Human Resource Management

Module -II
7. Industrial Relation in India

The term “Industrial Relation” refers to all types of relationship between all the parties
concerned with industry. In modern usage, the phrase “Industrial Relation” includes the whole
range of matters that arise due to the continuing relationship between the employers and the
workers.

Its scope includes three rarely distinct areas:

 Relations between mangers and individual workers.
 The collective relations between employers and labour (trade) union.
 The role of government in the regulation of these relationships.

These three closely associated areas are often referred to respectively as

 Personnel Management
 Collective Bargaining
 Labour Legislation

In the case of India, a country known for its diverse culture, vast population, and rapid
industrialization, the dynamics of industrial relations hold even greater significance. Over the
years, India has witnessed a series of reforms and challenges in its labor and industrial policies,
aiming to create a harmonious and productive work environment.
Industrial relations refer to the intricate web of interactions and connections that exist in the
workplace between employers, workers, and trade unions. The goal is to maintain a positive,
cooperative environment that fosters productivity, defends employee rights, and ensures the fair
distribution of profits. In India, laws, rules, and voluntarily agreed-upon codes of conduct all
play a role in regulating labor relations.
The two objectives of industrial relations are;
 Protecting workplace harmony and peace between management and the workforce
 Ensuring the cooperation of all departments in industry
The laborers must be assured fair compensation, wholesome working conditions, acceptable
working hours, holiday pay, and access to fundamental essentials of life if we are to create
industrial harmony and peace.
The role of industrial relation in India is mentioned below;
 To protect the interests of the management and the workforce
 To prevent workplace disagreement
 To increase the capacity for production
 To create industrial democracy

Parties
 Employers- They are responsible for:
 Providing a good work environment for the employees and taking strategic
decisions such as mergers, acquisitions, or shutting down of the organization, etc.
 Motivating the employees to give their best and gaining their trust and
commitment.
 Improving the overall efficiency and ensuring effective communication among
the employees and the management.
 Employee- The employees are the pillars on which the organization is built. They are the
chief contributors to the organizational objectives, and are the organization’s most
valuable resource. To maintain harmonious industrial relations, employees have to be
satisfied with the organization, its policies and procedures and their jobs.
 Government- The government has a limited role to play in industrial relations. It
provides a basic framework within which the management, the trade unions and the
employees are expected to work for the common good of the organization. The
government comes into the picture only when the three players fail to do this and is
unable to sort out their differences. The government then intervenes as a mediator
through the process of conciliation, arbitrator and adjudication.
 Trade Unions- Trade unions constitute the employee representative bodies in an
organization. Trade unions enjoy power and status based on the support of the
 employees. Their power is used as a weapon in regarding the organization’s industrial
environment and having their demands accepted by the management. These demands
usually relate to increase in wages, improvement in working conditions, and additional
benefits and welfare measures. In some cases, trade unions also have a political
affiliation, which adds to their power.

Management and Trade Unions

Of all the conflicts found in industrial organizations, those involving unions and management
have received the most attention. Labour unions are the primary means workers have for
advancing their collective interests at the workplace. Much of the history of industrial relations is
filled with efforts on the part of workers to gain the right to organize into free trade unions—that
is, worker organizations that are controlled neither by employers nor by a government.
While the actual percentage of workers who are organized into unions varies considerably from
country to country and over time within individual countries, it is safe to say that there is no
democratic country in the world where independent trade unions are not present. Unions serve an
essential role in a democratic society by giving voice to worker interests.
Unions and union–management relations are also of special importance in that,
through collective bargaining and other formal and informal means of interaction, unions and
employers establish the wages, hours, and working conditions of large numbers of workers. In
countries such as Sweden, Denmark, and Norway collective bargaining covers more than 80
percent of the labour force. In Britain, Germany, and Japan it covers between one-third and two-
thirds. Even in countries like France or the United States, where less than 20 percent of the
workers are unionized, collective bargaining often sets new patterns in wages and other
conditions of employment that are eventually adopted by nonunion employers.
It should be noted that employers are often reluctant participants in collective bargaining. While
the degree of opposition to unions varies among countries, this opposition is perhaps strongest in
the United States, where employers have aggressively opposed unionization of their employees.
This is one of the reasons why the right of employees to organize and bargain collectively is
normally protected by law.
The decades of the 1980s and ’90s were a time of tremendous pressure for change in union–
management relations around the world. This pressure came from increases in market
competition within and between countries, the rapid rate of technological progress, the changing
nature of the work force, shifts in jobs from highly unionized large manufacturing firms and
industries to smaller, newer firms and service industries, and, in some countries, the election of
governments less supportive of unions. As a result unions in the majority of industrialized
countries have lost membership and continue to debate how best to adjust their strategies and
practices to their changing environments.
Industrial Disputes:
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 the terms of employment or with the conditions of labour
of any person.
The main aim of the Industrial Disputes Act, 1947 is to maintain a balance between labour and
industry welfare by ensuring industrial peace and harmony. It focusses on the mechanism and
procedure for the investigation and settlement of industrial disputes by conciliation, arbitration
and adjudication which is provided under the statute.

1. Trends
There has been a growing trend in terms of workers involved and maydays lost in industrial
disputes. On the basis of nature of industrial disputes, maydays lost due to strikes and lockouts
and employers’ militancy, the industrial disputes over a period of four and half decades can be
studied into three sub periods:
a. Period I (Upto 1975)
There has been a growing trend in terms of workers involved and maydays lost in industrial
disputes. The total maydays lost increased from 38 lakh in 1951 to 49 lakh in 1961, 165 lakh in
1971 and 402 lakh in 1974. Strikes have dominated the industrial disputes during this period and
are the main cause of loss in maydays. During 1961-75 the number of maydays lost due to strikes
varied in the range of 60 to 84 per cent of the total maydays lost. Against this the share of
lockouts had ranged from 16 to 40 per cent.
The intensity of strikes was also higher in relation to lockouts during this period when the
intensity of strike or lockout is judged in terms of
i) number of workers involved,
ii) the duration of strike or lockout,
iii) the number of maydays lost per dispute in a strike or lockout
The data revealed that during 1961-75 the average number of days a worker was involved in
strikes was 88 against 28 days in lockouts. Thus, the intensity of strike was 3 times higher than
that of lockout during 1961-75.
b. Period II (1976-80)
With the declaration of emergency in 1975, due to promulgation of Maintenance of Internal
Security Act (MISA) and Defence of India Rules (DIR), industrial disputes declined. Employers’
militancy over laborers increased and the percentage of maydays lost due to lockouts increased
from 16.4 per cent in 1974 to 23.7 per cent in 1975 and 78 per cent in 1976. On the other hand,
maydays lost due to strikes declined from 83.6 per cent in 1974 to 76.3% in 1975 and 22% in
1976.
The situation changed during 1977 to 1979 during Janata Party regime. The maydays lost due to
strikes increased during this period. In relative terms strikes accounted for 82 per cent of total
loss of maydays while lockouts accounted for merely 18 per cent.
c. Period III (1980 - 1997)
Since 1980 particularly after 1984-85 a shift in the nature of industrial disputes is evident.
Lockouts in relation to strikes are occupying a pre-dominant position.
After introducing economic reforms in July 1991 preference has been given to the private sector
in the industrial development of India. Private sector has been given many incentives for faster
growth and higher productivity. During this period the share of lockouts began to rise and
reached a level of 72.3 per cent in 1993. The share of strikes in man-days lost declined from 48.4
per cent in 1992 to 27.7 per cent in 1993 and then slightly improved to 33.7 per cent in 1997.
Taking the 7-year period of reforms into account the share of strikes in man-days lost was of the
order of about 39 per cent against the lockout’s share of 61 per cent. This implies that during the
economic reforms period there is a relative decline in the advantage, which employees were
enjoying earlier in pressuring their demands.

2. Collective Bargaining
Collective Bargaining is the most effective method of resolving industrial disputes. The role of
collective bargaining in solving the problems arising between the management and the worker
has been widely recognized. Collective bargaining is the process of negotiating the employment
terms between an employer and a group of workers. Collective bargaining not only includes
negotiation, managing and implement of the written contracts between the employees and the
employers but also includes the process of resolving labour management conflicts.

Collective bargaining offers the following benefits to both of the employees and employers:

 It helps increase strength of both the parties at the same time protecting their interest.
 It helps resolve disputes when it is occur in the organization.
 It also helps to establish uniform conditions of employment with a view to avoid
occurrences of industrial disputes.

Collective bargaining can be at national level or industry level or plant level.

 Industry Level: Industry level bargaining is common in core industries, which are
concentrated in the public sector. These include coal, steel, banks, insurance, ports, etc.
 Industry-cum-region level: Bargaining at this level occurs in the industries where
private sector dominates. These include mainly textiles, plantations and engineering.
 Plant level: In multiplants, bargaining occurs in two stages. Basic wage rates and some
benefits are decided at the company levels. Certain allowances and incentives are
negotiated at plant level. Usually countrywide agreements are supplemented with plant
level agreements.
  Subjects: Wages and working conditions have been the domain of collective bargaining.
However, over the years everything from recruitment to retirement and post-retirement
benefits have become part and parcel of the agreements.
 Duration: Upto mid-20s, wage agreements used to be for a period of three years. In the
mid-80s several agreements were signed for four years. In 1990s, the government
mandated them to be for a period of five years.

3. Settlement Machineries
a) Conciliation Officers:
The Government appoints conciliation officers for particular regions and industries. These
officers bring both the parties together and help them to resolve their differences. If the dispute is
settled through their good offices and a settlement is reached, the report to this effect is sent to
the Government. In case of failure in settling the dispute, the officer informs the Government
narrating steps taken and the reasons for its failure.
b) Board of Conciliation: The government may appoint a Board of Conciliation to look into any
industrial dispute referred by it. The Board consists of a Chairman and two to four persons —
representing the employers and workers. The Chairman is an independent person. The Board
reports to the Government about the success or failure of its efforts including the steps taken and
the reasons for its failures to bring about a settlement.
c) Court of Enquiry: Whenever an industrial dispute is not settled by the conciliation officers or
by the Board of Conciliation, the matter is referred to a court of enquiry. The court investigates
the whole matter and submits its report to the Government. Afterwards the case is referred to an
Industrial Tribunal for adjudication.
d) Labour Courts: State Governments have set up labour courts to go into the matters like
disputed orders of the employers, dismissals and suspensions of employees by the management,
the legality of strikes, lockouts, etc. The labour courts are expected to decide the matters
speedily.
e) Industrial Tribunals: Industrial Tribunals are two types— State Tribunals and National
Tribunals. State Tribunals are appointed by state governments for adjudication of disputes
relating to wages, bonus, etc. National Tribunal is appointed by the Central Government for
adjudication of industrial disputes of
f) Arbitration: The word arbitration means settlement of industrial disputes between two or
more parties by means o f a decision of an impartial body when efforts in the process of
conciliation and mediation have failed. Arbitration is judicial in nature whereas conciliation is
advisory in nature. Arbitration is voluntary if the parties to the dispute have failed to settle their
differences by negotiation and conciliation, agree to submit them to arbitration as prescribed
under Section lOA of the Industrial Disputes Act, 1947. Compulsory arbitration or adjudication,
the government requires the parties to the dispute to submit their differences to an arbitration
tribunal which after considering the facts and arguments submitted to it, makes an award. In case
of voluntary arbitration it does not necessarily follow the procedure adopted by the courts. The
essentials of voluntary arbitration is that there should be voluntary submission of dispute to an
arbitrator and the enforcement of an award may not be necessary and binding because there is no
compulsion.
g) Adjudication: Adjudication or compulsory arbitration is the ultimate remedy for the
settlement of disputes in India. Adjudication consists of settling disputes through the intervention
of a third party appointed by the government. An industrial dispute can be referred to
adjudication by the mutual consent of the disputing parties.
The government can also refer a dispute to adjudication without the consent of the parties. The
Industrial Disputes Act, 1947, provides a three-tier adjudication machinery – namely Labour
Courts, Industrial Tribunals and National Tribunals – for the settlement of industrial disputes.

4. Role of Government
The role of the government in industrial relations depends on its ideological (socialist,
communist, capitalist, neo-capitalist persuasion), political (neo-colonial, democratic, dictatorship
or military regime), and socio-economic (protectionist or neo- liberal, export-oriented policies)
orientation.
Rapid changes in technology, the paradigm shifts in the workplace and significant changes in the
demographic profile of workers meant that blue-collar workers are progressively replaced by
white-collar knowledge/professional workers. The Govt may have felt that the new class of
workers should know how best to protect their interests. Therefore, the focus is shifting from
collective to individual rights, from union to worker participation, and from union to employee
communication. Newer forms of worker ownership and worker empowerment are ideas to carry
the message of non-adversarial, mutually beneficial employee involvement in management. With
the proliferation of knowledge workers, the focus is shifting towards expansion of information
and consultation rights of individual employees.

5. Labour Policy in India

Due to the workers' poor economic standing and inability to barter or negotiate with employers,
labour legislation is absolutely important. As a result, time to time, Indian government keep
updating and implementing the labour friendly policy, which intended to provide negotiating
power, health services, safety, security, and welfare.
India's labour strategy has evolved in response to the country's unique circumstances in order to
meet the demands of social justice and planned economic development. Its dual goals are to
maintain industrial peace and advance worker welfare. The recognition and implementation of
the strategy for worker engagement were stressed in the second, third, and fifth five-year plans.
The goal of India's current labour policy is to achieve full employment and raise the average
income of the population. It was kept in mind what a socialist society would be like. Therefore,
as stated in the Third Five Year Plan, the benefits of progress should be distributed fairly.
Labour Policy means setting trends, evolving course of actions, following principles and
practices to govern labour matters. The National Commission on. Labour (1969) observed "the
concern of the state in labour matters emanates as much from its obligation to safeguard the
interests of workers and employers as to ensure the community the availability of their joint
products/service at a reasonable price. The extent of its involvement is determined by the level of
social and economic advancement, while the mode of intervention gets pattemised in conformity
with the political system obtaining in the country and social and cultural traditions of its people".
The Labour Policy and the role of state in a democratic country will be different from that with
different philosophy for the governance of the people. In a democratic setup, the emphasis will
be on human freedoms and human rights, and policies reflect, broadly, the choice and the will of
the people:
Labour Policies are also influenced by the stages of development of an economy and
industrialization strategies. Policies regarding job and job security etc. are influenced by
economic health, employment unemployment situation, etc. The extent of state intervention also
differ from state to state. In USA state merely lays the ground rule and procedures and an
independent agency such as National Labour Relations Board administers the relations. But in a
state like India, state intervention takes place not only in the event of disputes but even when
there is apprehension of it. 42 In India, the labour policies and practices are influenced by a
variety of considerations, based on social economic and political patterns that emerged at the
time of independence.
 concern for planned development and rapid economic growth as envisaged in the
successive five year plans
 requirements of welfare state as envisaged in our constitution, specially the directive
principles of state policies (Art.39, 41, 43 43A etc.)
 the socio-economic imbalances in the society, the depressed conditions of the working
class as observed by the Royal Commission on Labour and the Labour Investigation
Committee.
 the imbalance in and between unions and employers and weaknesses of both the partners,
leading to preference for adjudication, despite obvious merit of free Collective
Bargaining.
 the role of state as a major employer, with public sector being projected "to achieve the
commanding heights of the economy as per the Industrial Policy Resolutions". However,
the New Economic Policy seems to alter this position.