peace wherein workers engaged in

production of goods and services feel content, thereby are propelled to give the best of
their talents and talent potentials for the development and progress of the organization.

Union: an employee organization that has the main goal of representing members in
employee management bargaining over job related issues.

4.13 SELF ASSESSMENT QUESTIONS

1. Explain the code of conduct of Industrial Harmony.

2. Mention the post liberalization era of industrial relations.

3. Discuss the post independence era of industrial relations.

4. Explain in detail about industrial revolution.

5. Explain the Period 1930-1955 of Industrial Relations.

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4.14 REFERENCES

 A.M. Sarma, Industrial Relations (conceptual and Legal Framework),

Himalaya Publishing House, 10thEdition, 2013.

 C.S. Venkata Ratnam, Industrial Relations, Oxford University Press,

15th impression, 2011.

 S.C Srivastava- Indistrial Relations, 5th edition, published by Vikas

publishing house.

 [Link], Satish Mamoria, S.V Gankar – Dynamics of Industrial

Relations, 14th revised edition (reprint) 2004, Himalaya Publishing
House 2004.

69
70
MODULE – 2: TRADE UNION

UNIT: 5 TRADE UNIONS MOVEMENT IN INDIA

STRUCTURE:

5.0. Objectives
5.1. Introduction
5.2. Meaning of Trade Union
5.3. Definitions of Trade Union
5.4. Trade Union movement in India
5.5. Role of trade unions in modern industrial society of India
5.6. Functions of trade Unions
5.7. Objectives of important trade union
5.8. Check Your Progress
5.9. Notes
5.10. Summary
5.11. Key words
5.12. Self Assessment Questions
5.13. References

71
5.0. OBJECTIVES

After studying this unit, you will be able to

 Understand the meaning of Trade Union
 Explain the Trade Union Movement in India
 Describe the Role of Trade Unions in Modern Industrial Society of India
 Bring out the function of Trade Unions
 Identify the Objectives of Trade Union

5.1. INTRODUCTION

It is an accepted fact that modern industries not only should run on democratic
principles, but also should work hand in hand and that is labour and management so
that economic growth can progress in a manner that we want it to be. Added to this
multiple unions have emerged and so there is a need to grow on a participative
manner. Moreover, in these days succession planning is a must.

Naturally, it is appropriate to develop a strong trade union where the present

senior workers will guide the future generations. After all the aim of trade union
should be to develop democratic way of solving the problems. This in turn will
develop good industrial relations. Further, one should encourage workers to solve
their problems through dialogue rather than in a court of law. Industrial conflict is the
child of modern industrial development and it has its roots based on a) Economic b)
Political c) Social and Even d) Psychological Factors. Another question that is
haunting is whether Indian Trade Unions are strong or Managements are strong.
However, one should argue that which is better to bring Economic welfare for the
workers rather than whether trade unions are strong or managements are strong. As
such trade unions should play a role in securing good life to workers in terms of
economies so that their status will be strong in the society.

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5.2. MEANING OF TRADE UNION

To establish good industrial relations, trade union is a major component. In

simple words trade union is one which tries to protect and improves economic status
of workers. It is because once economic status comes, many small problems will
vanish. Trade unions have come because, the world have experienced that employees
will not oblige the need of individuals unless they represent in the form of union.
Management will generally understand the gravity of a problem if workers
collectively represent the cases. This group is a trade union. Besides, the raising
revolutionary expectations of people(workers) due to demonstrating effect
(globalization), technology effect, and better working and economic conditions of
workers in the west has changed the attitudes of workers. Now they argue differently.
In the meanwhile workers also started to know their rights including the right to
bargain through trade unions. Employees also found it convenient to solve some
problems with a group of people called trade union. Therefore, the meaning for the
words trade union can be stated as follows:

It is an association voluntary formed by the employees belonging to an industry

for the purposes of:

a) Promoting the workers economically, socially and even politically.

b) To preserve their rights, interests and privileges from being exploited by
management.
Of course as a student of management you should also know that trade
unions can also be formed by employers also in their interests.

5.3. DEFINITIONS OF TRADE UNION

As a student of MBA it is worth knowing the best definitions given by

management experts to know the real position of trade Unions. Therefore, I am
quoting the following definitions given by experts like Prof. Dale Yoder, 2. Prof.
Edwin 3. Flippos and Mr. V.V. Giri.
73
 In general Trade Union is a combination of workers and employers. A trade
union can be formed for the following specific purposes also. For Ex: 1. to regulate
the relations between workmen and employers 2. To regulate the relations between
workmen and workmen. 3) Between employers and employers but the basic is to look
after the interest of workers regrets and privileges. Please understand the basic
problem is that it does not spell duties and responsibilities but spells out only regrets
and privileges.

Now carefully try to understand the definitions.

1. Prof. Dale Yoder: ‗Trade union is the workers organisation which is meant for
attainment of specific objective or specific purpose‘. Here specific purpose is
look after the interests of its members and to improve the labour management
relations.
2. Prof. Edwin b. Flippos: ―Trade is workers organisation which is established
by their collective activities to the welfare and political interests and to keep
them secure and for improvement in it‖.
3. Mr. V.V. Giri: ―Trade Union is such an organisation which is created
voluntarily on the basic of collective strength to secure the interest of the
worker‖.
Dear student please read the above definitions carefully and if you do this you
will be in a position to understand the value of trade unions to establish
industrial relations.

Beside the above, I am going to quote the definition given by Indian Trade
Union Act 1926

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Section – 2 (a)

This section says ―Any combination whether temporary or permanent, fanned

primarily for the purpose of regulating the relations between workmen and workmen
or between workmen and employers 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‖.

If you read this definition, you will be able to know the following.

1. Trade union is a combination of people; and that can be temporary or

permanent.
2. Such a combination can be a Federation of two or more trade unions.
The same definition also imposes the following objectives
a) Regulating relations among workers, employees and imposing
restrictions on the conduct of any trade or business.
5.4. TRADE UNION MOVEMENT IN INDIA

Though one cannot exactly predict when this movement was started, it
historians say it emerged somewhere in between 1850 and 1870. However, it is said it
started in 1860.

In 1920, All India Congress was established but the purpose was to fight for
freedom and in 1947 the movement has turned itself in to groups. And they are: 1.
Indian National Trade Union (1947). 2. Hind mazdoor sabha (1948). However, one
can say that the period between 1900-1920 was a crucial one for Indian Trade Union
Movement. Today the following are the trade unions. 1. AITUCC All India Trade
Union Congress affiliated to the communist party of India 2. BMS bharatiya mazdoor
sangh 3. HMSC Hind Mazdoor sabha with commitment to socialist philosophy. It is
also affiliated to international confederation of free trade unions. 4. CITU (Centre of
Indian Trade Union affiliated to the international federation of free trade union 5.

75
INTUC, India National Trade Union Congress affiliated to the congress party and
international confederation of free trade union.

What are the reasons for trade union movement?

Firstly: 1) Large scale industrial units

2) Wide spread use of machinery

3) New lines of production

Secondly: There was a system called Laissez faire – i.e. free trade or business.
If such a system is available individuals cannot think any advantage turn the rich
industrialists. Thus, at that juncture the only alternative was to have their own group
and fight for their basic needs. The reasons for their protest and to form a group
called union was

1. Exploitation by owners.

2. Protecting the workers from lead working conditions

3. Bad sanitation facilities

Thirdly, to gain bargaining power

To improve their economic status

Dear student, since the topic is trade union movement in India let us try to
know how the movement developed historically. Experts divided this movement in to
7 groups.

I. Social welfare period (1875 – 1918)

During this period there was no public opinion to express their sufferings since
workers were not organised and could not get themselves organised. The major
reason was lack of unity and education. They knew only one method that is leaving
the job and no attempt was made to have collective bargaining. This was largely due
to the ignorance of the conditions that were available to the workers in some other
76
please. During this period the following Indians contributed a lot to the welfare of the
workers. They are:

1. Mr. Sorabjee sharpurji, (1875) [Link] (1884), created a situation and

made the then government to understand the problems of workers and forced
the government to have legislation. Therefore, they virtually said ―don‘t kill a
rich man and try to become rich, on the other, take the richness of the rich and
become rich or intelligent was the slogan. These two people were themselves
industrialists but worried about working people. Even British government
passed Indian factories Act in 1881and then amendments took place. This act
reduced the working hours and improved the working conditions of children
and women.

Major Features between 1875 – 1918

Complete absence of radicalism in the Labour Movement. This period was

divided like: regulation period (1825-1891) when the children and women
employment conditions were regulated and abolition period (1891-1917) However,
the entire period was termed as a period of temporary organisations and a period of
labour movement.

II Period: Early Trade Union Period (1918-1924):

In the year 1918, trade union movement went to the hands of politicians from
social workers. In 1919 ILO was established and that gave the dignity to the working
class around the world. In 1920 All India Trade Union congress under the
chairmanship of Lala Lajpat Rai, Sardar Vallabai Patel, C.R. Das, and V.V. Giri gave
a boost to Indian Trade Union.

III Period: Left using unionism period (1924-1934)

During this period the following factors contributed to the growth of trade
unionism a) the growth of anti imperialist national movement, Repressive methods
adopted by the Britishers. However, there was some disunity in the trade unions
during the same period.

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IV Period: Trade Union Unity Period (1935-1938)

During this period a movement called Roy group or a platform unity came into
existence. In 1932 a federation developed a trade unity committee. The committee
said ―A trade union is an organisation of class struggle, its basic task is to organise the
workers for advancing and defending their rights and interests. They further said that
following should be an integral part of trade union a) Collective Bargaining b)
Negotiations and c) Representations.

In 1937 general election for trade unions, the Indian national congress said that
it wants ―To secure to the industrial workers a decent standard of living house of
workers, and conditions of labour in conformity, as far as economic conditions of the
country permit, within international standards, suitable machinery for the settlement of
1) disputes , between employees and workers,2) workers 3) protection against
economic consequences of old age, 4) sickness and 5) unemployment and the right of
workers to form unions and to strive for the protection of their interests.

V Period: Second World War Period (1939-1945)

In 1939 due to different political factions AITUE changed. By 1942, Quit India
Movement started. In the meanwhile socialists lost control and communists gained
control. However, during the war period, the status of Trade Unions has increased
due to the following factors:

1) The government and employers took steps to increase production of war

materials to maintain higher profits
2) Ban was imposed on strikes and lockouts and all disputes were referred to
adjudication and mutual understanding between labour and employees a
tripartite labour conference was done in 1942. By the end of war,
communists started dominating AITUE, the nationalist and socialist started
holding ―Labour front‖ particularly for Ahmadabad and Jamshedpur. The
climax of Second World War was Indian Trade Unions ability to participate
in negotiations increased.
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V Post Independence Period: 1948-2014

On January 30, 1948 Sardar Vallabai Patel asked the workers to do away with
distinctive nature and asked them to join INTUE. The INTUE itself has joined the
international confederation of free trade union as an affiliate. The consolation of
INTUC emphasised a) Negotiation, 2) conciliation if need be, 3) adjudication of
industrial disputes. At this stage, it was believed to be practice be demonstration in a
peaceful manner.

By 1949, trade union was spilt with factors like INTUE, AITUE, HMS and
UTUE. By 1959, HMS came into existence, and by 1962 confederation of free trade
union was formed, In 1970 communists dived themselves into CPM and eg: In 1975
emergently came and the emergency came to an end these bodies ceased to exist.

VII Present Situation:

Over a period of 150 years the political, economic, historical and international
factors have all helped the unions to set a legal status and they represent workers.
Today every management consults them in the areas like. 1. Improvement in working
conditions 2. Health and safety 3. Job security4. Wages and 5. Productivity. Today
trade unions are allied with one or the political parties and at the same time each one
has become a rival to another one due to politics. However, there is a growing
feeling that trade unions should be from political parties.

One word about a link of trade union with that of politics.

As on today there is a strong like between politicians and trade unions. Indian
constitution believes in equality and social justice and to achieve this public sector
came into existence and many times nationalisation also took place. Needless to say
politicians believe in vote banks and naturally they wish to have control over trade
unions. But in India Governments have changed particularly Central Government aver
state governments. Naturally when the party is not power unions sufficed.

Added to this in IT sector 80% are white collared workers. Of late securing a
secured employment has lost its original importance. Further based on Tamil Nadu

79
(US) Supreme Court, Trade Unions and workers have lost fundamental right. The
court said going on strike is not a fundamental right.

5.5. ROLE OF TRADE UNIONS IN MODERN INDUSTRIAL SOCIETY OF

INDIAN:

Trade Unions have become weaker due to their affiliation with some political
parties. Today some trade unions are working without contributing to the cause of
workers. Based on law 50% of the office bearers must be persons actually engaged
and employed in the industry which the trade union is connected. The remaining
people can be from social or political. This gives a meaning that even non-workers
can control a union. Since trade unions have affiliated to some political party they are
not in a position either to speak to workers or in a position to solve their grievances.

Again trade union are not in a position to act effectively to avoid strikes, lock
outs, lay off, closure or even retirement benefits. Most of the unions are already
because a prey for a particular political party. In today‘s situation (globalisation
concept) some industries are refusing to recognise trade unions. In modern society the
role of trade unions have diminished since managements are directly negotiating with
the employees and in India, the society has already neglected manufacturing sector
where workers will naturally be more. For example: in IT sector 80% will be white
collared workers and practically no need for a trade union. There was a wide spread
opposition to globalisation in the beginning but today layoffs and closing of industries
have become common. The strategic role of unions has changed with the increasing
level of globalization. For example: due to fragmentation nature of production,
outsourcing methods, different areas producing different products , the cost of
organising trade union became difficult. Today one can say the enterprise based trade
unions are there. Again, flexible labour market, increased insecurity to a majority of
workers and trade unions cannot just do anything. Private sector and MNC‘s have
practically neglected the need for trade unions.

80
 The role of trade unions to guarantee basic standards reduced as the industrial
economies their own labour regulations. Public sector has practically gone out of
India. The role of trade union is mixed today. Competition is the order of the day and
not just rights. Today the concept is rights should go with responsibility.
Unfortunately in India everyone feels about rights none feels about duties and
responsibilities. Due to liberalisation they have become market oriented. More over
industrial disputes act is no longer as powerful as in the earlier days with regard to
closure. In modern days security of jobs has changed as changing jobs have become
common.

5.6. FUNCTIONS OF TRADE UNIONS

Every Trade Union will have certain functions and objectives:

Here you should know the main functions. The important functions can be divided in
to three groups namely

1. Basic functions

2. Economic functions

3. Social functions

1. Basic functions: Basic functions have been suggested by national commission on

Labour.

a) To create safety, Security and tenure of a job

b) To solve the problems of wages and salaries and other grievances

c) To improve conditions of service and living

d) To secure cordial relations with the management with regard to a) Recruitment

policies b) Selection procedure c) placement matters d) To Solve problems of transfer
and even retrenchment.

e) To help educational, cultural and recreation facilities.

81
f) To make the workers to learn how to make decisions on critical issues. For this
trade unions try to provide an opportunity for participation in management.

g) It also helps to solve problems like bonus, work schedule.

h) Promoting interest in work and developing affinity to the working place.

i) Helping to improve the levels of productivity discipline and quality of work life.

j) Educating the workers through workers educational schemes about standing orders
of the organisation

k) Promoting individual and collective welfare and making the next generation of
workers for a perfect succession planning.

l) Advising the workers to equip themselves with:

a) Necessary skills and technical know-how and make the workers to become
compatible with the progress

m) Providing training on various trades from time to time.

n) Developing Negotiating skills for employment and for remuneration

o) It can also make arrangements to have conferences / seminars / workshops an

ethical values, leadership styles and qualities.

Second –II Economic Functions: Economic function should strictly be a basic

function. Since it is necessary to give benefit to the workers with regard to:

1. Conditions of Employment
2. Better wages
3. Better living and working conditions it should be included in Economic
Functions

Of course welfare activities are a part of trade union functions. For example:
organising mutual benefit societies cooperatives, education for children, helping
medically for the retired person / employees

82
Third – III Social Function: These functions can be classified in to three groups:

a) Quality of work life: To improve quality of life, it can help housing facilities,
cultural programmes, Training for women to make them self reliant in
Economies and/or to supplement the effects of the family.
b) Education : This is with regard to industries for example : Environmental
problems statutory rights and obligations
c) Research: This is to educate the workers in the fields of negotiation skills,
business communication skills, and bargaining techniques. For this trade union
can collect data an a) wages
b) Fringe Benefits
c) Working Conditions
d) Welfare facilities that is available in different industries around the world.
The same can be published in the form of periodicals, Newsletters magazines
extra.

Fourth IV Political Functions: Many a times Unions may have to interact with
politicians and seek their support either for legislation or for a favour. In fact trade
union Act 1926 is raving a clause to set up a separate political fund. Trade unions may
have to discharge some ancillary services. Ancillary functions are a) Education b)
Welfare activities 3 research. Here trade unions can keep continuous contact with
other unions and members to improve economic projects.

5.7. OBJECTIVES OF IMPORTANT TRADE UNIONS

Trade union Act 1926, Section 15:

Trade Union Act was passed with an objective of registering the Trade Unions
and to verify the membership of trade unions registered. Secondly, the Act wants to
see that trade unions should be legal and should get corporate structure. As that of a
company law grants legal status to a company Trade Union Act creates a status called
artificial person in Law.

83
1982, the amendment added the following objectives.

1. Trade Unions should have at least 100 workman to get registration

2. To resolve the disputes through voluntary arbitration
3. If prescribed 60 days for registration
4. Re-registration if need be can be done only after the expiry of 6 months from
the date of cancellation of registration
5. Office bearers in the executive union should now be 75% to promote
development.
Further, the following objectives are also available
a) It regulates relations among workmen, employees and workmen.
b) It imposes restrictions on the conduct of any trade or business objectives –
may be Economic, Social, Welfare or Political.

Please note if the above conditions are not fulfilled the registrar can refuse
registration.

5.8. CHECK YOUR PROGRESS:

1) What is the full form of CITU:
a) Centre of Indian trade Union b) Centre of international Union

c) Centre for trade Union d) Centre for trade Union

2) What does MNC mean?

b) Multinational Company b) Multinational Corporation

C) Millionaire Company d) Transnational Company

Answers for check your progress: 1) a, 2) a

NOTES

...............................................................................................................................

...............................................................................................................................

...............................................................................................................................

...............................................................................................................................
84
5.9. SUMMARY

Every trade union and industries should run on a democratic method in order to
protect rights and privileges of the workers and to establish a method for participative
action so that succession planning will be much easier and clear. This can be done by
way of guiding and giving knowledge as well as responsibilities of the managers.
Needles to say social, Economic and other objectives should be kept in mind trade
unions can become an important organisation in to establishing harmony or balance
between various parties to an industry or union. After all securing better living
conditions for the workers should be the motto of a trade union. A Trade Union is one
which tries to protect and improves workers all round progress. Since collective
bargaining principles should be implemented, it should be voluntary for employers to
promote economic status and scope should not give for the management to exploit.
Definitions will help us to know the summery if the chapter or topic. Therefore, if you
know two definitions given by experts you will be in opposition to unite the summary.
Basic functions are securing job security, Economic Functions and political functions
besides making the workers to gain both economic benefit and knowledge to take
decisions when they have to take decisions at later days.

5.10. KEY WORDS

Industrial conflicts

Economic Status

Voluntary Association

Economic Status

Collective activities

Management Relations

Specific purpose

85
5.12. SELF ASSESSMENT QUESTIONS

1. Write a brief introduction to trade unions

2. Explain the meaning of a trade union

3. Define trade unions given by Prof. Dale Yoder.

4. Explain how political factors affect trade unions

5. Discuss the role of Trade Unions in a modern industrial society

6. Explain important functions of a trade union

7. Mentor the major objectives of a Trade Union.

5.13. REFERENCES

a) Dr. M.R. Sreenivasan – Industrial Relations and labour legislations – Margham

Publications Chennai- 2006

b) Mamoria and Mamoria – Dynamics of Industrial Relations – Himalaya Publishing

House – Mumbai 2009

c) Arun Monappa – Industrial Relations – Tata Megraw Hill, New Delhi – 1985

d) C.S. Venkata Raman – Industrial Relations – Oxford University – 2010

Gary Dessler – Human Resource Management – Pearson – 2006

1. Karnik, V.B. 1981 – Trade Union Movement and Industrial Relations.

2. Sharma B.R. – 1993 – Managerial Unionism – Issues and perspectives. Sri Rama
Centre for Industrial Relations – New Delhi -11

86
UNIT: 6 MAJOR ISSUES IN TRADE UNION ACT 1926

STRUCTURE:

6.1. Objectives
6.2. Introduction
6.3. Major Issues in Trade Union Act 1926
6.4. Procedure for Registration of Trade Union
6.5. Grounds for the withdrawal and cancellation of Trade Union Registration
6.6. Procedure for cancellation of Registration and Provision for appeal
6.7. Union Structure
6.8. Trade Union Rights
6.9. Check Your Progress
6.10. Notes
6.11. Summary
6.12. Key words
6.13. Self Assessment Questions
6.14. References

87
6.1. OBJECTIVES

After studying this unit, you will be able to

 Understand the major Issues in Trade Union Act1926
 Explain the Procedure for Registration of Trade Union
 Describe the Union Structure
 Bring out the Trade Union Rights
 Identify the Procedure for cancellation of Registration and Provisions

6.2. INTRODUCTION

It is absolutely necessary to know some of the important sections, procedures

and formalities of a Trade Union. It is because there is an impact on labour,
management and society. As a student of MBA, you can become a manager or you
may occupy some important position in a company later in your life where you have
to deal with various sections. For example, factors that is required to registration of a
trade union, duties and obligations of a Trade Union, privileges including liabilities of
a Trade Union.

6.3. WHAT YOU SHOULD UNDERSTAND ABOUT TRADE UNION

ACT 1926 AND ITS AMENDMENTS

This act applies to both workers and employers and also applies to registered
unions. For example, you should know the terminologies. Appropriate government
section2. In general it means Central Government, however, since implementation
will be done by the State Government, many times appropriate Government will be
State Government also. However, this depends on what action and on what issue
State Government Exercises the powers and also jurisdiction of the industry.

A) Registrar (Section-2)f) : Appointed by the appropriate government under section

3 and include any additional or Deputy Registrar of Trade Union.

88
B) Trade dispute (Section-2 (g): Any dispute between employers and workmen or
between workmen and workmen, or between employers and employees. But such
disputes should be related to

a) Employment or NM-Emplacement
b) Terms of Employment
c) Conditions of Labour
C) Workmen: All persons employed in Trade or Industry whether or not in the
employment of the employer with whom the Trade dispute arises.
D) Trade Union 2(h) any combination whether temporary or permanent, formed for
the purpose of regulating the relations between

a) Workmen and Employers

b) Between workmen and workmen
c) Between Employees and Employees
d) Any federation of two or more Trade Unions or where any restrictive conditions
can be imposed to run trade or business.
Please know in any law words will repeated because one section should be read along
with another section of the sale law or some other law.
Now time has come to understand two important areas namely
a) What is Trade and
b) What is industry
Trade Industry

1. Trade Includes Industries 1. Industry or Industries will not

include workers involved in Trade

2. Trading activity involves 2. Industry largely depends on

selling, purchasing, transporting motive to do trade.
and insurance. exporting,
importing extra

89
 3. Trade dispute may be 3. Mere intension to do trade or
a). Between workmen and business will not amount to
workmen industry
c) Between employee and
employer
4. A Trade dispute has a wider 4. Industrial dispute can also as that
meaning of 3 in Trade dispute

5. A trading activity includes 5. Industry dispute has a narrow

industrial activity meaning

6. Industrial activity may not end up

un a trading activity though it is a
.............
major activity

However, you should know to consider any dispute as a trade dispute the following
conditions are to be fulfilled:

a) The conflict or dispute between employer and workmen must be real and
substantial and it should affect the conditions of the service of the workmen.
b) The workers must have an interest in the dispute affecting their employment. In
fact, you should observe that this issue has been decided in a case known as
workmen as workmen of Dimakuchi Tea Estate (VS) Dimakuchi Tea Estate
(AIR) 1958 Sc. 353.

Who can form a Trade Union?

People who are employees or workmen in industries or commercial

establishment can form unions. However, for example Army men, Navy men, Air
force men, Cannot form a Trade Union nor participate in a movement.

90
Then the Question is who are the other persons that are prevented to form a
Trade Union?

For example : people who are working in Raj Bhavan of the State as a)
Gardeners, Cooks, watchman and domestic workers are not allowed to form a Trade
Union.

What is the Reason?

They are not connected with any Trade or business. Please note that this has
been decided in a case known as Rangaswamy (vs) Registrar of Trade union, Madras,
AIR (1962) Mad 231.

6.4. PROCEDURE FOR REGISTRATION OF TRADE UNION (SECTION 4

TO 14) IT MANDATORY TO REGISTAR?

Registration of a Trade Union under 1926 Act is not mandatory. But if is not
registered it will not get some immunities i.e. freedom from punishment). Both from
civil and criminal proceedings.

Though it is not necessary to know immunities from civil and criminal

proceedings as per syllabus, you should know the practical aspects of a Trade Union.

a) Immunity from civil proceedings comes under section 18

b) Immunity from criminal proceedings comes under section 17

a) Immunity from Civil Proceedings : (Section-18)

If the Trade Union is registered no one will question this right in a civil court.
For example: The member‘s indulgence in a strike will not be considered as a breach
of contract. But if the strike becomes violent they can be punished. This has been
decided in RBg(vs) Ashis Kusum (1973) c.w.n.385

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 b) Immunity from Criminal Proceedings (Section-17)

The objectives of a union can be achieved only when members actually

participate. But if a Trade Union indulges in causing loss or damage to the properties
then the law can take its course.

For example : picketing, obstructing, instigating tall under section 17 of the

criminal law Amendment Act read with section 114 of the Indian penal code.

Again, for example: When women picketers were harassed by the public, they
beat the police man with their slippers. Such act is an offence against public servants.

Section – 4 – preliminary steps:

a) Under the Act any 7 or more members can form a Trade Union. They must submit
an application form for registration of a Trade Union with their signatures and
addressers and other details.

Such applications should be submitted in form A which is prescribed by 1938

Trade Union Amendment Act. As per Act 31, of 2001, No Trade Union shall be
registered unless at least 10% or 100 of the workmen are there as members on the date
of making application for registration.
B. Application for Registration
Prescribed fee should be paid with the following details.
1. The names, addresses and occupations of members making the application.
2. The name of the Trade Union and the address of the Head Office.
3. The Titles, names, age, addresses and occupations of the office bearers.
4. If a Union is already in existence for more than one year, then that application
should also consist a statement of assets and liabilities of a Trade Union.
Section – 6: Rules of Trade Union

1. There should be a name for the Trade Union

2. Objectives must be clear
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 3. Purpose for which general funds will be used and the purpose for any other use
the money can be used.
4. List of members
5. Adequate facilities for inspection by the office bearers and members of Trade
Union
6. List of ordinary members
7. List of members who are honorary.
8. The payment of subscription by the members of the Trade Union – i.e.
i) One rupee per annum for rural workers
ii) Three rupees per annum for workers in other organised workers
iii) Twelve rupees per annum for workers in any other case
9. Conditions under which members can set benefit.
10. The manner, in which the rules shall be a mended, varied or rescinded.
11. The manner in which the executive members and others can be appointed or
and removed
12. Safe custody of funds of the Trade Union
13. The annual audit and adequate facilities for inspection
14. The manner in which the Trade Union may be dissolved.

All the above rules are only contractual in nature and not necessarily statutory.

Punishment for Non-payment of subscription

NM payment will make a member not to participate in a meeting. However, if

subscription is paid belatedly, the office bearers cannot refuse acceptance of
subscription.

Section-7: Refusing Registration: As in any law of the land, if the name of

the Trade Union resembles any other Trade Union already registered, the registrar can
refuse registration.

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 Section-8: For Registration: Here ―Form B‖ should be used, but before giving
registration the registrar should check up two important factors namely

1) Whether the objects are coming under the Act

2) Whether the objects are useful of course he must satisfy about the bonafide
of the office bearers.
4. Certification of Registration (Section-9)

Here the question is on which circumstances the Registrar can refuse registration. The
answer is:

a) If the procedure is not proper

b) If the union is not proceeding sufficient information
c) If the Union is identical to any union already registered

Then the Question arises, what are the basic objectives:

1. Regulating the relation between workmen‘s and employees, workmen and

workmen, employers and employees.
Secondly, imposing restrictive conditions on the conduct of any Trade Union or
business.

This has been decided in a case (In Re –Indian Steam Navigation workers
union AIR (1936) cal.27. If the registrar is satisfied with all the conditions then he can
register under section 8 and then he shall issue a certificate in ―Form e‖ which
constitutes evidence to say, that the union has been registered.

Again a question arises. That is within what period this registration should be
done?
It should be done within 60 days from the date of receiving the application.
Once the registration is over trade union will become a corporate body.

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6.5. GROUNDS FOR WITHDRAWAL AND CANCELLATION OF
TRADE UNION REGISTRATION.
Grounds on which cancellation can be done:

1) If the application is in the prescribed manner.

2) That the certificate has been obtained under section 9 by fraud or by mistake

3) Trade Union had ceased to exist

4) When the Registrar is satisfied that

a) Trade Union wilfully violated some of the provisions of the Act

b) Trade Union allowed any rule to be incorporated that is inconsistent with the
provisions of the Act.

Note: However, the Registrar should in from the Trade Union at least 60 days before
stating that he will cancel the registration.

5. That the Trade Union has rescinded any rule providing for any material
provision which is required under section -6

1982 amendment included section 10 which says. ―If the registrar is satisfied
that the Trade Union has called for, or participated in any illegal strike, cancellation
can be made. In fact this section should be read along with section 24 of Industrial
Dispute Act 1947.

Can there be any Objection for cancellation or Registration:

Experts have cited the following obligations for cancellation of Registration.

1. First, the term ―wilful‖ is a vague term. For example: trade unions do not
submit their annual return on a regular basis. Whether it is wilful or
circumstances cannot be said rightly. Therefore first National commission on
labour said, ―When the union has failed to submit the annual return, its

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 registration should be cancelled irrespective of whether default is ―wilful or
otherwise‖. This recommendation has not yet been implemented.
2. Second, ―detective return‖ If any defects are there Trade Unions can satisfy the
mistakes within a prescribed period. Otherwise registrar can assume that the
returns have not been received.

Grounds or conditions that should be fulfilled before cancellation

1. Registrar should give a notice to the Trade Union in writing and give reasons
and say why he wish to withdraw or cancel the certificate
2. Registrar should give an opportunity to the Trade Union to show cause against
proposed action. However, unfortunately there is no provision to say ―that the
registrar shall record and communicate the same in writing to the Trade Union
concerned‖.
Please observe one it is withdrawn or cancels the registration of a Trade Union,
he has no power to quash the order. Again, he has neither power even to ―review
it‖ nor powers to withdraw it.
There is no provision in the Act for re-registration of trade union whose
registration is cancelled.
II Powers of the High Court – cancellation of Registration:

a) The Bombay high court held that the high court may exercise its powers under
article 22b of the constitution where the cancellation of the trade union had
been effectively improper.
b) Gujarat high court quashed the orders of registrar where no show cause notice
was given before cancellation of registration as required under section 10(b).

III withdrawal of Recognition of trade union – grounds:

a) Where executive or the other members of the Trade Union have committed an
unfair practice within 90 days three months prior to the date of application.
b) Trade Union has failed to submit returns under section 281.
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 c) Trade Union has ceased to be a representative of the workmen. On receipt of
the application the labour court will serve a notice asking why recognition
should not be withdrawn. If the court is satisfied that the Trade Union did not
satisfy the conditions, there it can order for with drawl. For re-recognition
Trade Union can appeal. If appeal is prepared then it should be done after 6
months from the date of withdrawal of recognition.
6.6. PROCEDURE FOR CANCELLATION OF REGISTRATION AND
PROVISION FOR APPEAL:
1. The application for cancellation of registration must have the approval of the
majority of the members of the Trade Union.

2. In case any doubt the Registrar can call for information as he deems fit. In fact
he can also examine any officer of the union.

3. Trade Union can rectify the mistakes but the registrar cannot withdraw the order
of cancellation.

4. Genuine mistakes can be a ground for cancellation of a Trade Union

5. If the Registrar is satisfied that the union is not having requisite number of
members he can order for cancellation or withdrawal of the certificate.

Provision for Appeal – (Section-11) – i.e. against the refusal of registration of a

trade union, or if a certificate of registration is withdrawn or cancelled. Under this
section any aggrieved party on appeal within 60 days from the date on which the
order is dated.

Where the Appeal can be made and or what is the Jurisdiction:

1. If the Trade Union is in metropolitan city the appeal should be before the
High Court.
2. If the Trade Union is in urban area or rural area than the appeal should be
before an
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 a) Additional or b) Assistant or c) Principal city civil court having
Jurisdiction. Of course, as usual the normal procedure should be fulfilled.

Section 23 and 24: If the Trade Union wishes to change the name, it must be duly
signed by the secretary and along with 7 members of a union.

6.7. UNION STRUCTURE:

Structure consists several layers. However, each layer can be based on:
a) Geography
b) National / Regional State
c) Sector or branch of activity(metal workers chemicals, banking etc) in the
economy

Each of them is related to the other, both horizontally and vertically. Further, it
should be noted that structure can also be based on:

a) Size
b) Spread
c) Role
d) Activities
e) Authority / Accountability etc

Staff in various departments / sections depending on the type of activities

or services. Again, rules and regulations concerning decision making and
mechanisms for reward etc. By profession Trade Union can also be structured like

a) Craft unions
b) Industrial unions
c) General unions
d) Occupational union
e) National Unions/ federations

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 Now let us know what the three structures:

1. Craft Unions: It is an organisation of workers based on a particular craft

or a trade. Largely, such unions are located in a particular area. Largely, craft
unions are found in non-manual employs and professional workers .For
example: Air India Pilot‘s Association.

Advantages of Such Unions:

1. Such firms provide a base for solidarity of Trade Unions because historically those
unions laid to the foundation for Trade Union Movement.

2. Workers may take under advantage of multi-union situation and play and union
against another union.

2. Industrial Workers: This is an association where types or categories of

workers will join without any difference in craft, skill, trade, position or even
gender. This type of union can be formed at the plant level also. For example.
Trade workers union in TISCO, Regional level Bihar sugar workers federation
and at National level colliery mazdoor sabha of India.

Advantages

1. It covers the interests of all categories of workers in a single agreement with the
employer(s)
2. Having Homogeneity and solidarity among workers.
Major weakness is that it is crowded with unskilled workers and it is unable to meet
the specific need and protect the interests of the skilled workers whose number is
small.
3. General Union: It is a several union where all workers employed in many
industries. For Example: Jamshedpur a labour union. Here the Membership covers
workers belong to the steel industry and various industries such as cable, Tube,
locomotive and tinplate located in Jamshedpur.
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4. Trade Union Federation:

For Example: 1. All India port and Dock Workers federation operating at the
National level

3. AITUC, INTUC, HMS are the examples of National Level

centres of Trade Unions in India.

What are the Various Dimensions of a Trade Union Structure?

Carefully read the following chart to understand Dimensions:

Political Executive Operational

Union Central Committee Union Secretariat Departments,

a) President Secretary general Administration

b) Vice President Deputy Secretaries Community Services

(General)
c) Secretary General Culture,
Assist Secretaries
d) Deputy Secretary Finance, Industrial
(General)
(General) Relations,
Secretaries in Change of
e) Assist Secretaries International Affairs
Departments
(General)
Occupations Health and
f) Treasurer and Safety,

g) Committee members Organising Productivity

and Committee Meetings,
Promotional skills, Sports,
Monthly,
Women‘s Programmes,
The Secretary has a full Computer Services,
time Job International, Technology,

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 Legal, Library, Media and

R&D

1. From the above chart, you can be clear that Political Executives and
operational responsibility of Trade Unions is vested with office bearers holding
political authority of decision making as per the provision of the constitution.
2. The People: They are members of the union. One cannot say any one
objective or items in industrial relations because it is largely concerned with
value judgement about concepts for which one cannot fix any one accepted
meaning. It is this difficulty that strains the relationship on one side and on the
very simple.

Concepts in Union – Management Relationships:

a) Fairness and Equity: It is concerned with association of payment structure

and sometimes with dismissal. Prof. Hyman and Brough said ―the commitment
of one side or the other to a particular notion of fairness often appears to exert a
significant influence on the actual cause of industrial relations.

You should understand fairness and equity means only value or belief that
may be used to judge the existence and extent of fairness.

No doubt there is inequality the society or in the organization. For example:

unequal distribution of wealth, income and ownership, nature of work, status
education, differential access to power, Authority and control. The irony is these
values and ethics that are available in capitalist societies justify inequalities.

Fairness can be observed either in monetary terms or on Non- monetary

terms. The fact is that relationship should be consistent.

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 2. Power and Authority: People have to make value judgements about Trade
Unions. People can have ability to control or improve ability to influence, ability
to force a change and ability to generate an implicit influence. Since collective
bargaining is playing a crucial role in industrial relations, the concept of power is
very important.

Individual and Relationship:

In the 21st century individuals are getting more value and they should be
seen as human beings, because each one of them is unique in their intelligence,
attitude behaviour and other areas. All said and done integrity must be there for
everyone. If personal integrity is compromised then the trust and respect of others
will be lost. The only principle in industrial relations is the maintenance of
personal integrity. Today Trade Union leadership should appreciate the worth of
committed, competent and motivated staff.

6.8. TRADE UNION RIGHTS:

Trade Union Act has given the following rights: 1. It has an exclusive
right to act and appear in any proceedings under the Industrial dispute Act 1947/ or
under Trade Union Act 1926. However, it can represent in the areas of Dismissal,
Discharge, Removal, Retrenchment, and Termination of services of a workman.
However, it has a right to appear and act in any proceedings relating to unfair
practices specified in items 2 and 6 of schedule IV of the Act.

2. To collect membership fee during pay day

3. To put up a notice board on the premises and affix notices thereon.

4. To hold discussion on the premises with the employees in connection with

prevention of an industrial dispute.

5. To meet and discuss employees problems

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6. To inspect any place of working

7. To appoint its nominees for the purposes of works committee

8. To appear before any proceedings on behalf of employees.

Section 23says two members of a Trade Union can appear in certain proceedings at a
time and they will be treated as on duty.

Dear Student please observe even an unorganised union has the following rights.

1. Rule-18. Officers (Specified) have a right to meet and discuss with an

employer on the grievances of an individual member relating to discharge /
dismissal / or termination of services.
2. To appear on behalf of any of its members employed in the undertaking in
any domestic or departmental entering held by the employer (Section 22)

6.9. CHECK YOUR PROGRESS:

1) Mention some rights of trade union
 To meet and discuss employees problems
 To inspect any place of working
 To appoint its nominees for the purposes of works committee
 To appear before any proceedings on behalf of employees.
2) Trade unions can also be structured like
 Craft unions
 Industrial unions
 General unions
 Occupational union
Answer to Check Your Progress. 1) All the options 2) all the options

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 6.10. NOTES

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6.11. SUMMARY
The emergence of Trade Union Act made the Indian workers and politicians to
work together both to improve economic status of workers as well as to achieve
democratic system in the Trade Union. Students should observe even
unorganised unions have rights and trade union act has given rights. There are
national and international trade union federations operating at national and
international level. The origin and growth of trade unions have been influenced by
a number of ideologies.

6.12. KEY WORDS

Registration of Trade Union

Privileges
Craft Union
Industrial workers
Unorganised Union
Dismissal
6.13. SELF ASSESSMENT QUESTIONS

1. What factors should be kept in mind to understand Trade Union Act 1926
2. Explain what is Trade Union under section 2 (4)
3. Differentiate between Trade and Industry
4. What is the procedure for Registration of Trade Union?
5. What are the rules of Trade Union?
6. What are the grounds for cancellation or withdrawal of Trade Union
registration
7. Describe Trade Union Structure in general.

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6.14. REFERENCES:

a) Human Resource Management 3rd edition, Biswaject Pattanayak, Prentice Hall

of India, New Delhi -11
b) Dynamics of Industrial relations – Mamoria, Mamoria and Gankar. Himalaya
Publishing House 2009
c) Industrial relations – C.S. Venkata Reritnama Oxford 2010
d) Industrial Relations and Labour Laws – Himalaya Publishing – Sarma 2006
e) Karnik U.B 1981 – Trade Union Movement and Industrial Relations
f) Sarma B.R. 1993. Managerial Unionism – issues and precautions – Sriram
Centre for Industrial Relations – New Delhi.
g) Arun Monappa – Industrial Relations – Tata Mcgrow Hall – Hew Delhi 1985
h) M.R. Srinivasan – Industrial Relations and Labour Legislation – Margham
publication – Channai - 2006

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UNIT – 7 TRADE UNION AND RELATED ISSUES

STRUCTURE

7.1. Objectives
7.2. Introduction
7.3. Trade Union constitution and its essentials
7.4. Mode of Registration
7.5. Major differences between registered and recognized union
7.6. Recognized union and union recognition agreement
7.7. Need for recognition
7.8. Rights of unrecognized union
7.9. Check Your Progress
7.10. Notes
7.11. Summary
7.12. Keywords
7.13. Self Assessment Questions
7.14. References

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7.1. OBJECTIVES

After studying this unit, you will be able to:

 Understand the Trade Union Constitution and its essentials
 Explain the Mode of Registration
 Describe the major differences between registered and recognized union
 Bring out the Need for recognition
 Identify the rights of unrecognized union

7.2. INTRODUCTION:

All registered trade union should have a constitution and must be endorsed by
its members with specific guidelines and principles.

For example:

1. Basis for its existence

2. Functioning
3. A permanent framework of the structure
4. Governance and administration matters
5. Different constituents of union and their respective powers, duties and
responsibilities.

7.3. TRADE UNION CONSTITUTION AND ITS ESSENTIALS:

a. Preamble
b. Name
c. Declaration of principles
d. Membership
e. Rights and obligations of members
f. General assembly/ delegates conference

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 g. Election at all levels
h. Duties and responsibilities of officials
i. Executive committee
j. Standing committee
k. Meeting rules
l. Finance / Funds
m. Collection of duties
n. Auditing
o. Allowances
p. Benefits of members like
i) Scholarships
ii) Fellowships
iii) Strike funds
iv) Death benefits
v) Procedure for winding up, if desired

A trade union is considered effective if it is able to:

a) Enroll all workers in the concerned branch / establishment and is thus

representative of the target group of workers.
b) Ensure jobs, income and social security and a career proposition for its
members.
c) Improve the productivity of the enterprise / industry / economy.

7.4. MODE OF REGISTRATION (SECTION 4):

As a student you should know what is registration? ―It is a formal recognition

of a representative body‖. But before registration the following formalities must be
fulfilled.

1. A registered union must allow membership to any worker who is above 15

years and must have 50% of the office bearers from within industry.
2. It must keep books of account in order.

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 3. It must send its income and expenditure statements to the registrar of trade
unions on or before 31st March.
4. Further, the union can spend its funds on
a) Salaries of office bearers
b) Prosecution
c) Defense and on other matters for protecting it
i) Trade union rights
ii) To provide compensation to members
iii) To levy subscription fee
iv) To public periodicals

However, it should be known that a registered union can claim protection from
being prosecuted for legitimate trade union activities. This protection is available
under section 120 (b) subsection 2 of the Indian penal code.

Registration (Section):

The registrar will register a trade union in the register (according to Form B)
after being satisfied that all the formalities have been fulfilled.

However, while registering a trade union, it is the duty of the registrar to

examine the application and look at the object for which the union was formed only
fact is that the registrar has to convince that whether the union seeking registration is
legal or illegal.

7.5. MAJOR DIFFERENCES BETWEEN REGISTERED UNION AND

RECOGNIZED UNION:
Registered Union Recognized Union

1 It may not always cover a 1 It is a voluntary act and may well

representative union especially in concerned a representative union.
multi-union situations or two or
three factors.

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2 Registration is done by the registrar. 2 Not mandatory under the trade
union act.

3 Both are not mandatory under the 3 State governments like

trade union act Maharashtra, Gujarat and Rajasthan
and Uttar Pradesh have enacted
legislation for recognition rules on
the other, state like A.P, Orissa and
West Bengal formulated recognition
rules.

4 There is a form and a procedure for 4 Registration is for the purpose

registration even now any 7
members can register a union.
However, where the trade union is
formed, at least 70 employees
should be there.

5 The registrar is the official of the 5 If multi unions are there

concerned state government management may close to recognize
one or two unions

6 Management can also choose

certain union together as a
bargaining council.

7.6. RECOGNIZED UNION AND UNION RECOGNITION AGREEMENT:

Union Recognition Agreement:

In all organized companies there will be a system that there management will
sign an agreement with the recognized union(s).

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 Such agreements explain do‘s and don‘ts for both management and union.
They also specify the benefits that management would provide to the unions and such
benefits may include union office, notice board in one or more spaces, telephone, fax,
computer, staff or time off for leaders, training and subsidies.

Check list of items in such agreements:

Check list can be in the form of (1) obligation of management (2) obligation of
the union.

a) Obligation of Management :
1. The union is recognized as a representative of the union. If it is a multi-
union set up it is required to mention the scope of recognition, whether All
India or regional or for a particular plant or office.
2. Duration / Time frame of recognition i.e. whether for two/or more fears.
3. Facilities to be provided to the union like
a) Office Space: Here specify the location and other details.
b) Office Equipment: Computers, fax, phone etc.
c) Time off: Time off for how many office bearers and for how long.
d) Receive and respond to union communication as required such
correspondence should be addressed to general secretary to the union or
to the person designated by the union.
e) Grant interview to specified union representatives with prior
appointment.
f) Notice Board (Notice copy to be shown to a designated management
representative before it is put on notice board.
g) Meeting facilities (meetings to be conducted outside the normal working
hours / shift hours.
h) Facilities and budget for meetings / conferences and for educational
programmes.

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 i) Joint activities-welfare, education and training, social and recreational,
co-operative societies etc since recognition will be given based on and
as a bargaining council.
4. The company shall notify the union before making any changes or
alternations to the terms and conditions of services of the workers in
accordance with section 9(a) of the Industrial Dispute Act 1947.
5. If the company / factory violates any provision that is available in the
agreement, management will have the option to suspend the recognition of
the union for a period of 14 days. During the period of suspension /
withdrawal of recognition the company may withdraw all facilities accorded
to the union. However, during the period of suspension, the union may
represent the reasons why the recognition should not be withdrawn. If
proper are give them automatically on the expiry of 14 days withdrawal/
suspension will take place.

(2) Obligation of the Union:

a) Union should comply with all the provisions of the Act.

b) Union should supply to the management with
a. Union constitution
b. Rules and Regulations
c. Membership with their addresses
d. List of names of office bearers
e. First negotiate with the management before approaching any other authority
for settlement of disputes.
f. Don‘t resort to strike immediately and it should be a lost resort if need be.
g. Agree to see that employees will do essential services and also take
preventive maintenance to continue to work even in the event of a strike.
h. Union shall hold strike ballot in the event of a strike (optional still made in
the law)
i. Issuing prior notice about union meetings.

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 j. Get the notices to the knowledge of management representative designated
for the purpose before notices are put up on the specified notice board.
k. Trade union activities shall be done during working hours only.

Again, please observe all the above facilities will be subject to certain
conditions.

For example: The recognition agreement may provide that while the union can
have a notice board within the company premises, it should show the notices that it
wished to display to an authorized representative of the management for approval.

Please note, management generally insist on prior clearance/approval of notices

to avoid any possible misuse of notice boards in the form of (1) spreading rumors (2)
Half truths, (3) Verification, (4) Campaign against individual managers or
management. Of late courts in India permitted managements to withdraw some
benefits that managements accorded to recognized representative unions.

For example: In the case of Blue Star company, the general secretary of the
union was allowed to obtain from work indefinitely to carryout union work during
office hours. Now it is removed on the other may trade union people have made it a
habit of not attending the work in the name of union work.

Further, if relations between union and management become bad, the

management can withdraw the benefit extended to some people on the ground ―No
work no pay‖.

7.7. NEED FOR RECOGNITION:

Recognition will provide a backbone for collective bargaining. Law relating to

recognition of trade unions is mentioned below.

a) Constitution and Recognition of Trade Unions:

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 The question is under Article 19(1) (c) of the constitution is it an obligation to
grant recognition or is it a fundamental right to the Trade Unions to get recognition.
This has been decided as ―Negative‖ in the case of [Link] (vs) Union of India
(1972) ____ 1978, Calcutta, and in Tamil Nadu Electricity Board Accounts Executive
Staff Union (vs) Tamil Nadu Electricity Board (Madras 1980). The reason is the right
to form an ―Association‖ does not carry with it the commitment right, that association
should be recognized by the employers.

Therefore, neither withdrawal of recognition of the union nor the

discontinuance of recognition infringes the fundamental rights guaranteed under
Article 19(1) (c) of the constitution.

In India as it is there is no central law governing recognition of ―Trade Unions‖

the Trade Union Amendment Act, 1947, provided for recognition of Unions by (1)
Agreements and (2) By order of the court satisfying the conditions laid down in
relevant conditions laid down in relevant sections of the Act. But the Act has not been
enforced.

Labour Court and Recognition:

Section 28 (E) of the Trade Union Act (Amendment) Act 1947, gives the
power to the labour courts to grant recognition where a Registered Trade Union
having applied for recognition to an employer fail to obtain the same within a period
of 3 months.

Conditions for Recognition:

a. All its ordinary workers are employed in the same industry or industries closely
allied to or connected with others.
b. It is a representative of all the work men employed by the employer in that
industry or those industries.
c. Its rules do not provide for the exclusion from membership of any class of
workmen referred in clause (2)
d. Its rules provide for the procedure for declaring a strike.
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 e. Its rules provide that a meeting of its executive shall be held at least once in
every six months.
f. It is a registered union and that is has complied with all provisions of the Act.

Problems in Recognition: Here only two questions are there:

1. Can an employer voluntarily recognize a union which is not a registered one

under the Act and which is fact a majority union?
2. Can an employer be forced to recognize more than one union?

What are the Rights of a recognized trade union?

Basically, the recognized trade union will have a right to negotiate with
employers in respect of matters connected with

a) Employment
b) Non-employment
c) The terms of employment and
d) Conditions of employment

The National commission on labour recommended the following rights:

1. Right of sole representative

2. Entering into collective agreement in terms of employment and conditions of
service
3. Inspecting the place of with
4. Holding discussion with concerned people

When managements refuse to recognize the trade unions:

1. If legislation is not there it can refuse recognition

2. If large number of office bearers are outsiders and, in particular politicians and
ex-employees
3. If the union has a few number of employees
4. If the trade union has not been registered under the Trade Union Act 1926.

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What are the grounds for withdrawal of recognition?

a. If the Executive or the members of the trade union have committed any Unfair
practice (Section 2J) within 3 months prior to the date of application.
b. Trade Union has failed to submit the returns referred in section 28.
c. Trade Union has ex-ceased to be a representative of the workmen referred to
clause (b) of section 28 (D).

7.8. RIGHTS OF UNRECOGNIZED UNIONS:

There is no provision in the Industrial Dispute Act or Trade Union Act

prohibiting the management from

a) Negotiating
b) Discussing or
c) Entering into settlement with unrecognized unions.

However, where the demands of unrecognized union are already seized by the
recognized union, such demand would not be maintainable. Again, however, direction
can be given to management that comes under Article 12 of the constitution.

Supreme Court Decision:

The Supreme Court in a case:

The Chairman, State Bank of India (vs) All Orissa State Bank Officers
Association delineated the rights of recognized and unrecognized trade unions while
interpreting the provision of Rule 24 of the verification of membership and
recognition of Trade Union Rules 1974 framed by the state of Orissa which is as
follows :

22 (a): Rights of Unrecognized Union:

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 1. To meet and discuss with the employer or any person appointed by him in that
behalf the grievances of any individual member relating to his service
conditions.
2. To appear on behalf of its members employed in the establishment of any
domestic or departmental enquiry held by the employer and before the
conciliation officer / labour court, Industrial Tribunal or Arbitrator. After
interpreting the above sections the court said :
a. Unrecognized union has no right to participate in the
discussions/negotiations regarding general issues affecting all
workmen/employees and
b. Settlement, if any arrived at as a result of such discussions/negotiations is
not binding as all workmen/employees.

But, it has,

1. The right to meet and discuss with the management/employer about the
grievances of any individual member relating to his service conditions and
2. To represent an individual member in domestic ensuring or departmental
inquiry and proceedings before the conciliation officer or adjudicator.

What are the reasons that the Hon. Court has given:

The court has given two major reasons to support its conclusion:

1. The right of the citizens of this country to form an association or union is

recognized under Article 19 (1) (c) of the constitution.
2. For the sake of individual peace and prosper administration of the industry, it is
necessary for the management to seek co-operation of the entire workforce.

The court further said, ―The very fact that certain rights are vested in a non-
recognized union shows that the Trade Union Act 1926 and the rules framed there
under acknowledge the existence of a non-recognized union.

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 Therefore, the management/employer cannot out rightly refuse to have any
discussion with a non-recognized union in matters relating to

a) Service conditions of individual members and

b) Other matters incidental there to.

7.9. CHECK YOUR PROGRESS:

1) Mention the obligation of the union

a) Union Constitution b) Rules and Regulations
c) List of names of office bearers d) issuing prior notice about union meetings
2) Mention the rights of a recognized trade union
a) Employment b) Non-Employment
c) The terms of employment and d) conditions of employment
Answer for Check Your Progress: 1) all the options 2) all the options

7.10. NOTES

………………………………………………………………………………………

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7.11. SUMMARY
In the face of multi unions, as well as in the reduction of trade union value due
to privatization concept, it is desirable to have a central legislation for compulsory
recognition. This will help both the workers and management besides helping to run
the industries. All the more it will help to establish better labour management relations
and also to avoid the various problems of trade union. Recognition of trade union will
create a backbone for collective bargaining and this is the base for the modern
industrial relations. Formal registration will help the trade unions to discharge its
duties and responsibilities and protects trade union.

7.12. KEY WORDS

Governance
Administration
Executive Committee
Trade Union Rights
Agreements
Courts of Law decisions
Rights of Unrecognized Union
Industrial Peace

7.13. SELF ASSESSMENT QUESTIONS

1. What are the essentials of a Trade Union?
2. What is Recognition?
3. What is Registration?
4. What is the need for recognition?
5. What are the differences between registration and recognition?
6. What are the problems in recognition?
7. What are the rights of an unrecognized union?

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7.14. REFERENCES:

1. News paper – Deccan Herald on various dates of 2015.

2. Dynamics of industrial relations – Manoria, Manoria and Ganker – Himalaya
publishing 2008.
3. Industrial relations – Himalaya, Sharma 2010.
4. Arun Monappa – Industrial relations – Tata Megraw Hill, New Delhi 1955.
5. [Link] Ratnam ―Industrial relations – Oxford University Press – 2010
6. Industrial Relations and Labour Laws [Link] Vikas publishing House –
2007.

7. Industrial Relation- Monal Arora – Excel Books 2005.

8. [Link] Ratnam – Industrial Relations – Oxford University Press –

2010.

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UNIT – 8 PROBLEMS OF TRADE UNIONS

STRUCTURE

8.1. Objectives
8.2. Introduction
8.3. Major Problems of Trade Union
8.4. Future of Trade Unions and Management in India
8.5. Why Trade Unions are not strong in India
8.6. Responsibilities of a Trade Union Act & Penalties for offence of Trade
Union
8.7. Characteristics of a Trade Union
8.8. Case Study
8.9. Check Your Progress
8.10. Notes
8.11. Summary
8.12. Keywords
8.13. Self Assessment Questions
8.14. References

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8.1. OBJECTIVES

After studying this unit, you will be able to

 Understand the Major problems of trade unions
 Explain the future of trade unions and Management in India
 Describe the Characteristics of a trade union
 Bring out the Responsibilities of a trade union Act

8.2. INTRODUCTION

In the 21st Century Trade Unions are under fire due to the following factors :

1. Changing character of labour including skills, knowledge, health and

productivity
2. Nature of work and incentives
3. Social security measures.

The problems have become complex largely due to raising revolutionary

expectations of labour plus advancement in technology which changed the nature of
work, work agreements and even the nature of negotiations between management and
trade unions.

8.3. MAJOR PROBLEMS OF TRADE UNIONS:

As a student you should keep in mind that many times governments will adopt
or force the trade unions to adopt some unrealistic but politically advantageous
policies. Sometimes government goals are too ambitious and may not be
implemented. Apart from political interventions, as a student of MBA you should try
to understand the following important problems:

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 1. Uneven growth (industry wise and area wise)
2. Size of the unions sometimes size will be very small since any 7 members can
form a union
3. Multiplicity of unions (due to act itself)
4. Inter-union rivalry
5. Leadership problems
6. Politicization of unions
7. Problem of recognizing the unions
8. Outdated trade union act due to recent change of organization and even labour
itself.

1) Uneven growth of union (industry and area wise):

Over a period of time trade unions have largely grown in industries like
plantations, coal mines, textiles, and chemicals. However, trade unions have largely
grown where manual labour is more. However, mention may be made like textile
workers in Mumbai, plantation in Assam are the places where trade unions have
grown very fast of course, in total 50% of labour there are the members of the trade
unions. One must know the larger the membership the greater will be the problem of
administration.

At the National Level All India Employees Union, All India Port and ____
workers unions are there.

2) Small size union:

In such cases membership will also be less, and the Act itself allows any 7
members can form an association. However, you can observe that small unions have
spring based on the type of employment or professions. Since the government has
divided the society based on caste, and other factors small unions have also come up
based on caste and on professional wise of course so far we don‘t have any serious
problem from gender based association but within 10 years, it will be major issue.
This type of division has also contributed for the reduction in membership. Therefore,

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the government must realize this danger and do something to remove these kinds of
problems.

What are the dangers due to small size unions?

1. Unions are suffering from financial problems and find it difficult to engage the
services of experts.
2. Small size reduced the bargaining power of trade unions.
3. Small size unions are not setting any political support.
4. Privatization also contributed to eliminate trade unions.

3. Financial weakness:

Since the membership is small, the contribution made by them is very less.
Basically the concept ―my union‖ has not come for workers. Rivalry and the role of
politicians have also contributed to this problem.

Members will generally contribute only when problems or disputes come and
as such there is no commitment towards the union. Further, unhealthy competition and
even not collecting the contribution from some members added to the problem of
finance. Secondly, whatever the contribution that is made by the trade union, 40 to
50% will be used only to run the office and naturally financial resources are not there.
Lastly as per law contribution is not even Rupee one per annum under law.

Remedies for Financial Weakness:

1. Union officials should also contribute

2. Integrity and honesty of the members are a must
3. National commission suggested that minimum subscription should be rupee
one per month.
4. Deduct the union dues from wages/salaries
5. One solution would be ―one industry one union‖

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4. Multiplicity of Unions and Inter Union Rivalry:

In India for the development of multiple unions our politicians are responsible.
The result is two or more unions. It is unfortunate that casteism, regionalism also
figures in our trade unions. Thereby

1. Old times association

2. Retired employees association
3. Higher income employees association
4. Law income employees association

And in the caste sub-groups are also available. All these factors contributed to
the growth of multi-unions with the result each union is having small membership and
that in turn suffer from financial position.

On the basis of trades, multiple unions created the problems like inter-
professional rivalry inter union rivalry further in some trade unions, collective
bargaining and non-co operation also contributed to develop more small unions.

5. Inter-Union Rivalry:

For ex: In India, Indian Railways have two parallel unions competing with each
other in textile industry three unions are there. In coal mining, iron and steel two
unions are there

Rival unions obstruct the working of another union on the political side; still
India follows ―Divide and Rule‖ principle. Management also contributes by
encouraging one group by another group that supports their cause.

How to reduce inter-unions rivalry:

Indian labour conference standing committee in 1966 recommended the following:

1. One provision must be made in the trade union act, 1926, stating that when
more than one set of person‘s claims to be the office bearers of the some union

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 then the union that is affiliated to any central organization, then first should try
to settle the differences within its affiliates first.
2. In case it is failed, then election should take place.
3. Code of conduct 1958 central labour organization has developed this code in
1958. This code of conduct suggested the following basic principles.
a) Every employee in industry or unit shall have t he freedom and right to
form a union of his choice.
b) There shall be no duel membership of unions.
c) There must be democratic functioning of trade unions.
d) There should be regular election for executive bodies.
e) Casteism, communalism, and provincialism shall not be practiced.
f) There shall be nonviolence, coercion, into mediation in inter union dealings.

5. Leadership issue:

Perhaps in the history of India only Mahatma Gandhi monopolized the

organizations. After independence all political parties have tried to dominate one
union or the other to gather votes for their respective parties. Thereby Indian Trade
Unions do not have their own leaders worth the name. Further, as the history goes v.v.
giri made an attempt to understand the problem of trade unions.

As a student you should know what made these politicians (also called outsiders)
to come over trade unions: The reasons are:

1. Illiteracy of Indian labour made them to accept outsides as their leaders.

2. Outsiders have started financing them by mobilizing funds since workers were
unable to mobilize their own resources. The reasons are largely, large families
and low wages / salaries.
3. In the meanwhile workers have started thinking an demonstrating effects, and
with the result expenditure is more than the income.
4. Higher cost of living also forced labour not to become contributors to trade
unions finances.

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 5. For want to resources workers accepted the politicians as whole time office
bearers. This has given room for politicians to maximize their preserve first and
to maximize their wealth. In fact in many cases politicians made workers to go
on strike against another party or management and thus failed to pay attention
to the workers.

National Labour Commission – Recommendations:

1. Ex employees should be treated as outsiders.

2. Limit the proportion of outsiders in the union executive functions.
3. Intensify workers education on the role that they have to play.

The same commission has also said that percentage of membership for outsiders
should be as follows:

1. Membership below 1000 Number of outsiders should not be more

than 10%

2. Membership between 1000 to 10000 20%

3. Above 10,000 30%
4. Permissible limit for industry
Wise unions should be 30%

Further, establish a convention that no union office bearers will currently hold an
office in a political party.

How to build leadership among workers:

1. Developing the leaders within an organization

2. Initiative should come from workers
3. Vigorous workers education should be made

6. Union and Politics:

In India one of the biggest problems is political parties and their influence.

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 Prof. [Link] in his book entitled “Trade Unions and politicians; in

India (1966) said:

―Even the most casual observer of the Indian Trade Union scene, say that much
of the behavior whether it is militant or passive behavior can be explained in political
terms‖.

May be the reason is largely legacy and right from the beginning it was
controlled either by congress people are communists in India. Even the decision of
trade union depends on the philosophy of a particular political party rather than on
economic welfare or workers interest.

Therefore, the only way to reduce the influence of politicians in trade union in
workers education about their rights, responsibilities and duties. This should create
competent and well disciplined trade union leaders.

7. Another problem is MNCs their labour practices, codes and practices.

Therefore many times one has to follow international standards and practices.

8.4. FUTURE OF TRADE UNIONS MANAGEMENT IN INDIA:

Dear student you know that in India trade unions are largely controlled by our
politicians are therefore outside leadership is not only more, but also in their decisions
it will be biased towards their political party ideologies with the result many times our
economic policies will be against the interest of economic welfare of the workers.
Even the basic structure of our unions is not that sound as that of British Trade Unions
of the present day. At present, the role, the functions, activities are largely as per the
constitution and affinity to a particular political party. At present the responsibility
and accountability of Indian Trade Unions can be analyzed by the following chart.

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 ABC Trade Union Congress

Number of Delegates Elected by

Individual affiliating once in three years

General Council Executive Council

Delegates elected by the Members elected by the

individual affiliates and the congress. Meets once in 2
Executive council meet weeks
twice a year

Local Unions Branch/Enterprise/Plant/Unions

Departments / Sections

With rapid advances in technology and growing complexity and uncertainty

due to global competitive pressures, trade union will need to adopt and develop
appropriate structures and divisions/ departments and must undertake various
activities. As the world and labour relations are going towards democratic life, trade
union should become democratic. This naturally will change the structure in future.
Further knowledge workers expect a new forum for them and so new trade union
structure may be required perhaps they will go for a cyber union.

Cyber Union Structure:

In future it is possible and one can be certain for another one decade there will
be an impact of technology on over trade unions too. There will be greater internet and
intranet connections since globalization will further advance web and web cameras
will also help to have greater contacts and connections with labour community around
the world. It is possible that Indian Trade Unions may go even beyond the principle
adopted in ILO and its conventions word membership may emerge due to the
emergence of multinational corporations.
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E-Unions:

In future since managements and workers as partners is progress rather than

management and labour, trade unions should try to avoid conflicts. It is expected that
highly educated people will become labour and therefore blindly one cannot do
whatever they wish to do. Hence E-Unions will come and will try to provide not only
customized services but also will help to develop a mechanism called collective
bargaining. They might deliver services on the web as well as at the workplace using
digital technology membership may be divided based on categories like E-
Membership, recognized members and even professional wise-naturally decentralized
members will be available.

Legal Problems:

Since next generation will largely concentrate on technology which includes,

web, face book, computers and other areas, there is a possibility of disturbances in
trade unions. It is certain surveillance and personal privacy will be lost. To meet both
legal and technology problems cyber laws and other legislations will emerge and enter
into trade union systems.

Future challenges for Trade Unions:

1. In further though manual labour may reduce in many areas, yet while collard
workers will form their own trade unions.
2. Though manual labour or manual jobs reduce due to technology, yet more
conflicts will come even in technology.
3. More rationalization more retrenchments, more closures and displacement
workers will take place naturally, more conflicts will come. This will become a
major challenge.
4. There is a likely hood to marginalizing of trade unions movement and there
will be a loss of empowerment for workers.
5. Probably exclusive trade unions will crop up in the near future.
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 6. Night shifts, and flexible working hours or flexy working culture will come and
this will be a big challenge.
7. There may not be any affinity to any body and this will have ethical problems.

Naturally, it is likely that some kind of recession will be there in the trade
union membership will be reduced because of in urban areas there is a culture that
nobody wants to know anybody. The assertion of capitalism may pose a danger to
trade unions.

There is a possibility that employees will definitely wish to keep their working
place free from trade unions. Yet there is a possibility that new employees like women
workforce and white collard job people may not wish to have the same loyalty to the
trade union. It is because in urban area no one has any free time to think about others.

Labour management relations may be good on the one side but on the other
side it may be extremely difficult.

Therefore, at one extreme it will be like this in all probability.

At one extreme:
1. Trade unions will become ―second line‖ managements.
2. Management‘s prerogatives will be completely go.
3. The new generation workers will be more conscious over their privileges and
rights rather than their du ties and obligations towards the organization.
4. Trade unions may fail t o convince the workers problems since private
companies may close down the factories in a conflict arises.
5. There is likely greater violence in the working place due to changes in attitudes
and urban stress.
6. Ethics and ethical values may disappear both on the part of trade unions and
management.
7. Collective bargaining will become a pressure group.
8. Workers may have to work under pressure and tension.
9. Only fear and force may restore discipline yet democratic methods will be
there.
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8.5. WHY TRADE UNIONS ARE NOT STRONG IN INDIA:

1. Basically a trade union in India is a divided house. Over a period of time politicians
have virtually taken over the management of trade unions and have been used for
political ends. They never kept workers interest in their minds.

Even today if salaries any other privileges are to come for parliamentarians (i.e
MPS or MLAs) they will first join and pass the legislation. But if same problem
comes for workers they will not take that interest.

So far barring a few exceptions, no politician ever raised questions about

labour and their conditions. Each politician say that Rs. 32/- is enough per day, but
nobody speaks how much money is needed for a politician per day. Many times they
get salary even without work. Therefore the first reason why trade unions are not
strong is the control by politicians.

2. Second, the law itself allows starting or forming any number of trade unions with
the result multiplicity of unions is there. Based on this, they fight with each other on
their own ideological reasons or fights with each other for supremacy. This is the
second reason why trade unions are not strong.

3. Thirdly contributions by members have been fixed as 0.25 paise per annum. Now it
is Rupee one per annum. This is unrealistic in nature. Though some people argue that
it can be deduced from salary, yet many may not be willing to salaries may not be paid
regularly. Even here, many people may get daily wages also. Therefore finance is
another reason.

4. Fourth, there are many unrecognized and informal trade unions. Therefore one
cannot have complete control over them.

5. Under section 14(A) Industrial Dispute Act (Amendment) Bill 1988 incorporated in
Chapter II A titled ―Realization of Subscription‖ says

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 ―Every member of a registered trade union of workmen shall authorize his
employer in writing and in a prescribed manner, to deduct monthly subscription
payable by him, from his wages and remit the same to the trade union‖.

Such authorization shall be valid for a period of 3 years. However, no such

member shall authorize his employer to deduct the monthly subscription in relation to
more than one registered trade union‖. But this provision is not completely deserved.

6. Every trade union leader as well as workers must acquire through knowledge about
their duties, rights, responsibilities, accountability unfortunately many trade union
leaders as well as workers and office bears do not know many things about trade
union act.

7. Managements should become realistic in nature and they should not discriminate
from one union to another union to take advantage of their weaknesses.

7. Political Fund (Section 16)

Trade unions are allowed to set up a separate fund for its political end and this
section says holding of political meetings of any kind and for distributing political
literature is allowed. This clause permits trade unions to spend money for its political
objectives unfortunately this fund helps or encourages the growth of puppet legislators
and allows them to become corrupt. Here the danger is trade unions can misuse funds.
This also contributes for the weakness of string trade union movement in India.

8.6. RESPONSIBILITIES OF A TRADE UNION ACT & PENALTIES FOR

OFFENCE OF TRADE UNION (5.15)

Once the trade union is registered it is an obligation to

1. To give a notice of change in the address of its registered office and establish.
2. A separate fund for political purposes.

For what purpose registered union can spend money:

1. To pay salaries, allowances, and expenses of the office bearers of a trade union.
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 2. To pay the expenses for the administration of the trade union, including
auditing of accounts.
3. The prosecution or defense of any legal proceedings for which any member is a
party.
4. To conduct of trade disputes on behalf of the trade union or any member
thereof. Here trade dispute means

Section 2(g) of the trade union act:

―Trade dispute‖ means any dispute between employees and workmen, or

between workmen and workmen, or between employers and employees which is
connected with the employment or non-payment, or the terms of employment or the
conditions of labour of any person‖

―Workmen‖ means all persons employed in trade or industry whether or not in

the employment of the employees with whom the ―trade dispute‖ arises. For trade and
industry see unit 2 of these lessons.

5. The conduct of trade disputes on behalf of the trade unions or any member
thereof.
6. Allowances to members or their dependents on account of death, old age,
sickness, accidents of employment of such members.
7. The issue or the undertaking of liability under policies of assurance for the
lives of members or under policies insuring members against sickness, accident
or employment.
8. Provision for a) Educational
b) Social or Religious benefits for members including the
expenses incurred on funeral or religious ceremonies of the
deceased members.
9. The upkeep of periodical published for the purpose of discussing questions
affecting employees or workmen.

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Penalties for offence of trade union:

Under section 28, Trade unions have to submit the returns or statements and if
they fail they have to pay the fine not exceeding Rupees five. However, the aggregate
fine shall not go beyond Rs. 50/- for any false entity or for any omission it is Rs. 500/-
.

8.7. CHARACTERISTICS OF A TRADE UNION:

The Characteristics of a Trade Union once it is registered are given below:
1. It becomes a body corporate and acquires the status of a legal entity.
2. It will acquire a perpetual succession and a common seal.
3. It will acquire the power to hold both movable and immovable properties.
4. It will have the power to contract.

8.8. CASE STUDY:

Example of a case study:

This case has been reproduced here from the author Dr. Monal Arora –
Industrial Relations Excel Books 2005, p. 65.

In one public sector undertaking with a chequered past a line manager was
appointed as the chief of personnel within a year after taking up the assignment, he
had to sign a lease agreement with the workers union. The union at that time was
dominated by non-technical staff. The union‘s charter of demands favored the
interests of the dominant members groups. It asked for a significant revision in
gardeners pay, but was not equally vocal in pressing for the increase in the pay scales
of the workers in certain technical grades. The management conceded these demands
because the union cooperated with them in keeping t he burden of the pay revisions
well within the guidelines of Bureau of public Enterprises (BPE).

Once the agreement was signed and communicated to the employees/ members
by the management and the union respectively, there was commotion among the
technical employees. They walked out of the union and formed a separate technical
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staff union. They marched round the company premises holding the placards which
read. ―Here gross cutters get more than the gas cutters. In the engineering assembly
unit till the pay revision occurred, welding was a highly rated job But not any longer.

Questions:

1. Was the action of Union management justified and why?

2. Forming a separate union was both right and wrong. Explain?
3. What are the legal implications of forming a separate union?
4. If you were in place of management, what factors would you like to consider
before finalizing the wages?

8.9. CHECK YOUR PROGRESS:

1) what is the full form of BPE
a) Bureau of public Enterprises b) Bureau of private Enterprises
b) Bureau of partner Enterprises d) Bureau of privatization Enterprises
2) How to develop Leadership among workers
a) Developing the leaders within an organization
b) Initiative should come from workers
c) Vigorous workers education should be made
d) Collective Bargaining

Answers to Check Your Progress: a) 1, b) a,b,c

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8.10. NOTES

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8.11. KEYWORDS:
Revolutionary expectations of worker
Recognition of Trade Unions
Multiplicity of Unions
Political ideologies
Divided house
Unrecognized union
Power to enter into contract
Corporate body and legal entity
8.12. SUMMARY:
The problem of trade union have become very complex due to the
revolutionary expectations of employees, changing nature of working procedure,
increasing occupational hazards and technology. Even the negotiations character
will change.
In future due to technology, working culture, cyber crimes, E-unions, labour
management relations will create a new method for trade unions. There may not be
any affinity to anyone. Union just like no loyalty for any one job or company for
the employees. The major problems of trade unions are: Uneven growth of unions,
Size of unions, Multiplicity of unions, Inter-union rivalry, Leadership issues,
Politicization of unions, Problems of recognition, outdated trade union practices
financial weakness etc.
8.13. SELF ASSESSMENT QUESTIONS :
1. What are the major problems of trade unions
2. Briefly identify the problems or situations that may arise to understand the
future of Indian trade unions.
3. Explain why Indian trade unions are not strong
4. Identify the major responsibilities of a trade union.
5. What are the major characteristics of a trade union?
6. Take a case study given in these lessons and answer the same.
7. Write a few guidelines that you should follow.

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8.14. REFERENCES:
1. National commission of labour 1 and 2
2. Sarma industrial relations
3. Arun monappa industrial relations Tata Mcgraw Hill – New Delhi – 1985.
4. C.S. Venkata Ratman – Industrial Relations – Oxford University Press – 2010.
5. National commission on labour 1 and 2
6. S.C. Srivastava – Industrial Relations Vikas Publishing House – 2007.
7. Monal Arora – Industrial Relations Excel Books- 2005.
8. Venkata Ratnam – Industrial Relations Oxford University Press – 2010.

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MODULE – 3 : INDUSTRIAL DISPUTES
UNIT – 9 INTRODUCTION TO INDUSTRIAL DISPUTES

STRUCTURE:
9.0. Objectives
9.1. Introduction
9.2. Industrial relations concept
9.3. Scope of Industrial relations
9.5. Industrial conflicts
9.6. Essential features of Industrial disputes.
9.7. Kinds of Industrial Disputes
9.8. Industrial unrest
9.9. Impact of industrial disputes
9.10. Industrial peace
9.11. Check Your Progress
9.12. Notes
9.13. Summary
9.14. Key words
9.15. Self-assessment questions
9.16. Reference

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9.0. OBJECTIVES:
After studying this unit, you are able to understand
 The industrial relations concept
 The nature of industrial concepts
 The causes of industrial concept
 Impact of industrial disputes
 Significance of industrial peace

9.1. INTRODUCTION:
Industrial relations is a dynamic socio-economic process. It is a ―designation of a
whole field of relationship that exists because of the necessary collaboration of men
and women in the employment processes of industry‖. It is not the cause but an effect
of social, political and economic forces.
It has two main aspects, they are co-operation and conflict. Thus, the relationship
starting with cooperation soon changes into conflict and after its resolution again
changes in to cooperation. This change of process becomes a continuous feature in
industrial system. This process certainly involves conflict and also dispute settlement
solving procedure. So, in this respect it is better to study industrial disputes, its causes
and settlement machinery involved in it.

9.2. INDUSTRIAL RELATIONS-CONCEPT:

Of all the human resource management problem that have emerged on the
corporate forefront in recent times, the problem of industrial relations is one that has
achieved more prominence when compare to other aspects. The increased popularity
of this vital aspect of human resources management is due to one single factor that
who are the base of industry- a class of people that makes things to happen. Their
inaction or violent action very often makes lot of changes in the industrial sector.
Certainly, the strikes and gheraos by the workforce and the indifferent and inhuman
attitude of employers relating to lockout and layoff, in dealing with various labour
problems is a matter of great concern. In fact, the very relationship between labour

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and management itself creates a host of opportunities; they bring parties to conflict.
So, coming out of jungle of definitions, here industrial relations are viewed as the
―process by which people and their organization interact at the place of work to
establish the terms and conditions of employment.
The term ―industrial relations‖ commonly denotes ―employee- employer
relations‖, in both organized and unorganized sectors of the economy. Industrial
relations (also known as labour-management relations or labour relations) will be
treated here as the study of employee-employer relationship in all respects.
A few prime essential features relating to industrial relations were as follows:
a) Industrial relations do not emerge in vacuum they are born out of
―employment relationship‖ in an industrial settlement. Without the existence of
two parties, i.e., labour and management, this relationship cannot exist. It is
the industry which provides the environment for industrial relations that
includes cordial cooperation and a peaceful work atmosphere.
b) Industrial relations are characterized by both conflict and co-operation.
Most of these conflicts were solved by adopting the proper use of various
settlement authorities.
c) As the labour and management do not operate in isolation but are part of
large system, so the study of industrial relations also includes vital
environmental issues like technology of the workplace, country‘s socio-
economic and political environment, nation‘s labour policy, attitude of trade
unions, workers and employers, industrial unrest and industrial harmony.
d) The study of Industrial relations includes, the laws, rules, regulations,
agreements, settlement authorities, adjudicating authorities, awards of courts
and tribunals , customs and traditions, as well as policy framework laid down
by the government for eliciting co-operation between labour and management.

9.3. SCOPE OF INDUSTRIAL RELATIONS:

An industry is a social world in miniature where an association of variety of people
like employers, executives and supervisory personnel and workmen interact and create

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a relationship known as industrial relations. The industrial relations certainly include
the fiduciary relationship between employer and employee.
The main aspects of industrial relations are:
i) Promotion and development of healthy labour-management relations;
ii) Maintenance of industrial harmony and avoidance of industrial
misunderstanding;
and
iii) Development of industrial democracy.
We will discuss them in detail, as follows,
i) Development of healthy labour-management relations:
The promotion of healthy labour management relations requires some of the following
aspects,
a) The existence of strong, well-organized, democratic and responsible trade
unions and off course a well organized association of employers. These
organizations enhance the job security of employees and also help in increased
workers participation in management. This will definitely affects the terms and
conditions of employment.
b) The spirit of collective bargaining and willingness to take recourse to voluntary
arbitration. The collective bargaining recognizes equality of status between the
two conflicting groups such as employers and employees and prepares the
ground in an atmosphere of fiduciary relationship, this helps for discussions,
consultations and negotiations on matters of common interest of both industry
and labour.
c) Welfare measures, whether statutory or non- statutory, provided by the state,
trade
unions, and employers create, maintain and improve labour-management
relations and thereby contribute towards maintenance of industrial peace.

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ii) Maintenance of industrial peace:
Industrial harmony pre-requires the absence of industrial strife which is essential
for increased productivity and harmonious labour-management relations.
The industrial peace can be largely nurtured through the following means:

a) The Machinery should be set up for the prevention as well as settlement of

industrial conflicts. It can be brought about by enacting of various legislative
and administrative enactments like Trade Unions Acts, Industrial Disputes Act,
Industrial Employment (standing industrial orders) Act, and also the creation of
works committees and joint management councils, and appointment of
conciliation officer and boards of conciliation; establishment of labour courts,
industrial tribunals, national tribunals, courts of enquiry; and provisions for
voluntary arbitration.
b) The government should have the power to refer disputes and adjudication when
the situation tends to get out of control and industry is faced with economic
closure due to continued stoppage of production on account of long
strikes/lockouts; or when it is in the public interest to do so during the period of
emergency, or when there is a fear of foreign attack; or when production
needs to be carried on without interruption.
c) The government enjoys the power to maintain the status quo: this power is
exercised when the government, after referring the dispute to arbitration finds
the either party is continuing the strike or lockout and that strike or lockout is
likely to jeopardize, the life of the community and to create industrial unrest.
d) The provision of the bipartite and tripartite forums for the settlement of
disputes. These forums act on the basis of the code of discipline in industry,
the code of conduct, the code of efficiency and welfare, model standing orders,
grievance procedure and the granting voluntary recognition of trade unions by
the employer.

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9.4. INDUSTRIAL CONFLICTS:
Genesis of industrial conflicts:
The modern civilization has not been an unmixed blessing. It has created a huge
gap between management and labour. The power concentrated in the hands of a few
entrepreneurs, while the majority has been relegated to an insignificant position of
mere wage earners. The workers have now come to realize that most of their demands
can be satisfied only if they resort to continuous and collective action; while
employers are aware of the fact that they can yield to these demands. This denial to
meet their genuine demands. This in future turned in to dissatisfaction of the workers
to their distress, and this in turn leads to violent activities on their part. In
consequence, it affects the production and harmed both the workers and the
employers. This once again became a major cause of industrial unrest.
It has been rightly pointed out that the ―profit maximization may also require
authoritarian, administration of the enterprise, disciplined and thorough supervision
of workers, maintenance of strict discipline and complete obedience of the rules of
the establishment. On the other side , workers may demand the share in the
management of the enterprise, a voice in the formulation and announcements of the
standing orders, and scope for self-expression and respect for the dignity of their
individually. Hence, it is not only the sharing of the fruits of industry and generate
conflicts, the very fact of the existence of the wide cleft of authority between the
‗hand that produce‘ and ‗hands that control the means of production‘ has become a
major source of conflict between management and labour.

Industrial conflicts or disputes:

An industrial conflict is rather a general concept. When it acquires specific
dimensions, it becomes an industrial dispute. The various terms, such as ―industrial
disputes or ―trade dispute‖ are used in different countries to identify the differences,
misunderstanding and conflicts between the employers and the employees.

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9.5. ESSENTIAL FEATURES OF INDUSTRIAL DISPUTES:
The concept of industrial dispute can be best studied if it is looked at from a
legalistic angle rather than a general perspective.
According to the Industrial Disputes Act, 1947, Section 2(k); ―Industrial Dispute
means, any dispute or differences 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‖.
For a dispute to become an industrial dispute, it should satisfy the following
essentials:
i) There must be a dispute or difference (a) between employers (such as wage-
welfare where labour is scarce); (b) between employers and workmen (such
as demarcation disputes): and (c) between workmen and workmen.
ii) It is connected with the employment or non-employment or the terms of
employment or with the conditions of labour of any person, or it must
pertain to any industrial matter.
iii) 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.

Some of the principles of judging the nature of a dispute were evolved by the
courts as follows.

1) 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.
2) The dispute should invariably be taken by taken up by the industry union or by
an appreciable number of workmen.
3) There must be a concerted and continuous demand by the workers and the
grievance becomes such that it turns from individual complaint into a general
compliant further it leads to an industrial dispute.

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4) The parties to the dispute must have direct and substantial interest in the dispute.
5) 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.

9.6. KINDS OF INDUSTRIAL DISPUTES:

Classification of industrial disputes:
The various kinds of industrial disputes were listed below:
a) Disputes that arise out of deadlocks in the negotiations for a collective
bargaining,
popularly known as interest disputes and
b) Disputes that arise from day-to-day workers grievances or complaints,
popularly
known as grievance disputes.
c) Those arising from acts of interference with the exercise of the right to
organize or acts commonly known as unfair labour practices and
d) 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.

9.7. INDUSTRIAL UNREST:

Nowadays industrial unrest is big menace even in global scenario. Industrial unrest
is growing all over the country at an unprecedented scale on account of
discontentment amongst workers. The demonstrations, ‗dharna‘s‘, strikes, hunger
strikes, sit in strikes, tool-down strikes, pen down strikes, picketing, gherao, go-slow,
processions, ‗work-to-rule‘ etc. have become the order of the day. This need a
disciplined and controlled mechanisms to address it.
The alarming feature of these conflicts is the violence that erupts in some of them.
The most tragic is the situation when workers seize the establishment and
management for days together. Sometimes the unrest amongst the workers.

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A strike may also happen for capturing position in trade union field. Yet another
reason for the workers to go on strike is the lack of efforts on the part of an employer
to satisfy them in regard to their long standing economic demands. This is because the
workers cannot be expected to remain passive when prices rise to such an extent that
their standard of living is adversely affected. And it also leads to utter violation of
Human Rights guaranteed under national and international conventions. For the
protection of the workers‘ rights and providing them their welfare amenities some
enactments has to be passed.

9.8. IMPACT OF INDUSTRIAL DISPUTES:

The consequences of industrial disputes are very far-reaching, for they disturb the
economic, social and political life of a country. And also they made lot of influences
of working conditions of that particular establishment. In their importance, they are
no less than ‗war‘. And it is once again emphasized that the poor victims of industrial
disputes are generally the working class.
Industrial disputes result in a huge wastage of man power and dislocation in the
production work and in some cases production stops and it leads to closure. A strike
in a public utility service like water supply, power and gas supply units, posts and
telegraphs or telephone services, railways or roadways, or any system of public
conservancy or sanitation, defense establishments, hospitals and dispensaries, etc.
Disorganizes the public life and throws the economy out of gear. And consumers are
subjected to untold hardships and it further leads to a chaotic situation in the country.
If the commodity produced by a factory, when workers are on strike is used in other
production operations, then other producers also suffer. When stoppages of work take
place, the short supply of consumer goods results in sky- rocketing prices, and leads to
their non-availability in the open market. Because of this the consumer suffers a lot.
And further in future this also becomes a prime ground of consumer disputes.

The workers are also badly affected in more than one ways. They lose the wages for
the strike period. To meet day-to-day expenses, debts have to be incurred,

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employment is lost and future prospects become a big zero. The disruption in the
family life, personal hardship, mental agonies and tensions develop and persist.
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 organizing counter demonstrations, processions and meetings
of blacklegs creating company unions; protecting plant and machinery and
undertaking publicity and espionage. Apart from these losses, the loss of mental
peace, respect and status in society cannot be computed not in terms of money. All
these things further leads to great unbearable financial losses to the employers and in
consequences of this, some of the employers become bankrupts.

9.9. INDUSTRIAL PEACE:

The responsibility for nurturing a healthy industrial climate lies with the
management, the unions and the government. The political parties, the community and
society should also play a decisive role in improving the existing industrial relations
situation in the country by placing moral emphasis on the partners in industry that it
would be in the interest of all to maintain harmonious relationships; that if there is any
dispute or conflict, it should be settled by mutual negotiation or conciliation or
voluntary arbitration. And all the authorities constituted and appointed under
Industrial Disputes Act, shall strive to minimize the existing industrial disputes and
also think and act about preventing the industrial conflicts between employers and
employees.

Some of the basic causes of industrial conflict can be prevented or at least reduced
to a great extent by effective management and union action, the employee
communication, grievance procedure and speedy, settlement of grievances, joint
consultation at different levels of the plant. In addition to this, proper education and
awareness programs, healthy and stable trade unions and their due recognition as
bargaining agents, sincere observance of the code of discipline, labour management

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association, and revision of wages in the context of the price index level also helps in
controlling this menace. Helpful attitude of supervisors to workers problems,
improvement in working conditions and provision of welfare amenities on a wider
scale, including facilities for transport, education, housing and health services for the
workers and their families- these would all go on a long way in achieving industrial
peace. Even though so many enactments are already passed to give so many facilities
to the working class, but the real intention of the law completely defeated because of
various problem in implementing it. If the implementing authorities are good in
implementing it at proper time and in proper places, the certainly it leads to industrial
harmony.

9.10. CHECK YOUR PROGRESS

1) The main aspects of industrial relations are:
a) Promotion and development of healthy labour-management relations
b) Maintenance of industrial harmony and avoidance of industrial
misunderstanding
c) Development of industrial democracy
d) Employee Regulation
2) Mention the different kinds of industrial Disputes:
a) Interest Disputes b) Grievance Disputes
c) Recognition Disputes d) Unfair Labour Practices

Answers to Check your Progress: 1) a, b, c 2) All the four

9.11. NOTES

……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………
……………………………………………………………………………………

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9.12. SUMMARY:
As a means of resolving disputes, comprehensive legislative measures have been
evolved and guidelines made available to the workers and employers for the
regulation of their relationship. Thus, where a dispute arises or is likely to arise, the
parties are expected to resolve their differences by negotiation. If the dispute is not
resolved, they are, in the second stage, expected to sort out their differences either
through conciliation or voluntary arbitration. Only after this stage, if a solution is not
found, are the parties allowed to resort to direct action. i.e., strike or lockout. But even
here, the State may intervene and refer the dispute to an industrial court/ tribunal for
compulsory arbitration. The award given by the court/industrial tribunal is blinding on
both the parties. After following all these steps meticulously and if the implementing
authority also fair enough in doing their activities, then it certainly leads to industrial
peace.
9.13. KEY WORDS:
1. Industrial relations
2. Industrial conflicts
3. Tribunal
4. Bipartite forum
5. Strike
6. Industrial unrest
7. Industrial peace
8. Industrial Unrest
9. Implementing Authorities

9.14. SELF-ASSESSMENT QUESTIONS

1. Examine the scope of industrial relations.
2. Explain the genesis of industrial disputes.
3. Enumerate the causes of industrial conflicts.
4. Describe the essential features of industrial disputes.
5. Bring out the impacts of industrial conflicts

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6. State the various kinds of industrial disputes.
7. Explain the necessity of maintaining the industrial harmony in the industrial sector.
8. State the main aspects of industrial relations.
9. Examine the role of State in avoiding the industrial unrest.

9.15. REFERENCE
1. [Link], Satish Mamoria, S.V Gankar – Dynamics of Industrial Relations,
14th revised edition (reprint) 2004, Himalaya Publishing House 2004.
2. Avtar Singh, and Harpreet Kaur- Introduction to labour and Industrial law, 3rd
edition 2014, Lexis Nexis 2014.
3. S.C Srivastava- Industrial Relations, 5th edition, Vikas Publishing House.
4. H.L. Kumar – Labour Laws, 5th edition 2008, Universal Law Publishing co. Pvt.
Ltd. 2008.
5. H.L. Kumar- The Industrial Disputes, 2nd edition 2006, Universal Law Publishing
co. Pvt. Ltd. 2006.
6. H.L. Kumar – Labour Management 4th edition 2004, Universal Law Publishing co.
Pvt. Ltd. 2004.

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UNIT – 10 INDUSTRIAL DISPUTES – PREVENTIVE MEASURES

STRUCTURE

10.0. Objectives
10.1. Introduction
10.2. Concept of industrialization
10.3. Development of industrial laws in India
10.4. Genesis of Industrial Disputes Act in India
10.5. Industrial disputes-preventive measures
10.6. Standing orders
10.7. Ethical code and its impact
10.8. Collective Bargaining
10.9. Check Your Progress
10.10. Notes
10.11. Summary
10.12. Key words
10.13. Self-Assessment questions
10.14. References

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10.0. OBJECTIVES:

After studying this unit, you should be able to;

 The meaning and concept of industrialization

 Genesis of Industrial Dispute Act in India
 Preventive measures of Industrial Disputes
 Aspects of collective bargaining
 Ethical code and its impact

10.1. INTRODUCTION:

The Industrial Dispute Act is a benign measure which seeks to pre-empt industrial
tensions, provide the mechanics of dispute resolutions and set up the necessary
infrastructure so that the energies of partners in production may not be dissipated in
counter-productive battles and assurance of industrial justice may create a congenial
climate. And by adopting preventive measures in respect of Industrial disputes, to the
full extent, we may expect maintenance of industrial harmony in industrial sector.

10.2. THE CONCEPT OF INDUSTRIALIZATION:

Industrial revolution ushered in an era of industrialization and with the rapid spread
and quick distribution of science technology, except a very few states, the entire globe
is now engulfed in the process of industrialization, some at the door, some developing,
some developed.

Industrialization has been conceived in western and American economies as

application of capital and scientific techniques to economic activity. The concrete
shape of industrialization in India has been given by five year plans conscience to it
has been provided by the Constitution. Through planned economic development,
contours of the economy also of the society are getting altered; the old structure is
gradually pulled down. The whole economy is being followed in a purposeful manner.
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 An analysis of the constitutional provisions on Industrialization reveals:
[a] positive directions programme of lifting rural economy and promoting economic
interests of weaker masses are in Articles 43 and 48 ;
[b] The constitution has left open the concrete programme and shape of
industrialization
in other sectors and areas;
[c] The course of Industrialization has however been channelized by laying down
purposes, policies and directives for,
[1] Promoting mass welfare [Art.38]
[2] Securing a just social order [Art.39]
[3] Dispersal, ownership and control of community‘s resources for public good
[Art.39]
[4] Avoiding concentration of wealth and means of production [Art.39]
[5] Securing guarantees for work, wages, working conditions, social security, health,
standard of living etc. [Arts.39, 41 to 43, 45 and 47]
[6] Protection of people against economic exploitation and social injustices [Arts 39
[e],[f], and 46]

10.3. DEVELOPMENT OF INDUSTRIAL LAWS IN INDIA:

The jurisprudence of industrialization has demonstrated vital role of labour laws
as an instrument of social justice. Amongst laws which are vital to the nation‘s life,
which manifest nation‘s spirit, which bestow revolutionary progressive values to
jurisprudence and lift it from conservative to progressive strata, industrial law has
acquired a place of pride. It is estimated that nearly one-sixth of litigation in the
Supreme Court pertains to industrial law matters and a substantial portion of
legislative activity at Centre and in states covers subjects of industry and labour.
The study of industrial law is, therefore, a very significant part of the study of
modern jurisprudence. Sociological jurisprudence and micro-sociology of law have
become veritable grounds for legal research and studies in management by objectives.

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It is not merely a study of abstract rules of law but it is a study of law in its interaction
on sociology, economics and political science.
Though labour laws are traceable to ancient India, we are here concerned with the
growth and development of modern labour laws as a part of the present system of
jurisprudence. Though the rise of modern labour legislation dates back to ‗thirties of
the last century, it is only after independence that the labour laws have become real
instruments of social action. The history of growth of modern labour legislation may
be divided into the following periods;
1. The beginnings of modern labour laws [1830-1918]
2. Labour legislation between the two World Wars i.e. 1919-1942
3. Labour legislation between 1942-1947.
4. Post-Impendence labour legislation between 1947-1975.
5. Post-Emergency legislation from 1975 onwards.

10.4. GENESIS OF INDUSTRIAL DISPUTES ACT IN INDIA:

The Industrial Disputes Act bill was introduced by the Government of India in the
legislative Assembly on the 28th October 1946. After the Select committee‘s report on
February 1947, with some amendments, it was passed in March 1947 and became the
law from 1st April 1947 repealing the Trade Disputes Act, 1929.
While retaining most of the provisions of the earlier law, this Act introduced two new
institutions for the prevention and settlement of industrial disputes; works committees
consisting of representatives of employers and workers; and machinery for industrial
adjudication.
A reference to an industrial tribunal under this Act lies where both parties to any
industrial dispute apply for such reference, and also where the appropriate government
considers it expedient to do so.
An award of a tribunal has normally to be enforced by the Government and is
binding on parties to the dispute for such periods as may be specified, up to a
maximum of one year. The Act also seeks to give a new orientation to the entire
conciliation machinery.

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 Another important feature of the Act is the prohibition of strikes and lockouts
during the pendency of conciliation and adjudication proceedings, of settlements
reached in the course of conciliation proceedings and of awards of industrial tribunals
declared binding by the appropriate Government.
The objectives of industrial relations and industrial disputes legislation, may be
outlined as under;
[a] Industrial Peace; For prosperity industry, it is necessary that there be a continuous
and growing production which is only possible if [i] there are no interruptions and
stoppages in production i.e. absence of disputes, and [ii] if the various agencies of
production are satisfied and are in a harmonious bent to work.
In other words industrial peace is very necessary for the vitality of industry.
[b] Economic Justice; All interruptions in production arising out of industrial disputes
are really caused by the dissatisfaction of labour with their existing economic
condition. The history of labour struggle is nothing but a continuous demand for fair
return to labour expressed in varied forms e.g. [i] increase in wages, [ii] resistance to
decrease in wages, [iii] grant of allowances and benefits etc.

10.5. INDUSTRIAL DISPUTES-PREVENTIVE MEASURES:

There are so many methods which certainly help to prevent industrial disputes.
The following factors are deemed as very important in dealing with this subject, they
are:

Tripartite and Bipartite bodies:

Tripartite bodies—Industrial relations in India have been shaped largely by
principles policies evolved through tripartite consultative machinery at the industry
national levels. The aim of the consultative machinery is ‗to bring the parties together
for mutual settlement of differences in a spirit of co-operation and goodwill.‘
A large number of tripartite bodies have been set up by the government to provide
forum of discussion and consultation on various labour-related issues. Among these
bodies, a few notable ones are;

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[1] The Indian Labour Conference [I.L.C.] [2] The standing Labour Committee
[S.L.C.] [3] The committee on conventions [4] The Industrial committee, and [5]
Other bodies of tripartite nature deals with various aspects of labour problems.
[1&2] Indian Labour Conference and Standing Labour Committee;
Both I.L.C. and S.L.C .are two important constituents‘ tripartite bodies. They play a
vital role in shaping, the industrial relations system of the country.
A brief account of these bodies is discussed here—
The objects of the Indian Labour Conference [I.L.C.] are;
[a] To promote uniformity in labour legislation;
b] To lay down a procedure for the settlement of industrial disputes; and
[c] To discuss all matters of all-India importance as between employers and
employees.

The function of the ILC is to ‗advice the government of India on any matter
referred to it for advice , taking into account suggestions made by the provincial
government, the states and representatives of the organizations of workers and
employers.‘
The standing labour committee‘s [S.L.C.] main function is to ‗consider and
examine such questions as may be referred to it by the plenary conference or the
central government, and to render advice taking into account the suggestions made by
various governments, workers and employers.‘
The rule and procedures, which characterize the Indian tripartite consultative
machinery, are largely in tune with recommendations of the ILO committee on
consultation and co-operation. In this connection, the following guidelines have been
suggested;
[1] Use of flexible procedures;
[2] Calling a meeting only when necessary with adequate notice of the meeting and
the
agenda;
[3] Reference of certain items to working parties, if necessary;

159
[4] Dispensing with voting procedures in arriving at conclusions to facilitate
consultations;
[5] Maintaining records of discussions in detail and circulating the conclusions
reached to
all participants;
[6] Documentation of references; and
[7] Provision of an effective secretariat and a small representative steering grant in
case of more formal consultative machinery.

Bipartite bodies;
The bipartite consultative machinery comprises two important constituents, viz.,
the works committees and the joint management councils. These are purely
consultative, and not negotiating bodies. This consultative joint machinery –with
equal representation of the employers and workers-has been set up exclusively for
dealing with disputes affecting plant or industry.
[a] Works committee ;
These committees have been regarded as the most effective social institution of
industrial democracy and as a statutory body, established within the industrial units
with representatives of the management and workmen, for preventing, and settling
industrial disputes at the unit level. The works committee can be formed by any
enterprise, employing 100 or more workers. Its objectives are;
[1] To remove the causes of friction in the day-to-day work situation by providing an
effective grievance-resolving machinery;
[2] To promote measures securing amity and good relationship;
[3] To serve as a useful adjunct in establishing continuing bargaining relationship; and
[4] To strengthen the spirit of voluntary settlement, rendering recourse to conciliation,
arbitration and adjudication rather infrequent; for these are achieved by commenting
upon matters of concern or endeavor to compose any material difference of opinion in
respect of such matters.

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[b] Joint management council;
These committees give labour a greater sense of participation and infuse a spirit
of co-operation between the two parties without encroaching upon each other‘s sphere
of influence, rights and prerogatives. They establish a channel of close mutual
interaction between labour and management which, by keeping tension at a low level,
generates a co-operative atmosphere for negotiation and settlement.
These committees also aim at making the will of the employees effective in the
management, ensure the operation of the private-owned concern in conformity with
national interests and provide for a popular agency for supervising the management of
nationalized undertakings. In brief, such committees try to promote industrial
goodwill and harmonious relations through better understanding of employees by
management and of management by workers.
To accomplish this goal, the works committees are entrusted with a number of
functions which are of benefit to managements as well as employees.
Composition of the works committee;
A works committee consists of representatives of employer and workmen engaged
in the establishment. The number of representatives of workmen shall not be less than
the number of representatives of the employer.
Officers of the committee and their terms of office;
The committee shall have among its office-bearers a chairman, a vice-chairman,
secretary and a joint secretary. The secretary and joint secretary shall be elected every
year. The chairman shall be nominated by the employer; and the vice-chairman shall
be elected by the members on the committee representing the workers from amongst
themselves. In the event of equality of votes, the matter shall be decided by the draw
of a lot. The committee shall elect one secretary and one joint secretary, each one
representing either the employer or the workers.
The term of office of the representatives of the committee shall be two years, except
for a member chosen for a filling a casual vacancy. A member chosen to fill a casual
vacancy shall hold office only for the unexpired term of his predecessor. A member

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who, without the permission of the committee, fails to attend three consecutive
meetings of the committee shall forfeit his membership.
The committee may meet as often as necessary not less than once in three months.
At its first meeting, the committee shall regulate its own procedure. It shall ordinarily
meet during the working hours of the establishments and the representatives of
workers shall be deemed to be on duty while attending the meeting.

Functions of the works committee;

According to section 3 [1] [2] of the Industrial Disputes Act, the works committees
‗promote measures for securing and preserving amity and good relations between the
employer and the workmen; and to that end, comment upon matters of their common
interest or concern endeavor to compose any material difference of opinion in respect
of such matters.‘
These committees deal with day-to-day questions of interest to both the
management and the employees. These questions cover a wide range, bear upon the
daily life of the workers, and usually include all matters relating to production and
employment. Until these questions are deal with satisfactorily at the initial stages, they
may lead to disputes. They provide opportunities to both the parties to discuss matters,
and therefore they serve as an important machinery for both for the prevention of
disputes. And at the same time committee emphasis on settlement of disputes in any
industrial sector.

10.6. STANDING ORDERS:

The prerequisite for the development and maintenance of a healthy relationship
between employers and wage-earners is the existence of satisfactory employment and
working conditions. In this context, standing orders play a significant role. They refer
to the rules and regulations which govern the conditions of employment of workers.
They specify the duties and responsibilities on the part of both employer and
employees. They make both conscious of their own limitations, on the one hand,
employers have to follow the specified rules and procedures laid down regarding

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working hours, pay days, holidays, grant of leave to employees, temporary stoppages
of work, termination of employment, suspension or dismissal in certain condition; on
the other hand, they require that employees should adhere to the rules and regulations
mentioned in the Standing Orders and assist each other in creating conditions which
are favorable to the attainment of industrial harmony. These orders regulate the
conditions of employment, discharge, grievances, misconduct, disciplinary action,
etc., of the workers employed in industrial undertakings. These issues are potential
problems in industrial relations. Unsolved grievances can become industrial disputes
and disciplinary action in the wake of disciplinary proceedings against misconduct
may lead to industrial unrest.

Evolution of Standing orders:

Prior to the passing of the Industrial Employment [Standing Orders] Act in 1946,
very few industries had written terms of employment for their workers and therefore,
there was lack of standardized conditions of employment in factories.
Since the standing orders regulate the condition of employment from the stage of
entry to the stage of exit of employees, they form the regulative pattern for industrial
relations is so far as managements role in the administration of standing orders is
applicable to individuals and groups in industrial establishments. As the Standing
orders lay down the do‘s and don‘ts‘, they act as a code of conduct for employees
during their working life within an organization. If it is strictly adhered by both
employer and employee shall in further decreases the number disputes.
The responsibility for the enforcement of standing orders lies with officers,
supervisors others entrusted with this task. Therefore the co-operation and compliance
of employees and officials of unions is essential for the maintenance of cordial
industrial relations between labour and management.
A faulty or inadequate application and administration of the Standing orders may
lead to grievances and misconduct which might adversely affect industrial relations.
Section 2 [g] Industrial Employment [standing orders] Act, 1946 [hereinafter referred
to as IESOA] defines ‗‘Standing Orders‘‘ to mean;

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Rules relating to matters set out in the Schedule.
Thus, the items which have to be covered by the Standing orders in respect of which
the employer has to make a draft for submission to the certifying officers are matters
specified in the schedule.
Contents of the schedule;
[1] Classification of workmen, e.g., whether permanent, temporary, apprentices,
probationers, or badlis.
[2] Manner of intimating to workmen periods and hours of work, holidays, pay-days
and wage rates.
[3] Shift working.
[4] Attendance and late coming.
[5] Conditions of procedure in applying for, and the authority which may grant leave
and holidays.
[6] Requirements to enter premises by certain gates and liability to search.
[7] Closing and re-opening of sections of the industrial establishment, and Temporary
stoppages of work and rights of liabilities of the employer and workmen arising
there from.
[8] Termination of employment, and the notice thereof to be given by employer and
workmen.
[9] Suspension or dismissal for misconduct, and acts or omissions which constitute
misconduct.
[10] Means of redress for workmen against unfair treatment or wrongful exactions by
the employer or his agents or servants.
[11] Any other matter which may be prescribed.
The central government shall, by notification, make Standing orders to provide
for the following matters, namely;
[a] Classification of employees, that is to say; whether permanent, temporary,
apprentice, probationers, badlis.
[b] Conditions of service of employees, including matters relating to the issue of
orders of appointment of employees, procedure to be followed by employees in

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 applying for, and the authority which may grant leave and holidays.
[c] Misconduct of employees, enquiry into such misconduct and punishment there
for.
[d] Superannuation of employee.
[e] Shift working of employees.

10.7. ETHICAL CODE AND ITS IMPACT:

In spite of the fact that a large number of labour laws have been enacted, and the
Indian labour scene crowded with various complex judicial formalities and legalities
and they were played a key role in rendering justice in industrial relations. Even
though, the industrial relations scene has not been peaceful. The industrial discipline
has ceased to exist. The labour-management relations have been shattered and the
expected workers involvement has not adequately achieved. The need for some
measures other than legislative was, therefore, felt both by the management and the
workers.
In pursuance of this suggestion, the fifteenth Indian labour conference, held in July
1957, discussed the question of discipline in industry laid down the following general
principles;
[1] There should be no lockout or strike without notice.
[2] No unilateral action should be taken in connection with any industrial matter.
[3] There should be no recourse to go-slow tactics.
[4] No deliberate damage should be caused to plant or property.
[5] Acts of violence, intimidation, coercion or instigation should not be resorted to.
[6] The existing machinery for the settlement of disputes should be utilized.
[7] Awards and agreements should be speedily implemented.
[8] Any agreement which disturbs cordial industrial relations should be avoided.
These principles were later considered by a sub-committee and after certain
modifications therein, the code of discipline was evolved. It came into force from June
1, 1958.

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Main Features of the code;
The code defines, in the first section, the duties and responsibilities of employers,
workers and even of the government. In the second section are listed the common
obligations of management and unions. The third section deals with the obligations of
the management only, while the fourth section deals with those of the unions, only.
To ensure better discipline in Industry, management and union[s] agree
[1] That no unilateral action should be taken in connection with any industrial
Matter and that disputes should be settled at the appropriate level;
[2] That the existing machinery for the settlement of disputes should be utilized with
the utmost expedition;
[3] That there should be no strike or lockout without notice;
[4] That affirming their faith in democratic principles, they bind themselves to settle
all future differences, disputes and grievances by mutual negotiation, conciliation and
voluntary arbitration;
[5] That neither will have recourse to [a] coercion, [b] intimidation, [c] victimization,
or [d] go-slow;
[6] That they will avoid [a] litigation, [b] sit-down and stay-in-strikes, and [c]
lockouts;
[7] That they will promote constructive co-operation between their representatives at
all levels and as between workers themselves and abide by the spirit of the agreement
mutually entered into;
Management Agrees;
[1] Not to increase workloads unless agreed upon or settled otherwise.
[2] To take prompt action for [a] settlement of a grievance, and [b] implementation of
settlements, awards, decisions and orders.
[3] To display conspicuous places in the undertaking the provisions of this code in
local language[s].
Union[s] Agree;
[1] Not to encourage any form of physical duress;

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[2] Not to permit demonstrations which are not peaceful and not to permit rowdyism
in demonstrations;
[3] 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;
[4] To take prompt action to implement awards, agreements, settlements and
decisions;

10.8. COLLECTIVE BARGAINING:

Collective bargaining has developed some extent in India since Independence.
Collective bargaining is a method by which problems of wages and conditions of
employment are resolved amicably, peacefully and voluntarily between labour and
management. The system is highly developed in many countries is making headway
slowly in India. The prerequisites for its success are, first, unions, which are neither
controlled nor seriously influenced by the employers, and, second, some rough
equivalence of bargaining power on the two sides of the table. Unorganized workers
are usually helpless; they have little or no power to bargain against their employer. To
each he can say, ‗If you don‘t like my terms, go work somewhere else‘. Each needs a
job, and may have to complete with other workers by offering to work for a pittance.
The workers key to power is to combine. This gives bargaining strength, and the
power to resist exploitation and unjust discrimination.
Some Advantages of Collective Bargaining:
Advantages of collective bargaining, in comparison to adjudication, are first, that
is quick and efficient in that the parties do not waste their time in unnecessary
litigation; second, that it is more democratic to let the parties resolve their own
disputes; and third, that it is produces more harmonious relation between employer
and workers. Such harmonious relations benefit the workers and employers alike. The
collective bargaining is nothing but a local remedy after exhausting it then only, the
parties may choose their dispute shall be referred to adjudicating authorities. They

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contrast sharply, and most favorably, with the bitterness, expense, and delay that mark
adjudication.
Disadvantages of collective bargaining;
Disadvantages of collective bargaining are; first, that the consumer is not
represented in the bargaining, but yet bears the burden of settlements raising wages
and prices he must pay; second, that collective bargaining settlements flow more from
power politics than from rational moral thought; and third, that under this system,
when the bargaining parties fail to agree, intolerable strikes sometimes occur. Some
prohibition, legal or practical, there surely must be against the worst of strikes. And
some consideration there must be, too, for the consumer whose interests entitle him to
be represented at the bargaining table.

10.9. CHECK YOUR PROGRESS

1) Mention the industrial disputes preventive measures
a) Industrial harmony
b) Grievance Committee
c) Tripartite and Bipartite bodies
d) Standing Orders
2) The full form of JMC
a) Joint Management Community b) Joint Management Council
c) Joint Management Concern d) Joint Management Committee

Answers for Check Your Progress: 1) c 2) b

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10.10. NOTES

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10.11. SUMMARY:
For maintaining happy industrial relations in undertakings, attempts should be
made to motivate unions to adopt voluntary arbitration. In fact, it should be customary
that in the event of failure of collective bargaining, matter to be compulsorily referred
to voluntary arbitration with a view to have a balanced award through this process. It
is desirable to have a board of arbitration consisting of an equal number of
representatives of both the management and labour. In the event members of board
fail to arrive at a unanimous decision, the umpire should be appointed by them, whose
decision would be final and binding on both the parties. At the same time the efforts
of works committee in maintaining the industrial harmony also needs some
recognition.

10.12. KEY WORDS:

1. Industrialization
2. Standing orders
3. Ethical code
4. Collective bargaining
5. Preventive measures
6. Tripartite bodies
7. Bipartite bodies
8. Works Committee
9. Joint Management Council

10.13. SELF ASSESSMENT QUESTIONS:

1. State the development of Industrial disputes laws in India
2. Define the meaning and the concept of Industrialization
3. Explain how far the preventive measures will help to maintain industrial peace.
5. Describe the provisions relating to Standing orders.
6. Enumerate the advantages of collective bargaining.
7. Write a note on the evolution of standing orders.

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8. Elucidate the main features of ethical code and state the effects if ethical code.
9. Enumerate the main advantages and disadvantages of collective bargaining.
10. State the provisions relating to bipartite and tripartite bodies.

10.14. REFERENCES:
1. [Link], Satish Mamoria, S.V Gankar – Dynamics of industrial relations, 14th
revised edition (reprint) 2004, published by Himalaya Publishing House 2004.
2. Avtar Singh, Harpreet Kaur- Introduction to labour and industrial law, 3rd edition
2014, published by LexisNexis 2014.
3. S.C Srivastava- Indistrial Relations, 5th edition, published by Vikas publishing
house.
4. H.L. Kumar – Labour Laws, 5th edition 2008, published by Universal Law
Publishing co. Pvt. Ltd. 2008.
5. H.L. Kumar- The Industrial Disputes, 2nd edition 2006, published by Universal Law
Publishing co. Pvt. Ltd. 2006.
6. H.L. Kumar – Labour Management 4th edition 2004, published by Universal Law
Publishing co. Pvt. Ltd. 2004.

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UNIT 11 THE INDUSTRIAL DISPUTES Act 1947
PART – I SETTLEMENT MACHINERY
STRUCTURE:
11.0. Objectives
11.1. Introduction
11.2. Industrial Disputes Act, 1947
11.3. Settlement Machinery
11.4. Works committee
11.5. Conciliation Officer
11.6. Boards of Conciliation
11.7. Courts of Inquiry
11.8. Grievances Settlement Authority
11.9. Adjudication Machinery
11.10. Industrial Tribunals
11.11. National Tribunals
11.12. Case study
11.13. Check Your Progress
11.14. Notes
11.15. Summary
11.16. Key Words
11.17. Self Assessment Questions
11.18. References

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11.0. OBJECTIVES:
After studying this unit, you are able to understand
 The important definitions of Industrial Dispute Act
 The constitution of various authorities under the Act
 The powers and functions of authorities
 The constitution of adjudicating authorities
 Provisions relating to grievances settlement authority

11.1. INTRODUCTION:
Industrial Disputes Act, 1947 is one of the important social legislation enacted to
provide mechanism for resolution of Industrial disputes which may arise between
employer and workmen, workman and workman, employers and employers. Prior to
enactment of this Act in 1947, Industrial disputes were being settled under the
provisions of Trade Disputes Act, 1929 which was found inadequate to Industrial
disputes, so that it leads to new enactment.
This Act provides not only the machinery and procedures for the investigation and
settlement of industrial disputes but also to secure industrial peace so that it may result
in more production and improve national economy for providing congenial Industrial
relations and working conditions. This Act is applicable to every establishment or
factory whether in public or private sector which falls within the definition of Industry
and those employees who are covered under the definition of workman given in the
Act.
The Act envisages appointment of conciliation officers charged with the duty of
mediating in and promoting settlement of Industrial disputes, constitution of labour
courts and Industrial Tribunals.
Though the Act does not interfere with the right of employees and employer to
declare strike or lockout but it provide due procedure for such eventualities. The Act
prohibit strikes and lockout during the pendency of conciliation and adjudication
proceedings of settlement reached in the course of conciliation proceedings and of

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awards of Industrial tribunal declared binding by the appropriate Government. It also
contains detailed provisions regarding lay off, retrenchment, closures, prevention of
unfair labour practices and penal provisions for violation of any provisions of this Act
etc.

11.2. INDUSTRIAL DISPUTES ACT, 1947:

Objectives and definitions:

The main objectives Act are follows;
[1] Securing industrial peace through-
[a] preventing and settling industrial disputes between employer and employees.
[b] Setting up an Internal Works Committee for maintaining good relations between
employer and employees.
[c] Promoting good relations through external machineries like conciliation, courts of
enquiry, Industrial tribunals, National tribunals and labour courts.
[2] Ameliorating the condition of workmen in industry.
[a] by redressing the grievances of workmen through a statutory machinery.
[b] by assuring job security.

Important definitions;
[1] ‗Conciliation officer‘ means a conciliation officer appointed under this
Act [section 2[d] ].
[2] ‗Industry‘ means any business, trade, undertaking, manufacture or calling, service,
employment, handicraft, or industrial occupation or avocation of workmen
[Section 2 [j] ].
[3] ‗Industrial dispute‘ means any dispute or difference between employer and
employees, or between employers and workmen, or between workmen and
workmen, which is connected with the employment or non-employment or the
terms of employment or with the conditions of labour, of any person [section
2[k]

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[4] ‗ Lock-out‘ means the temporary closing of a place employment or the suspension
of work, or the refusal by an employer to continue to employ and number of
persons employed by him [Section 2[l] ]
[5] ‗Retrenchment‘ means the termination by the employer of the service of a
workman for any reason whatsoever, otherwise than as a punishment inflicted by
way of disciplinary action, but does not include—
[a] voluntary retirement of the workman; or
[b] retirement of the workman on reaching the age of superannuation if the contains a
stipulation in that behalf; or
[c] Termination of the service of the workman as a result of the non-renewal of the
contract of employment between the employer and the workman concerned on its
expiry or of such contract being terminated under a stipulation in that behalf
contained therein;
[d] Termination of the service of a workman on the ground of continued ill-health
[section 2[0] ]
[6] ‗Settlement‘ means a settlement arrived at in the course of conciliation proceeding
and includes a written agreement between the employer workmen arrived at
otherwise than in the course of conciliation proceedings where such agreement
has been signed by the parties thereto in such manner as may be prescribed and
a copy thereof has been sent to an officer authorized in this behalf by the
appropriate government and the conciliation officer [section 2[p] ]
[7] ‗strike‘ means cessation of work by a body of persons employed in an industry,
acting in combination or a concerted refusal under a common understanding, or
any number of persons who are or have been so employed to continue to work
or to accept employment [Section 2[q] ]

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11.3. SETTLEMENT MACHINERY:
The Act provides following statutory authorities and vests in them necessary
powers to investigate the disputes and to bring about settlement of such disputes
arising between the employees and employers;
[1] Works committee;
[2] Conciliation officers;
[3] Boards of conciliation;
[4] Courts of inquiry;
[5] Labour courts;
[6] Industrial tribunals;
[7] National tribunals.

11.4. WORKS COMMITTEE [SECTION 3]:

Section 3 provides for the composition of the works committee. The power to
constitute works committee rests with the appropriate government. It may by a general
or special order applicable to industrial establishments in which 100 or more workmen
are employed on any day in the preceding 12 months require them to constitute a
works committee.
The manner of constituting the works committee has to be provided by the
appropriate government. The membership has to consist of representatives of
employers and employees in equal numbers but representatives of employees can be
in greater number. The representatives of workers have to chosen in the prescribed
manner from among the workers of the establishment in

The works committee is an authority under the Act. The following are the
duties of the works committee;
[a] To promote measures for securing and preserving amity and good relations
between
the employers and workmen;

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[2] To achieve the above object, it is their duty to comment upon matters of common
interest or concern of employers and workmen;
[3] To endeavor to compose any material difference of opinion in respect of matters of
common interest or concern between employers and workmen.
The main purpose of creating the works committee is to develop a sense of a
partnership between the employer and his workmen; it is a body which aims to
promote good-will and measures of common interest.

11.5. CONCILIATION OFFICER (SEC 4):

The Appropriate government may by notification in the official gazette, appoint
conciliation officers. These officers are charged with the duty of mediating in and
promoting the settlement of industrial disputes. The Appropriate government may
appoint one or more conciliation officers, as it thinks fit. A conciliation officer may be
appointed for a specified area or for specified industries in a specified area. The
appointment may be made matters in respect of the conciliation officer shall be
published in the official gazette.
Duties of conciliation officer:
1. Where any industrial disputes exists or apprehended, the officer shall hold
conciliation proceedings in the prescribed manner,
2. The officer shall, without delay, may do all such things as he thinks fit for the
purpose of inducing the parties to come to a fair at any and amicable
settlement of the dispute.
3. If a settlement of the dispute arrived at in the course of the conciliation
proceedings, the conciliation officer, shall send a report thereof to the
appropriate government together with a memorandum of settlement signed by
the parties to the disputes.
4. If no such settlement is arrived at, the officer shall, after close of the of the
investigation, send to the appropriate government a full report which consists
of such facts and circumstances and the reasons on account of which in his
opinion a settlement could not be arrived in.

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 5. After obtaining the report the government, is satisfied that there is a case for
reference to a board, labour court, tribunal and national tribunal it may make
such reference.
6. A report under this section shall be submitted within fourteen days of the
commencement of the conciliation proceedings.

11.6. BOARDS OF CONCILIATION: (SEC 5) :

The appropriate government has been given the power to constitute a board of
conciliation. This board is constituted for promoting the settlement of an industrial
dispute. The board consists of a Chairman and two or four other members, as the
appropriate deems fit. The Chairman shall be an independent person and other
persons shall be appointed in equal numbers to represents the parties to the disputes.
Duties of the Board ; A board to which a dispute is referred must investigate the
dispute and do all things for the purpose of inducing the parties to come for a fair and
amicable settlement of the dispute without delay.
If a settlement is arrived at, the board shall send a report to the appropriate
government together with a memorandum of settlement signed by the parties to the
dispute . If no settlement is reached the board shall send a full report together with
its recommendation for the determination of the dispute.
In case of failure of settlement by a board, the government may refer the dispute
to a labour court, tribunal or national tribunal. The government is, however not bound
to make a reference.
A board is required to submit its report within two months of the date on which
the dispute was referred to it or within such shorter period as it fixed by the
government.

11.7. COURTS OF INQUIRY: ( SEC 6) :

A procedure similar to the constitution of a Board of conciliation is provided for
bringing in to existing a court of inquiry as well. The board of conciliation may be
constituted for promoting the settlement of an industrial dispute, but the court of

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inquiry constituted for enquiring in to any matter connected to an industrial
dispute. The idea of a court of inquiry is borrowed from the British Industrial
Disputes Act, 1919.
Duties of the court : It is the to duty of the court to inquire in to the matters
referred to it and submit its report to the appropriate government ordinarily within
six months from the commencement of its inquiry. The Act requires that the report
shall be published within thirty days of its receipt. The court does not have the
power of adjudication.
The appropriate government may consist a court of inquiry for inquiring in to any
matters appearing to be connected with or relevant to an industrial dispute by
notification in the official gazette.
A court of inquiry may consist one independent person or such number of
independent persons as the appropriate government may think it. Where a court of
inquiry consists of two or more members, one shall be appointed as a Chairman.

11.8. GRIEVANCE SETTLEMENT AUTHORITY: SEC 9(C) :

As per Sec 9(c) every establishment employing twenty or more workers will
have to constitute one or more grievance redressel committee for the resolution of
disputes arising out of individual grievances.
The committee will consist of equal number of members from the employers and
the workman subject to maximum of six members in total. In case the committee has
two members, one of them should be a woman. As far as possible where it has more
than two members, the number of women may be increased proportionately.
The committee may complete its proceedings within thirty days of the receipt of the
receipt of written application by or on behalf of the aggrieved person. The workman
aggrieved by the decision of the committee may prefer an appeal to the employer
within one month from the date of the appeal dispose of the same and inform
his decision to the workman concerned.

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11.9. ADJUDICATION MACHINERY:
Labour courts—
Since the Act was passed with the object of providing machinery for investigation
and settlement of industrial disputes it makes provision for constitution of
adjudication machinery besides the authorities of investigation and settlement of
industrial disputes. The labour courts, Industrial tribunals National tribunals constitute
adjudication machinery under the Industrial disputes Act which has been given
specific jurisdiction for adjudication purposes.

Constitution of Labour Courts:

The appropriate government has been empowered under Section 7 of the Act to
constitute one or more labour courts for adjudication of industrial disputes relating to
any matter specified in the second schedule and for performing such other functions as
may be assigned to them under the provisions of this Act. A labour court consists of
one person only to be appointed by the appropriate government. The person so
appointed is known as Presiding officer of a labour court.

The functions of the Labour court as provided in the Act are:

[1] Adjudication of industrial disputes relating to any matter specified in the second
schedule;
[2] performing of such other functions as may be assigned to them under this Act.
The following matters are specified in the second schedule, namely;
[1] The property or legality of any order passed by an employer under the Standing
orders;
[2] The application and interpretation of Standing orders
[3] Discharge or dismissal of workmen, including reinstatement of, or grant of, or
relief to, workmen wrongfully dismissed;
[4] Withdrawal of any customary concession or privilege;
[5] Illegality or otherwise of a strike or lock-out;

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11.10. INDUSTRIAL TRIBUNALS- SEC 7A :
In our country the Industrial tribunals were for the first time created by the
Industrial Disputes Act, 1947. Commenting upon the status of these tribunals the
Supreme Court has observed that the tribunals under the Act are invested with many
trappings of a court but do not have the same status as courts. These Tribunals need
not follow the strict technicalities of law in adjudication of industrial disputes.
The power to constitute Industrial tribunal is conferred upon the Appropriate
government. The appointment of an industrial tribunal together with the names of
persons constituting the tribunal shall be notified in the official gazette. Further one
or more tribunals may in the discretion of appropriate government, may be
constituted. It is the duty of the tribunal to adjudicate upon any Industrial dispute
relating to any matter , whether specified in the first schedule or second schedule.
These tribunals shall perform such other functions as may be assigned to them under
this Act.

Matters of Jurisdiction ;
The following matters are within the jurisdiction of industrial tribunal ;
a. Wages including the period and mode of payment
b. Compensatory and other allowance
c. Hours of work and rest intervals
d. Leave with wages and holidays
e. Bonus, profit sharing, provident fund and gratuity
f. Shift working
g. Classification of workers
h. Rules of discipline
I .Retrenchment of workman
J. Closure of the establishment
K. Any other matter that may be prescribed.

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Powers of the Tribunal ;
The tribunals are constituted when any industrial dispute arises and they function
till the dispute is disposed of. They are constituted for deciding a specified number of
disputes for a limited period of time. Whenever in any proceeding any prejudice is
likely to be caused to any party, the newly appointed tribunal may start hearing the
case from the beginning. There are many powers which a civil court does not
have. For ex, the power to enforce contracts of personals service, to create contracts
and to change contracts etc.

11.11. NATIONAL TRIBUNALS –SEC 7B:

Constitution : The central government may constitute one or more National
Industrial for adjudication of industrial disputes by notification in the official gazette.
National Tribunals are constitute to adjudicate upon such industrial disputes which as
per the opinion of the central government, involve questions of national importance
or are of such a nature that industrial establishments situated in more than one State
are likely to be interested in, or affected by, such disputes. A national tribunal shall
consist of one judge as presiding officer and appointed by the central government.
The appropriate government is authorized to appoint two persons as assessors to
advice the Industrial tribunal in the proceeding before it.
Jurisdiction of the National tribunal :
There is no specific mention of matters which may be considered to be within
the jurisdiction of the national tribunal. Since there is no limitation specified in
respect of its jurisdiction like industrial tribunal and labour court, its jurisdiction is
wide enough to deal with any industrial dispute on any matter specified in second or
third schedules to the Act or any matter which is not specified there in. However two
conditions shall be fulfilled before acquiring jurisdiction :
1. Industrial disputes must involve questions of national importance in the
opinion of central government

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 2. Industrial disputes must be of such a nature that industrial establishments
situated in more than one state are likely to be interested in, or affected by
such dispute.
If one of the above conditions is fulfilled the national tribunal acquires the
jurisdiction over such matters for adjudication. It may be pointed out that the
national tribunal also has limited jurisdiction in the sense that it can only decide
matters which are referred to it for adjudication or matters which are connected
with the disputes referred to it.
Sec 7-C Disqualifications for the presiding officers of labour court, Tribunal and
National tribunals – No person shall be appointed to, or continue, if,
a. he is not an independent person
b. he has attained the age of sixty five years.
The moment any person suffers from any disqualification stated above he shall
cease to have authority to act in the office concerned.

11.12. CASE STUDY:

The action was initiated by the management against 154 workmen for willful
disobedience of lawful orders of superiors, acts subversive of good and proper
behavior within the establishment after authorized hours of work without permission
and shouting of slogans within the establishment amounting to misconduct under
standing orders. Later 134 of the workmen were taken back into employment. In
regard to 7 of the dismissed workmen conciliation was undertaken and upon its failure
disputes were raised under section 11-A and were asked to be referred to the labour
court for adjudication. But the government declined to make reference. All the
workmen who were proceeded against had accepted the guilt. It was held that the
industrial unrest etc. are not germane and relevant for the purpose of declining to refer
the dispute for adjudication. If the dispute raised involves disputed question of law
and fact the appropriate government cannot reach final conclusion. When all the
workmen had accepted their guilt, there was no justification for the employer to
discriminate between 134 workmen who were restored to service and the remaining

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20 including those to whom re-employment was not given. The government cannot
refuse reference on the ground that they had considered the quantum of punishment
and the nature of charges framed. Therefore, the government was directed to refer the
dispute for adjudication by the labour court.

11.13. CHECK YOUR PROGRESS

1) what does lock out mean
a) Temporary closing of a place employment
b) The suspension of work
c) Tripartite and Bipartite bodies
d) Working in the organisation
2) The main objectives of Industrial Disputes Act is
a) Securing Industrial Peace b) Assuring Job Security
c) Redressing Grievance d) Retrenchment

Answers for Check Your Progress: 1) a, b 2) a, b, c

11.14. NOTES
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11.15. SUMMARY:
Industrial dispute means dispute between employers and employers or wrokmen‘s
and workmen‘s or workmen‘s and employers which is connected with employment or
non employment or any terms of employment or with the condition of labour of any
person. For the purpose of promoting settlement of industrial disputes the appropriate
government may appoint such number of persons as conciliation officers. For the
purpose of promoting settlement of an industrial dispute the appropriate government
may constitute a board of conciliation. Appropriate government may require an
industrial establishment employing 100 or more workmen‘s on any day in the
preceding 12 months to constitute a works committee. Appropriate government may
constitute one or more industrial tribunal for adjudication of industrial dispute relating
to matters specified in any schedule. For adjudication of industrial dispute of national
importance the central government may constitute one or more national tribunal.

11.16. KEY WORDS:

1. Board of conciliation
2. Award
3. Authorities
4. Collective bargaining
5. Industrial disputes
6. Court of enquiry
7. Tribunal
8. Adjudications machinery
9. National Tribunal

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11.17. SELF ASSESSMENT QUESTIONS:
1] Explain the powers of settlement authorities according to Industrial Disputes Act,
1947
2] Who is a conciliation officer? Examine his powers.
3] State the composition of works committee. Explain the objectives of it.
4] Explain the composition and functions of Industrial Tribunal.
5] Describe the powers and functions of labour court.
6] Write an explanations note on adjudications authorities.
7) Examine the importance of National Tribunal in settlement of industrial dispute.
8) Examine the provisions relating to adjudicating authorities.

11.18. REFERENCES :
1. Avtar Singh, Harpreet Kaur- Introduction to labour and industrial law, 3rd edition
2014, published by LexisNexis 2014.
2. S.C Srivastava- Indistrial Relations, 5th edition, published by Vikas publishing
house.
3. V.G. Goswami- Labour And Industrial Laws, 6st edition 1996, published by Central
Law Agency 1996.
4. S.N. Mishra- Labour and Industrial Laws, 27th edition 2013, published by Central
Law Publications 2013.
5. G.M. Kothari- A Study of Industrial law, 3rd edition, published by N.M. Tripathi
Pvt. Ltd.
6. Ahmedullah Khan, Amanullah Khan- Labour and Industrial Law, published by
Asia Law House.

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UNIT 12 INDUSTRIAL DISPUTES ACT, 1947 – PART- II
STRUCTURE:
12.0. Objectives
12.1. Introduction
12.2. Strikes and Lock-outs
12.3. Lock-out
12.4. Prohibition of strike and lock outs
12.5. Lay –Off
12.6. Retrenchment
12.7. Closure
12.8. Case study
12.9. Check your Progress
12.10. Notes
12.11. Summary
12.12. Key Words
12.13. Self-Assessment Questions
12.14. References

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12.0. OBJECTIVES
After studying this unit, you should be able to;
 The provisions relating to strikes
 Prohibition of strikes and lock-out
 The significance of Lay –off
 The provisions relating to retrenchment
 Aspects relating to closure

12.1. INTRODUCTION
In general, labour‘s instruments of economic coercion comprise of such worker‘s
action or omission, in furtherance of an industrial dispute which threaten or inflict
financial loss to the management. They put management under economic pressure to
accept the demands of workers.
Likewise, management‘s instruments of economic coercion comprise of such
management‘s action or mission, in furtherance of an industrial dispute which is
resorted to with the objective of inflicting financial loss on the labour. So that they
would rather accept management‘s term than suffer irreparable financial loss. Further,
in harmony with the view; ‗no work no payment‘ the closing of a place of
employment or suspension of work or the refusal by an employer to continue to
employ any number of persons employed by him is the means adopted to put the
requisite economic pressure.
The activities may assume various forms, e.g., strikes, lock-outs, Lay-off,
retrenchment and closure of the establishment. The main objectives of the Act is to
regulate and suggesting for suitable remedies.

12.2. STRIKES AND LOCK-OUTS

Now we will discuss these coercive activities in detail. Strike is a collective
stoppage of work by workmen undertaken in order to bring pressure upon those who
depend on the sale or use of products of work. Ludwig Teller in his book, ‗labour

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disputes and collective bargaining‘ opines that ,the word ‗strike‘ in its broad
significance has reference to a dispute between an employer and his workers, in the
course of which there is concerted suspension of employment. Because it is an
expensive weapon in the hands of the workers. And the strike is generally labour‘s
last resort in connection with industrial controversies.
Lock-out is a weapon in the hand of the employer, similar to that of strike in the
armory of workmen used for compelling persons employed by him to accept his terms
or conditions of or affecting employment . In lock-outs an employer shuts down his
place business as a result of reprisal, or as an instrument of coercion or as a mode of
exerting pressure upon the employees with a view to dictate his own terms to them.

Section 22. : Prohibition of strikes and lock-outs :

Section 22 of the Act deals with the prohibition of strikes and lock-outs. This
section applies to the strikes or lock-outs in industries carrying on public utility
service. Strike or lock-out in this section is not absolutely prohibited but certain
requirements are to be fulfilled by the workmen before resorting to strike or by the
employers before locking out the place of business. Conditions laid down in section
22[1] are to be fulfilled in case of strike in any public utility service and conditions as
laid down in section 22[2] are to be fulfilled in case of any lock-out by the employer
carrying on any public utility service.

Strike is one of the oldest and the most effective weapons of labour in its struggle
with capital for securing economic justice. The basic strength of a strike lies in the
labour‘s privilege to quit work and thus brings a forced readjustment of conditions of
employment.
Anderson‘s law dictionary defines strike to be a combination among labourers or
those employed by others, to compel an increase of wages, a change in the hours of
labour, a change in the manner of conducting the business or to enforce some
particular policy in the character or number of the men employed or the like.
Webster‘s dictionary defines the term strike as ‗ the act of quitting work done by

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mutual understanding by a body of workmen as a means of enforcing compliance with
demands made on their employer ; a stopping of work by workmen in order to obtain
or resist a change in conditions of employment‘.
It shows that strike is adopted as a means to compel the employer to enforce
compliance of demands made on their employer. In such an action the work is stopped
by the workmen under common understanding. The purpose of strike is always to
ameliorate the working conditions or for some gainful objective.
Strike has been defined in Section 2[q] of the Industrial disputes Act as under
‗strike means a cessation of work by a body of persons employed in any industry
acting in combination, or a concerted refusal, or a refusal under a common
understanding, of any number of persons who are or have been so employed to
continue to work or to accept employment‘.

The analysis of the definition would show that there are following essential
requirements for the existence of a strike;
[1] There must be cessation of work;
[2] the cessation of work must be by a body of persons employed in any industry;
[3] the strikers must have been acting in combination.
[4]the strikers must be working in any establishment which can be called industry
within the meaning of Section 2 [1] ; or
[5] there must be a concerted refusal ; or
[6] refusal under a common understanding of any number of persons who are or have
been so employed to continue to work or to accept employment;
[7] they must stop work for some demands relating to employment, non-employment
or the terms of employment or the conditions of labour of the workmen.

12.3. LOCK-OUT
The commonest and the widely recognized lawful weapon of the employers have
used some other types of activities e.g., blacklisting, strike-breaking. Webster‘s
dictionary defines ‗lock out‘, to be the withholding of employment by an employer

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and the whole or partial closing of his business establishment in order to gain
concessions from employees. In ordinary sense, it comprehends the action of an
employer in temporarily closing down his undertaking or refusing to provide work at
all. Provided that by so doing he is seeking to compel his employees to accept
demands made either by him or another employer or to withdraw demands made by
them on him made either by or another employer or to withdraw demands made by
them on him or by other employees upon another employees upon another employer
or other employers. It is the corresponding weapon of the employer, as strike is of the
labour. Thus in ordinary sense lock- out means a corresponding action of the employer
in respect of his establishments so that workers may withdraw their demands made on
him. Lockout, therefore is a weapon in the armory of employers to fight with the
labour class and compel the labour class to agree on the dictated terms or on
concessional terms of labour.
Lock out is defined in Section 2 [1] of the Industrial disputes Act which has been
amended in 1982 and has come into force with effect from 21. 8. 1984. Now it stands
as follows;

‗Lock out means the temporary closing of a place of employment; or the

suspension of work, or the refusal by an employer to continue to employ any number
of persons employed by him‘.
The analysis of the definition would show that there are following requirements
of lock out:
[1] Temporary closing of place of employment.
[2] The element of a demand for which the industrial establishment is locked out,
must be present.
[3] The intention to re-open or take the workers back if they accept the demands must
exist.
[4] The employer and the employees must be engaged in an industrial process carried
on in an institution falling within the meaning of industry as defined in section.

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12.4. PROHIBITION OF STRIKES AND LOCK OUTS
Section 22 of the Act deals with the prohibition of strikes and lock-outs . This
section applies to the strikes or lock outs in industries carrying on public utility
service. Strike or lock –out in this section is not absolutely prohibited but certain
requirements are to be fulfilled by the workmen before resorting to strike or by the
employers before locking out the place of business. Conditions laid down in section
22[1] are to be fulfilled in case of strike in any public utility service and conditions as
laid down in section 22[2] are to be fulfilled in case of any lock-out by the employer
carrying on any public utility service.

Sec 22 further spells about the details of the prohibition as under,

1. No person employed in a public utility services shall go on strike , in breach of
contract :
a. without giving to the employer notice of strike, within six weeks before striking,
b. within fourteen days of giving such notice
c. before the expiry of the date of strike specified in any such notice
d. during the pendency of any conciliation proceedings
2. No employer carrying on any public utility service shall lockout any of his
workman
a. without giving them notice of lockout, within six weeks before lock out,
b. within fourteen days of giving such notice,
c. before the expiry of the date of lock out specified in any such notice,
d. during the pendency of the conciliation proceedings.

General prohibition of strikes and lockouts : Sec 23

No workman who is employed in any industrial establishment shall go on strike
and no employer declare a lockout, :
a. during the pendency of conciliation proceedings and seven days after the
conclusion of such proceedings

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 b. during the pendency of proceedings before the Labour court, Tribunal and
National tribunal and two months after conclusion of such proceedings
c. during the pendency of arbitration proceedings and two months after
conclusion of such proceedings,
d. during any period in which a settlement or award is in operation.
As per Sec 24 a strike and lockout is illegal if it is commenced or declared in
contravention of sec 22 or sec 23.

12.5. LAY –OFF:

The term Lay-Off is defined in Sec 2(kkk) as follows,
Lay off means the failure, refusal or inability of an employer on account of
shortage of coal, power, raw material or the accumulation of stock or the breakdown
of machinery to give employment to a workmen and who has not been retrenched.

Essentials of a lay-off :
The analysis of section 2 [kkk] brings out following essentials of a lay-off;
[1] There must be [a] the failure, [b]refusal or [c] inability of the employer to give
employment to a workman.
[2] The names of the workmen laid off must be on the muster rolls of the industrial
establishment on the date on which they have been laid off.
[3] The failure, refusal or inability to give employment must be on account of one or
more of the following reasons ;
[a] shortage of coal,
[b] shortage of power,
[c] shortage of raw materials,
[d] accumulation of stocks,
[e] breakdown of machinery, or
[f] natural calamity or for any connected reason.
[4] The workman in question must not have been retrenched.

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Quantum of lay –off compensation Section 25[c]
The rules regulating lay-off compensation and payments are as under Section 25-c
re-enacted by industrial disputes Act, 1965 which can be divided into following
points;-
[1] whenever a workman [other than badly workman or a casual workman].
[2] Whose name is borne on the muster rolls of an industrial establishment, and
[3] Who has completed not less than one year of continuous service under an
employer
whether continuously or intermittently, is laid off,
4). except such weekly holidays as may intervene,
5). he shall be paid by the employer for all days during which he is so laid off ,
compensation equal to fifty percent of the total of the basic wages and
dearness allowance,
6). that would have been payable to him had he not been so laid off.

12.6. RETRENCHMENT: SECTION 2 (OO ) :

Retrenchment means,-
[1] the termination by the employer of the service of a workman for any reason
whatsoever,
[2] other than as a punishment inflicted by way of disciplinary action,
[3] but retrenchment does not include-
[a] voluntary retirement of the workman ; or
[b] retirement of the workman on reaching the age of superannuation if the contract of
employment between the employer and the workman concerned contains a stipulation
in that behalf ; or
[c] termination of the service of the workman as a result of the non-renewal of the
contract of employment between the employer and the workman on its expiry or if
such contract is terminated under a stipulation in that behalf contained in it ; or
[d] termination of the service of a workman on the ground of continued ill-health.

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Essentials of retrenchment—
It follows that the following are the essential ingredients of retrenchment defined in
Section 2 [00] of the Act;-
[1] There must be termination of services of a workman by the employer.
[2]The termination of service must be on the ground of surplus labour.
[3] The service which is terminated must have been capable of being continued.
[4] The termination of service may be for any reason whatsoever but it should not be
actuated by any motive of victimization or any unfair labour practice.
[5] The termination of service must be of surplus labour or staff in a continuing
industry.
Thus termination of service of workmen on the closure of the business is not
retrenchment.
[6] The termination of service of the workmen must be for proper reasons such as for
economy, rationalization in industry, installation of new labour saving machinery
or any other industrial or trade reasons.
[7] The termination of service must not fall within the exclusion clause of the
definition, such as voluntary retirement, retirement on reaching the age of
superannuation and termination on the ground of continued ill-health etc.
The analysis of Section 25-f would show that following are the conditions which
must be complied with before retrenchment ;
[1] The workman must be given one month‘s notice ;
[2] The notice must be in writing ;
[3] The notice must contain reasons for retrenchment ;
[4] The period of notice must expire ;
[5] The period of notice must expire or the workman must be paid in lieu of the notice,
wages for the period of notice.
It means that the employer is under duty to give one month‘s notice before
retrenchment and if he decides to retrench the workman at once in that case he has to
give wages for the notice period that is for one month. It would be significant to note
that prior to amendment made by Act No. 49 of 1984 with effect from 18-8-1984 there

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was a proviso to section 25-f [a] to the effect that ‗‘no notice shall be necessary if the
retrenchment is under an agreement which specifies a date for the termination of
service. But now it has been omitted by the said amendment, which would make it
necessary to give such notice in all cases unless the employer gives wages in lieu of
such notice. But the adjudicator has to remain very cautious in construing Section 25-f
[a] and Section 2[00] and omission of proviso to Section 25-f [a] of the Industrial
disputes Act. Sometimes appointment is made for a fixed period and the date of
termination of service is indicated in the contract of service in such cases no notice is
required to be given by the employer because the workman knows it from the very
beginning.
[6] The workman must be paid retrenchment compensation at the time of
retrenchment.
[7] The compensation must be equivalent to fifteen days average pay for every
completed year of continuous service or any part thereof in excess of six months.
[8] He must be in continuous service as defined in section 25-B for not less than one
year. Before a workmen can complain of retrenchment being not in consonance with
Section 25-F he has to show that he has been in continuous service for not less than
one year under that employer who has retrenched him from service.

12.7. CLOSURE
Closure means
The permanent closing down of a place of employment or part thereof is closure.
According to the Bombay and Madhya Pradesh Industrial relations Act, the ‗Closure‘
means the closing of any place or part of a place of employment or the total or partial
suspension of work by any employer or the total or partial refusal by an employer to
continue to employ persons employed by him whether such closing, suspension or
refusal is or is not in consequence of an industrial dispute.
Closure and lock out are two different things. In closure employer does not merely
close down the place of business but finally closes the business itself, whereas in a
lock-out, the employer closes the place of business only.

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 Closure is a fundamental right. It is a fundamental right of a citizen to carry on or
close down business, industry or work if he chooses and nobody can be compelled to
carry on his business against his will.
Closure must be, when effected, permanent. This does not mean that the employer
is barred from re-starting the closed business or because the business is re-started, it
was not closed with the intention of closing permanently. It would be a question of
fact whether the closure, when effected, was intended to be a permanent or temporary
closure. Refusal to employ a single worker may be a closure. The right is subject to
liability of payment of compensation to the workmen as provided by section 25 FFF
of the Industrial Disputes Act,1947 and also to obtain permission in cases under the
Act.
Closure implies termination of services, i.e. refusal to employ. It is not correct to
say that the definition of closure covers only those cases where relationship of master
and servant continues like that in ‗lock-outs.‘
A closure of a section or department or a branch or a part of undertaking is a
‗closure‘ and is valid. It is not retrenchment. Closure may also be effected in stages.
Compensation to work men in case of closing down of undertakings. Section 25-FFF
contains the following provisions in this respect.
1) Where an undertaking is closed down for any reason what soever, every
workman who has been in continuous service for not less than one year in that
undertaking immediately before such closure shall, subject to the provisions of
sub section.
2) Be entitled to notice and compensation in accordance with provisions of
sections 25-F, as if the workman had been retrenched.
But where the undertaking is closed down on account of unavoidable
circumstances beyond the control of the employer, the compensation to be paid to the
workman under clause (b) of section 25F shall not exceed his average pay for three
months.

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 In order to explain the circumstances which may be considered to be beyond
control of the employer, an explanation has been added in 1971 by act 45 of 1971
which provides that an undertaking which is closed down by reason merely of-
i) Financial difficulties (including financial losses); or
ii) Accumulation of undisposed of stocks; or
iii) To expiry of the period of the lease or license granted to it; or
iv) In a case where the undertaking is engaged in mining operations, exhaustion of the
minerals in the area in which such operations are carried on, shall not be demand to
be closed down on account of unavoidable circumstances beyond the control of the
employer within the meaning of the provision to this sub-section.
12.8. CASE STUDY :
The respondent were a tyre manufacturing company at Bombay having its
distribution office at Delhi. Thirty workmen were employed in Delhi office. As a
result of strike in the company there was short supply of tyres to the distribution
office. Out of 30 workmen 17 were laid off by the management. There was no
certified standing orders, nor was there any term of contract of service conferring any
right of lay off. It was held that the workmen were laid off without any authority of
law or the power in the management under the contract of service. Therefore, the
workmen would be entitled to their full wages.
12.9. CHECK YOUR PROGRESS
1) Retrenchment means
a) Voluntary Retirement b) Retirement
c) Termination by the employer c) Compensation
2) Closure Implies
a) Is a fundamental right b) Unavoidable circumstances
c) Termination of services c) Undertaking

Answer for check your progress 1) c, 2) a

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12.10. NOTES
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12.11. SUMMARY

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 In any industrial endeavor co-operation of labour and capital is quite essential for
its success, although they have interests contrary to each other. They have different
strategies and weapons to ventilate their grievances and safeguard their interests.
These democratic weapons often used by them are strikes and lock-outs. Just as strike
is a weapon available to employers for enforcing their industrial demands, a lock out
is weapon available to the employer to persuade by a coercive process to see his point
of view and to accept his demands. In the struggle between labour and capital as the
weapon of strike is available to labour and is often used by it, so is the weapon of
lock-out available to the employer and can be used by him. In some of the occasion
the employer can recourse to closure also. But, all these coercive methods shall be in
accordance of Industrial dispute Act.

12.12. KEY WORDS

1. Lay-off
2. Retrenchment
3. Closure
4. Strike
5. Lock-out
6. Public utility services
7. Compensation
8. Prohibition
9. Superannuation
10. Voluntary retirement

12.13. SELF ASSESSMENT QUESTIONS:

1] Define strike. State the essential requirements of strike.
2] What is lock-out? State the circumstances under which a lock-out becomes illegal.
3] What is retrenchment? Explain the conditions of a valid retrenchment.
4] Define and distinguish between strike and lock-out.
5] Define lock-off. State the essential requirement of lay-off.

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6] Examine the provisions relating to the closure of an undertaking under Industrial
dispute.
7] Explain the provisions relating to the prohibition of strikes and lockouts.
8] Describe the law relating to the compensation in the cases valid retrenchment.
9] Explain briefly relating quantum of Lay-off compensation.

12.14. REFERENCES:
1. Avtar Singh, Harpreet Kaur- Introduction to labour and industrial law, 3rd edition
2014, published by LexisNexis 2014.
2. S.C Srivastava- Indistrial Relations, 5th edition, published by Vikas publishing
house.
3. V.G. Goswami- Labour And Industrial Laws, 6st edition 1996, published by Central
Law Agency, 1996.
4. S.N. Mishra- Labour and Industrial Laws, 27th edition 2013, published by Central
Law Publications, 2013.
5. G.M. Kothari- A Study of Industrial law, 3rd edition, published by N.M. Tripathi
Pvt. Ltd.
6. Ahmedullah Khan, Amanullah Khan- Labour and Industrial Law, published by Asia
Law House.

201
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MODULE -4 : COLLECTIVE BARGAINING AND NEGOTIATION

UNIT 13 COLLECTIVE BARGAINING

STRUCTURE

13.0. Objectives
13.1. Introduction
13.2. Meaning and Definition
13.3. Nature of Collective Bargaining
13.4. Essentials for the success of collective Bargaining
13.5. Collective Bargaining Process
13.6. Importance of Collective Bargaining
13.7. Functions of Collective Bargaining
13.8. Case Study
13.9. Notes
13.10. Summary
13.11. Key words
13.12. Self Assessment Questions
13.13. References

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13.0. OBJECTIVES

After studying this unit, you Should be able to;

 Understand the nature and concept of collective bargaining.

 Analyze the process and importance of collective bargaining.
 Identify the essentials and functions of collective bargaining.

13.1. INTRODUCTION
Mutual determination of the terms and conditions of employment between the
Management of an employer and the exclusive bargaining representatives of the
employees. Collective bargaining is a process of negotiating between management
and workers represented by their representatives for determining mutually agreed
terms and conditions of work which protect the interest of both workers and the
management. The term ‗collective bargaining‘ was coined by Sydney Webb and
Beatrice Webb, who believed that collective bargaining was the collective equivalent
to individual bargaining, whose primary aim was achieving economic advantage.
Collective bargaining is concerned with the relationship between trade unions
(representatives of workers) and the management (representatives of employers).
Bargaining is collective because chosen representatives of both labour unions and
management act as bargaining agents.

13.2. MEANING AND DEFINITION

Meaning

Collective bargaining relates to group bargaining as opposed to individual

bargaining about wages and salaries and conditions of work in the broadest and
employer or his representatives or an employers‘ association or federation under
which two parties, namely, workers and management, reach an agreement about wage
rates and basic conditions of employment.

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Definitions

According to Dale Yoder’, ―Collective bargaining is essentially a process in

which employees act as a group in seeking to shape conditions and relationships in
their employment‖.

According to [Link]: Collective bargaining takes place when a number of

work people enter into a negotiation as a bargaining unit with an employer or group of
employers with the object of reaching an agreement on working conditions of the
employees. Collective bargaining is a complex process. It involves psychology,
politics and power.

In the words of Edwin B. Flippo, ―Collective bargaining is a process in which the

representativeness of a labour organization and the representativeness of business
organization meet and attempt to negotiate a contract or agreement, which specifies
the nature of employee-employer-union relationship.‖

13.3. NATURE OF COLLECTIVE BARGAINING

The ILO Right to Organize and Collective Bargaining Convention (No. 98),
1949 describes collective bargaining as:

"Voluntary negotiation between employers or employers' organizations and workers'

organizations. With a view to the regulation of terms and conditions of employment
by collective agreements".

Collective bargaining could also be defined as negotiations relating to terms of

employment and conditions of work between an employer, a group of employers or an
employers' organization on the one hand, and representative workers' organizations on
the other, with a view to reaching agreement.

The essential features of collective bargaining are as under:

 It is a collective process. The representatives of the both the management and

employees‘ participate in it.

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  It is continuous process. 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 means that
bargaining is a day-to-day process. In this context, Summer Stitcher has rightly
observed, ―It would be a mistake to assume that collective bargaining begins
and ends with the writing of the contract. Actually that is only the beginning of
collective bargaining.

 It is flexible and dynamic process. The parties have to adopt a flexible

attitude through the process of bargaining.

 It is a method of partnership of workers in management. It is in fact a way

to establish industrial democracy.

 It is based on give and take approach and not in take or leave approach.

 It is an attempt in achieving and maintaining and maintaining discipline in

industry.

 It is an effective step in promoting industrial jurisprudence.

13.4. ESSENTIALS FOR THE SUCCESS OF COLLECTIVE BARGAINING

Collective bargaining is an institutionalized representative process. It involves an

exercise in graceful retreat from original position – a retreat without seeming to retreat
to compromise. As such, it is a complex process involving psychology, politics, and
poker. It is a process of thought-minded economic calculus and horse trading. The
factors are pointer to the fact that bargaining sessions almost unavoidably contain
certain stresses and strains. Moreover, the labour management tensions are recurrent
in nature since fulfilled to make collective bargaining successful.

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 Strong and stable Union:

A strong and stable union is essential for the success of collective bargaining. The
employers can easily ignore a weak union on the plea that it hardly represents the
workers. The question of entering into negotiation with such a union does not arise
because agreement with such a union will hardly be honoured by a large section of
workforce. There would be permanent danger to its being sabotaged by non-union
members.
Recognition:
The recognition by the management of the representative trade union as a
bargaining agent is of paramount significance. A trade union may be strong and
stable, but until it is given recognition, it will hardly have any impact. The non-
recognition of union by management emerges from two-fold fears: (i) fear of decision
making encroachment; and (ii) fear of union values being antithetical to those of
management. These fears must be shaded and the rights of union must be accepted. In
fact, collective bargaining cannot exist or begin until union is recognized and regarded
as an integral part of industrial relations. This is the first step towards creating climate
of mutual trust and abolishing union hostility.
Permanent Bargaining Machinery:
Among other things, for bargaining sessions to be successful, the bargaining
machinery must be efficient and permanent. No ad hoc arrangements are satisfactory
is merely a framework for everyday working relationships, the main bargain is carried
on daily and for this there is a need to have permanent machinery. As for machinery
being efficient, it has three aspects: (a) availability of full information, (b) selection of
proper representativeness; and (c) recognition of natural temperament of each other.

Mutual Accommodation:
There has to be a greater emphasis on mutual accommodation rather than conflict
or uncompromising attitude. Conflicting attitude does not lead to amicable labour
relations; it may foster union militancy as the union reacts by engaging in pressure

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tactics. The approach must be of mutual “give and take” rather than “take or leave”.
The core of collective bargaining is the process for continuous joint consideration and
adjustment of common problems.
Political Climate:
If collective bargaining has to be fully effective, a favorable political climate
must exist. The government must be convinced of bargaining‘s positive
contribution. If encouraging attitude of government exists, it does everything to
facilitate bargaining process such as providing machinery for the settlement of
disputes, mediation and conciliation. However, the role of government has to be
minimum, because collective bargaining is primarily a two-way process more
concerned with micro aspects.

Bargainer’s Authority:
The procedures must be developed to ensure the negotiators have full authority
to bind their constituents. If bargaining representatives have to refer constantly
back to their respective organizations, it makes bargaining process most ridiculous
and ineffective, because parties know by experience that bargaining team is only a
show piece and not the real authority.

13.5. COLLECTIVE BARGAINING PROCESS

Indian Institute of Personnel Management has suggested the following procedure

for collective bargaining:

Composition of the Negotiating Team:

The negotiating team should consist of representatives of the both workers and
employers, with adequate qualities, job knowledge and skill for negotiation. They
should not only truly represent the two parties but also have full authority to speak for
them and make decisions. A correct understanding of the main issues to be covered

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and intimate knowledge of operations, working conditions, production norms and
other relevant factors in addition to the basic qualities of balanced views, even temper,
analytical mind, and objective outlook are highly desirable in the members of the
negotiating team. It is essential to include in the management team, executives who
can talk authoritatively on personnel and production matters. If other functional heads,
conversant with other aspects like costs or industrial engineering, can be included, it
would be much better.

Make a Good Beginning:

Well begun is half done and this no less true in the case of collective
bargaining. It will be good to stress the need for mutual co-operation and for putting
the members in the right frame of mind before the talks start. With a proper climate
for mutual understanding and a mind and a common desire to reach agreement by
objective assessment of facts, with a true spirit of ―give and take‖, the process of
negotiation has very chance of success.

Maintain Continuity of Talks:

Collective bargaining is half done and this is no any other negotiation and, with
all the goodwill in the world, there will on occasions be emotional outbursts and road
blocks. The important thing is never to reach a dead end but to sidetrack blind alleys
and keep talks continuing. Under the worst situations, breaking off temporarily for
cooling down and rethinking may be necessary. When the main issue gets confused in
the dust and storm raised, bringing things to fundamentals will often help. It may at
times be necessary to leave controversial points alone for the being and leap over to
the next issues. As the field of agreement is widened and the field of disagreement is
narrowed down, a solution will be possible ultimately. To keep the discussion fluid is
therefore very important.

Develop a Problem-Solving Attitude:

Negotiations will be easier if it is appreciated on both sides that they are

expected to solve the practical problems of industrial life created through the

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interaction of various forces and various interests and also to lay the foundation for
better understanding, better performance and increased prosperity in the future for the
benefit of all concerned. If conflicts and disputes are looked upon as problems to be
solved through the application of accumulated experience and specialized knowledge,
if they are dissected and analysed, and if it is agreed on both sides that the results of
such factual analysis will be taken as the basis for solution, the attitude of problem-
solving will have been developed, and agreement will then be easy to reach.

Encourage Leadership:

Is collective agreement possible in every industrial unit and under all

conditions? The answer is: ―yes‖, if management is really serious about it, and
believes that workers have right to associate together and to fight for justice and a fair
deal. It is easier and more practical to deal with a few representatives of a strong and
organized body than with a heterogeneous mass of disunited individuals. A complaint
often heard is that the union lacks proper leadership. If this be the situation,
management should ask itself whether it has helped to create a condition which would
stimulate growth of competent and constructive leadership or has acted in a reverse
direction.

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 type of union leadership. ―Management gets the union it deserves‖ is not just an
empty phrase. If management has, through its actions and dealings, established a
reputation for fair but firm dealing, if it has persistently followed a labour policy
based on the three principles of justice, sympathy and firmness, and if it has made it
clear that it believes in the growth of healthy and strong trade unionism, there is little
doubt that development of the right of leadership is only a matter of time.

Bringing in Other Managers:

In the process of creating a congenial atmosphere under which collective

bargaining will succeed, and in the process of collective bargaining itself, other
manager has important contributions to make. It is necessary for everybody to realize
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that the personnel functions cannot be detached from other activities and that a
collective agreement covers not just one part but the entire field of industrial activity.

It is unrealistic to expect that even in the best managed industry, with the right
type of leadership on both sides, everything will run smoothly at all times and that all
disputes will be settled promptly and peacefully. Leaving aside the question of human
shortcomings and failures, lack of understanding and proper communication, which
often created problems and difficulties, there may be some definite disagreement on
objectives and clash of principles where a dispute cannot be avoided. Management is
primarily interested in production of goods in the most economical way and the union
is primarily interested in increasing of its members; discipline is more important to the
management, job security is a vital question with the union; management wants to
promote employees on merit, the union wants to fight for seniority rights. These
points of basic difference in view and the manner in which the fruits of joint
Endeavour can be distributed are potential grounds for conflict. At times, conflict may
grow really serious and the situation may become explosive, threatening discipline,
peace and production. Maintaining normal conditions and preserving the spirit of
agreement in such a situation presents a tough challenge to the skill and ability of the
management.

13.6. IMPORTANCE OF COLLECTIVE BARGAINING

Collective bargaining not only includes negotiation, administration and

enforcement of the written contracts between the employees and the employers, but
also includes the process of resolving labour-management conflicts. Thus collective
bargaining is legally and socially sanctioned way of regulating in the public interest
the forces of power and influence inherent in organized labour management groups.

The role of collective bargaining for solving the problems arising at the plant or
industry level has been widely recognized. Labour legislation and the machinery for
its implementation prepare a framework according to which industrial establishments
should operate. But whatever labour laws may lay down, it is the approach of
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employers and trade union leaders which matters. Therefore, the solution to common
problems can be found directly through negotiation between both the parties and in
this context, the scope of collective bargaining is very wide.

Collective bargaining helps to promote cooperation and mutual understanding

between the workers and the management. It provides a framework for deciding the
terms and conditions of employment without resort to strikes and lockouts and without
the intervention of outsiders. According to National Commission on Labour, ―The
best jurisdiction for collective bargaining is that it is a system based on bipartite
agreements and as such superior to any arrangement involving third party intervention
in matters which essentially concern employers and workers.‖ Collective bargaining
is, in fact, a lasting solution to the problem of industrial relations.

Importance to Employees

 Collective bargaining develops a sense of self-respect and responsibility

among the employees.

 Collective bargaining increases the strength of the workers. Their

bargaining capacity as a group increases.

 Collective bargaining increases the morale and productivity of

employees.

 It restricts management‘s freedom for arbitrary action against the

employees. Unilateral actions by the management are discouraged.

 Effective collective bargaining machinery strengthens the trade union

movement.
Importance to Employers

 The workers feel motivated as they can talk to the employers on various matter
and bargain for higher benefits. As a result, their productivity increases.

 It is easier for the management to resolve issues at the bargaining table rather
than taking up complaints of employees individually.

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  Collective bargaining promotes a sense of job security among the employees
and thereby tends to reduce cost of labour turnover to management, employees
as well as the society at large.

 Collective bargaining opens up the channels of communication between the top

and bottom levels of the organization which may be difficult otherwise.
Importance to Society

 Collective bargaining leads to industrial peace in the country.

 Collective bargaining results in the establishment of a harmonious industrial

climate which supports the pace of a nation‘s efforts towards economic and
social development since the obstacles to such development can be largely
eliminated or reduced. As a vehicle of industrial peace or harmony, collective
bargaining has no equal.

 It is the most significant aspect of labour-management relations and extends the

democratic principle from the political to the industrial fields. It builds up a
system of industrial jurisprudence by introducing civil rights in industry and
ensures that management is conducted by rules rather than by arbitrary
decisions.

 The exploitation of workers by the management is checked.

 Collective bargaining is a measure to distribute equitable the benefits derived

from industry among all the participants including the employees, the unions,
the management, the customers, the suppliers and the public.

13.7. FUNCTIONS OF COLLECTIVE BARGAINING

Over the past few decades, collective bargaining has come to be accepted as a
process of decision-making and a mechanism for balancing the power between the
employers and the employees on a case-by-case basis. In the process, collective

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bargaining performs three important functions, as identified by Arthur D. Butler.
These are:

 Technique of long-run social change.

 Peace treaty between two parties in continual conflict.
 Establish a system of industrial jurisprudence.
Functions of Collective Bargaining

Social change Industrial peace Industrial democracy

Long-Run Social Change.

Collective bargaining in its broader aspect is not confined only to the economic
relations between employers and employees. In fact, it is a technique whereby an
inferior social class or group carries on a never slackening pressure for a bigger share
in the social sovereignty as well as for more welfare, security and liberty for its
individual members. Social change consists of the alteration of pattern of actions and
interactions and also simultaneous change in the norms, values, cultural products and
symbols. If these two statements describing the nature of collective bargaining acts as
an agent to bring about the social change, i.e., it contributes towards the change in
interaction patterns, values and normative system of the society at large.

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 Thus, when viewed as a process of social change, collective bargaining
encompasses more than the direct clash between employers and unions. It refers to the
rise in the political and social power achieved by workers and their organizations.
With gradual rise in political and social powers, workers gain greater recognition and
ability to assert against employers. By capacities, they compel the employers to
bargain with them and develop novel interaction patterns and values.

The contribution of collective bargaining towards the process of social change

brings to light two important implications:

 Collective bargaining is not an abstract class struggle, but is rather

pragmatic and concrete. The inferior class does not attempt to abolish
the old ruling class, but merely to become equal with it. It aims to
acquire large measures of economic and political control over crucial
decisions in the areas of decision-making.

 The process of change initiated by collective bargaining also functions

as a source of stability in changing environment. Wage earners have
enhanced their social and economic position and the same time,
management has retained a large measure of power dignity. These gains
were not registered in one great revolutionary change, but rather step by
step, with each clash between opposing parties settled with a new
compromise somewhat different from previous settlement. Thus
collective bargaining accomplishes long-run stability on the basis of day
by day adjustments in relations between management and labour. As
such, it encompasses a great prerequisite for social change that it permits
groups which are rising in power and prestige to approach their new
levels of authority, and at the same time permits groups which are
declining to retain their dignity and respect.

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 Peace Treaty or Temporary Truce.

Collective bargaining may be viewed as struggle between two opposing powers

which is smoothened by the compromises. Compromise represents a state to which
each side is prepared to descend from the original stand (with neither party fully
satisfied). This receding from original position may come about in two major ways:

(a) With combative aspects.

(b) Without combative aspects.

(a) Compromise with combative aspects:

When combative aspects of parties are in operation, the outcome of struggle

depends on the parties‘ relative strength. The inherent strength of each side is its
ability to withstand strike. This is partly an economic matter. To what extent can the
union provide financial aid to the strikers? Can the workers find temporary jobs? Are
unemployed workers available to serve as strike breakers? How much will employer‘s
sales are reduced? Will his position in the product market be permanently impaired?

The ability to withstand strike also depends on such non-economic factors as

loyalty of workers to union, and their willingness to make personal scarifies to support
its goals. The degree of loyalty, of course, is affected by the presence of any
factionalism within the union.

The settlement between the two parties when finally reached, with or without
strike, is a compromise. The extent to which each side is willing to accept less than its
original bargaining demands depends, in part, on how strong it feels relative to its
opponent. The compromise then is a temporary truce with neither side being
completely satisfied with the results. Since the contract is always of limited duration,
each begins immediately to prepare a new list of demands, including previously
unsatisfied demands and to build up its bargaining strength in anticipation of next
power skirmish.

(b) Compromise without combative aspects.

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 Not always, as described above, the compromise is the culmination of continuous
struggle and antagonistic attitudes. Instead a majority of contracts are reached without
a strike; the truce is signed before either opponent fires a shot. A tranquil stability is
achieved in the process of controlling economic change. That is, the union starts first
of all to make changes and improvements in its relations with the employers. Once a
truce has been signed, the union stabilizes working conditions by presenting the status
defined in the contract. It generally adheres to this contract and might bring sanction
against any attempt to abrogate the contract.

(c) Industrial Jurisprudence.

Collective bargaining creates a system of industrial jurisprudence. It is a method of

introducing civil rights in industry, that is, of requiring that management be conducted
by rules rather than arbitrary decisions. It establishes rules which define and restrict
the traditional authority exercised by management.

13.8. CASE STUDY

United Steel Workers of America (USW) and 10 other major steel factories in USA
have ratified a historical Agreement to eliminate strike in 1973. This Agreement was
subsequently validated till 1980. This Agreement was preceded by devastating strike
the loss of which was estimated $80 million per annum. In addition it also resulted in
loss of one lakh full time job opportunities in USA due to import of steel during the
strike period. This Agreement was popularly known as ―Experimental Negotiation
Agreement‖ (ENA). The terms of E.N.A are the following:

 Avoid strike as a means of setting industrial dispute.

 3.5 lakh employees were assured of wage increase at least 3% every year from
1974.
 Employees were given a onetime bonus of $ 150.
 Refer any unresolved disputes for arbitration.
Interestingly enough, some union members approached the Federal Court in USA to
declare this Agreement null and void as it violated the constitution and labour law, by
giving up ―strike‖ as a means of settling industrial dispute. Court upheld the
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Agreement on the ground that a ‗union‘ is ―representative democracy‖ and not a ―pure
democracy‖.

13.9. NOTES
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13.10. SUMMARY

While describing the nature of collective bargaining, attempt has been made to
present its definition, nature, objectives, functions, process and types. The widening
scope of collective bargaining embraces various issues. The collective bargaining
procedure involves variation, preparation, stages, critical situations, drafting and
designing of contract and contract administration. At present, trade unions are irritant
rather than threat to management. Accordingly, concept of collective bargaining has
changed with growing power of employers and dwindling fortunes of trade unions.

13.11. KEY WORDS

Collective bargaining,

Labour organization,

Employees,

Employer‘s management,

Industrial jurisprudence,

Negotiation

13.12. SELF ASSESSMENT QUESTIONS

1. What is collective bargaining? What are its major functions?

2. Describe the procedure of collective bargaining.

3. Explain the importance of collective bargaining in India?

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13.13. REFERENCES

1. International Labour Office, Collective Bargaining in Industrialized Market

Economics, Geneva, ILO, 1974.

2. International Labour Office, Collective Bargaining: A Response to the

Recession to the Industrialsed Market Economy Countries, Geneva, ILO,1987

3. Chamberlain, N.W and J.W. Kuhn (1951), Collective Bargaining, 2nd edn,
McGraw-Hill.

4. National Commission on Labour (1969), report Ministry of Labour, Govt. Of

India.

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UNIT 14 COLLECTIVE BARGAINING / AGREEMENTS

STRUCTURE

14.0. Objectives
14.1. Introduction
14.2. Meaning and Definition
14.3. Prerequisites of Collective Bargaining
14.4. Implementation and administration of Agreements
14.5. Collective Bargaining as Wage Fixation
14.6. Analysis of Collective Bargaining Agreements
14.7. Case Study
14.8. Notes
14.9. Summary
14.10. Key words
14.11. Self Assessment Questions
14.12. References

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 14.0. OBJECTIVES

After studying this unit, you Should be able to;

 Understand the prerequisites of collective bargaining,

 Implementation and administration of Agreements,
 Collective bargaining as wage fixation,
 An overall analysis of collective bargaining agreements.

14.1. INTRODUCTION

One of the efficient ways of resolving industrial disputes is collective bargaining.

It is concerned with the relations between trade union representing workers and the
management representing the employers. It is the distinct feature of modern industrial
era. Industrial peace and harmony can be achieved only if there are healthy industrial
relations in the country. Collective bargaining is defined to cover the negotiation,
administration, interpretation, application and enforcement of written agreement
between employers and unions representing their employees setting forth joint
understanding as to policies and procedures governing wages, rates of pay, hours of
work and other conditions of employment. So the collective bargaining can be
defined as:

14.2. DEFINITIONS:
Encyclopedia of social services defines collective bargaining as ―a process of
discussion and negotiation between two parties one or both of whom is a group of
persons acting in concert. The resulting bargain in an undertaking as to the terms and
conditions under a continuing service is to be performed‖.
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 According to Michael [Link], ―Collective bargaining refers to a process by which,
employers on the one hand, and representatives of employees on the other, attempt to
arrive at agreements covering the conditions under which employees will contribute
and be compensated for their services‖.

L.G. Reynolds defines it as, ―Trade unions try to advance the interests of their
members mainly be negotiating agreements usually termed‘ union contracts or
collective agreements‘ with employers. The process by with these agreements are
negotiated, administered and enforced are included in the term collective bargaining‖.

14.3. PREREQUISITES OF COLLECTIVE BARGAINING

1. RIGHT TO ORGANISE AND RIGH TO COLLECTIVE BARGAIN:

The extent to which, the workers enjoy the right to organize and bargain
is the key success factors to which collective bargaining works in any country.
There are two prerequisites for the successful implementation of this condition,
first is the effective enjoyment of the freedom of association in accordance with
the principles set out in the ―Freedom of association and the protection of right
to organize convention‖, and the second is the ―workers and the employers
organization should be free and sufficiently strong but also relatively equal in
strength with the management.

2. STRONG AND STABLE TRADE UNIONS:

The impact of unionization has a strong influence on the growth and
development of collective bargaining in a country. The rate of unionization
varies from country to country. The strong and stable trade unions lead to the
success of collective bargaining. Whereas the fragmentation of the unions, inter
union and intra union rivalries hinders the progress of the collective bargaining
process. This also leads to the host of other problems both for the employer as
well as the state, in addition to the above said.
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 Example: A union in the plant level may have conflict with the central union,
ultimately affecting the collective bargaining process.

3. RECOGNITION OF TRADE UNIONS:

The collective bargaining can take place only if the employers recognize
trade unions or the workers association for that purpose. The refusal of
employer to recognize the trade union or the complications that might arise in
achieving recognition greatly complicates the process of collective bargaining.
Recognition of union is achieved in two ways: it can be made compulsory
under the law or some systems must be developed by which the unions can be
recognized. For example: There are some countries where there is no legal
provision regarding the recognition of trade unions and hence such unions have
to struggle for getting the same.

4. ATITUDE OF EMPLOYERS AND TRADE UNIONS:

The attitude of the parties involved is also a crucial factor in the success of
the bargaining. If the parties are rigid, non-compromising and close minded it
will be impossible for collective bargaining to function. In that case the
common consensus is hard to be reached upon. On the contrary, if, the parties
have a compromising and flexible attitude, then only the possibilities of an
agreement can take place.

5. A SUITABLE FRAMEWORK:
A set of established procedures and a governing body is required for the
smooth and effective functioning of the collective bargaining procedures. In
case of developing countries the lack of a suitable frame work is so acute that,
the collective bargaining procedure may come to a standstill. These statutory
bodies are established in many of the developing countries where they may
vary in regards of composition, terms of reference and level of operations. The
machineries for the effective work out of the process of collective bargaining
have been laid down either by the legislation of the country or by mutual

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 agreement. Therefore setting up of the well organized negotiating bodies for
the purpose of collective bargaining is of immense importance.

14.4. IMPLEMENTATION AND ADMINISTRATION OF AGREEMENTS

Methods of implementation

In some countries the implementation and supervision of collective agreements

depend on the good faith of the parties, and their provisions cannot be enforced by
action at law. This is the position , for example in the United Kingdom, where it is
assumed that the working condition agreed upon collectively by the employers and
trade unions will be observed by the individual employees and the workers, who will
conclude individual contracts in accordance with the terms of the process. It should be
remembered that when a trade union and an employer‘s organization agree, for
example, that a certain wage shall be paid for a certain job, neither the unions nor the
employer‘s organization is actually employing workers on that job. The actual
contract of employment is concluded between individual employers and individual
workers. Under the British system, there is usually no legal impediment to their
concluding contracts providing for lower standards of remuneration than those fixed
in the collective bargaining; an action cannot be considered by the courts merely
because its terms are less favorable than the terms of such an agreement. Only if the
individual contract is violated can it be enforced by the legal process. The essential
remedy for failure to observe the terms of a collective agreement by an employer
belonging to an organization which is a party to the agreement is pressure by this
organization and trade union concerned. In the last resort the union could use its
economic power by calling a strike at the plant to secure enforcement.

In a great many other countries where the effects of collective agreements are
regulated by special legislation, the provisions of collective agreements are
automatically applicable to the employment relationships of all individuals covered by
them. In these cases observance of a collective agreement may therefore be secured
through action for damages in the courts wherever there has been a breach of the
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contract. Such actions can be brought either by an organization in the event of
violation by another organization which is a party to the agreement, or by one of its
members, to secure damages either for itself or for a member. Where this system exist
the law often prohibits, during the validity of an agreement, strikes or lockouts
intended either to enforce or to modify its terms.

Interpretation of agreements

Once collective bargaining has resulted in an agreement, the provisions of the

latter are regarded as part of each contract of employment, whether written or implied,
between an employer who is a party to the agreement and each worker in his employ
in the occupations represented by the trade union or unions. Many agreements contain
clauses specifying the procedure to be adopted if disputes arise over the interpretation.
These may provide that the dispute shall be submitted to a joint meeting of the
representatives of the parties. Often, too, there are clauses providing that there shall be
no strike or lockout over the question of interpretation until the procedure established
for reaching agreement on interpretation has been followed without success. In other
countries disputes over the interpretation of the collective agreements are settled by
special labor courts. Such disputes are as a rule more easily settled than those which
occur in the negotiations of new agreements, when much more important issues are at
stake; and they are of a different character.

Administration of the agreement

In the administration of the agreement, both parties, viz, the management and
the union, have to play their respective roles. It would be a mistake to assume that the
sole responsibility of the agreement administration rests with the employer. There can
be denial of the fact, however, that agreement administration requires a major and
more active role on the part of the management than on the part of the union. The
agreement embodies a number of issues which are of complex nature. Such complex
issues cannot be left for self administration. Experience has shown that during
negotiations many problems escape attention of the parties inadvertently; the reason
being that collective bargaining cannot be as perfect as mathematical calculations.

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Moreover, many novel situations arise or develop which could not possibly have been
conceived at the time of entering into the agreement. These problems within the
framework of the agreement and without letting its balance tilt too much in favor of
either party. This is definitely not an easy task.

With a view to making administration of the agreement smooth and easy, it

should be the duties of both the parties to educate the line managers and the rank and
file of workers on the meaning and interpretation of each clause of the agreement.
There is a need for extensive and effective communication in this behalf. Various
methods such as, house – magazines, bulletins, meetings and conferences are
considered to be important media to interpret the agreement. Since detailed
commentaries are usually avoided in the text of the agreement, the administration
thereof is the proper time when detailed commentaries tend to serve a useful purpose.
Proper care need, however, be exercised to ensure that no conflict arises while giving
interpretations and making commentaries on agreement clauses by the parties
concerned.

As already stated elsewhere, the process of negotiations does not end with the
fruition of the agreement but is continued thereafter. The administration of negotiated
agreement is a vital link in the chain of this process. A number of day to day problems
crop up which have no direct bearing on the agreement. Such problems may require
even longer time to negotiate than did the collective bargaining agreement itself.
Generally speaking, the management is not inclined to enter into negotiations on these
problems. The employer considers that conclusion of the agreement is the be-all-and-
end-all of labor problems during its tenure. This attitude is not correct in the situation
of collective bargaining. It must be borne in mind that the agreement is negotiated
with the basic objective of providing satisfactory cooperation of both the parties as a
continuous process at all stages of negotiations and the same objective should pervade
the administration of the agreement.

The handling of grievances is a part of agreement administration. The

administration of the agreement enjoins upon the parties that the grievances are

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handled promptly and satisfactorily so that these are not allowed to accumulate and
later emerge in the shape of a major dispute. If the grievances defy satisfactory
solution or settlement the deficiency lies in the agreement administration rather than in
the agreement itself. Except minor grievances of transitory character, it is necessary to
put all grievances on record so that their examination is conducted in a proper and
systematic manner. Such recording also helps in the preparation of further
negotiations between the parties.

Due to dynamic character of labor management relationship, occasions may

arise necessitating adjustments and modifications in the agreement by mutual consent.
While such actions form an integral part of agreement administration, the authorities
on the subject have strongly advocated that such adjustments and modifications
should not be effected without prior consultation with shop stewards and line
managers in whose area the problem originated. Their participation is deemed
absolutely necessary as they are not only directly involved but also have to carry out
the compromises to workable implementation. Any attempt to ignore this important
link is fraught with difficulties, is the amount give rise to avoidable resentment and
violates an important principle of agreement administration.

14.5. COLLECTIVE BARGAINING AS WAGE FIXATION

A significant feature of collective bargaining agreements is the wages that will be
paid for the work done by the employees. The union‘s concern as well as that of the
management is the criteria utilized in wage negotiations. In actual fact the union is
rarely involved in setting the original job rates; this is done by the management. The
union is actually involved in enhancing, or, at least, preventing a decrease of wages.
This factor is significant in determining the union‘s wage criteria and is to be taken in
conjunction with the economic factors prevalent in the plant or industry. The major
criteria used by unions and management in setting wage levels can be classified as:

 Measure of equity

 Measure of need

 Measure of contribution
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 However, the most commonly used criteria are comparable wages, cost of living,
the living wage, the ability to pay, productivity and purchasing power. The living
wage and purchasing power criteria are used only by unions as justification for their
demands. To the management, wages are a cost and to the worker (union) income.
Some concerns for the management would be in terms of saving by reducing workers
or transferring resources for technological improvements. The worker‘s (unions) will
constantly compare themselves with others in same field. These issues are usually
examined in the context of the commonly used wage criteria referred to earlier.

Another area of significance is that of productivity bargaining. The concept of

productivity bargaining has gained increasing attention in the Indian industrial
relations system. In such agreements advantages such as higher wages or increased
leisure are given to workers for accepting changes in established work practices and
organization of work itself, thus reducing/eliminating waste and leading to more
effective working.

Randle and Wortman state: ―Productivity usually refers to output in physical units
per man hour of work. It is a measure of the relationship between the volume of goods
produced and one factor of input-labour time‖. However, labour is only an input and
there are several other variables such as ―more efficient utilization of fuel, more
economical materials; technical improvements in machines; in organization and in
process; the skill and effort of the work force; the efficiency of management and the
state of Labour Relations‖. Increased productivity is usually reflected in increased
ability to pay therefore industries with high or increasing productivity are generally
able to pay high wages. Data shows that historically productivity has been going up at
the aggregate for the national level. Productivity data is computed both nationally and
plant-wise. Man hour production over time is the basis for calculating the
productivity, but as argued earlier Labour‘s contribution is difficult to isolate. This
data therefore serves as the base for negotiations to move on, coupled with other
arguments by unions, particularly in boom and normal periods.

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 The engine plant of the Amalgamations group on Madras did resort to
productivity type bargain many years back. In the plantation industry, work norms are
established for each type of activity. The emphasis here is on achievement of targets.
If the worker is fast and does not take the full time for scheduled breaks and if he
finishes his assigned task early, then he does not have to wait; he may leave the work
spot. The emphasis here is not on time spent, but on output and quality. The Indian
Railways have also established a productivity base, taking a base year as the norm and
comparing subsequent year‘s performance with the base, to identify variations and
establish the productivity achieved. In fact the Government of India tried hard to
propagate the concept of productivity-linked bonus, to boost output and control
inflation, especially at the time of payment during the festive season.

In India, Collective bargaining as one of the methods of wage fixation has been
adopted in many industries. Most of the agreements are at the plant level, though some
significant industry level agreements have also been concluded. The numbers of long-
term agreements are also on the increase in the range of two to five years. Since the
Industrial Disputes Act 1947, which governs the relations between management and
workers of Industrial establishments, does not provide for recognition of trade union
as a sole bargaining agent, collective bargaining has been more frequent in industries
where there are majority unions.

Apart from dealing with issues relating to wage matters, collective agreements
cover a wide range of aspects of employment from recruitment to retirement.

The scope of collective bargaining agreements now covers issues such as

wages, bonus, overtime, paid holidays, paid sick leaves, safety wear, production
norms, hours of work, performance appraisal, workers‘ participation in management,
hiring, fixing of job evaluation norms, and modernization. Although the scope of
collective bargaining is expanding, wages remain their main concern.

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14.6. ANALYSIS OF COLLECTIVE BARGAINING AGREEMENTS
Collective bargaining agreements have been concluded at various levels in India-
at plant level, industry level and national level.

At Plant Level

A collective agreement at plant level is reached only for the plant for which it
has been drafted, and its scope and extent are limited only to that particular unit or
undertaking. The agreement generally provides for certain common norms of conduct
with a view to regulating labour management-relations and eliminating hatred and
misunderstanding. It contains provisions for a quick and easy solution of those issues
which require immediate and direct negotiation between the two parties, and lays
down a framework for their future conduct if and when controversial issues arise.

Since 1955, a number of plant level agreements have been reached. These
include:

The Bata Shoe Company Agreement, 1955,1958 and 1962; the Tata Iron &
Steel Co. Agreement, 1956 and 1959; the Modi Spinning and Weaving Mills
Company's Agreement of 1956; the National Newsprint Nepanagar Agreement of
1956; the Belur Agreement of 1956 (between the Aluminium Co. and its employees);
The Metal Corporation of India Agreement of 1960 and 1961; the agreement reached
between Caltex India and its workmen in 1959, and the one arrived at between the
Hind Mercantile Corporation and the workers of the manganese mines at
Chikangyakam Haiti, in 1968; the Bhilai Steel Plant and its workers.

The highlights of the agreement between the Tata Iron & Steel Co. and its workers'
union, which was concluded in 1956 " to establish and maintain orderly and cordial
relations between the company and the union so as to promote the interests of the
employees and the efficient operation of the company's business", are:

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 The company recognizes the Tata Workers' Union as the sole bargaining agent
of the employees at Jamshedpur. It agrees to the establishment of a union
membership security system and the collection of union subscriptions which
would be deducted at the source from the wages of all employees, except from
the salaries and wages of the supervisory staff.

 The union recognizes the right of the company to introduce new and/ or
improved equipment and methods of manufacture, to decide upon the number
and locations of plants, and the nature of machinery and/ or equipment required
for them, subject to the condition that the union would be consulted beforehand
if the interests of the employees are likely to be affected adversely.

 The union recognizes the right of the company to hire transfer promote or
discipline employees after the normal procedure for this' purpose has been gone
through; to fix the number of men required for the normal operation of a
section or a department; and to abolish change or consolidate jobs, sections,
departments, provided that' when the employees' interests are likely to be
adversely affected the management shall consult the trade union before any
decision is taken.

 The company assures the union that there shall be no retrenchment of existing
employees. The employees required for the various jobs shall, wherever
necessary, be trained on the specific jobs; and if any employees are transferred
or put under training, their present average earnings shall be guaranteed to
them.

 The company and the union agree to a programme of job evaluation as the
basis of a simplified and rational wage structure.

 The company agrees that promotions to vacancies in the supervisory and

nonsupervisory staff shall be made, wherever possible, internally. It further
agrees that the grievance redressal procedure, formulated in consultation with
the union, shall be introduced in all the departments, and shall be strictly

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 followed. The top management of the company and of the union shall intervene
only in exceptional cases.

 The company agrees that the amount of dearness allowance will be included in
the wages of employees at the time of the calculation of gratuity to be paid to
them.

 The company and union agree to negotiate revised wages and emoluments
separately for the workers in the plant, for the supervisory staff and for
employees outside the works.

At the Industry Level

The best example of an industry level agreement is offered by the textile

industry of Bombay and Ahmedabad.

The agreements between the Ahmedabad Millowners' Association and the

Ahmedabad Textile Labour Association, which were signed on 27th June, 1955, laid
down the procedure to be followed for the grant of bonus and the voluntary settlement
of industrial disputes. The salient features of the first agreement are:

The agreement applied to all the member mills of the Association and contained terms
for the determination and set dement of bonus claims for four years—from 1953 to
1957. It was agreed between the parties that the bonus would be payable only out of
an "available surplus or profit" after all the charges had been provided for—charges
for statutory depreciation and development rebate, taxes, reserves for rehabilitation,
replacement and/or modernization of plant and machinery, including a fair return on
paid-up capital. The fair return would be computed at 6 per cent on the paid-up capital
in cash or otherwise, including bonus shares and reserves employed as working
capital. The bonus would be paid to employees out of the available surplus or profit at
a rate which would be not less than 4.8 per cent and not more than 25 per cent of the
basic wages earned during a particular year.

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 The two Associations agreed that they would jointly determine the quantum of
the available surplus or profit, and fix the quantum of bonus to be distributed by each
mill. If mere was any difference of opinion between the two Associations, the matter
would be referred for decision to the President of the Labour Appellate Tribunal or, if
he was not available, to an umpire to be mutually agreed upon under the second
agreement or, in his absence, to a person acceptable to both the parties; and that
decision would be final and binding on both.

The second agreement provided that all future industrial disputes between the
members of the two Associations would be settled by mutual negotiation, failing
which by arbitration, and that they would not resort to any court proceedings for the
purpose of resolving their disputes. If arbitration was agreed upon, each party would
constitute a panel of arbitrators and also jointly nominate a panel of umpires
consisting of not less than two and not more than five independent persons. Whenever
there was an industrial dispute which had not been settled by mutual negotiation each
party would nominate its own arbitrator from a Board of Arbitrators. This Board
would select an umpire out of the panel or from among outsiders so that, in the event
of a difference of opinion between the two arbitrators, their individual decisions might
be referred to him for evaluation. The award given by the umpire would then be final
and binding on both the parties.

The agreements at the national level are generally bipartite agreements and are
finalized at conferences of labour and managements convened by the Government of
India. The Delhi Agreement of 7th February 1951 and the Bonus Agreements for
Plantations Workers of January 1956 are example of such bipartite agreements.

At National Level:

The Delhi Agreement was concluded at a conference of the representatives of

labour and managements and related to rationalization and allied matters. It was
agreed at this conference that:

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 Musters would be standardized and workloads fixed on the basis of the
technical investigations carried out by experts selected by the management and
labour. At the same time, the working conditions of labour would be
standardized. When new machinery is set up, a period of trial may be necessary
before standardization is affected.

 Wherever rationalization is contemplated, fresh recruitment should be stopped;

and vacancies which occur as a result of death or retirement should not be
filled.

 Surplus workers should be offered employment in other departments whenever

it is possible to do so. At the same time, it should be ensured that there is no
break in their service and that their emoluments do not go down.

 Whenever conditions in an industry permit—that is, conditions governed by the

raw materials position, the state of the capital goods and the products
manufactured by a company—new machinery should be installed.

 Gratuities should be offered to workers to induce them to retire voluntarily.

 Whenever there is need for retrenchment, the services of those who were
employed last should be terminated first.

 Workers who are thrown out of employment as a result of rationalization

should be offered facilities for re-training in alternative occupations. The
period of such re-training may be extended up to nine months. A scheme for
this purpose should be jointly worked out by the government, the employers
and the workers.

 The maintenance of the workers during the period of their retraining would be
the responsibility of the employers, while the cost of this re-training would be
borne by the government.

 The fullest use should be made of surplus labour in the various projects
undertaken by the government.

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  Incentives in the form of higher wages and a better standard of living should be
offered to show the gains which have accrued as a result of rationalization.
Where such gains have largely been the result of additional efforts made by the
workers, the latter should have a share in them, particularly when their wages
are below the living wage. The capital investment of the management should,
however, be taken into account while determining the workers' share in the
gains of rationalization. In this way, workers would be persuaded to accept the
need for rationalization.

The bonus agreement for plantations workers was concluded in January 1956 between
the representatives of the Indian Tea Association and the India Tea Planters'
Association on the one hand and the Hind Mazdoor Sabha and the Indian National
Trade Union Congress (INTUC) on the other. The agreement was about the payment
of bonus to about one million plantation workers.

With growth, the nature of collective bargaining has changed over the years. This
is applicable not only to structure but to the contents, languages and format of
agreements. Agreements concluded earlier even in the same company usually
covered fewer items of issues and dealt mainly with wages and allowances,
working conditions and welfare. But as costs increased over the years, and
management demands featured more and more in the negotiation process, many
more issues have crept into the negotiations.

Format of Agreements:

A collective agreement usually has the following format:

1. Names of the signatories – names of the Parties to Agreement, both from

management and union sides, and their respective signatures,

2. Coverage – the locations and establishments to which the Agreement

applies and the particular categories of workmen who are covered (without
this, some categories may also claim benefits and higher returns).

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 3. Short Recital of the Background – is an introduction indicating the
circumstances in which the agreement was signed and whether it was
signed in conciliation or was purely bipartite, whether a strike or lockout
marred it, how quickly it was concluded, what hampered or facilitated it,
and so on.

4. Duration of Agreement – this may come at the beginning of end, but

indicates the period for which the agreement holds, and the method of
terminating the agreement.

5. Body of Agreement – the terms of the settlement or the issues such as

wages, working conditions, welfare allowances, production targets, and so
on.

6. Appendices – which may list personnel affected, or revised wages, fitment

formula, productivity, incentives or benefits, bonus calculations, etc.

The order of some of these items may change from agreement to agreement, but the
basic format remains constant.

Many of the agreements being signed from time to time are settlements under
section 12(3) of the Industrial Dispute Act, and are binding on the entire organization.
Management, who are unsure of their control over the unions or workers, often resort
to this method. In recent times, key agreements involving productivity or employment
or major organizational changes have used this expedient.

Coverage:

Most companies specify the type of employees covered in each agreement. For
example, Hoechst India Ltd signed two separate agreements at the same time, one for
the permanent workmen of its head office, Bombay branch and its factory at Mulund
and another for its permanent Medical, Veterinary, Diagnostic and Agrochemical
Representatives at different centers all over the country. Philips signed separate
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agreements for its different regions. But in 1997, there were demands in the Calcutta
region for parity with other regions, especially Bombay or Pune, where wages were
higher. To a great extent, state government pressure on the union helped Philips to
reach an agreement. Atlas Copo (India) Ltd. Covered all its permanent staff and
permanent workmen at all locations, but belonging to the Employees‘ Federation.

Britannia Biscuit Company‘s agreement of 1995, was restricted to just the

clerical, supervisory staff and area salesmen of one factory, but signed under section
12(3) and 19(3) of ID Act. Many of the PSUs have coverage in their agreements, to
include all employees. The names of all unions representing employees at Bombay,
Ahmedabad, Baroda, Tripura, Ankleswar (Gujarat), Dehra Dun (Uttaranchal),
Calcutta, and Sibsagar(Assam), appeared in National Aluminium agreement of 1987,
five locations in addition to its registered offices were included in the agreement,
covering all its establishments in India.

Duration:

In the 1970s and 1980s, agreements were signed for two to three years. This
gave management less elbow room, since the gap between agreements was quite short.
During the late 1980s and 1990s, most agreements were stretched out to four of five
years‘ duration. This assured a longer period of certainty to management, and relieved
them form the strains of fresh negotiations at short intervals. Tamil Nadu Electricity
Board (TNEB) signed an agreement for 5 years in 1979. This was departure from the
usual practice. But the advantages of the longer duration were nullified by the signing
of several supplementary agreements on billing systems, before the expiry of the main
agreement. Ultimately, TNEB ended up with 50 settlements in 28 years. However,
during 2000, it was observed that the gap between agreements again reduced to 3 or
even 2 years. Some smaller companies or establishments had signed annual
agreements.

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 But some industries, for instance the jute industry, stretched out the
negotiations self to two years, thereby gaining at least a year at the old rates of pay.
For example, if an agreement expired in end-1992, and bargaining began only in the
mid-1993 and was signed in early-1994 with effect from January 1994, management
paid old wage rates for 1993. This was done on several occasions. There were delays
in the public sector negotiations as well, but the effective date of application was
usually from the date of expiry of the earlier agreement, with no loss of wage for
workers, who rather got hefty amounts as arrears. Bank agreements are a good
example. The industry settlement of 2 June 2005 was actually effective from 1
November 2002. The earlier agreement also had similar back-dated effect.

Public sector undertaking, Nalco‘s 1984 agreement what could be described as

pattern bargaining. It followed the structure and terms of the agreement concluded just
before, in Bharat Aluminium, and approved it through a Board resolution in 1987. In
one peculiar case-Bayer (pharmaceuticals), the agreement of December 1982
mentioned that the negotiations began with an IR consultant, rather than company
officials. This made the actual duration vague.

Issues and Concerns:

The usual issues included in collective agreements are of course wages, and other
terms and conditions of service. The issues constitute the main body or terms of
agreements even though their scope was expanding. The EFI studies of 1966, 1969
and 1971, referred to earlier; found the bulk of the agreements concentrating on wages
and allowances. It is possible to classify the issues into three broad groups:

 Wages and Allowances: which includes basic wages, fitment, dearness

allowances (fixed, additional, variable), special pay, stagnation benefits,
various allowances for house rent, city compensatory allowance, transport,
leave travel, etc.

 Benefits or Allowances related to Welfare and working conditions: like

medical, educational allowances or facilities, recreation facilities
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 heat/dust/difficulty/underground/night shift allowances, washing or uniforms,
leave pay, canteen or food facilities, social security benefits (statutory and non-
statutory) like provident fund, gratuity, pension, safety and others.

 Work-Related Issues: such as workload, fall-back wages, productivity and

production targets, control of wastage, capacity utilization, overtime, etc.

14.7. CASE STUDY

a) In 1920, Ahmedabad Textile Labour Association and Mill owners Association

agreed to go for peaceful settlement of disputes through voluntary negotiations
and arbitration. This agreement was reached under the leadership of Mahatma
Gandhi.
b) In 1940, the Coir Factory Workers Union and Coir Mats and Matting
Manufacturers Association, instituted a joint negotiating body called the
Industrial Relations Committee for voluntary negotiations and settlement of
differences in regards to terms of employment.

c) New Textile Wage Agreement – Bombay:

This agreement was reached between Bombay Mill Owners Association and
Rashtriya Mill Mazdoor Sangh (representative union as per BIR Act 1946) wherein a
new pattern was established which, for the first time made an attempt to link wages
with productivity. This Agreement was signed on 28 December 1973. Here a new
wage structure was developed and new pattern of DA was fixed. This Agreement was
valid for three years from 1.1.1974. The leftist trade unions were not satisfied and they
went on strike for 41 days and called off at the instance of Sri V.P Nail, the then Chief
Minister of Maharashtra.

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Following are the salient features of the agreement.

 As per original Agreement Minimum basic wage fixed at Rs. 282.52 per month
for unskilled labour.
 Annual increment of Rs.4.
 Agreed to link variable DA over Index No. 200 in percentage of revised
minimum pay.
 At the intervention of Mr. V.P. Naik, after the strike by leftist unions, an
additional increment of Rs.4 was given with effect from 1.4.1974.
 Workers of Government run mills were also given 50% of benefit of private
sector as per this agreement, external influence of Government was brought to
bear by intervention of Chief Minister, to modify terms of original agreement
between the original negotiating parties.
14.8. NOTES

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 14.9. SUMMARY

One of the efficient ways of resolving industrial disputes is collective bargaining.

It is concerned with the relations between trade union representing workers and the
management representing employers. The fundamentals of collective bargaining was
analyzed in this chapter and also the measures like, Measure of equity, Measure of
need and Measure of contribution were important for in fixation of wages as collective
bargaining.

14.10. KEY WORDS

Trade Unions
Wage fixation
Agreements
Administration
14.11. SELF ASSESSMENT QUESTIONS
1. What are prerequisites of collective bargaining?
2. Explain the implementation and administration of agreements in collective
bargaining?
3. What is the importance of collective bargaining in wage fixation?
4. How do you analyze the agreements of collective bargaining at various levels?
14.12. REFERENCES

 International Labour Office, collective Bargaining in Industrialized Market

Economics, Geneva, ILO, 1974.
 International Labour Office, collective Bargaining: A Response to the
Recession in Industrialized Market Economy Countries, Geneva, ILO, 1984.
 Chamberlain, N.W and J.W. Kuhn (1951), Collective Bargaining, 2nd edn,
McGraw-Hill.

 National Commission on Labour (1969), report Ministry of Labour, Govt. Of

India.

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UNIT- 15: NEGOTIATION SKILLS

STRUCTURE

15.0. Objectives
15.1. Introduction
15.2. Meaning and Definition
15.3. Types of Negotiations
15.4. Problem Solving Attitude
15.5. Negotiation Process
15.6. Techniques of Negotiations
15.7. Essential Skills for Negotiation
15.8. Case Study
15.9. Notes
15.10. Key words
15.11. Summary
15.12. Self Assessment Questions
15.13. References

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 15.0 . OBJECTIVES

After studying this unit, you Should be able to

 Understand the different types of negotiation.

 Analyze the different techniques of negotiation.
 Examine the process and essential skills required for negotiation.

15.1. INTRODUCTION
Negotiation is the process of discussion between two or more disputants, who seek
to find a solution to a common problem, one that meets their needs and interests
acceptably. Learning to be a skilled negotiator can help you make deals, solve
problems, manage conflicts, and preserve relationships.

‗A process of securing an agreement between parties with different needs and

goals, but each having something to offer to the other, and each benefitting from
establishing an agreement, though the balance of power can be dependent upon
whether one party‘s needs are significantly greater than the other‘.

It is a process by which the involved parties or group resolve matters of dispute by

holding discussions and coming to an agreement which can be mutually agreed by
concerned parties.

15.2. MEANING AND DEFINITIONS

Negotiation is a dialogue between two or more people or parties intended to

reach a mutually beneficial outcome, resolve points of difference, to gain advantage
for an individual or collective, or to craft outcomes to satisfy various interests.
Negotiation occurs in business, non-profit organizations, and government branches,
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legal proceedings, among nations and in personal situations such as marriage, divorce,
parenting, and everyday life. The study of the subject is called negotiation theory
Professional negotiators are often specialized, such as union negotiators, leverage
buyout negotiators, peace negotiators, hostage negotiators, or may work under other
titles, such as diplomats, legislators or brokers.

Starting with a definition may seem ‗academic‘ but it highlights some key points
about negotiation that provide some preliminary but important practical insights.
Negotiation is a process where two parties with differences which they need to resolve
are trying to reach agreement through exploring for options and exchanging offers –
and an agreement.

Firstly, negotiation is a process – a sequence of activities, perhaps with an

underlying pattern. It is not a single event – choices are made along the way. It is not
mechanical or deterministic – the choices negotiators make affect how agreement is
achieved and what the agreement will be.

Secondly, we need two parties for a negotiation. Having more than two parties
does not alter the fundamental duality of the process

Thirdly there must be differences. If there are no differences there is no need to

negotiate and because there are differences, we can expect some conflict and
competition. The parties must need to resolve their differences. It is this need that
generates cooperation between the parties. The need to settle their differences also
helps negotiators understand their power

According to ILO, ―as negotiations about working conditions and terms of

employment between an employer and one or a group of employees or one or more
employees‗ organizations, on the one hand, and one or more representative of
workers‗ organizations, on the other, with a view to reaching an agreement.

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15.3. TYPES OF NEGOTIATIONS

Distributive negotiation:

Distributive negotiation is also sometimes called positional or hard-bargaining

negotiation. It tends to approach negotiation on the model of haggling in a market. In
a distributive negotiation, each side often adopts an extreme position, knowing that it
will not be accepted, and then employs a combination of guile, bluffing, and
brinkmanship in order to cede as little as possible before reaching a deal. Distributive
bargainers conceive of negotiation as a process of distributing a fixed amount of
value.

The term distributive implies that there is a finite amount of the thing being
distributed or divided among the people involved. Sometimes this type of negotiation
is referred to as the distribution of a "fixed pie." There is only so much to go around,
but the proportion to be distributed is variable. Distributive negotiation is also
sometimes called win-lose because of the assumption that one person's gain results in
another person's loss. A distributive negotiation often involves people who have never
had a previous interactive relationship, nor are they likely to do so again in the near
future. Simple everyday examples would be buying a car or a house.

Integrative negotiation:

Integrative negotiation is also sometimes called interest-based or principled

negotiation. It is a set of techniques that attempts to improve the quality and likelihood
of negotiated agreement by providing an alternative to traditional distributive
negotiation techniques. While distributive negotiation assumes there is a fixed amount
of value (a "fixed pie") to be divided between the parties, integrative negotiation often
attempts to create value in the course of the negotiation ("expand the pie"). It focuses
on the underlying interests of the parties rather than their arbitrary starting positions,
approaches negotiation as a shared problem rather than a personalized battle, and
insists upon adherence to objective, principled criteria as the basis for agreement.

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 Integrative negotiation often involves a higher degree of trust and the forming
of a relationship. It can also involve creative problem-solving that aims to achieve
mutual gains. It is also sometimes called win-win negotiation. (Win-win game)

15.4. PROBLEM SOLVING ATTITUDE

When things get uncomfortable during negotiations, sometimes our tendency is

to dig in our heels and hold on to our position. That can be completely appropriate at
times – the challenge is to do it in a way that is professional and consistent with your
organization‗s values. A problem solving attitude can help.

A problem solving attitude doesn‗t mean that you give in or instantly

compromise every time as Manager disagree with the client. What it means is that a
Manager demonstrates open-mindedness. In other words, a Manager consistently let
them know that he is open to hearing about different ways to approach the situation
and reach a mutually acceptable solution.

15.5. NEGOTIATION PROCESS

In order to achieve a desirable outcome, it may be useful to follow a structured

approach to negotiation. For example, in a work situation a meeting may need to be
arranged in which all parties involved can come together.

The process of negotiation includes the following stages:

 Preparation

 Discussion

 Clarification of goals

 Negotiate towards a Win-Win outcome

 Agreement

 Implementation of a course of action

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Preparation :

Before any negotiation takes place, a decision needs to be taken as to

when and where a meeting will take place to discuss the problem and who will
attend. Setting a limited time-scale can also be helpful to prevent the
disagreement continuing. This stage involves ensuring all the pertinent facts of
the situation are known in order to clarify your own position. In the work
example above, this would include knowing the ‗rules‘ of your organization, to
whom help is given, when help is not felt appropriate and the grounds for such
refusals. Your organization may well have policies to which you can refer in
preparation for the negotiation. Undertaking preparation before discussing the
disagreement will help to avoid further conflict and unnecessarily wasting time
during the meeting.

Discussion:

During this stage, individuals or members of each side put forward the
case as they see it, i.e. their understanding of the situation.

Key skills during this stage include questioning, listening and clarifying.

Sometimes it is helpful to take notes during the discussion stage to record all
points put forward in case there is need for further clarification. It is extremely
important to listen, as when disagreement takes place it is easy to make the
mistake of saying too much and listening too little. Each side should have an
equal opportunity to present their case.

Clarifying Goals

From the discussion, the goals, interests and viewpoints of both sides of
the disagreement need to be clarified.

It is helpful to list these factors in order of priority. Through this clarification it

is often possible to identify or establish some common ground. Clarification is
an essential part of the negotiation process, without it misunderstandings are
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 likely to occur which may cause problems and barriers to reaching a beneficial
outcome.

Negotiate Towards a Win-Win Outcome

This stage focuses on what is termed a 'win-win' outcome where both

sides feel they have gained something positive through the process of
negotiation and both sides feel their point of view has been taken into
consideration.

A win-win outcome is usually the best result. Although this may not always be
possible, through negotiation, it should be the ultimate goal.

Suggestions of alternative strategies and compromises need to be considered at

this point. Compromises are often positive alternatives which can often achieve
greater benefit for all concerned compared to holding to the original positions.

Agreement

Agreement can be achieved once understanding of both sides‘

viewpoints and interests have been considered. It is essential to for everybody
involved to keep an open mind in order to achieve an acceptable solution. Any
agreement needs to be made perfectly clear so that both sides know what has
been decided.

Implementing a Course of Action

From the agreement, a course of action has to be implemented to carry

through the decision.

Stages in negotiation Process:

This is unique combination framework that puts together the best of many
other approaches to negotiation. It is particularly suited to more complex,
higher-value and slower negotiations.

The eight stage negotiation process:

1. Prepare: know what you want. Understand them.

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 2. Open: put your case. Hear theirs.

3. Argue: support your case. Expose theirs.

4. Explore: seek understanding and possibility.

5. Signal: indicate your readiness to work together.

6. Package: assemble potential trades.

7. Close: reach final agreement.

8. Sustain: make sure what is agreed happens.

There are deliberately a large number of stages in this process as it is designed to

break down important activities during negotiation, particularly towards the end. It is
easy trap to try to jump to the end with a solution that is inadequate and unacceptable.

Note also that in practice, you may find variation on these, for example there
may be loops back to previous stages, stages overlapping, stages running parallel and
even out of order.

The bottom line is to use what works. This process is intended to help you
negotiate, but do not use it blindly. It is not magic and is not a substitute for thinking.
If something does not seem to be working, try to figure out why and either fix the
problem or try something else. Although there are commonalities across negotiations,
each one is different and the greatest skill is to be read the situation in the moment and
adapt as appropriate.

15.6. TECHNIQUES OF NEGOTIATIONS

Share information.

We often approach negotiation being very guarded and wary of showing our
cards. Yet, while we believe this is a smart approach, it has a negative impact
on our outcomes and inhibits trust. As Grant points out, people tend to be
matchers and ―follow the norm of reciprocity, responding in kind to how we
treat them. If we want to be trusted, we must first offer it.
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 Studies have shown that revealing some information, even when it‗s
unrelated to the negotiation, increases the outcome. You don‗t have to put all of
your cards on the table at the outset. Simply putting something of yourself out
there – your hobbies, personal concerns, or hopes – can set a positive tone
that‗s conducive to gaining agreement.

Ranks order your priorities.

Typically when we negotiate, we know what our key issues are, and we
sequence them. For example, if we‗re trying to close a new client, we might
say that the price is most important, and if we don‗t agree, there‗s no use to
continue.

Grant recommends another approach called rank ordering. His research

shows that you are able to achieve better outcomes by ranking and leaving all
the issues on the table and being transparent about it. That way both parties can
compare their rankings and determine what the full sets of options really are.

In the above example, perhaps a Manager could make trade-offs in

scope or travel requirements if the client can‗t get to a Managers‗price.

Go in knowing your target price and your walkaway terms.

Galinsky calls your walkaway price (or terms) your reservation price.
Your target price is what you‗re hoping for. Often we go into negotiations with
one or the other – or let our partner start the bidding. This puts us at a huge
disadvantage.

It‗s critical to do the research ahead of time here. You need your research
to be based on firm data, as not only will it provide more confidence and power
to you, but it also reduces the chance that you‗ll throw something crazy out
there. By knowing your own range, it will help you make better decisions in the
moment, and be clear about your limits.

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Make the first offer.

This is one piece of advice that clearly defies conventional wisdom. In

negotiations, information is often equated with power. We believe it‗s best to
extract as much as possible from the other person before tipping our own hand.

Grant and Galinsky both agree that the research is clear on this point:
people who make first offers get better terms that are closer to their target
price. The reason is the psychological principle of anchoring. Whatever the
first number is on the table, both parties begin to work around it. It sets the
stage.

Often we are reluctant to go first because we may be way off, and

disengage the other party. But Galinksy notes that this does not play out in the
research. He said that most people make first offers that aren‗t aggressive
enough.

There‗s a reason we have the adage, ―you get what you pay for. Higher
prices make the buyer focus on the positives, while lower ones invite focus on
the downsides. In other words, we find data that supports this anchor.
(Consider real estate: a high-priced home makes us look at all the desirable
qualities, while a below-market offering brings up a bad location or needed
repairs.)

Galinsky says that ideally the best first offer is one that‗s just outside
your partner‗s reservation price, but not so far that they have sticker shock.

Don’t counter too low.

If you aren‗t able to make the first offer, then you need to also protect
yourself against the anchoring effect. Caution: most people go too low, too
quickly. Your counter should be based on the same information you would
have used if you‗d made the first offer, Galinsky says.

You may also want to consider re-anchoring, as Grant puts it. Let the
other person know that their offer is way off, and go back in with a new reset.

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 It also may be helpful to call out what you‗re observing to redirect the
conversation, i.e. you may be trying to test my thinking with that first offer, but
here‗s more of what I had in mind.

Counter offers make both parties more satisfied.

Every buyer wants to feel that they got a good deal; every seller wants to
feel as if they drove a hard bargain. Parties are most satisfied on both fronts if
there was some back and forth. This may come as a surprise if you‗re someone
who abhors negotiation.

Galinsky even advises that you shouldn‗t take the first offer, even if it
meets your needs. By going back and asking for concessions you can ensure
that you got the best deal, and increase your partner‗s satisfaction as well. More
satisfied partners are more likely to work harder and be more committed to the
end result, which is the ideal outcome from the start.

15.7. ESSENTIAL SKILLS FOR NEGOTIATION

Interpersonal Skills: Good interpersonal skills are essential for effective

negotiations, both in formal situations and in less formal or one-to-one negotiations.

These skills include:

 Effective verbal communication includes speaking

 Good Listening skill.

 Reducing misunderstandings is a key part of effective negotiation.

 Rapport Building - Build stronger working relationships based on mutual respect.

See our pages: Building Rapport and How to be Polite.

 Problem Solving - Learn some simple techniques to help you make better
decisions.

 Assertiveness is an essential skill for successful negotiation.

 Dealing with Difficult Situations.

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15.8. CASE STUDY

Case No 1:

Negotiation Styles Countries: USA & Japan

A well-known US candy company was interested in selling its products

overseas. The company found a possible partner based in Tokyo. The Tokyo
Company seemed to be perfect for the deal. After many phone calls between the two
parties, a decision was made to meet in Tokyo. The US Company chose one of their
businessmen, Mike Waller, to represent it. He was the company´s most persuasive
negotiator.

Before Waller left the United States, he and the company lawyer worked
together to write a detailed contract for the deal. The contract was fifty pages long.
The deal would be advantageous for both firms. It promised big profits.

Waller left for Japan with the contract. He was pleased with his careful
preparation. He thought his future partners would be satisfied with his work and
would be ready to bargain about the details of the contract. He had studied their
company interests and was sure they would want to change a few conditions in the
contract. He planned to agree to those changes as concessions. He was certain the
meetings would result in good negotiations and a quick final agreement.

On the day of the meeting in Tokyo, Waller entered the boardroom with copies
of the contract for the Japanese businessmen at the meeting. He handed them each a
copy and began discussing the details. The representatives of the Tokyo firm did not
open the contract. They didn´t discuss the contract at all, but instead spoke about
general business issues. They spoke about the proposed cooperation between the two
companies but they didn´t make any promises.

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 Waller then went back to the United States. He felt extremely surprised and
disappointed. The Japanese had never asked him one question about the contract. No
agreements or commitments had been made. He wasn´t even sure if there would be
another round of negotiations.

 What are the cultural dimensions involved in this case?

 Why did Waller fail to reach an agreement?

Case No 2:

M/s Bildop a private company making tyres with their HQ at Cochin. Labour
management relation was cordial. They have three years wages agreement renewed
periodically without any strike or lockout for the last ten years. There were three main
unions INTUC, AITUC & CITU owing allegiance to respective political parties.

Current wages Agreement is likely to expire shortly. Mr. Joseph, Director

Personnel was holding negotiations with union leaders for the last three months.
During this period he sorted out differences on all seven out of 8 points. The 8th point
was in regard to the wages increase. Union originally demanded a wage rise of 30%
where as management was prepared to go only up to 15%. After a series of
discussions, union leaders agreed to scale down their demand from 30% to 25% and
management agreed to increase their offer from 15% to 17%. The stalemate continues
for next 20days. Series of meetings went on among executives and union leaders
separately. Finally management cleared a figure of 18% wage increase. This
information was conveyed to unions by Director Personnel as the final offer and
suggest union to sign the agreement. Union leaders called a meeting of their members
and discussed the matter but the members did not agree instead called for strike.

Mr. Mathur, the MD, of the firm accepted their challenge and preferred to face
the strike than succumb to their pressure. He said union leaders were bluffing and
predicted that the strike would not last for more than two weeks.

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 After 1 week strike, union published a half page advertisement in the local
newspaper informing that they are rescinding to all tentative agreements reached on
all 7 points and in regard to 8 they have revised their demand of increase to 27%.

Management did nothing for three days. On the fourth day, when strike entered
the second week, the management published a one page newspaper announcement
stating their background and details of management offers justifying their actions and
concluding that the strike was unwanted. The advertisement ended with warming that
if the union leaders do not honour their tentative agreement already reached, they have
no other alternative but to declare a lockout. Management also announced that their
offer of present agreement will remain valid only for next three days.

 Explain union‘s rationale of the latest demand.

 Explain the reason of management actions.
 Predict the outcome of this dispute.
 Suggest additional gestures from management or union to break the present
stalemate.

15.9. NOTES
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15.10. KEY WORDS

ILO
Interpersonal Skill
Problem solving
Agreement.

15.11. SUMMARY
Negotiation skills are important part of communication skills. The situation of
negotiation usually emerges in case of conflict or buying and selling deals. It is a
delicate process that involves being clear about one‘s objectives, understanding other
party‘s position as well as one‘s own, and offering as well as accepting the proposal to
reach the agreement.

15.12. SELF ASSESSMENT QUESTIONS

1. Explain the different types of negotiations?

2. What are the various techniques available for negotiations?
3. Briefly explain the process of negotiation?
4. How skills are essential for negotiation. Discuss.
15.13. REFERENCES
1. Drucker, F. Peter, (2007). Management – Tasks, Responsibilities & Practices.
18th Reprint Allied Publishers, New Delhi.
2. Business Communication: Concepts, cases and applications: PD Chaturvedi &
Mukesh Chaturvedi, Pearson Education.
3. Business Communication, Process and Product – Mary Ellen Guffey –
Thomson Learning.
4. Basic Communication, Lesiker Flastley – TMH.
5. Excellence in Business Communication – Bovee, Thill – Pearson Education.

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UNIT 16 WORKERS PARTICIPATION IN MANAGEMENT (WPM)

STRUCTURE

16.0. Objectives
16.1. Introduction
16.2. Meaning and Definition
16.3. Determinants of workers Participation in Management
16.4. workers Participation in Management in India – Schemes / Methods/
Techniques
16.5. Reasons for Failure of WPM in India
16.6. Notes
16.7. Summary
16.8. Key words
16.9. Self Assessment Questions
16.10. References

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 16.0. OBJECTIVES

After studying this unit, you will be able to

 Understand the meaning, definitions and concept of WPM.

 Identify the determinants of WPM.
 Examine the various schemes/methods adopted by India as WPM.
 Understand the reasons for failure of WPM in India.

16.1. INTRODUCTION

Participative management is also referred to as workers participation in

management. The concept of workers ‗participation in management is considered as a
mechanism where workers have a say in the decision-making process of an enterprise
formally. The concept of Quality Circles (QC) provides informal involvement of
employees in the decision-making and implementation process. WPM has come to
stay in both developed and developing countries. Its efficacy as a system is no more in
question but its content, and structure, is what is debated about, in terms of the ‗best
fit‘. The concept is an extension of the political system to the work place. In a
democracy, participation of the people in the political process is an essential process
to workplace relations. Participation in the political context is an influencing process,
so also at the plan level, it affects employee terms and conditions of employment. Yet
at the same time, the process of participation also helps in understanding the dynamics
of an enterprise‘s viability and hence a ―We-They‖ culture. Such a process helps in
the growth of the individual and creates a sense of belonging. The structure, content
and form of WPM depend on the political ideology and systems adopted by a
particular society. Socialist ideologues advocated direct participation at every level of
management, whereas the capitalist societies left it unconstructed. Thus the range of
WPM, in terms of forms, levels and content, extends form self-management in
Yugoslavia, codetermination in West Germany, collective bargaining in Anglo-
American countries to joint management councils and works committees in India.
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 16.2. MEANING AND DEFINITION

The concept of workers‘ participation in management is considered as a

mechanism where workers have a say in the decision making process of an enterprise.

In the view of social thinkers like Comte and Owen, workers‘ participation in
management should be encouraged for achieving social justice. They were concerned
about the status of workers in the factory organization and in order to prevent their
exploitation, they observed that workers should have as much power as the
management.

From the point of view of social scientists, participative management is one of

the tools of management where the emphasis is on the utility of a humane approach.
The experiments of Blake, Mayo, Lewin and Likert popularized the belief that if
workers are given opportunities to participate in the management process there could
be positive gains to the organization‘s effectiveness and morale.

The form that WPM can take depends on the differences in the level of
management, the subject matter of participation, the strength of the union and the
pattern of industrial relations. The important forms in which workers could participate
in management are collective bargaining, joint decision-making, consulting and
information sharing. They may take the form of formal organizations (WC‘s/ JMCs)
or an informal system, for instance, a supervisor consulting a worker before taking
any decision in which the latter is interested.

The scope, extent, and the form it may take and its successful working depends
to a great extent on the objectives as viewed by the three actors of the system
industrial relations-the employee, the employer and the government. In India, the
objectives as viewed by these three parties are contradictory. The workers expect that
WPM schemes will lead to the manager‘s interest is in the maximization of profit
through increased production. The government expects the scheme to bring about
closer association between labour and management and peaceful industrial relations.

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According to Davis, ― WPM is a mental and emotional involvement of a person in a
group situation which encourages him to contribute to goals and share responsibilities
in them‖

Mamoria defines WPM as a system of communication and consultation either formal

or informal by which employees of an organization are kept informed about the affairs
of the undertaking and through which they express their opinion and contribute to
management decisions.

The International Institute of Labour Studies remarks: ―The participation results

from practices which increase the scope for employees ‗share of influence in decision-
making at different tiers of the organizational hierarchy with concomitant assumptions
of responsibility‖5. This becomes meaningful only in such a situation. Here it is quite
evident that the participation of each should strictly confine to the field for which he is
competent and concerned with. Everybody poking his nose into everything is,
therefore, not participation, but proliferation. This must have been the reason why a
group of practicing managers defined: workers ‗participation in management is
involvement of workers only in such areas of activities of the enterprises where they
can make some positive contribution for the betterment of the enterprise.6‖ Such
participation should facilitate effective utilization of available resources and effective
execution of long-term expansion plans, including diversification. It should facilitate
the day-to-day functioning as well as inventions and innovations.

16.3. DETERMINANTS OF WORKERS PARTICIPATION IN MANAGEMENT

It is felt that the success of WPM is determined by two types of factors:

(i) Situational and

(ii) Human.

The former refers to the peculiar characteristics of each enterprise which determine
its participation potential, such as autonomy, its size and organization structure as
well as technological factors.

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Walker’s Model

The autonomy of the enterprise refers to the extent to which it is free to make
managerial decision. This affects the potential for workers‘ participation. Technology
refers to the nature of work done and the working conditions under which it is done.
The more complex the technology the lesser it is possible for workers to contribute to
managerial decisions. The size of an enterprise has an influence on the potential for
WPM in two ways. First, in some countries laws required a particular type of workers‘
participation scheme. The organization structure is influenced by the three factors
mentioned above: autonomy, size and technology and by legal provisions. The
organization structure, here, refers to the authority and power one has to undertake
managerial functions and the distribution of authority and power within the enterprise.

In addition to the factors mentioned above the environment in which

enterprises are situated also influence the type of authority structures adopted by them,
which, in turn determine the turn, determine the ‗push‘ on the part of the workers to
get involved in participation in decision-making. For example, enterprises in stable
environment tend to adopt ‗mechanistic‘ and rigid type of authority structure which
may not give much scope for workers‘ participation.

―Organization structure thus provides varying potential for workers‘

participation including its scope, degree, extent and level.‖

By human factors is meant a workers‘ propensity to participate and the

manager‘s acceptance of the participation schemes. This has three aspects, i.e, (i)
workers‘ attitude to participation i.e, whether he has a desire to participate or not; (ii)
secondly, the workers‘ perceived power to participate; if he sees and believes that he
has the power, then he makes efforts to participate; (iii) thirdly, his capacity to
participate, i.e, his ability to understand the managerial functions and the issues
involved in participation and the ability to express himself clearly.

Human factors also relate to a manager‘s attitude, which is dependent upon the
kind of approach he adopts for running an enterprise. This can be either: (i)
authoritarian; (ii) paternalistic; (iii) constitutional (iv) democratic. These determine
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not only his acceptance of workers‘ participation schemes but also the form that they
may take.

These two ‗human‘ factors interact to determine the participation potential, the
form and the type of participation.

16.4. WORKERS PARTICIPATION IN MANAGEMENT IN INDIA –

SCHEMES/METHODS/TECHNIQUES

In our country, the concept of workers‘ participation in management is

comparatively of recent origin. Workers ‗participation in management in India entered
the Indian scene in the year, 1920, when Mahatma Gandhi had suggested that workers
should participate and contribute to the organization and also share its prosperity. He
advocated a relationship characterized by friendship and co-operation between the
workers and the management.

In India workers ‗participation in management is one of the Directive Principles of

State Policy embodied in Article 43-A of our constitution. The Royal Commission on
Labour (1929-1931) recommended the formation of works committees and joint
machinery. The Tata iron and steel company (TISCO) has established joint
committees in 1958. The committee under the chairmanship of Justice Rajendra
Sachar suggested methods for improving workers ‗participation in management. The
recommendations of the committee included workers ‗representation in board of
directors and allotment of equity to workers. Similarly another committee under the
chairmanship of Ravindhra Varma the then union Minister for Labour was constituted
to look into various aspects, statutory and non statutory schemes and also
recommended outlines or comprehensive schemes for workers ‗participation in
management. The key recommendations of the committee included:

1) Three – tier system of participation that is, shop-floor, plant and board levels.

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2) Legislation for covering all undertakings with 500 or more workers. (Public or
private)

3) Provision for extending the scheme to enterprises with at least 100 workers.

4) Usage of secret ballot for electing representative.

5) Issue of not less than 10% equity to workers.

Forms of workers’ participation in management

The various forms of workers‘ participation in management currently prevalent in the

country are:

1) Works Committee

The tri-partite sub-committee of the 17th session of the Indian Labour Conference
(1959) laid down an illustrative list of items which the works committee will normally
deal with, namely:

i. Conditions of work, such as ventilation, lighting, temperature and sanitation,

including latrines and urinals;

ii. Amenities, such as drinking water, canteens, dining rooms, crèches, rest rooms,
medical and health services;

iii. Safety and accident prevention, occupational diseases and protective equipment;

iv. Adjustment of festival and national holidays;

v. Administration of welfare and fine funds;

vi. Educational and recreational activities, such as libraries, reading rooms, cinema
shows, sports, games, picnic parties, community welfare and celebrations; Promotion
of thrift and savings;

viii. Implementation and review of decisions reached at meetings of works

committees.

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The sub-committee has also pointed out a list of items which the works committees
will not normally deal with, like:

i. Wages and allowances;

ii. Bonus and profit sharing schemes;

iii. Rationalization and matters connected with the fixation of workload;

iv. Matters connected with the fixation of standard labour force;

v. Programmes of planning and development;

vi. Matters connected with retrenchment and lay-off;

vii. Victimization for trade union activities;

viii. Provident fund, gratuity schemes and other Quantum of leave and national and
festival holidays;

x. Incentive schemes; and

xi. Housing and transport services.

The usefulness of the institution of works committee as a channel for joint

consultation and for the promotion of harmonious industrial relations was stressed in
the successive five-year plans. The National Commission on Labour (1969), ―the
general feeling among knowledgeable people in the country is that the committees
have not proved effective.‖ The employers‗ associations have attributed the failure of
the works committees to factors like inter-union rivalries, conflict between union
jurisdiction and the jurisdiction of the works committees, lack of positive response,
routine meetings without any worthwhile discussions. Etc. In a nutshell, works
committee mechanism is a failure in India.

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 2) Joint Management Councils (JMCs 1958)

The Second Five-Year Plan recommended the setting up of joint councils of

management consisting of representatives of workers and management. The
Government of India deputed a study group (1957) to study the schemes of workers
‗participation in management in countries like UK, France, Belgium and Yugoslavia.
The report of the study group was considered by the Indian Labour Conference (ILC)
in its 15th session in 1957 and it made certain recommendations:

a. The workers ‗participation in management schemes should be set up in selected

undertaking on a voluntary basis.

b. A sub-committee consisting of representatives of employers, workers and

government should be set up for considering the details of workers‗participation in
management schemes. This committee should select the undertakings where
workers‗participation in management schemes would be introduced on an
experimental basis.

Objectives

The objectives of Joint Management Councils are as follows:

i. To increase the association of employers and employees, thereby promoting cordial

industrial relations;

ii. To improve the operational efficiency of the workers;

iii. To provide welfare facilities to them;

iv. To educate workers so that they are well prepared to participate in these schemes;
and

v. To satisfy the psychological needs of workers.

A tripartite sub-committee was set up as per the recommendations of Indian Labour

Conference which laid down certain criteria for selection of enterprise where the
JMCs could be introduced. They are:

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i. The unit must have 500 or more employees;

ii. It should have a fair record of industrial relations;

iii. It should have a well organized trade union;

iv. The management and the workers should agree to establish JMCs;

v. Employers (in case of private sector) should be members of the leading Employers‘
Organization; and

vi. Trade unions should be affiliated to one of the central federations.

It was observed by the sub-committee that if the workers and employers mutually
agree they can set up JMCs even if these conditions are not met.

Functions

The following are the important functions of JMCs:

a. To be consulted on matters like standing orders, retrenchment, rationalization,

closure, reduction of operations etc.

b. To receive information, to discuss and offer suggestions.

c. To shoulder administrative responsibilities like maintaining welfare measures,

safety measures, training schemes, working hours, payments of rewards.

1. Joint Councils

At every division/region/zonal level, or as may be considered necessary in a

particular branch of an organization/service employing 100 more people, there shall
be a joint council.

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 a. The main feature of the joint council shall be:

(i) Each organization/service shall decide the number of councils to be set up for
different types of services rendered by it in consultation with the recognized unions-or
workers as the case may be, in the manner best suited to the local conditions.

(ii) Only such persons who are actually engaged in the organization/service shall be
members of the joint council. Each organization/service may decide the number of
members in the manner suggested in item(s) but the membership should not be
unwieldy.

(iii)The tenure of the council shall be two years. If, however, a member is nominated
in the mid-term of council to fill a causal vacancy, the member nominated shall
continue in office for the remaining period of the council‗s tenure.

The chief executive of the organization/service or of its divisional/regional/zonal

branch, as the case may be, shall be the chairman of the joint council. There shall be a
vice-chairman who will be chosen by the worker-members of the council.

(v) The joint council shall appoint one of its members as its secretary who will prepare
the agenda, record the minutes of the meetings and report on the implementation of
the decisions arrived at every meeting. The management shall provide the necessary
facilities within the premises of the organization/service for the efficient discharge of
his functions by the secretary.

The joint council shall meet whenever considered necessary, but at least once in a
quarter. Every meeting shall review the action taken on the decisions of earlier
meetings for an effective follow-up action.

(vii) Every decision of the joint council shall be on the basis of consensus and not by a
process of voting; it shall be binding on the management and workers and shall be
implemented within one month, unless otherwise stated in the decision.

Functions of the Joint Councils

The following are the functions of the joint council:

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i. The settlement of matters which remain unresolved by unit level councils and
arranging joint meetings for resolving inter-council problems.

ii. Review of the working of the unit level council for improvement in the customer
service and evolving for the best way of handling of goods traffic, accounts, etc.

iii. Unit level matters which have a bearing on other branches or on the enterprise as a
whole.

iv. Development of skills of workers and adequate facilities for trading.

v. Improvement in the general conditions of work and preparation of schedule of

working hours and holidays.

vii. Proper recognition and appreciation of useful suggestions received from workers
through a system of rewards.

viii. Discussion on any matter having a bearing on the improvement of performance of

the organization/service with a view to ensuring better customer service.

2. Unit councils

Encouraged by the success of the Joint Councils scheme in manufacturing and mining
units, a new scheme of workers‗ participation in management in commercial and
service organizations in the public sector, having large-scale public dealings, was
announced on 5th January 1977. The scheme envisaged the setting-up of unit councils
in units employing at least 100 persons.

a. Features of the Scheme

The main features of the scheme are:

(i) A unit level council, consisting of representatives of workers and management of

the organization/service, employing 100 or more workers, may be formed in each unit
to discuss day-to-day problems and find solutions; but wherever necessary a
composite council may be formed to serve more than one unit, or a council may be
formed department-wise to suit the particular needs of an organization/service.

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(ii) Every unit council shall consist of an equal number of representatives of the
management and workers. The actual number of members should be determined by
the management in consultation with the recognized union, registered unions or
workers in the manner best suited to the local conditions obtaining in a unit or an
organization but their total number may not exceed 12. It would be necessary to
nominate suitable and experienced workers from various departments, irrespective of
their cadre, affiliation or status, and not trade union functionaries who may not be
actually working in the unit.

(iii) The management‗s representatives should be nominated by the management and

should consist of persons from the unit concerned.

(iv) The management shall, in consultation with the recognized union or the registered
union or workers as the case may be, determine in the manner best suited to local
conditions, the number of unit councils and the departments to be attached to each
council of the organization/service.

(v) All the decisions of a unit council shall be on the basis of consensus and not by a
process of voting, provided that either party may refer the unsettled matters to the
joint council for consideration.

(vi) Every decision of a unit council shall be implemented by the parties concerned
within a month, unless otherwise stated in the decisions itself. The management shall
make suitable arrangements for the recording and maintenance of minutes of meetings
and designate one of its representatives as a secretary for this purpose, who shall also
report on the action taken on the decisions at subsequent meetings of the council.

(viii) Such decisions of a unit council as have a bearing on another unit of the
organization/service as a whole shall be referred to the joint council for consideration
and decision.

(ix) A unit council once formed shall function for a period of three years. Any
member nominated or elected to the council in the mid-term to fill a casual vacancy
shall continue to be a member of the council for the unexpired period of the term of
the council.
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 16.5. REASONS FOR FAILURE OF WPM IN INDIA

 Lack of understanding of the concepts.

 Rigid attitude of the employees.

 Vagueness of the definitions, scope and functions of these bipartite forums.

 Half-hearted implementation of decisions arrived at these forums

 Suspicion in minds of trade union leaders about the fairness of the scheme.

 Implementation of bill is unsuccessful.

Other reasons explained in brief:

1. Ideological Differences:

There is an ideological difference between the employees and the employers regarding
the WPM scheme. While employees want to introduce the scheme simultaneously at
all levels, the employers are of the opinion to introduce participation gradually at the
Board level‖. The result is the half-hearted acceptance and implementation of the
scheme.

2. Improper Implement of the Spirit:

The workers‘ representatives consider WPM an instrument for redressal of grievances,
higher wages, better working conditions, better security of service etc. They neglect
the larger problems like absenteeism reduction, productivity increase, etc. On the
other side, the employers feel that the participation will take away from them their
right to manage. They also consider the bipartite bodies as substitutes for trade unions.

3. Absence of Strong Trade Unionism:

The Indian trade unionism is characterized by features like multiplicity of unions,
inter-union rivalry, affiliation to political philosophies, etc. As such there is lack or
absence of strong trade unionism in the country. This renders the working of the
WPM scheme.
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4. Illiteracy of Workers:

The Indian working class is generally illiterate. The workers‘ representative; on

various participation bodies are, therefore, expectedly illiterate or less educated. As
such, in the absence of adequate knowledge on their part about the various aspects of
the WPM scheme they are unable to actively and effectively participate in decision
making forums.

5. Improper Implementation:
There are reports that, in contrast to the stated objectives of participation, in most
cases, various boards find themselves dealing with personal matters rather than with
productivity and efficiency. This causes dissatisfaction to the employers towards the
participation scheme. In addition, delay in implementing the suggestions and
recommendations of various bodies often lead to the waning of workers‘ interest in
such bodies and schemes

6. Absence of Committed Spirit:

Past experiences suggest that mere creation of structures and formulation of schemes
do not guarantee success. Spirit precedes success. The same seems absent in case of
WPM schem e-be on the part of employees or employers.

There-are instances to cite that in some cases even elementary procedures such as
selection of representatives, recognition of unions‘ undertakings are plagued by
absence of genuine bargaining platforms. This leads to lack of trust between the
parties and, in turn, eventual failure of the purpose.

16.6. CASE STUDY – INDIAN ORGANIZATIONAL SCENARIO:

Workers' Participation in Bharat Heavy Electricals Ltd. (BHEL): The Case of

Tiruchi

The Government of India has been continuously laying special emphasis on

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Category 1980-81 1981-82 1987-83 1983-84 1984-85

Executives 1290 1390 1493 1614 1702

Supervisors 2844 2841 3249 3546 3621

Others 6957 10139 10824 11477 12218

Total 13791 14370 15566 16637 17541

Table 1: Growth of Personnel in the Tirichi unit (1980-1985)

Strengthening the practice of labour participation in manufacturing and service

sectors. In relations of the national objective of promoting employee participation in
management, the Bharat Heavy Electricals Limited (BHEL) decided to introduce the concept of
labour participation in management in the early seventies in its various units. A formal beginning
was made with the constitution of a Joint Committee at the corporate level on April 3, 1973.

Background of Tiruchi Unit:

The Tiruchi unit of BHEL manufacturers of high pressure boilers for thermal and nuclear power
stations of unit‘s size up to 500MW and 235 MW respectively and also manufacturers the related
auxiliary equipment.

The other products include industrial process steam boilers of different sized to meet
the requirements of fertilizer, petrochemical, steel and paper industries. The boilers
are designed for operation on a wide range of fuels, namely, coal, fuel oil, gas, black
liquor and a combination of some of these types. Beginning from 1980 till the year
1985, the Tirupachi unit witnessed a phenomenal growth in personnel from 13,791
employees in 1980-81 to 17,541 in 1987-85. Of the total employees, 1,702 belong to
the executive cadre and 3,621 and 12,218 fall in the category of supervisors and
workers/ministerial staff respectively. The growth of man power over the years is
evident from table 1.

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The main tasks of these executives are:

 To resolve day-to-day grievances of the workers.

 To provide feedback to the Industrial Relations Manager and Personnel
Manager about shop-floor process.
 To maintain personal files of the workers to carry out routine administrative
work.
 To counsel the workers on issues like absenteeism. Code of conduct and
behavior at the workplace, attitude to superior, alcoholism, money lending and
other undesirable practices.
 To act as an important channel of communication between the workers on the
shop-floor and the management.
 To be available to the workers and to help them on any matters as and when
need arises.

Industrial Relations and Trade Union Structure:

In the year 1985, there was a tool-down strike resulting in the loss of 161 man-
days. Another strike of eight hours‘ duration took place in support of striking teachers
and fishermen which resulted in the losss of 2,114 man-days. There are 9 unions
operating at Tiruchi unit, out of which the following four have been recognized by the
corporation as participating unions:

1. BHEL Workers‘ Union (CITU)

2. Boiler Plant Employees‘ Union (TNTUC)
3. BHEL Employees‘ Progressive Union (LPF/DMK)
4. Boiler Plant Anna Workers‘ Union (ATP/AIADMK)

It has been reported by the management that despite the existence of many unions, the
problem has handled by evolving the concept of “Participating Union‖

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16.7. NOTES

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 16.8. SUMMARY

The management and employees have equal interests in the survival and the
prosperity of the industry the concept of participation is based on the concept of co-
partnership in the industry. Participation demands maximum co-operation between
management and workers, voluntary co-operation generated from within it and not
imposed from without. Decisions are taken by employers and employees jointly. The
success of WPM is determined by two types of factors, i.e, Situational and Human
which will be explained by Walker‘s Model. The participation of workers in
management in India was started from 1920s. The status of WPM in India is analyzed
and also the reasons of why it has been failed in India.

16.9. KEY WORDS

WPM

Works Committee

Joint Council

Union Council

ILO

16.10. SELF ASSESSMENT QUESTIONS

1. What are the determinants of WPM? Explain in brief.

2. Whether WPM has failed in India. Discuss

3. Explain the method of WPM exists in India?

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16.11. REFERENCES

1. Industrial relations- Arun Monappa-tata mcgraw hill-2000

2. Industrial Relations, Trade Unions, and Labour Legeslation, PRN Sinha, Pearsons
educations 2000

3. C.B. Memoria and Satish Mamoria, ―Dynamics of Industrial Relations in India,

Himalaya publishing house, Mumbai, 1990, p.479.

4. J.P. Kesari, ―The System of Workers Participation in Management, Indian Journal

of Social work, xx.1:4.

5. Keith Davis, ―Human Relations in Business, 1957, p.288.

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278
MODULE-5 : GRIEVANCE PROCEDURE AND DISCIPLINE
MANAGEMENT
UNIT 17 GRIEVANCE MANAGEMENT

STRUCTURE:
17.0. Objectives
17.1. Introduction
17.2. Meaning and Definition of Grievances Management
17.3. Classification and Causes of Grievances
17.4. Effects of Grievance
17.5. Consequences of Employee Grievance
17.6. Nature of Grievance
17.7. Presentation of grievances
17.8. Role of Human Resource Department
17.9. Grievance Redressal Procedure
17.10. Guidelines for handling grievance
17.11. Grievance in Industry
17.12. Check Your Progress
17.13. Notes
17.14. Summary
17.15. Key words
17.16. Self Assessment Questions
17.17. References

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 17.0. OBJECTIVES:
After studying this unit, you Should be able to;
 Understand the meaning of Grievance
 Describe the effects of grievance
 Analyze the nature of grievance
 Identify the role of human resource department
 Highlight the guidelines for handling grievance

17.1. INTRODUCTION:
Employee grievance is the perception of unfair treatment on the job. There are
many factors that make employees unhappy. For instance, non cooperation from
fellow members or a harsh remark relating to domestic affairs may create unhappy
situation at work. Such feelings of dissatisfaction or discontent result in employee
grievance. There is hardly an organization that runs smoothly at all times. In most
of the organizations, employees have complaint against their employers which is
termed as employee grievance. Hence, a complaint affecting one or more
employees at a time does constitute a grievance. The complaint may be related to
wages, working hours or conditions of employment. The dissatisfaction which is
expressed by an employee is regarded as a complaint. When the complaint is filed
and brought to the notice of management, it will then be grievance. Hence,
employee grievance is resulted from the perception of unfair treatment and
differences in employee's expectations and managerial practices. A well defined
grievance procedure is an important constitute of employee relation as it provides
a medium for the transmission of complaints to the table of management.
17.2. MEANING AND DEFINITION OF GRIEVANCE MANAGEMENT:

According to Michael Jucius, " A grievance can be any discontent or

dissatisfaction, whether expressed or not, whether valid or not, and arising out of

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 anything connected with the company that an employee thinks, believes, or even
feels as unfair, unjust, or inequitable."

Employee grievance refers to the dissatisfaction of an employee with what he

expects from the company and its management. A company has to provide an
employee with a safe working environment, realistic job preview, adequate
compensation, respect etc.

A grievance is defined as a dispute between the employee and the employer

(which may be the specific manager or the University at large) about the
interpretation or application of the collective agreement. An employee may bring a
grievance when they believe the collective agreement has been violated.

A grievance is a complaint raised by an employee which may be resolved by

procedures provided for in a collective agreement, an employment contract, or by
other mechanisms established by an employer.

It is simply a complaint, which has been formally presented in writing, to a

management representative or a union official. However for most of the people, the
word "grievance" suggests a complaint that has been ignored, over ridden or dismissed
without due consideration.

17.3. CLASSIFICATION AND CAUSES OF GRIEVANCE:

The various reasons and the causes of Grievance are listed below :

• Wages, Incentives, work arrangements, complaints about job specification;

• Rule interpretation, transfer, seniority, promotion;
• Working conditions, health, safety, welfare amenities;
• Supervision, discipline, grievances against foreman, interpersonal relationship;
and
• Organizational change.
• Contract violation, and unfair labour practices.

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Causes of grievances may be traced to the following issues:

• Working environment, e.g., light, space, heat.

• Use of equipment, e.g., tools that have not been properly maintained.
• Supervisory practices, e.g., workload allocation.
• Personality clashes and other inter-employee disputes (work related or
otherwise.
• Behaviour exhibited by managers or other employees, e.g., allocation of
overtime working, harassment, victimization, and bullying incidents.
• Refused requests, e.g., annual leave, shift changes.
• Problems with pay: e.g., late bonus, payments, adjustments to overtime pay,
perceived inequalities in treatment: e.g., claims for equal pay, appeals
against performance related pay awards.
• Organisational change: e.g., the implementation of revised company policies of
new working practices.

Classification and causes of Grievances

The below given table represents various causes for the grievances in an
organisation:

Classification Causes

 Wage Grievances  Demand for individual wage adjustment

 Complaint about job classification
 Complaint about incentive system
 Miscellaneous

 Supervision  Complaint against discipline/

administration
 Complaint against behaviour of
supervisor
 Objection to the method of supervision
 Working conditions  Safety and health
 Violation of rules and regulations
 Miscellaneous

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  Seniority and promotion and  Loss of seniority
transfers  Calculation / interpretation of seniority
 Promotion – denial or delay
 Transfer or change of shifts
 Discipline  Discharge/ dismissal/layoffs
 Alcoholism, absenteeism and accidents
 Harshness of punishment and penalty
 Collective bargaining  Violation of contract/award/agreement
 Interpretation of contract/ award
agreement
 Settlement of grievances
 Union management  Recognition of union relations
 Harassment of union officials
 Work stoppage/ go-slow tactics

17.4. EFFECTS OF GRIEVANCE

Grievances, if they are not identified and redressed, may affect adversely the
workers, managers and the organization. The effects of grievance may fall into
various categories such as :

On the production:

• Low quality of production and productivity

• Increase in wastage of material, spoilage/ leakage of machinery

• Increase in the cost of production per unit.

On the employees:

• Increases the rate of absenteeism and turnover.

• Reduces the level of commitment, sincerity and punctuality.

• Increase the incidence of accidents.

• Reduces the level of employee morale.

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 On the managers:

• Strains the superior-subordinate relations

• Increases the degree of supervision, control and follow up.

• Contributes to disciplinary cases.

• Increase in employee unrest and conflicts.

17.5. CONSEQUENCES OF EMPLOYEE GRIEVANCE

Employee grievance may be resulted either from management policies, or working

conditions of the organization or personality traits of employees. These are the
primary forces that give impetus to the emergence of grievance in the actual work
floor. A firm can hardly operate without the influence of grievance. Hence, handling
grievance through appropriate procedures play a key role in the settlement of
management's mistakes and weakness. If grievances are handled with a proper care
and attention, they will introduce positive changes in the organization, thereby
enhancing organizational productivity and employee satisfaction.
But if the grievance is not managed properly, they will create some negative impacts.
Such impacts reduce organization's output as well as productivity.

Some of the negative consequences of employee grievance are mentioned below:

 Reduced Productivity
 Absenteeism Problem
 Disobeying of orders
 In disciplined behavior
 Reduced quality of work
 Reduced co-operation among the employees
 Discouragement in employees
 Disharmonious relation between management and employees

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 Therefore, a due consideration should be given towards the proper settlement
of employee grievance instantly when they occur.

17.6. NATURE OF GRIEVANCE:

Grievances are symptoms of conflicts in the enterprise. Just like smoke could
mean fire, similarly grievances could lead to serious problem if it is not addressed
immediately! So they should be handled very promptly and efficiently. Coping with
grievances forms an important part of any job. The manner in which a manager deal
with grievances determines his efficiency of dealing with subordinates. A manager is
successful if he is able to build a team of satisfied workers by removing
their grievances.

While dealing with grievances of subordinates, it is necessary to keep in mind

the following points:
 A grievance may or may not be real.
 Grievance may arise out of not one cause but multifarious causes.

Every individual does not give expression to his grievances. Please understand that
complaints of employees relating to interpretation and implementation of agreements,
labour legislations, various personnel policies, rules and regulations, past practices,
code of conduct are very much grievances.

17.7. PRESENTATION OF GRIEVANCES

Informal and formal presentations of grievances have their advantages and

disadvantages. Informal treatment of grievances avoids the fear of bringing in writing
and perpetuating the record of an employee being a chronic grievance against the
management. But informal and oral handling tends to promote a feeling of
inadequacy, less attention, and even inconsistent treatment. The recent trend in
grievance handling has been towards formal procedures. It is the most common
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conflict management tool available to the employers. In practice, formal grievances
get more serious attention than do informal complaints. The formal step provides for
the grievances to be presented in a written form. The reason for writing is not to
generate a bureaucratic culture but to inject a sense of responsibility.

Most enterprises have written grievance procedures patterned after the Indian
Labour Conference model and tailored to specific plant conditions. In exercising the
right to present a grievance, the employee needs to be free from restraint or coercion.
An aggrieved worker IS likely to be emotionally upset and does not always feel
capable of putting his problem before the superiors, even orally, much less in writing.
In such cases, he should be assisted by a co-employee of his choice. The presentation
of grievance to the first-line supervisor and its settlement at that level is very
important, as most of the grievances are at the shop and workplace level. First-line
management is more familiar with the workplace problem areas and so better capable
of handling them. Moreover, grievance handling at the shop floor level gives meaning
to the concept of industrial democracy.

A measure of success of the grievance redressel process is the extent to which

grievances are settled with skill, fairness, understanding and good judgment.
Emphasis is, therefore, placed for grievances being settled at the first stage. But there
is gradual erosion in the front-line manager's status and authority in grievance
handling as a result of the increasing influence of unions on the shop floor, and
uncertainty of advice and assistance from the specialist staff department. Moreover, at
the first level, the foreman or supervisor is too frequently side-stepped. The long-term
solution in this regard is to strengthen the first line managerial level through training,
guidance, involvement, support, delegation, feedback and review. Workplace
grievances help the managers in learning the values of persuasion, compromise and
hard realities of gaining co-operation from men of diverse interests. Front-line
managers need to be trained to be factual and analytical in grievance handling and to
investigate and not to evaluate any grievance.

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 In the USA the National Labour Relations Board (NLRB) constituted under
the National Labour Relations Act, 1935 (Wagner Act), provides· that unions certified
as exclusive bargaining agents must handle grievances of all employees, whether they
are members or non-members , and must do so without charging any fee. The Act
provides that any individual employee or group of employees shall have the right to
present grievances to their employers. Most collective agreements in the United States
provide for regular grievance procedure.

17.8. ROLE OF HUMAN RESOURCE DEPARTMENT

Grievance handling is not the monopoly of a specialist or of a functional

department. The role of HR department in this regard should be:

a) To devise a sound grievance procedure which could serve as an effective

upward communication in the organisation
b) To advise the line people about the importance of a sound grievance handling
system and its implementation;
c) To train the staff people, especially the front-line supervisors, in effective
grievance handling and in counseling skills;
d) To implement promptly the decisions taken by the grievance committee, and
for that matter to maintain effective and close liaison with all concerned;
e) To maintain records of the activities of the grievance committee such as details
of meetings held, actions taken and implemented;
f) To take necessary follow-up action, review the procedure, and if necessary,
modify the existing procedure to suit the changing circumstances; and
g) To follow up individual cases of grievances settled and identify its effect on the
concerned individual worker and its impact on other employees of the
organisation.

17.9. GRIEVANCE REDRESSAL PROCEDURE

The grievance procedure may be regarded as supplying the "psychotherapy" of

industrial relations. Small problems can be discussed and settled promptly before they

287
become major and troublesome issues. Serious problems can be analysed in a rational
manner and resolved speedily, peacefully and in keeping with the terms of collective
bargaining contract.

A well-planned and well-administered grievance redressel procedure has

certain advantages as mentioned below:

 It offers an opportunity to employees to process their grievances in a

dignified manner.
 It satisfies the employees' need of self-expression.
 It provides a vehicle for individual employees to express themselves.
 It builds up a communication channel which the employers can use to
communicate with unions, especially in a situation where day-to-day
relations have broken down.
 It improves man-management skills of managers at the various
hierarchical levels by building up mature behaviour.
 It helps management to locate problem areas in the union-management
relations and to anticipate union demands.
 It strengthens union functioning and fosters understanding that
facilitates negotiation.
 It indicates employees' morale, their attitudes towards the management
and the kind of problems they face in the work situation.
 It enables the management to understand the problems of the workforce
and workplace, and helps to take corrective timely action.

Grievances must be settled as near as possible to the point of origin and on

merit only. Hasty actions, without properly ascertaining facts, only help to aggravate
the situation. Hence, it is better to have a systematic grievance redressel procedure
which should (i) be simple, fair and easy to understand; (ii) encourage employees to
put forth their grievances ;( iii) function promptly and expeditiously; (iv)gain
employee confidence; and (v) promote healthy relations between the employees and
the company. In short, a sound grievance procedure can really strengthen the bonds
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between the management and the workers, can serve as an "alarm bell" if there is any
problem of serious nature, and can prevent individual grievance from becoming an
industrial dispute. It can also lead to better harmonious relations between the
management and the workers; can prevent the union from exploiting and misguiding
the workers, and can bring the "conflicts" into the open and resolve them.

The number of steps in a grievance procedure may vary depending on the size
of the company and the number of employees, usually from one-step to five-step
grievance procedure. Smaller companies do not usually have a formal procedure to
process grievances or may have less number of steps in the redressel procedure. A
grievance procedure should not operate in such a manner that it constantly leads to
loss of production, extraordinary preoccupation or a climate of grievance-proneness. It
should result in greater industrial peace, improved inter-personal relations, more' job
satisfaction and serve the interests of employers and employees.

Analysis of grievance:

An important parameter of a sound grievance procedure is the maintenance and

upkeep of grievance data, the analysis and research of 'which helps to improve the
performance of the grievance redressel machinery. It provides an insight into the
group dynamics and informal leadership patterns at the workplace. Constant
monitoring and interpretation of data can provide the management with valuable
feedback. The grievance data should include:

 Number of grievances;
 Nature of grievances;
 Grievances appealed to the highest level;
 The nature of decision-making at the first, second and third appellate
levels; and
 Grievances not finally closed.

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Evaluation of grievance:

It is advisable for an organisation to periodically evaluate its formal grievance

procedures against three criteria: (i) the grievance rate; (ii) the settlement rate; and (iii)
The settlement level. Pigors and Myers suggest the following test questions that a
personnel administrator should ask if he is keen on evaluating the success of the
redressel machinery on any given grievance:

a) Was the case handled in such a way that the parties involved in it were able to
Identify, and agree upon, what was at stake?
b) Was the incident closed with a sense of satisfaction on the part of everyone
Immediately involved in the original complaint?
c) Was the case handled in a way that strengthened the line authority, especially at
the level immediately above that at which the dissatisfaction was first
expressed?
d) Did the solution result in a better understanding and a better adjustment
between the supervisor and his subordinate?
e) Was there any spread of understanding, as a result of this case, to others in the
management and in the union who were not directly involved in the original
complaint?
f) Did the solution contribute to operational efficiency?

17.10. GUIDELINES FOR HANDLING GRIEVANCE:

The Various Guidelines for handling the grievance in mentioned below

 Investigate and handle each and every grievance.

 Talk with the employee about his grievance; give him a good and full hearing.

 Comply all the procedural requirements and time limits.

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  Visit the work areas where the grievance arose and ascertain if there were any
witnesses.

 Determine if there has been equal treatment of employees in grievance

redressal.

 Analyze the facts. Look for precedents, if any, set in the matter.

 Fully examine the grievant‘s past and present personal record.

 Identify the relief the union/individual is seeking.

 Hold your grievance discussion privately.

 Provide the grievance process to all the employees including non-union

members.

 Satisfy the union(s) right to relevant information.

 Ensure that proper productivity levels be maintained during the processing of

incentive grievances.

 Settle grievances on the basis of what is fair and just.

 Take a decision and look for organizational implications of the likely solution.

 Follow up to evaluate the impact of the redressal decision on the morale of the
aggrieved worker as well as on other employees of the organization.

17.11. GRIEVANCE IN INDUSTRY

Grievance means any type of dissatisfaction or discontentment‘s arising out of

factors related to an employee‘s job which he thinks are unfair. A grievance arises
when an employee feels that something has happened or is happening to him who he
thinks is unfair, unjust or inequitable. In an organization, a grievance may arise due to
several factors such as:
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  Violation of management‘s responsibility such as poor working conditions

 Violation of company‘s rules and regulations

 Violation of labor laws

 Violation of natural rules of justice such as unfair treatment in promotion, etc.

Various sources of grievance may be categorized under three heads: (i) management
policies, (ii) working conditions, and (iii) personal factors

1. Grievance resulting from management policies includes:

 Wage rates

 Leave policy

 Overtime

 Lack of career planning

 Role conflicts

 Lack of regard for collective agreement

 Disparity between skill of worker and job responsibility

2. Grievance resulting from working conditions includes:

 Poor safety and bad physical conditions

 Unavailability of tools and proper machinery

 Negative approach to discipline

 Unrealistic targets

3. Grievance resulting from inter-personal factors includes:

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  Poor relationships with team members

 Autocratic leadership style of superiors

 Poor relations with seniors

 Conflicts with peers and colleagues

It is necessary to distinguish a complaint from grievance. A complaint is an

indication of employee dissatisfaction that has not been submitted in written. On the
other hand, a grievance is a complaint that has been put in writing and made formal.

Grievances are symptoms of conflicts in industry. Therefore, management should be

concerned with both complaints and grievances, because both may be important
indicators of potential problems within the workforce. Without a grievance procedure,
management may be unable to respond to employee concerns since managers are
unaware of them. Therefore, a formal grievance procedure is a valuable
communication tool for the organization.

17.12. CHECK YOUR PROGRESS

1. Mention some consequences of employee grievance

a) Reduced Productivity b) Absenteeism Problem

c) Disobeying of orders c) In disciplined behavior

2. What is the full form of NLRB?

a) National Labour Recognition Board b) National Labour Relations Board

c) National Labour Retention Board c) National Labour Rest Board

3. Mention the grievance resulting from inter-personal factors

a) Autocratic leadership style of superiors

b) Poor relations with seniors

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 c) Conflicts with peers and colleagues

d) Poor relationships with team members

Answer to check your progress: 1) All options, 2) b 3) all options

17.13. NOTES

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17.14. SUMMARY:

Grievances generally arise from the day-to-day working relations in an

undertaking or an organization. Usually a worker or trade union protest against an act
of omission or commission of management that is considered as an infringement on
workers‘ rights. Grievances typically arise on such matters like the payment of wages
and other fringe benefits, working hours, promotions, demotions, transfers, discharge
and dismissals , and so on. The absence of an effective mechanism to manage the
conflicts can lead to increasing employee unrest. Grievance procedure must be used to
identify the areas of the conflict in the union-management relationships, and to the
overall benefit of union and employers alike.

17.15. KEY WORDS:

Infringement: The action of breaking the terms of a law, agreement, etc.; violation.

Demotions: is a compulsory reduction in an employee's rank or job title within the

organizational hierarchy of a company, public service department, or other body.

A demotion may also lead to the loss of other privileges associated with a more senior
rank and/or a reduction in salary or benefits.

An employee may be demoted for violating the rules of the organization by a behavior
such as excessive lateness, misconduct, or negligence.

17.16. SELF ASSESSMENT QUESTIONS

1. What do you mean by grievance?

2. Define the nature of grievance.

3. Explain the consequences of employee grievance.

3. Relate the classification and causes of grievance.

4. Discuss the grievance redressal procedure.

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17.17. REFERENCES:

1. [Link], Satish Mamoria, S.V Gankar – Dynamics of industrial relations, 14th

revised edition (reprint) 2004, published by Himalaya Publishing House 2004.

2. Avtar Singh, Harpreet Kaur- Introduction to labour and industrial law, 3rd edition
2014, published by LexisNexis 2014.

3. S.C Srivastava- Indistrial Relations, 5th edition, published by Vikas publishing

house.

4. H.L. Kumar – Labour Laws, 5th edition 2008, published by Universal Law
Publishing co. Pvt. Ltd. 2008.

5. H.L. Kumar- The Industrial Disputes, 2nd edition 2006, published by Universal Law
Publishing co. Pvt. Ltd. 2006.

6. H.L. Kumar – Labour Management 4th edition 2004, published by Universal Law
Publishing co. Pvt. Ltd. 2004.

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UNIT 18 GRIEVANCE PROCEDURE AND INDISCIPLINE

STRUCTURE:
18.0. Objectives
18.1. Introduction
18.2. Causes of Grievances
18.3. Procedure for Settlement of grievances
18.4. Essence of Model Grievance Procedure
18.5. Indiscipline/Misconduct
18.6. Remedial Measures for Acts of Indiscipline
18.7. Procedure for Punishment
18.8. Termination of Employment
18.9. Types of Punishment under Standing Orders
18.10. Check Your Progress
18.11. Notes
18.12. Summary
18.13. Key words
18.14. Self Assessment Questions
18.15. References

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18.0. OBJECTIVES
After studying this unit, you will be able to
 Give the meaning of grievance
 Explain the indiscipline/misconduct
 Describe the procedure for punishment
 Bring out the essence of model grievance procedure
 Identify the remedial measures for acts of indiscipline
 Highlight the termination of employment
18.1. INTRODUCTION

The term-"grievance" is used to designate claims by .workers of a trade union

concerning their individual or collective rights under an applicable collective
agreement, individual contract of employment, law, regulations, work rules, custom or
usage. Such claims involve questions relating to the interpretation or application of the
rules. The term "grievance" is used in countries to designate this type of claim, while
in' some other countries reference is made to disputes over "right" or "legal" disputes.

Grievance may be any genuine or imaginary feeling of dissatisfaction or injustice

which an employee experiences about his job and its nature, about the management
policies and procedures. It must be expressed by the employee and brought to the
notice of the management and the organization.

Grievances take the form of collective disputes when they are not resolved. Also they
will then lower the morale and efficiency of the employees. Unattended grievances
result in frustration, dissatisfaction, low productivity, lack of interest in work,
absenteeism, etc. In short, grievance arises when employees‘ expectations are not
fulfilled from the organization as a result of which a feeling of discontentment and
dissatisfaction arises. This dissatisfaction must crop up from employment issues and
not from personal issues.

Grievance may result from the following factors-

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 o Improper working conditions such as strict production standards, unsafe
workplace, bad relation with managers, etc.
o Irrational management policies such as overtime, transfers, demotions,
inappropriate salary structure, etc.
o Violation of organizational rules and practices

18.2. CAUSES OF GRIEVANCES

Grievances generally arise from the day-to-day working relations in an

undertaking, usually a worker or trade union protest against an act or omission of
management that is considered to violate workers' rights, Grievances typically arise on
such matters like discipline and dismissal, the payment of wages and other fringe
benefits, working time, over-time and time-off entitlements, promotions, demotion
and transfer, rights deriving from seniority, rights of supervisors and union officers,
job classification problems, the relationship of works rules to the collective agreement
and the fulfillment of obligations relating to safety and health as laid down in the
agreement. Such grievances, if not dealt with in accordance with a procedure that
secures the respect of the parties, can result in embitterment of the working
relationship and a climate of industrial strife,

18.3. PROCEDURE FOR SETTLEMENT OF GRIEVANCES

It has been widely recognized that there should be appropriate procedures
through which the grievances of worker may be submitted and settled. This
recognition is based both on considerations of fairness and justice, which require that
workers claims concerning their rights should receive fair and' impartial
determination, and tin 'the desire to remove from the area of power-conflict a type of
dispute that can properly be settled through authoritative determination of the
respective rights and obligations of parties.

It has been pointed out that adequate measures for the examination of
grievances are essential for the promotion and maintenance of good labour-
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management relations and a high degree of efficiency in the undertaking, Conversely,
the lack of opportunity for workers to air their grievances and have them seriously
considered tends to promote dissatisfaction and a poor level of morale among the
work-force, which in turn may have a negative effect on the workers performance at
their jobs. Moreover, effective grievance procedures facilitate communication to
management of difficulties within the undertaking which might require remedial
measures by the management. Further, by contributing to the creation of a climate of
mutual confidence and respect, such procedures help to establish a relationship
between the parties which enhances the prospects of the harmonious functioning of
collective bargaining itself. Grievance procedures in certain systems are a substitute
for or a delaying factor in respect of direct action in the form of strikes.

The procedure for the settlement of grievances is sometimes established.'

pursuant to legislation or often to general agreements between the central
organizations of employers and workers. If the procedure is to function effectively, it
is essential that the workers should be familiar with it; that they have confidence in the
fairness of the' management in handling grievances and should not suffer reprisals for
presenting them; and that the procedure is expeditious.

In large undertakings, a common type of grievance procedure involves

successive steps at different levels, a worker's grievance being first discussed with the
immediate supervisor, and then, if no solution is found, with higher levels of
management. The number of levels and steps in the procedure usually increases with
the size of the undertaking. Sometimes, when an important question of principle,
which would involve a number of workers, is concerned, the matter may go directly to
a higher level of management. Under some procedures, bipartite or joint grievance
committees within the undertaking hear grievances after they have been considered at
lower levels at a number of earlier stages in the procedure. A settlement reached
jointly by worker and management representatives at any level is generally regarded
as final and binding on both the parties. A grievance is also deemed to be settled if an
appeal is not lodged at the next highest level with a given time.

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 Till the enactment of the Industrial Employment (Standing Orders) Act,
1946, the settlement of day-to-day grievances of workers in India did not receive
much attention. Clause 15 of the Model Standing Orders in the Schedule of the
Industrial Employment (Standing Orders) Act, 1946, specified that:

"All complaints arising out of the employment, including those relating to

unfair treatment or wrongful action on the part of the employer or his agent, shall be
submitted to the manager or other person specified in his behalf with the right of
appeal to the employer."

Under the Factories Act, 1948, state government had framed rules requiring
Labour Welfare Officers to ensure settlement of grievances; but this provision did not
prove substantially helpful because of the dual role of these officers.

In the past, detailed grievance procedures worked out by mutual agreement

only in a few units. Most of these units, however, did not have any machinery for the
redressal of grievances. When day-to-day grievances piled up, the accumulated
discontent of workers often culminated in industrial disputes. The matter regarding the
formulation of a grievance procedure was, therefore, referred to the 15th session of the
Indian Labour Conference, 1957 which formulated the Code of Discipline, laying
down that management and unions would "establish, upon mutually agreed basis, a
grievance procedure which will ensure speedy and full investigation leading to
settlement." The guiding principles, which were evolved under the Code for this
purpose and the Model Grievance Procedure for adoption by the parties, were settled
in a tripartite committee in September 1958.

The Industrial Disputes (Amendment) Act, 1982, provides for the reference
of certain individual disputes to grievance settlement authorities. Section 9C of the
Act stipulates that in every establishment in which one hundred or more workmen are
employed or have been· employed on anyone day in the preceding twelve months, the
employer shall set up a time bound grievance redressal procedure.

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18.4. ESSENCE OF MODEL GRIEVANCE PROCEDURE

The three cardinal principles of grievance settlement, under the procedure, are:

 Settlement at the lowest level;

 Settlement as expeditiously as possible; and
 Settlement to the satisfaction of the aggrieved.

Like justice, grievances must not only be settled but also seem to be settled in
the eyes of the aggrieved.

The Model Grievance Procedure has a three-tier system for the settlement of
grievances at the levels of the immediate supervisor; departmental or factory head;
and a bipartite grievance committee representing the management and the union, with
a provision for arbitration or appeal to the organisation head, and a specified time-
limit for the resolution process.

The procedure has successive time-bound steps, each leading to the next step in
case of lack satisfaction. Under the procedure, an aggrieved employee would first
present his grievance verbally to a designated officer, who would give a reply within
48 hours. If the worker is dissatisfied with the decision or fails to get an answer within
the stipulated time, he would, personally or accompanied by his departmental
representative, present his grievance to the head of the department. If the department
head fails to give a decision within 3 days. Or if the decision is unsatisfactory, the
aggrieved worker can seek relief through the grievance committee, consisting of
nominees of management and workers. This committee would communicate its
recommendations to the manager within 7 days of the grievance reaching it. If the
recommendations are not made within this time, the reasons therefore would be
recorded, and if a unanimous decision is not possible, the relevant papers would be
placed before the manage for decision. The manager is expected to communicate his
decision within 3 days. The worker would have a right of appeal to higher authorities
for a revision of the manager's decision. Ali these appeals have to be decided within 7
days of the worker's petition. The worker, the so desires, could take a union official
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with him for discussion with the appellate authority. In case of failure to settle the
grievance even at his stage, the union and the management may refer it to voluntary
arbitration within a week of receipt of the management's final decision.

The procedure then deals with various procedural matters, such as: when a
grievance arises out of an order given by the management, such an order is first to be
complied with before the procedure is invoked; the right of worker's representative on
the Grievance Committee to see a document and the right of management's
representative to refuse to show a document of a confidential nature; the time limit (72
hours) within which an appeal can be taken from one step to another; payment for the
time spent for the redress of any grievance etc. In the case of a grievance arising out of
discharge of dismissal, the worker has the right to appeal either to the dismissing
authority or to a senior authority specified by the management within a week from the
date of dismissal or discharge.

The procedure provides a model under the Code of Discipline, which also lays
down that a grievance procedure, should be evolved in consultation with the union in
the organization.

18.5. INDISCIPLINE/MISCONDUCT

Webster’s Dictionary has defined discipline thus: "first, it is the training that
corrects, moulds, strengthens or perfects individual behaviour; second, it is control
gained by enforcing obedience; and third, it is punishment or chastisement."

According to Bremblett, "discipline does not mean a strict and technical observance
of rigid rules and regulations. It simply means working, co-operating, and behaving in
a normal and orderly way, as any responsible person would expect an employee to
do."

In other words, it may be noted that discipline is employee self-control which prompts
him to willingly co-operate with the organizational standards, rules, objectives, etc.

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 Misconduct is a transgression of some established and definite rules where no
discrimination is left to the employee. It is violation of rules. Any breach of these
rules and discipline may amount to misconduct. It is an act or conduct which is
prejudicial to the interest of the employer or is likely to impair the reputation of the
employer or create unrest and can be performed even outside the premises of the
establishment and beyond duty hours. It is for the management to determine in its
Standing Orders as to what shall constitute acts of misconduct and to define the
quantum of punishment for them.

Causes of Misconduct

Indiscipline generally arises because of the following reasons:

a) Unfair labour practices and victimization on the part of employers, like wage
differentials, unreasonable declaration of payment or non-payment of bonus,
wrongful works assignment, defective grievance procedure, ' etc.
b) Bad service conditions, defective communication by superiors and ineffective
leadership lead to indiscipline.
c) Poverty, frustration, indebtedness, generally overshadows the minds of the
workers. These agitate his minds and often results in indiscipline.
d) Generally speaking absenteeism, insubordination, dishonesty and disloyalty,
violation of plant rules, gambling, incompetence, damage to machine and
property, strikes, etc., all lead to industrial indiscipline.

Forms of Misconduct

Misconduct is a serious form of indiscipline against the management. The

scope of misconduct (according to the decision of the Gujarat High Court in
Jagmohan Dass Jagjivan Dass Mody v. State of Bombay 1962,11. LW507) can extend
to the following cases:'

1. Where the act of a worker is inconsistent with the peaceful discharge of his
duty towards his employer;
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 2. Where the act of the employee makes it unsafe for the employer to retain him
in service;
3. Where the act of the employees is so grossly immoral that all responsible men
would not trust that employee;
4. Where the conduct of the employee is such as to open before him ways for not
discharging his duties properly;
5. Where the employee is insulting and insubordinate to such a degree that his
behavior is incompatible with the continuance of the relation of master and
servant;
6. Where the worker is abusive or he disturbs the peace .at the place of his
employment;
7. Where the conduct of the employee is such that the employer cannot rely on his
faithfulness;
8. Where the employee is habitually negligent in respect of the duties for which is
engaged. According to the Bombay High Court the following acts would also
constitute misconduct:
(i) Theft, fraud or dishonesty in connection with employers' business;
(ii) Illegal strike;
(iii) Breach of duty; absence without leave; non-performance of jobs,
duties; disobedience of orders;
(iv) Breach of discipline; disrespect to or assaulting, superior, or
subversion of discipline; disrupting relations with co-workers;
(v) Delinquencies like telling lies; disloyalty and corruption; damage to
property and goodwill; and
(vi) Disabling or disrespectful conduct; disreputable outside conduct.

Clause 14 of the Model Standing Orders refers to acts and omissions which are
generally regarded as misconduct and provide for disciplinary action. These are:

a) Willful insubordination or disobedience whether alone or in combination with

others, to any lawful and reasonable order of a supervisor.

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 b) Theft, fraud or dishonesty in connection with employers' business or property. .
c) Willful damage to, or loss of, employer's goods or property.
d) Taking or giving bribes or any illegal gratification.
e) Habitual absence without leave or absence without leave for more than ten
days.
f) Habitual negligence or neglect of work.
g) Habitual breach of any law applicable to the establishment.
h) Riotous or disorderly behaviour during working hours at the establishment or
any subversive of discipline.
i) Frequent repetition of any act or omission for which a fine may be imposed to a
maximum of two percent, of the wages in' the month.
j) Resorting to a strike or inciting others to go on a strike in contravention of the
provisions of any law or rule having' the force of law.

These are not exhaustive but illustrative examples of misconduct under the
Model Standing Orders, framed as a part of the rules made under the Industrial
Employment (Standing Orders) Act, 1946.

18.6. REMEDIAL MEASURES FOR ACTS OF INDISCIPLINE.

Labour is the most important factor of production. Therefore, an organisation

can prosper only if labour is properly motivated towards the attainment of specific
objectives. A tactful human relations approach becomes necessary if management
wants to extract more and efficient honest work from its employees. It is, therefore,
obligatory on the part of management to analyses and study the causes of indiscipline
and then take the necessary action in the matter.

Each worker, as an individual needs a fair or reasonable wage. To maintain him

and his family in good health' and spirits. Therefore the wages should be adequate so
that the worker may meet the economic needs of his family.

When a worker joins an organisation, he agrees, under a contract of

employment, to give a certain amount of work and' loyalty and in return expects

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suitable economic reward, security of employment, fair treatment and other kinds of
support from his employer. To encourage him to stay in his job and to allow him the
necessary security, amenities and freedom to express his feelings and sentiments
human relations' approach should be adopted.

The trade union leadership should be developed from within the rank and file
of workers. A leader who comes from within is part of the workmen s associations and
is in a better position to know the feelings and reaction of his fellow-workers so that
he" may be able to put their demands in a right manner.

Finally, the various human resource management policies should be made more
realistic and progressive.

Disciplinary Action

Indiscipline is the result of many inter-related. Reasons - economic,

psychological, social, etc. It needs to be properly ' handled. The disciplinary .action
must conform to certain principles.

For example:

(i) The principle of natural justice must guide all enquiries and actions. This
means that no person should be appointed to conduct an enquiry, who himself
is interested in the outcome either as an aggrieved party or because he is
hostile to the person proceeded against, or for any other reason.
(ii) The principle of impartiality or consistency, i.e., under identical situations
where even the extenuating circumstances are alike, there should be no marked
difference in the action taken.
(iii) The principle of impersonality or consistency, i.e., the disciplinary authority
should not have a sense of elation or triumph or sadistic pleasure when a
recalcitrant or delinquent employee is brought to book.
(iv) The disciplinary authority should afford reasonable opportunity to the offender
to defend himself. Article 311 of the Constitution of India says: "No person
employed by the Union or a State Government shall be dismissed or removed
307
 until he has been given a reasonable opportunity showing cause against the
action proposed to be taken in regard to him."

The Model Standing Orders lay down that "before dismissing an employee, he
should be given an opportunity to explain the circumstances alleged against him."

18.7. PROCEDURE FOR PUNISHMENT

Usually the following procedure is adopted under the Model Standing Orders
before passing an order for suspension, dismissal or discharge.

(1) Framing and Issuing a Charge sheet: The first step is to frame a charge sheet in
writing, based upon a written complaint by someone, giving details of allegations of
misconduct/offence and indicating the time within which the reply to the charge sheet
is to be submitted to the authorities. It requires the authorities to show cause why
disciplinary action should not be taken against him. The charge sheet also indicates
what penalty is proposed to be imposed if the charges are substantiated.

The charge sheet may be explained to the worker in his own language before
some witness. And a copy handed over to him. If he refuses to accept it, it has to be
sent to his registered address by registered post under acknowledgement due. Refusal
to accept a charge sheet would itself constitute a fresh charge of misconduct. If the
employee refuses to take delivery, and if it returns undelivered, or when the worker
disappears from his known address, it may be published in a local paper, to give it a
wide publicity.

(2) Receiving the Defendants Explanation: The worker is required to submit his
explanation within a reasonable time or he may demand extension for its submission.
In preparing his case, he should be allowed access to documents he considers
necessary for the purpose. If the reply given is satisfactory, the management may
withdraw the charges promptly. But if the explanation is not satisfactory, the enquiry
would nevertheless proceed - may be ex parte.

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(3) Issuing Notice of Enquiry: When it is decided to hold an enquiry, an Enquiry
Officer is appointed, preferably aided by a person well-versed in law, or an outside
expert well conversant with the intricacies and procedures of domestic enquiries. Then
a notice of enquiry has to be issued to the worker, giving the time, date and place of
enquiry, and the name of the person officer holding the enquiry. The worker is
required to be present along with his witnesses at the appointed time and date.

(4) Holding the Enquiry: On the appointed day and time, the enquiry is held by the
Enquiry Officer in the presence of the worker. The process of the enquiry, the contents
of the charge sheet and an explanation about the procedure of enquiry are all
explained to the worker. If he pleads innocent, the enquiry is proceeded with; but if he
pleads guilty in writing and unconditionally, the enquiry is dropped.

The details of the enquiry are to be recorded and signed by all persons. After all
the witnesses against him have been examined, the defence witnesses (including the
worker) are required to submit their statements. All supporting evidence and
documents may be called for and examined.

(5) Findings of the Enquiry Officer: When the enquiry is over, the Enquiry Officer
is required to give his findings, which should invariably contain the procedure of the
enquiry, the parties heard, the documents produced and examined, the charges made
and the explanations given, the evidence produced, and then his own findings on each
of the charges and his grounds for his findings. He must specifically mention which
charges stand proved and which of them are not proved. He submits his findings to the
authorities empowered to take disciplinary action. He, however, is not required to
make any recommendation.

(6) Decision of the Disciplinary Authority: The authority will have to decide if he
accepts the findings or accepts them partially or totally rejects them. In the latter
event, he might even order a fresh enquiry or let the matter drop. In other cases, he
will decide upon a penalty commensurate with the evidence, with the accentuating or
extenuating factors, if any, and after keeping in mind the previous record of service of
the offender. The decision has to be in writing.
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(7) Communication of the Order of Punishment: The employee has to be given the
order in writing, giving a clear idea of the charges established, the punishment
awarded and the reasons thereof. With the service of the order of punishment, the
domestic enquiry is concluded.

All the documents need to be carefully preserved for future reference, for all
Standing Orders provide for appeals against any order by which a worker is aggrieved.

18.8. TERMINATION OF EMPLOYMENT

The Model Standing Orders provide for the termination of employment by

notice or as punishment for misconduct or by retirement on reaching the age of
superannuation:

The termination of the service of an employee may be effected in anyone of the

following ways:

(a) Voluntary abandonment of service by the employee. Where an employee

overstays his leave. When the employer issues a notice to him, calling upon him to
resume his duty within a reasonable specified period, and if he fails, he will be
deemed to have lost his lien on the job.

(b) Resignation by the employee. Where the employee gives a notice to that effect.
A resignation is not effective unless it has been accepted by the employer and the
acceptance has been communicated to the employee in writing. A resignation is
revocable till it is accepted. If the resignation is obtained by duress by the employer, it
can be treated as a wrongful dismissal.

(c) Discharge by notice thereof given by the employer. Where a proper notice is
given by the employer of 14 days that the services of the employee would not be
needed thereafter.

310
(d) Discharge or dismissal by the employer as a punishment for misconduct. The
following conditions are essential and must be satisfied before an employee is
discharged from his service by way of punishment for misconduct:

 The misconduct of the worker should be of such a character

that discharge or dismissal would be the appropriate
punishment and has, been provided for either under the
Standing Orders or otherwise.
 An enquiry must be held by the employer in respect of the
misconduct with which a worker has been charged, after filing
the charge sheet and serving it on him, and after giving him
due notice of the date, time and place where the enquiry
would be held.
 The enquiry must be held in such a manner as appears to be
fair and proper and in conformity with the rules of natural
justice. The worker concerned must be given adequate
opportunity to defend' himself and to present his witnesses.
 The officer holding the enquiry must be one who is not
disqualified for any reason, such as bias, personal interest or
an eye-witness or a victim.
 At the conclusion of the enquiry, the findings, with reasons
based on the evidence must be recorded by the enquiry
officer. '
 The findings must be based on the' evidence recorded and
should not be' baseless or perverse.
 The order of dismissal or discharge passed against the worker
must be bona fide and made in good faith.
 The order must be duly communicated to the workman.

(e) Retirement on reaching the age of superannuation.

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18.9. TYPES OF PUNISHMENT UNDER STANDING ORDERS

The Act provides for punishment for misconduct. The Model Standing Orders
prescribe fine, suspension and dismissal. Some Standing Orders also contain
provisions for censure or warning as a punishment.

(1) Censure or Warning: This may either be as a matter of caution or as a

punishment. When a simple warning is issued in writing to caution the worker against
misconduct, it is deemed to be a caution, But if a worker is found guilty of misconduct
after an enquiry is held and after a warning is issued, it is imposed as a penalty, before
the penalty is imposed, three conditions must be fulfilled:

 The worker should have been found guilty of some misconduct;

 It should be imposed for a good and sufficient cause;

 It is imposed after giving notice to the worker and after considering his
explanation,

(2) Fines: Fines may be imposed on the worker but only after giving him a reasonable
opportunity for explaining his conduct.

(3) Suspension: The last resort is which he would have been entitled if he had not
been suspended. This subsistence allowance is paid for 90 days. If the enquiry is
prolonged beyond 90 days, the allowance will be increased· to three-fourths of his
normal emolument. If, however, the responsibility for prolonging it is that of the
worker, the allowance would be reduced to one-fourth of his normal emoluments.

(4) Dismissal: A worker may be dismissed from service after-conducting an enquiry

into the allegation against him, provided the misconduct is serious and the concerned
worker has not shown any improvement on, previous actions.

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18.10. CHECK YOUR PROGRESS

1. Mention the type of punishment under the standing orders

a) Suspension b) Censure or Warning

c) Dismissal c) Fines

2. Indiscipline generally arises for the following reasons

a) Violation of plant rules b) dishonesty and disloyalty

c) Gambling & incompetence c) insubordination

3. Grievance may result from following factors

a) Improper working conditions such as strict production standards, unsafe

workplace, bad relation with managers, etc.

b) Irrational management policies such as overtime, transfers, demotions,

inappropriate salary structure, etc.

c) Violation of organizational rules and practices

d) Fringe Benefits

Answer to check your progress: 1) All options, 2) All options 3) a, b, c

18.11. NOTES

……………………………………………………………………………………

……………………………………………………………………………………

……………………………………………………………………………………

……………………………………………………………………………………

……………………………………………………………………………………

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18.12. SUMMARY:

An effective grievance procedure ensures an amiable work environment

because it redresses the grievance to mutual satisfaction of both the employees and the
managers. It also helps the management to frame policies and procedures acceptable
to the employees. It becomes an effective medium for the employees to express t
feelings, discontent and dissatisfaction openly and formally.

In any employment situation, disagreements or differences between employees and

supervisors can occur. For an employer, it is important that he responds quickly and
effectively so that a minor issue does not grow into one which cannot be resolved
easily. Grievances, complaints and the associated complaint processes are time
consuming and can be potentially expensive. And it is always advised to make every
effort to resolve concerns informally. The best way to prevent dissatisfaction among
employees is to set right and fare expectations. Managing employee's expectations of
what is fair and not and handling those properly can go a long way in impeding
grievances.

One of the worst things that an organization can do is to ignore employee complaints.
Listening to employees and making an attempt to fix anything that does seem out of
line is the easiest way to keep morale high and maintain a good working culture.

18.13. KEY WORDS:

Dissatisfaction: May be defined as anything that disturbs an employee, whether or
not such unrest is expressed in word e.g. engineers and technicians may be upset
because they are suddenly instructed to observe regular hours.

Complaint: It is a spoken or written dissatisfaction, brought to the attention of the

supervisor and the union leader. The complaint may or may not specially assign a
cause for dissatisfaction.

Grievance: It is simply a complaint, which has been formally presented in writing, to

a management representative or a union official. However for most of the people, the

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word "grievance" suggests a complaint that has been ignored, overridden or dismissed
without due consideration.

18.14. SELF ASSESSMENT QUESTIONS

1. What do you mean by grievance?

2. Define the procedure for punishment.

3. Explain the termination of employment.

3. Relate the classification and causes of grievance.

4. Discuss the procedure for settlement of grievances.

5. Identify the remedial measures for acts of indiscipline.

18.15. REFERENCES:

1. [Link], Satish Mamoria, S.V Gankar – Dynamics of industrial relations, 14th

revised edition (reprint) 2004, published by Himalaya Publishing House 2004.

2. Avtar Singh, Harpreet Kaur- Introduction to labour and industrial law, 3rd edition
2014, published by LexisNexis 2014.

3. S.C Srivastava- Indistrial Relations, 5th edition, published by Vikas publishing

house.

4. H.L. Kumar – Labour Laws, 5th edition 2008, published by Universal Law
Publishing co. Pvt. Ltd. 2008.

5. H.L. Kumar- The Industrial Disputes, 2nd edition 2006, published by Universal Law
Publishing co. Pvt. Ltd. 2006.

6. H.L. Kumar – Labour Management 4th edition 2004, published by Universal Law
Publishing co. Pvt. Ltd. 2004.

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UNIT-19: DISCIPLINE MANAGEMENT

STRUCTURE:
19.0. Objectives
19.1. Introduction
19.2. Meaning and Definition
19.3. Who is Responsible for Discipline?
19.4. Types of Disciplinary Problems
19.5. Objectives of Employee Discipline
19.6. Traditional Approaches to Dealing with Discipline
19.7. Causes of Disciplinary Problems
19.8. Discipline Maintenance System
19.9. Importance of Discipline in Industry
19.10. Hot Stove Rule
19.11. Check Your Progress
19.12. Notes
19.13. Summary
19.14. Key words
19.15. Self Assessment Questions
19.16. References

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19.0. OBJECTIVES
After studying this unit, you Should be able to;
 Understand the meaning of Discipline
 Explain the importance of Discipline in Industry
 Analyze the discipline Maintenance System
 Bring out the various Disciplinary problems
 Identify the causes of Disciplinary problems
 Highlight different types of Disciplinary problems

19.1. INTRODUCTION:
Discipline means behaving in a right and desired manner. It connotes orderly
and acceptable behavior by the members of the organization. The employees are of
different kinds and they come from different background, cultures and experiences
with different norms, values and cultures. Hence, if they behave differently, the
organizational objectives will be far beyond from target of achievement.
Employee discipline can be referred as a force that promotes individuals. Groups to
observe the rules, regulations and procedures of the organization which are necessary
to achieve organizational goals. It is a condition in which employees perform
organizational activities with a consistent behavior. In other words, it is said that
discipline avoids disorder, irregularity and confusion. It is a condition in an
organization when employees perform their activities in accordance of organizational
rules and regulations. Through such disciplinary actions, employees confirm with
what is considered proper behavior. It means, the employees confirm to organizational
rules and regulations framed by the organization as acceptable behavior.
Discipline is the regulation and modulation of human activities to produce a controlled
performance. The real purpose of discipline is quite simple. It is to encourage
employees to confirm to established standards of job performance and to behave
sensibly and safely at work. Discipline is essential to all organized group action.
Discipline is employee learning that promotes self-control, dedication, and orderly
conduct. In relation to employees in the U.S., discipline is generally used in a
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restricted sense to mean punishment. Consequently, the written procedures used to
punish employees for job deficiencies are called disciplinary procedures. Punishment
is the process of either administering an unpleasant stimulus, such as a warning letter
or a suspension, or withholding a reward, such as not granting a scheduled pay
increase because of an employee's job deficiencies. Punishment is only one form of
discipline; other forms are positive reinforcement, including commendations and
praise, and human resources development.

19.2. MEANING AND DEFINITION:

Discipline is very essential for a healthy industrial atmosphere and the

achievement of organisational goals. Discipline in industry may be described as
willing cooperation and observance of the rules and regulations of the organisation.
Discipline is essential to a democratic way of life. It is a process of bringing
multifarious advantages to the organization and its employees.

According to Brembless: ―Discipline does not mean a strict and technical

observation of rigid rules and regulations. It simply means working, co-operating and
behaving in a normal& orderly way, as any responsible person would except an
employee to do"

Discipline may be defined as an attitude of mind which aims at inculcating restraint,

orderly behavior and respect for and willing obedience to a recognized authority.

Discipline is a useful tool for developing, improving and stabilizing the personality of
workers. Industrial discipline is essential for the smooth running of an organization,
for increasing production and productivity, for the maintenance of industrial peace and
for the prosperity of the industry and the nation.

According to Richard D. Calhoon, ―Discipline is the force that prompts individuals

or groups to observe rules, regulations, standards and procedures deemed necessary
for an organization.‖

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Therefore discipline means securing consistent behavior in accordance with the
accepted norms of behavior. I am sure you will agree that discipline is essential in
every aspect of life. It is equally essential in industrial undertakings.

Simply stated, discipline means orderliness. It implies the absence of chaos,

irregularity and confusion in the behavior of workers.

Let us examine another definition by Ordway Tead, ―Discipline is the orderly

conduct of affairs by the members of an organization who adhere to its necessary
regulations because they desire to cooperate harmoniously in forwarding the end
which the group has in view, and willingly recognize that, to do this, their wishes must
be brought into a reasonable unison with the requirements of the group in action.‖

Discipline is a procedure that corrects or punishes a subordinate because a rule of

procedure has been violated. —Dessler, 2001

Discipline should be viewed as a condition within an organization whereby

Employees know what is expected of them in terms of the organization‘s rules,
Standards and policies and what the consequences are of infractions.—Rue & Byars,
1996

From the above definitions, you can find the following elements:

 The objective is orderly behaviour.

 Orderly behaviour is a group desire.
 Orderly behaviour assists the attainment of organisational goals
 When members behave appropriately as per rules, there is no need for
disciplinary action. This is self discipline.
 When some members violate the rules and regulations, punitive actions are
needed to correct them.

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  Punishment serves two purposes: first, to directly punish an individual for an
offence and secondly, to set an example for others not to violate the rules and
regulations.

19.3. WHO IS RESPONSIBLE FOR DISCIPLINE?

The immediate supervisor is responsible for maintaining discipline and morale

among the employees he supervises and for initiating appropriate disciplinary action
where the facts warrant such action. The line supervisor is responsible for the
enforcement of company rules. It is an important responsibility requiring impartiality,
good judgment, and courage. Disciplinary action should, therefore, be done by the line
supervisor. However, to avoid embarrassments and violation of company policies and
rules as well as of union contract, before taking disciplinary action involving warning
letters, suspensions or dismissals, he must first consult with his superior and the
personnel manager. He must know the background of why the particular policy or rule
was established.

The personnel manager or the industrial relations director would be more competent to
give advice on the appropriateness of the contemplated action and he would then
know how to go about taking such action. Investigations, hearings, and specific
procedures may be involved in serious disciplinary cases. It must be remembered that
disciplinary action is a tool, not a weapon of supervision.

Supervisors must thoroughly understand the purposes of disciplinary action and must
be given training on the techniques of handling the day-to-day disciplinary problems.
Such training may be in the form of role-playing, case studies, films, and lecture
discussion by outside experts. Supervisors who possess the qualities of leadership are
able to handle the discipline function properly. But it is also the responsibility of
management to equip the supervisors with the knowledge and skill for doing a good
job of supervising, by means of a training program.

19.4. TYPES OF DISCIPLINARY PROBLEMS

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 All the employees of an organization neither are nor self-disciplined, rather
some of them may create disciplinary problems in the organization. Such problems are
also called indiscipline behaviors or misconducts.
The most frequently used disciplinary problems are as follows:

Attendance Related Problems:

Attendance related problems are those in disciplinary actions that seriously
create infractions for managers. They are undoubtedly a serious problem facing
managers. It is much more serious and wide spread than other problems. Attendance
problems are as follows:
 Absenteeism
 Abuse of sick leave
 Tardiness
 Late arriving
 Leaving work without permission.

Job Behavior Problems:

Job behavior problems are related to on the job behavior of the employees.
Such problems may include carelessness, fighting, gambling, failure to use safety
devices, dishonesty, refusal to obey orders, failure to report accidents, abuse of
alcoholic liquids and drugs, sleeping or loafing on the job, insubordination and so on,
Most of these problems reflect direct infractions of organizational rules and
regulations, Moreover, such problems clearly indicate a violation of organizational
norms, values and culture; hence, such infractions are rarely difficult to address.

Dishonesty Problems:
Dishonesty is another crucial disciplinary problem in an organization. This has
traditionally resulted one of the severe disciplinary problems found in organizations.
Stealing, theft, falsification of information, etc. are the examples of dishonesty

321
problems. Such dishonest act directly affects one's character and leads the employee
separated from the organization even if it was only a first offence.

Outside Activities Problems:

These are those disciplinary problems that will take place outside
organizational environment. These are therefore, also called off-the-job activities.
They are resulted from activities of employees outside of their work
and adversely affect the work performance. Unauthorized strikes, wage garnishing,
decorating outside criminal activities, working for competitors are the examples of
outside activities. Sometimes they impair the image of the organization. Hence, such
activities should be checked properly for which there will be a need for disciplinary
actions.

19.5. OBJECTIVES OF EMPLOYEE DISCIPLINE

The primary concern of discipline is to frame an employee's behavior as per the
organizational rules and regulations, or the value set by the organization. Besides,
other important objectives are as follows:

 To obtain organizational rules, regulations, norms and values so that the

organizational activities are performed effectively.
 To impart the environment of certainty despite the differences in individual
backgrounds, cultures, values and experiences, and other related organizational
changes.
 To develop a spirit of tolerance and desire to make adjustments among
employees.
 To give and seek direction and responsibility.
 To promote the environment of respect for human personality and harmonious
labor relation.
 To motivate the employees for higher level of performance and so on.

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19.6. TRADITIONAL APPROACHES TO DEALING WITH
INDISCIPLINE

Following are some of the traditional approaches to dealing with

indiscipline. Punitive Approach:

The traditional approach to dealing with problems of indiscipline tends

to emphasize the coercive and punitive methods within the rational-legal
framework. The underlying assumptions behind such an approach are:

 People need to be coerced or forced to conform to the norms of a group

or organization, thereby, necessitating policing functions on the part of
the supervisory and managerial personnel; and
 That punishment is necessary for correcting deviations and changing the
behaviour of people in a desirable direction.

These assumptions are unrealistic as they are based in inadequate and

superficial understanding of the complexities of human behaviour. Coercion as
a means of ensuring conformity ultimately leads to alienation and apathy on the
part of employees. They will conform to rules and regulations only to the
extent to which they can safeguard their own interest rather than give their best.
The threat of punishment induces people to direct their energy towards
nullifying and/or removing the threat rather than correcting their own
behaviour. The behaviour change is usually temporary and is subject to one‘s
perception that the threat of punishment is present. Numerous cases of
indiscipline, occurring particularly when the supervisory staff or leader is not
present, illustrate the above points.

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Judicial Approach:
The judicial approach has a serious limitation in dealing with the
problems of indiscipline in a constructive manner. It is invariably resorted to as
an aftereffect, that is, when the situation of indiscipline has already arisen.
Thus, the corrective action creates a time lag between the occurrence of in
disciplined behaviour and the initiation of necessary action. Despite several
limitations, however, this approach is quite frequently adopted in Indian
industries. This indeed has advantages in the sense that it follows the law of
natural justice and it provides the offender every opportunity to state his/her
side of case.
It is a well known fact that the judicial approach, disciplinary proceedings, and
the like are time consuming processes leading to unusual delays. There may be
reluctance on the part of the disciplinary authority to get involved
unnecessarily. Management at times resorts to strategic leniency under
conditions of apprehension that a disciplinary action might provoke reactive
responses like stoppages of work, etc. Strict compliance with requirements of
discipline may become an end in itself at the cost of the overall interest of the
organization. Discipline tends to connote strict adherence to rules and
regulations rather than to meeting the objectives of the organization. In normal
course, therefore, taking recourse to the judicial approach in dealing with
problems of indiscipline does not create conditions for the optimum utilization
of human potential toward constructive pursuits.

Humanistic Approach:
Due to the problems mentioned above, there is yet another school of
thought which advocates a more humanistic approach to dealing with the
problems of indiscipline. This approach is often labeled as a ‗human relations‘
approach where the emphasis is on establishing a healthy interpersonal
relationship between the leader and the employees. The offending employees
are treated as human beings and their total personality and behaviour are taken

324
 into consideration. An attempt is made to probe deeper into the causes leading
to acts of indiscipline. Even causes stemming from personal factors are
considered to be of relevance. Corrective mechanisms involve being
considerate to the employees and helping them to get over their personal
difficulty by change of assignments, shifts etc. Punitive actions are avoided as
much as possible. This approach, which is basically oriented towards
establishing a good relationship with subordinates and being sympathetic
towards them, is often perceived as a soft approach. Individual and personal
factors like interpersonal attractiveness, biases, stereotypes, etc. may influence
the decision leading to perceived inconsistency in dealing with deviations
among other employees.

19.7. CAUSES OF DISCIPLINARY PROBLEMS

Disciplinary problems are unproductive hurdles to the organization. Rather

they hinder the smooth operation of organizational activities. Hence, such problems
need to be addressed timely. Main causes of disciplinary problems are as follows:

 Defective recruitment selection and socialization of employees.

 Inappropriate and inadequate organizational values and norms established by

the organization.

 Defective evaluation of employees by supervisors.

 Defective communication system may create such disciplinary problems.

Defective communication means, lack of two-way communications.

 Defective leadership by managers.

 Defective supervision or lack of supervision at work.

 The 'divide and rule' policy practiced by the managers.

 Bad and unpleasant working environment.

 Discrimination of employees at work.

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  Lack of delegation of authority and assignment of responsibility.

 Improper coordination work.

 Lack of timely address of employee‘s problem.

 Entry of different employees with different backgrounds, skills and

experiences.

 Lack of proper training and skill development programs at work.

 Carelessness of work.

19.8. DISCIPLINE MAINTENANCE SYSTEM:

Disciplinary actions have serious repercussions on the employees and on
the industry, and, therefore, must be based on certain principles in order to be
fair, just and acceptable to the employees and their unions. So in any discipline
maintenance system, certain principles are to be observed, such as:

 The rules of discipline, as far as possible, should be framed in co-

operation and collaboration with the representatives of employees for
their easy implementation. Employees in a group should be associated in
the process of discipline enforcement. The group as a whole can control
an individual worker much more effectively than the management can,
through a process of remote control or by imposing occasional penalties.
Informal groups are likely to exert social pressures on wrong-doers
avoiding the need for negative disciplinary actions.

 The whole discipline maintenance must gear to the organizational needs.

The organization as a whole should be discipline – oriented. It should
pervade throughout the hierarchy of an organization and at every level.

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  The rules and regulations should be appraised at frequent and regular
intervals to ensure that they are appropriate, sensible and useful.

4. The rules and regulations should be flexible to suit different categories

of employees in the organization, i.e., both the blue-collar workers and white-
collar employees.

5. The rules must be uniformity enforced for their proper acceptance. They
must be applied fairly and impersonally. In other words, all defaulters should
be treated alike, depending upon the nature of their offence and past record.
Any discrimination or favoritism in this regard is likely to create discontent
among the employees. Further, there should be a definite and precise provision
for appeal and review of all disciplinary actions.

6. The rules of discipline embodied in the standing orders, or in the

company‘s manual, must be properly and carefully communicated to every
employee preferably at the time of induction for their easy acceptance. It serves
as a warning and a learning process and helps to improve future behavior of the
employees in the enterprise.

7. The responsibility for maintaining employee discipline should be

entrusted to a responsible person (e.g., a line executive), through it is the
personnel officer who should be given the responsibility of offering advice and
assistance. The line executive should issue only verbal and written warnings. In
serious matters, which warrant suspension, discharge, etc., the industrial
relations department should be consulted.

8. Disciplinary action should be taken in private because its main objective

is to ensure that a wrong behavior is corrected and not that the wrong- doer is
punished. If disciplinary action is taken in the presence of other employees, it

327
 may offend the sense of dignity of the employee and impair his social standing
with his colleagues. Similarly, an immediate supervisor should never be
disciplined in the presence of his subordinates. If this happens, it would lower
his status and authority, and make it difficult, if not impossible, for him to
discipline his subordinates under certain circumstances.

9. A punitive action must satisfy the principle of natural justice. The

management must act without bias and without vindictiveness, and its
disciplinary action must be based on justice and fair-play. The punishment
should be commensurate with the gravity of the offence. An individual is
presumed to be innocent until he is proved to be guilty. The burden of proof is
on the employer and not on the employee.

10. While awarding punishment, the management should keep in mind such
factors as the seriousness of the offence, the past employment record of the
worker, the lapse of time since the last incidence of misconduct, possible
mitigating factor or circumstances, and the organization‘s decisions on similar
cases in the past. It should be exercised bona fide and in conformity with the
principles of uniformity and consistency.

19.9. IMPORTANCE OF DISCIPLINE IN INDUSTRY:

Discipline is the very essence of life. The goals or objectives of industrial discipline
should be clearly stated

 To ensure that employers & employee recognize each other‘s rights and
obligations.

 To promote constructive cooperation between the parties concerned at all

levels.

 To maintain discipline in industry.

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  To secure settlement of disputes & grievances by negotiation, cancellations
voluntary arbitration.

 To eliminate all forms of coercion violence in industrial relation.

 To avoid work stoppages.

 To facilitate the free growth of trade unions.

 Respect for the human personality.

Management personnel should set high standards. Discipline is the very

precious step in life everywhere and every place. An industrial organisation is an
organic whole in which a variety of forces act in union towards the attainment of its
ultimate aims. Obviously, smooth and effective functioning demands a high degree of
co-ordination among the various elements which from integral parts of an
organization. In an industry big or small manpower is the major factor. Manpower can
be used effectively only if there is discipline in the industry. Maintain of discipline is a
prerequisite for the attainment of maximum productivity not only of the workers but
also of the whole nation. In this way discipline is important in the industry.

19.10. HOT STOVE RULE

The "Hot-Stove Rule" of Douglas McGregor gives a good illustration of how to

impose disciplinary action without generating resentment. This rule draws an analogy
between touching a hot stove, and undergoing discipline. When you touch a hot stove,
your discipline is immediate, with warning, consistent, and impersonal.

These four characteristics, according to McGregor, as applied to discipline are

self-serving and may be explained as follows:

When you touch the hot stove, you burn your hand. The burn was immediate. Will
you blame the hot stove for burning your hand? Immediately, you understand the
cause and effect of the offense. The discipline was directed against the act not against
anybody else. You get angry with yourself, but you know it was your fault. You get
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angry with the hot stove too, but not for long as you know it was not its fault. You
learn your lesson quickly.

You had warning as you knew the stove was red hot and you knew what would
happen to you if you touched it. You knew the rules and regulations previously issued
to you by the company prescribing the penalty for violation of any particular rule so
you cannot claim you were not given a previous warning.

The discipline was consistent. Every time you touch the hot stove you get burned.
Consistency in the administration of disciplinary action is essential. Excessive
leniency as well as too much harshness creates not only dissatisfaction but also
resentment.

The discipline was impersonal. Whoever touches the hot stove gets burned, no
matter who he is. Furthermore, he gets burned not because of who he is, but because
he touched the hot stove. The discipline is directed against the act, not against the
person. After disciplinary action has been applied, the supervisor should take the
normal attitude toward the employee.

In applying this Hot Stove rule in disciplinary action, there must be company policies,
rules and regulations regarding certain behavior and conduct which were issued and
clearly explained to employees and accepted by them for compliance. Disciplinary
action must be directed against the act, not against the person. It must be used by
supervisors as a tool to develop the employee and the group.

The steps that should be followed are:

Immediate investigation: of the offense must be done to determine the facts. If the
company is unionized, the investigation must be conducted in the presence of the
union steward or one of the representatives of the union. Promptness is necessary in
order that the employee will associate the investigation with the offense rather than
with his person.

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 Previous warning: In labor relations, it is important that the company policies,
rules and regulations be issued to and explained to all employees upon induction as
part of the orientation program. This should be done by the supervisor with the help of
the personnel department. In addition, whenever new policies, rules and regulations
are promulgated, they must be posted in the company's bulletin board, circulated, and
explained to the employees by the supervisor. It is good practices to have the
employees acknowledge receipt of a copy of the said rule or policy so they could not
deny knowledge of the rules.

In some companies, the rules and regulations provide "progressive discipline"

whereby penalties are graduated depending upon the gravity and frequency of the
violation.

Consistency: in the administration of disciplinary action is highly essential so that

employees will know what to expect as a consequence of an infraction or violation of
the rule or regulation.

Disciplinary action: must be impersonal. It should be directed against the act, not
the person. It should be institutional, that is, for the protection and interest of the entire
organization and for all employees, and not done to satisfy the personal whim and
caprice of the supervisor.

19.11. CHECK YOUR PROGRESS:

1) Mention the traditional approaches of discipline

a) Judicial approach b) Humanistic Approach

b) Punitive Approach d) Grievance Approach

2) Mention the importance of discipline in the industry.

a) To maintain discipline b) To avoid work stoppages

b) Respect for human personality d) Facilitate the growth of trade unions

3) The hot stove rule was given by

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 a) Douglas McGregor b) Abram Maslow

b) Douglas Gregor d) Douglas Maslow

Answers to Check Your Progress: 1) a, b, c 2) All the options 3) a

19.12. NOTES

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19.13. SUMMARY:
Absence of discipline tells upon the functioning of industries and the society.
Importance of discipline has to be realized by all concerned and maintenance of
discipline should be joint responsibility of both the workers and management.
Discipline is two-way traffic and a breach of discipline on the part of the either party
in industry will cause unrest. The approach to managing discipline depends to a great
extent upon managerial philosophy, culture and attitude towards the employees. A
negative approach to discipline relies heavily on punitive measures and in line with
the traditional managerial attitude of ―hire and fire‖ and obedience to orders. On the
other hand, a constructive approach stresses on modifying forbidden behavior by
taking positive steps like educating, counseling, and the like. The concept of positive
discipline promotion aims at the generation of a sense of self-discipline and
disciplined behavior in all the human beings in a dynamic organizational setting,
instead of discipline imposed by force or punishment. The approach to the disciplinary
action in most cases should be corrective rather than punitive. The positive discipline
maintenance should form an integral part of human resource development efforts of an
organization.

19.14. KEY WORDS:

Discipline: Means conformity to the norms, rules, regulations, and expectations of the
management by the employees.

Punitive Approach: is the traditional approach for dealing with problems of

indiscipline and tends to emphasize the coercive and punitive methods within the
rational-legal framework.

Grievances: are complaints affecting one or more individual workers in respect of

their wage payments, overtime, leave, transfer, promotion, seniority, work assignment,
or discharge. Where the points at dispute are of general applicability or of
considerable magnitude, they will fall outside the scope of this procedure.
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19.15. SELF ASSESSMENT QUESTIONS

1) Mention the objectives of Discipline.

2) Explain the Discipline Maintenance System.
3) Mention the importance of Discipline in Industry.
4) explain the causes of Disciplinary problems.
5) Mention the individuals who are responsible to maintain the discipline.

19.16. REFERENCES

1. [Link], Satish Mamoria, S.V Gankar – Dynamics of industrial relations, 14th

revised edition (reprint) 2004, published by Himalaya Publishing House 2004.

2. Avtar Singh, Harpreet Kaur- Introduction to labour and industrial law, 3rd edition
2014, published by LexisNexis 2014.

3. S.C Srivastava- Indistrial Relations, 5th edition, published by Vikas publishing

house.

4. H.L. Kumar – Labour Laws, 5th edition 2008, published by Universal Law
Publishing co. Pvt. Ltd. 2008.

5. H.L. Kumar- The Industrial Disputes, 2nd edition 2006, published by Universal Law
Publishing co. Pvt. Ltd. 2006.

6. H.L. Kumar – Labour Management 4th edition 2004, published by Universal Law
Publishing co. Pvt. Ltd. 2004.

334
UNIT-20 LABOUR WELFARE WORK

STRUCTURE:
20.0. Objectives
20.1. Introduction
20.2. Meaning and Definition of Labour Welfare
20.3. Concept of Labour Welfare
20.4. Basic Features of labour Welfare
20.5. Need for welfare work
20.6. Approaches to Labour Welfare
20.7. Scope of Labour Welfare Works
20.8. Check Your Progress
20.9. Notes
20.10. Summary
20.11. Key words
20.12. Self Assessment Questions
20.13. References

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20.0. OBJECTIVES
After studying this unit, you Should be able to;
 Give the meaning of labour welfare
 Explain the features of labour welfare
 Describe the concept of labour welfare
 Bring out the approaches of the labour welfare
 Identify the need of labour welfare work
 Highlight the scope of labour welfare work

20.1. INTRODUCTION
Industrial progress of a country depends on its committed labour force. In this
regard the importance of labour welfare was recognized as early as 1931, when the
Royal Commission on Labour stated that the benefits which go under this
nomenclature are of great importance to the worker who is unable to secure by
himself. The schemes of labour welfare may be regarded as -a wise investment" which
should and usually does bring a profitable return in the form of greater efficiency.
Twenty years later, the Planning Commission realized the importance of labour
welfare, when it observed that "In order to get the best out of a worker in the matter of
production, working conditions require to be improved to a large extent. The worker
should at least have the means and facilities to keep himself in a state of health and
efficiency. This is primarily a question of adequate nutrition and suitable housing
conditions. The working condition should be such as to safeguard his health and
protect him against occupational hazards. The work place should provide reasonable
amenities for his essential needs. The worker should also be equipped with the
necessary technical training and a certain level of general education.

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20.2. MEANING AND DEFINITION OF LABOUR WELFARE

ILO defines labour welfare as a term which is understood to include such

services, facilities and amenities as may be established in or in the vicinity of
undertakings to enable the persons employed in them to perform their work in healthy,
congenial surroundings and to provide them with amenities conducive to good health
and high morale.

Welfare includes anything that is done for the comfort and improvement of
employees and is provided over and above the wages. Welfare helps in keeping the
morale and motivation of the employees high so as to retain the employees for longer
duration. The welfare measures need not be in monetary terms only but in any
kind/forms. Employee welfare includes monitoring of working conditions, creation of
industrial harmony through infrastructure for health, industrial relations and insurance
against disease, accident and unemployment for the workers and their families.

Labor welfare entails all those activities of employer which are directed
towards providing the employees with certain facilities and services in addition to
wages or salaries.

20.3. CONCEPT OF LABOUR WELFARE

The concept of 'labour welfare' is flexible and elastic and differs widely with
time, region, industry, social values and customs, degree of industrialization, the
general socio-economic development of the people and the political ideologies
prevailing at a particular lime. It is also moulded according to the age-group, sex,
socio-cultural background, marital and economic status and educational level of the
workers in various industries. Accordingly, the concept cannot be very precisely
defined. However, efforts have been made by the expert bodies to do so, each his own
way. A few of these definitions are given below:
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 The Labour Investigation Committee preferred to include under 'Labour
Welfare':

"Anything done for the intellectual, physical, moral and economic betterment of the
workers, whether by employers, by government or by other agencies, over and above
what is down by law or what is normally expected of the contractual benefits for
which workers may have bargained.

According to the Committee on Labour Welfare, welfare services should

mean:

"Such services, facilities, and amenities as adequate canteens, rest and

recreation facilities, sanitary and medical facilities, arrangements for travel to and
from place of work, and for the accommodation of workers employed at a distance
from their homes; and such other services, amenities and facilities, including social
security measures, as contribute to the conditions under which workers are employed.

The ILO report refers to labour welfare as:

"Such services, facilities and amenities as may be established in or in the

vicinity of undertakings to enable the persons employed in them to perform their work
in healthy, congenial surroundings and provided with amenities conducive to good
health and high morale."

The Encyclopedia of Social Sciences has defined labour welfare work as:

"The voluntary efforts of the employers to establish, within the existing

industrial system working and sometimes, living and cultural conditions of the
employees beyond what is required: by law, the custom of the country and the
conditions of the market."

20.4. BASIC FEATURES OF LABOUR WELFARE

A perusal of the above definitions indicates that the term 'labour welfare' has
been used - a 'wide' as well as 'narrow' sense. In the 'broader sense,' it may include not

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only the minimum standard of hygiene and safety laid down in general labour
legislation, but also such aspects of working life as social insurance schemes,
measures for the protection of women and you workers, limitation of hours of work,
paid vacations, etc. In the 'narrow sense', welfare in addition to general physical
working conditions is mainly concerned with the day-to-day problems of the workers
and the social relationships at the place of work. In some countries, the use of the
welfare activities provided is confined to the workers employed in the undertakings
concerned, while others, the workers' families are allowed to share in many of the
benefits which are available.

On the basis of the various definitions, the basic characteristics of labour

welfare work may be noted thus:

(i) It is the work which is usually undertaken within the premises or in the vicinity
of the undertakings for the benefit of the employees and the members of their
families.
(ii) The work generally includes those items of welfare which are over and above
what is provided by statutory provisions or required by the custom of the
industry or what the employees expect as a result of a contract of service from
the employers.
(iii) The purpose of providing welfare amenities is to bring about the development
of the whole personality of the worker - his social, psychological, economic,
moral, cultural and intellectual development to make him a good worker, a
good citizen and a good member of the family,
(iv) These facilities may be provided voluntarily by progressive and enlightened
entrepreneurs at their own accord out of their realization of social
responsibility towards labour, or statutory provisions may compel them to
make these facilities available; or these may be undertaken by the government
or trade unions, if they have the necessary funds for the purpose.
(v) 'Labour Welfare' is a very broad term, covering social security and such other
activities as medical aid, crèches, canteens, recreation, housing, adult

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 education, arrangements for the transport of labour to and from the work
place.
(vi) It may be noted that not only intra-mural but also extra-mural, statutory as
well as non-statutory activities, undertaken by any of the three agencies - the
employers, trade unions or the government - for the physical and mental
development of a worker, both as a compensation for wear and tear that he
undergoes as a part of the production process and also to enable him to sustain
and improve upon the basic capacity of contribution to the processes of
production, "which are all the species of the longer family encompassed by the
term 'labour welfare'.'

The Committee of Experts on Welfare Facilities for Industrial Workers

convened by ILO (1963) included the following items under the term 'labour
welfare".

20.5. NEED FOR WELFARE WORK

The need for the labour welfare arises from the very nature of the industrial
system, which is characterized by two basic factors; one, the conditions under which
work is carried on are not congenial for health; and second, when a labourer joins an
industry, he has to work in an entirely strange atmosphere, which creates problems of
adjustment. One author calls these two factors "the long arm of the job", and "the
social invasion of the factory.

The working environment in a factory/mine adversely affects the workers'

health because of the excessive heat or cold, noise, odors, fumes, dust and lack of
sanitation and pure air etc. lead to occupational hazards. These have, therefore, to be
held in check by providing ameliorative services, protective devices and
compensatory benefits following of accident or injury or disablement. This has been
referred to as "the long arm of the job which stretches out its adverse effects on to the
worker long after his normal 8-hour work." Hence the need for provision of welfare
services within the premises of the factory, mine or plantation arises.

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 When a worker, who comes from rural areas to work in a factory, he has to
work and live in unhealthy, congested factories and slum areas, with no outdoor
recreation facilities. To escape from the trying conditions of his tedious and tiresome
job, he absents himself, becomes irregular and is often undisciplined. Hence the need
for providing welfare services arises. For whatever improvements in the conditions of
work and life of the employees, whatever leads to increasing adaptation of the worker
to this hob, and whatever makes him fully contented lessen his desire or need to leave
the factory for a time and lighten for him the burden of this social invasion of the
factory."

There is a social reason also as pointed out by the Labour Investigation

Committee, "the provision of canteens improves the physique, and entertainment
reduces the incidence of vices. Medical aid and maternity and child welfare services
improve the health of the workers and bring down the rates of general, maternal and
infantile morality; and education facilities increase their mental efficiency and
economic productivity.

The need for labour welfare was strongly felt by the Royal Commission on
Labour as far back as in 1931, primarily because of lack of commitment to industrial
work among factory workers and the harsh treatment they received from their
employers. This need was emphasized, in free India, by the Constitution which
contains the following Articles in this regard:

"Article 41: The state shall, within the limit of its economic capacity and
development makes effective provisions for securing the right to work to education,
and to public assistance in cases of unemployment, old-age, sickness, and disablement
and in other cases of underserved want."

"Article 42: The state shall make provision for securing the just and humane
conditions of work and for maternity relief."

"Article 43: The state shall endeavor to secure, by suitable legislation or economic
organisation or in any other way, to all workers, agricultural, industrial or otherwise,

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work, a wage, conditions of work ensuring a decent standard of life and full
enjoyment of leisure and social and cultural opportunities; and in particular, the state
shall endeavor to promote cottage industries on an individual or co-operative basis in
rural areas‖.

Aims of Labour Welfare Work

The Labour Welfare Work aims at providing such service facilities and amenities as
would enable the workers employed in industries/factories to perform their work in
healthy, congenial surroundings conducive to good health and high morale.

(1) It is partly humanistic, for it enables the workers to enjoy a fuller and richer
life.
(2) It is partly economic because it improves the efficiency of the worker,
increases its availability where it is scarce and keeps him contented. It,
therefore, minimizes the desire of the workers to form or join unions and to
resort to strikes.
(3) The aim is partly civic because it develops a sense of responsibility and dignity
among the workers and thus makes 'hem worthy citizens of the nation.

20.6. APPROACHES TO LABOUR WELFARE

The issue of labour welfare may be studied from different angles, such as:

• The location, where these amenities are provided, within and outside the
industrial undertakings;
• The nature of amenities such as those concerned with "conditions of
employment," and "living conditions of work people".
• The welfare activities termed as 'statutory', 'voluntary' and 'mutual'.
• The agency which provides these amenities.
• On the basis of the location of welfare activities, labour welfare work has been
classified in two specific categories, namely, (a) intramural (b) extra-mural.
Intra-mural Activities consist of such welfare schemes provided within the
factories as medical facilities, compensation for accidents, provision of crèches
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 and canteens, supply of drinking water, washing and bathing facilities, provision
of safety measures such as fencing and covering of machines, good lay-out of the
machinery and plant, sufficient lighting, first aid appliances, fire extinguishers;
activities relating to improving conditions of employment, recruitment and
discipline and provision of provident fund, pension and gratuity, maternity
benefits etc.
Extra-mural Activities cover the services and facilities provided outside the
factory such as, housing accommodation, indoor and outdoor recreation
facilities, amusement and sports, educational facilities for adults and children,
provision of libraries and reading rooms.

In the welfare activities concerned with conditions of employment are included

activities for the management of problems arising out of hours of work, wages,
holidays with pay, rest intervals, sanitation, and safety, continuity of employment,
control over the recruitment of female and juvenile labour, while all such schemes of
benefits as co-operative societies, legal and medical aid, and housing are included in
the category of activities concerned with "conditions of workers".

Labour welfare work may be statutory, voluntary or mutual. It is statutory

when such activities have to be undertaken in furtherance of the legislation enacted by
the government. It is voluntary when the activities are undertaken at their own accord
by the employers or some philanthropic bodies or when a labour organisation
undertakes such activities for the welfare of their members. It is mutual, when all
parties join hands to bring about the social and economic uplift of the workers.

The National Commission on Labour has classified various labour welfare

measures under two distinct classes:" (i) those which have to be provided, irrespective
of the size of the establishment or the number of the persons employed therein such as
facilities relating to washing, storing, drying the clothing, first-aid, drinking water,
latrines and urinals; and (ii) those which are to be provided subject to the employment
of a specified number of persons, such as Canteen, rest shelter, crèche, ambulance etc.

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According to the Encyclopedia of Social Science, "industrial welfare work" has taken
numerous forms, such as:

 Those dealing with immediate working conditions are special

provisions for adequate light, heat, ventilation, toilet facilities, accident
and occupational disease prevention, lunch room, rest room, maximum
hours, minimum wages, etc.;
 Those concerned with less immediate working conditions and group
interests, are gymnasiums, club rooms, playgrounds, gardens, dancing,
music, house organs, mutual aid societies, vacation with pay, profit-
sharing, stockownership, disability and unemployment funds, pensions,
savings banks, provisions for conciliation and arbitration, shop
committees and workers' councils;
 Those designed to improve community conditions, such as housing,
retail stores, schools, libraries, kindergartens, lectures on domestic
sciences, day nurseries, dispensary and dental service screening of
motion pictures, arranging athletic contests and picnics and summer
camps.

20.7. SCOPE OF LABOUR WELFARE WORKS

It is somewhat difficult to accurately lay down the scope of labour welfare

work, especially because of the fact that labour class is composed of dynamic
individuals with complex needs.

In a world of changing values, where ideologies are rapidly undergoing

transformation, rigid statements about the field of labour welfare need to be revised.
Labour welfare work is increasing with changing opportunities and needs to meet
varying situations. It is also increasing with the growing knowledge and experience of
techniques. An able welfare officer would, therefore, include in his welfare
programme the activities that would be conducive to the well-being of the worker and
his family. The test of a welfare activity is that it removes, directly or indirectly, any

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hindrance, physical or mental of the worker and restores to him the peace and joy of
living the welfare work embraces the worker and his family.

The following list, which is by no means exhaustive, gives the items under
which welfare work should be conducted inside and outside the work place:

(1) Conditions of Work Environment:

 The workshop sanitation and cleanliness must include the regulation of

temperature, humidity, ventilation, lighting, elimination of dust, smoke,
fumes and gases convenience and comfort during work, operative
postures, sitting arrangements etc; distribution of work hours and
provision for rest times, meal time, break and workmen's safety
measures.
 The factory sanitation and cleanliness must consist of: provision of
urinals, lavatories and bathing facilities; provision of spittoons, water
disposal, disposal of wastes and rubbish, general cleanliness; white-
washing and repair of buildings and workshop; ingress, egress, passage
and doors; and care of open spaces, gardens and roads.
 Provision and care of drinking water;
 Canteen services;
 Management of workers' cloak rooms, rest rooms and library.

(2) Workers' Health Services: These should include:

 Factory health centre: playgrounds; health education; medical

examination of workers and health research.
 Factory dispensary and clinic for general treatment; treatment of
individual diseases, fatigue and treatment of accidents.
 Women and child welfare work, anti-natal and prenatal care; maternity
aid: infant welfare; creches; women's general education; health and
family welfare.

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  Workers' recreation facilities; playgrounds, outdoor life; athletics,
gymnasium and women's recreation.
 Education: provisions of reading rooms; libraries; circulating library;
visual education; pictorial education; lecture programmes; debating
unions; study circles; education of workers' children nursery schools;
primary schools; women's general education with emphasis on hygienic,
sex life, family planning, child care, domestic economy and home
handicrafts.
 Cultural activities include; musical evenings and circles; art circles; folk
songs, the arts and stories; histrionics, folk dancing and festival
celebrations.

(3) Labour Welfare Programme: These should cover: factory council consisting of
representatives of labour and employers; workmen's arbitration council, vocational
and job adjustment, social welfare departments; co-operation with personnel
administration, especially for case investigation, interview and vocational testing;
employment, follow-up and research bureau.

(4) Labour's Economic Welfare Programme: These should include: co-operatives

or fair price shops for consumer necessities, especially grains, vegetables, milk, meat,
oils and ghee, cloth and daily requirements, co-operative credit society, thrift schemes
and savings bank, unemployment insurance, health insurance, employment bureau,
profit sharing and bonus schemes and factory transport service.

(5) General Welfare Work: This should relate to: housing and family car.

20.8. CHECK YOUR PROGRESS

1. Labour welfare work has been classified in two specific categories

a) Intramural b) Extra-mural

c) Progressive c) Non-Progressive

2. Welfare helps in keeping the

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 a) Morale and Motivation of employees
b) Grievance of employees
c) Determination of employees
d) Collective Bargaining of employees

3. Employee welfare includes

a) Monitoring of working conditions

b) creation of industrial harmony
c) Insurance against disease
c) accident and unemployment for the workers and their families.
Answer to check your progress: 1) a, b 2) a 3) All the options

20.9. NOTES

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20.10. SUMMARY:

Labour welfare has tremendous potentialities for fostering good industrial

relations in India. The labour force must be directed in right channels in our fast
developing technological machinery. ―Ignorance, ill-health and dirt are the three
giants‖ labour welfare has to fight in the home life, personal life, work life and
community life of the workers. They have to be fought out steadily on all sides. In the
coming year, the labourers shall be made mightier than the machine with which he
works, more fruitful than the dust on which he treads and richer than the earth into
which he digs. Decent wages, adequate perquisites, and safe and clean working
environment are basic to all other activities in the area of human welfare, and,
therefore, the enterprises which reduce the wage bill on these counts are sure to lose
the goodwill of employees.‖
20.11. KEY WORDS:
Labour welfare: is an important dimension of industrial relation, labour welfare
includes overall welfare facilities designed to take care of well being of employees
and in order to increase their living standard. It can also be provided by government,
non government agencies and trade unions.

Recreation: is an activity of leisure, leisure being discretionary time. The "need to do

something for recreation" is an essential element of human biology and psychology.
Recreational activities are often done for enjoyment, amusement, or pleasure and are
considered to be "fun".

20.12. SELF ASSESSMENT QUESTION

1. What do you mean by labour welfare?

2. Define the scope of labour welfare works.

3. Mention the approaches to labour welfare.

4. Explain the concept of labour welfare.

5. Discuss the basic features of labour welfare.

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20.13. REFERENCES:

1. C.B. mamoria, Satish Mamoria, S.V Gankar – Dynamics of industrial relations, 14th
revised edition (reprint) 2004, published by Himalaya Publishing House 2004.

2. Avtar Singh, Harpreet Kaur- Introduction to labour and industrial law, 3rd edition
2014, published by LexisNexis 2014.

3. S.C Srivastava- Indistrial Relations, 5th edition, published by Vikas publishing

house.

4. H.L. Kumar – Labour Laws, 5th edition 2008, published by Universal Law
Publishing co. Pvt. Ltd. 2008.

5. H.L. Kumar- The Industrial Disputes, 2nd edition 2006, published by Universal Law
Publishing co. Pvt. Ltd. 2006.

6. H.L. Kumar – Labour Management 4th edition 2004, published by Universal Law
Publishing co. Pvt. Ltd. 2004.

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