ASSIGNMENT

CHARACTERSTICS OF INDIAN IR SYSTEM

Submitted By :

Aditya Dhawan

Roll No : 02

MBA Exec 3rd Semester

 Industrial Relations

OVERVIEW

Industrial relation means the relationship between employers and employees in course of
employment in industrial organisations. However, the concept of Industrial Relations has a
broader meaning. In a broad sense, the term Industrial Relations includes the relationship
between the various unions, between the state and the unions as well as those between the
various employers and the government. Relations of all those associated in an industry may be
called Industrial Relations.

According to International Labour Organisation, Industrial relations comprise

relationships between the state on one hand and the employer’s and employee’s organisation on
the other, and the relationship among the occupational organisations themselves.

Definition: According to J.T. Dunlop, “Industrial relations are the complex interrelations
among managers, workers and agencies of the government”

Industrial relations has three faces: science building, problem solving, and ethical. In the science
building face, industrial relations is part of the social sciences, and it seeks to understand the
employment relationship and its institutions through high-quality, rigorous research. In this vein,
industrial relations scholarship intersects with scholarship in labor economics, industrial
sociology, labor and social history, human resource management, political science, law, and
other areas. In the problem solving face, industrial relations seeks to design policies and
institutions to help the employment relationship work better. In the ethical face, industrial
relations contains strong normative principles about workers and the employment relationship,
especially the rejection of treating labor as a commodity in favor of seeing workers as human
beings in democratic communities entitled to human rights."The term human relations refers to
the whole field of relationship that exists because of the necessary collaboration of men and
women in the employment process of morden industry."It is that part of management which is
concerned with the management of enterprise -whether machine operator,skilled worker or
manager.It deals with either the relationship between the state and employers and workers
organisation or the relation between the occupational organisation themselves.
Industrial relations scholarship assumes that labor markets are not perfectly competitive and
thus, in contrast to mainstream economic theory, employers typically have greater bargaining
power than employees. Industrial relations scholarship also assumes that there are at least some
inherent conflicts of interest between employers and employees (for example, higher wages
versus higher profits) and thus, in contrast to scholarship in human resource management and
organizational behavior, conflict is seen as a natural part of the employment relationship.
Industrial relations scholars therefore frequently study the diverse institutional arrangements that
characterize and shape the employment relationship—from norms and power structures on the
shop floor, to employee voice mechanisms in the workplace, to collective bargaining
arrangements at a company, regional, or national level, to various levels of public policy and
labor law regimes.

When labor markets are seen as imperfect, and when the employment relationship includes
conflicts of interest, then one cannot rely on markets or managers to always serve workers’
interests, and in extreme cases to prevent worker exploitation. Industrial relations scholars and
practitioners therefore support institutional interventions to improve the workings of the
employment relationship and to protect workers’ rights. The nature of these institutional
interventions, however, differ between two camps within industrial relations. The pluralist camp
sees the employment relationship as a mixture of shared interests and conflicts of interests that
are largely limited to the employment relationship. In the workplace, pluralists therefore
champion grievance procedures, employee voice  mechanisms such as works councils and labor
unions, collective bargaining, and labor-management partnerships. In the policy arena, pluralists
advocate for minimum wage laws, occupational health and safety standards, international labor
standards, and other employment and labor laws and public policies. These institutional
interventions are all seen as methods for balancing the employment relationship to generate not
only economic efficiency, but also employee equity and voice. In contrast, the Marxist-inspired
critical camp sees employer-employee conflicts of interest as sharply antagonistic and deeply
embedded in the socio-political-economic system. From this perspective, the pursuit of a
balanced employment relationship gives too much weight to employers’ interests, and instead
deep-seated structural reforms are needed to change the sharply antagonistic employment
relationship that is inherent within capitalism. Militant trade unions are thus frequently
supported.
HISTORY

Industrial relations has its roots in the industrial revolution which created the modern
employment relationship by spawning free labor markets and large-scale industrial organizations
with thousands of wage workers. As society wrestled with these massive economic and social
changes, labor problems arose. Low wages, long working hours, monotonous and dangerous
work, and abusive supervisory practices led to high employee turnover, violent strikes, and the
threat of social instability. Intellectually, industrial relations was formed at the end of the 19th
century as a middle ground between classical economics and Marxism.

Features of Industrial Relations:

1. Industrial relations are outcomes of employment relationships in an industrial enterprise.

These relations cannot exist without the two parties namely employers and employees.
2. Industrial relations system creates rules and regulations to maintain harmonious relations.
3. The government intervenes to shape the industrial relations through laws, rules,
agreements, terms, charters etc.
4. Several parties are involved in the Industrial relations system. The main parties are
employers and their associations, employees and their unions and the government. These
three parties interact within economic and social environment to shape the Industrial
relations structure.
5. Industrial relations are a dynamic and developing concept, not a static one. They undergo
changes with changing structure and scenario of the industry as and when change occurs.
6. Industrial relations include both individual relations and collective relationships.

Objectives of Industrial Relations:

1. To maintain industrial democracy based on participation of labour in the management

and gains of industry.
2. To raise productivity by reducing tendency of high labour turnover and absenteeism.
3. To ensure workers’ participation in management of the company by giving them a fair
say in decision-making and framing policies.
4. To establish a proper channel of communication.
5. To increase the morale and discipline of the employees.
 6. To safeguard the interests of the labour as well as management by securing the highest
level of mutual understanding and goodwill between all sections in an industry.
7. To avoid all forms of industrial conflicts so as to ensure industrial peace by providing
better living and working standards for the workers.
8. To bring about government control over such industrial units which are running at a loss
for protecting the livelihood of the employees.

IMPORTANCE OF INDUSTRIAL RELATIONS: 

The healthy industrial relations are key to the progress. Their significance may be discussed as
under – 

1. Uninterrupted production – The most important benefit of industrial relations is that this
ensures continuity of production. This means, continuous employment for all from manager to
workers. The resources are fully utilized, resulting in the maximum possible production. There is
uninterrupted flow of income for all. Smooth running of an industry is of vital importance for
several other industries; to other industries if the products are intermediaries or inputs; to
exporters if these are export goods; to consumers and workers, if these are goods of mass
consumption.

2. Reduction in Industrial Disputes – Good industrial relation reduce the industrial disputes.
Disputes are reflections of the failure of basic human urges or motivations to secure adequate
satisfaction or expression which are fully cured by good industrial relations. Strikes, lockouts,
go-slow tactics, gherao and grievances are some of the reflections of industrial unrest which do
not spring up in an atmosphere of industrial peace. It helps promoting co-operation and
increasing production.

3. High morale – Good industrial relations improve the morale of the employees.
Employees work with great zeal with the feeling in mind that the interest of employer and
employees is one and the same, i.e. to increase production. Every worker feels that he is a co-
owner of the gains of industry. The employer in his turn must realize that the gains of industry
are not for him along but they should be shared equally and generously with his workers. In other
words, complete unity of thought and action is the main achievement of industrial peace. It
increases the place of workers in the society and their ego is satisfied. It naturally affects
production because mighty co-operative efforts alone can produce great results.

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

revolution of workers and employees. The industrial peace lies ultimately in a transformed
outlook on the part of both. It is the business of leadership in the ranks of workers, employees
and Government to work out a new relationship in consonance with a spirit of true democracy.
Both should think themselves as partners of the industry and the role of workers in such a
partnership should be recognized. On the other hand, workers must recognize employer’s
authority. It will naturally have impact on production because they recognize the interest of each
other.

5. New Programmes – New programmes for workers development are introduced in an

atmosphere of peace such as training facilities, labor welfare facilities etc. It increases the
efficiency of workers resulting in higher and better production at lower costs.

6. Reduced Wastage – Good industrial relations are maintained on the basis of cooperation
and recognition of each other. It will help increase production. Wastages of man, material and
machines are reduced to the minimum and thus national interest is protected. 

Thus, from the above discussion, it is evident that good industrial relation is the basis of higher
production with minimum cost and higher profits. It also results in increased efficiency of
workers. New and new projects may be introduced for the welfare of the workers and to promote
the morale of the people at work.

An economy organized for planned production and distribution, aiming at the realization of
social justice and welfare of the massage can function effectively only in an atmosphere of
industrial peace. If the twin objectives of rapid national development and increased social justice
are to be achieved, there must be harmonious relationship between management and labor. 

Difference between Industrial Relations & Human Relations: 

The term “Industrial Relations” is different from “Human Relations”. Industrial relations refer to
the relations between the employees and the employer in an industry. Human relations refer to a
personnel-management policy to be adopted in industrial organizations to develop a sense of
belongingness in the workers improves their efficiency and treat them as human beings and make
a partner in industry.

Industrial relations cover the matters regulated by law or by collective agreement between
employees and employers. On the other hand, problems of human relations are personal in
character and are related to the behavior of worker where morale and social elements
predominated. Human relations approach is personnel philosophy which can be applied by the
management of an undertaking. The problem of industrial relations is usually dealt with a three
levels – the level of undertaking, the industry and at the national level. To sum up the term
“Industrial Relations” is more wide and comprehensive and the term “Human Relations” is a part
of it. 

Determining factors of industrial relations – 

Good industrial relations depend on a great variety of factors. Some of the more obvious ones are
listed below: 
1. History of industrial relations – No enterprise can escape its good and bad history of industrial
relations. A good history is marked by harmonious relationship between management and
workers. A bad history by contrast is characterized by militant strikes and lockouts. Both types
of history have a tendency to perpetuate themselves. Once militancy is established as a mode of
operations there is a tendency for militancy to continue. Or once harmonious relationship is
established there is a tendency for harmony to continue.

2. Economic satisfaction of workers – Psychologists recognize that human needs have a certain
priority. Need number one is the basic survival need. Much of men conducted are dominated by
this need. Man works because he wants to survive. This is all the more for underdeveloped
countries where workers are still living under subsistence conditions. Hence economic
satisfaction of workers is another important prerequisite for good industrial relations.

3. Social and Psychological satisfaction – Identifying the social and psychological urges of
workers is a very important steps in the direction of building good industrial relations. A man
does not live by bread alone. He has several other needs besides his physical needs which should
also be given due attention by the employer. An organization is a joint venture involving a
climate of human and social relationships wherein each participant feels that he is fulfilling his
needs and contributing to the needs of others. This supportive climate requires economic rewards
as well as social and psychological rewards such as workers’ participation in management, job
enrichment, suggestion schemes, re-dressal of grievances etc.

4. Off-the-Job Conditions – An employer employs a whole person rather than certain separate
characteristics. A person’s traits are all part of one system making up a whole man. His home life
is not separable from his work life and his emotional condition is not separate from his physical
condition. Hence for good industrial relations it is not enough that the worker’s factory life alone
should be taken care of his off-the-job conditions should also be improved to make the industrial
relations better.

5. Enlightened Trade Unions – The most important condition necessary for good industrial
relations is a strong and enlightened labor movement which may help to promote the status of
labor without harming the interests of management, Unions should talk of employee contribution
and responsibility. Unions should exhort workers to produce more, persuade management to pay
more, mobilize public opinion on vital labor issues and help Government to enact progressive
labor laws.

6. Negotiating skills and attitudes of management and workers – Both management and workers’
representation in the area of industrial relations come from a great variety of backgrounds in
terms of training, education, experience and attitudes. These varying backgrounds play a major
role in shaping the character of industrial relations. Generally speaking, well-trained and
experienced negotiators who are motivated by a desire for industrial peace create a bargaining
atmosphere conducive to the writing of a just and equitable collective agreement. On the other
hand, ignorant, inexperienced and ill-trained persons fail because they do not recognize that
collective bargaining is a difficult human activity which deals as much in the emotions of people
as in their economic interests. It requires careful preparation and top –notch executive
competence. It is not usually accomplished by some easy trick or gimmick. Parties must have
trust and confidence in each other. They must possess empathy, i.e. they should be able to
perceive a problem from the opposite angle with an open mind. They should put themselves in
the shoes of the other party and then diagnose the problem. Other factors which help to create
mutual trust are respect for the law and breadth of the vision. Both parties should show full
respect for legal and voluntary obligations and should avoid the tendency to make a mountain of
a mole hill.

7. Public policy and legislation: - when Government, regulates employee relations, it becomes a
third major force determining industrial relations the first two being the employer and the union.
Human behavior is then further complicated as all three forces interact in a single employee
relation situation. Nonetheless, government in all countries intervenes in management – union
relationship by enforcing labor laws and by insisting that the goals of whole society shall take
precedence over those of either of the parties. Government intervention helps in three different
ways 1) it helps in catching and solving problems before they become serious. Almost every one
agrees that it is better to prevent fires them to try stopping them after they start; 2) It provides a
formalized means to the workers and employers to give emotional release to their dissatisfaction;
and 3) It acts as a check and balance upon arbitrary and capricious management action.

8. Better education: - with rising skills and education workers’ expectations in respect of rewards
increase. It is a common knowledge that the industrial worker in India is generally illiterate and
is misled by outside trade union leaders who have their own axe to grind. Better workers’
education can be a solution to this problem. This alone can provide worker with a proper sense of
responsibility, which they owe to the organization in particular, and to the community in general.

9. Nature of industry: - In those industries where the costs constitute a major proportion of the
total cast, lowering down the labor costs become important when the product is not a necessity
and therefore, there is a little possibility to pass additional costs on to consumer. Such periods,
level of employment and wages rise in decline in employment and wages. This makes workers
unhappy and destroys good industrial relations. 

Industrial Relations Programme: 

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

views his job as personalizing management, or that of a social worker in a factory, or a union
buster, he looks upon his department as an adjunct to management supervision at all levels; he
keeps other executives informed about new discoveries, programme trends and needs. At the
same time, he provides efficient service in the operation of several centralized services.

A successful industrial relations programme reflects the personnel viewpoint, which is

influenced by three main considerations: 
a) Individual thinking 
b) Policy awareness and 
c) Expected group reaction

Individualized thinking makes if imperative for the administrator to consider the entire situation
in which the affected individual is placed. Policy awareness underscores the idea of the
consistency of treatment and the precedent value of any decision which a management takes;
while expected group reaction balances what we know of human nature in groups against an
individual’s situation in the light of the policy that has been formulated and implemented. In all
these different circumstances, reality demands that all the three aspects of the personnel
viewpoint should be considered at once in terms of the past, the present and the future. This
viewpoint is held at all the levels of management from the top to the bottom, from the top
executives and staff to the line and supervisory personnel. 

Scope of IR Work: 

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

The functions of the industrial relations staff are – 

1. Administration, including overall organization, supervision and co-ordination of industrial

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

FUNCTIONAL REQUIREMENTS OF A SUCCESSFUL INDUSTRIAL RELATIONS

PROGRAMME 
The basic requirements on which a successful industrial relations programme is based are :- 
a) Top Management Support: - Since industrial relations is a functional staff service, it must
necessarily derive its authority from the line organization. This is ensured by providing that the
industrial relations director should report to a top line authority to the president, chairman or vice
president of an organization.

b) Sound Personnel Policies: - These constitute the business philosophy of an organization and
guide it in arriving at its human relations decisions. The purpose of such policies is to decide,
before any emergency arises, what shall be done about the large number of problems which crop
up every day during the working of an organization. Policies can be successful only when they
are followed at all the level of an enterprise, from top to bottom.

c) Adequate practices should be developed by professionals: - In the field to assist in the

implementation of the policies of an organization. A system of procedures is essential if intention
is to be properly translated into action. The procedures and practices of an industrial relations
department are the “tool of management” which enables a supervisor to keep ahead of his job
that of the time-keeper, rate adjuster, grievance reporter and merit rater.

d) Detailed Supervisory Training :- To ensure the organizational policies and practices are
properly implemented and carried into effect by the industrial relations staff, job supervisors
should be trained thoroughly, so that they may convey to the employees the significance of those
policies and practices. They should, moreover, be trained in leadership and in communications.

e) Follow-up of Results: - A constant review of an industrial relations programme is essential, so

that existing practices may be properly evaluated and a check may be exercised on certain
undesirable tendencies, should they manifest themselves. A follow up of turnover, absenteeism,
departmental morale, employee grievances and suggestion; wage administration, etc. should be
supplemented by continuous research to ensure that the policies that have been pursued are best
fitted to company needs and employee satisfaction. Hints of problem areas may be found in exit
interviews, in trade union demands and in management meetings, as well as in formal social
sciences research.

Causes of poor Industrial Relations:

1) Economic causes: Often poor wages and poor working conditions are the main causes for
unhealthy relations between management and labour. Unauthorised deductions from
wages, lack of fringe benefits, absence of promotion opportunities, faulty incentive
schemes are other economic causes. Other causes for Industrial conflicts are inadequate
infrastructure, worn-out plant and machinery, poor layout, unsatisfactory maintenance
etc.
 2) Organisational causes: Faulty communications system, unfair practices, non-recognition
of trade unions and labour laws are also some other causes of poor relations in industry.

3) Social causes: Uninteresting nature of work is the main social cause of poor Industrial
relations. Dissatisfaction with job and personal life culminates into Industrial conflicts.

4) Psychological causes: Lack of job security, non-recognition of merit and performance,

poor interpersonal relations are the psychological reasons for unsatisfactory employer-
employee relations.

5) Political causes: Multiple unions, inter-union rivalry weaken the trade unions. Defective
trade unions system prevailing in the country has been one of the most responsible causes
for Industrial disputes in the country.

Suggestions to improve Industrial Relations:

1. Sound personnel policies: Policies and procedures concerning the compensation, transfer
and promotion, etc. of employees should be fair and transparent. All policies and rules
relating to Industrial relations should be fair and transparent to everybody in the
enterprise and to the union leaders.

2. Participative management: Employees should associate workers and unions in the

formulation and implementation of HR policies and practices.

3. Responsible unions: A strong trade union is an asset to the employer. Trade unions
should adopt a responsible rather than political approach to industrial relations.

4. Employee welfare: Employers should recognise the need for the welfare of workers.
They must ensure reasonable wages, satisfactory working conditions, and other necessary
facilities for labour. Management should have a genuine concern for the welfare and
betterment of the working class.

5. Grievance procedure: A well-established and properly administered system committed to

the timely and satisfactory redressal of employee’s grievances can be very helpful in
improving Industrial relations. A suggestion scheme will help to satisfy the creative urge
of the workers.

6. Constructive attitude: Both management and trade unions should adopt positive attitude
towards each other. Management must recognise unions as the spokesmen of the
workers’ grievances and as custodians of their interests. The employer should accept
workers as equal partners in a joint endeavour for good Industrial relations.
 7. Creating a proper communication channel to avoid grievances and misunderstandings
among employees

8. Education and training imparted to the employees

Industrial Disputes

Industrial disputes are organised protests against existing terms of employment or conditions of
work. According to the Industrial Dispute Act, 1947, an Industrial dispute means

“Any dispute or difference between employer and employer or between employer 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”

In practice, Industrial dispute mainly refers to the strife between employers and their employees.
An Industrial dispute is not a personal dispute of any one person. It generally affects a large
number of workers’ community having common interests.

Prevention of Industrial Disputes:

The consequences of an Industrial dispute will be harmful to the owners of industries, workers,
economy and the nation as a whole, which results in loss of productivity, profits, market share
and even closure of the plant. Hence, Industrial disputes need to be averted by all means.

Prevention of Industrial disputes is a pro-active approach in which an

organisation undertakes various actions through which the occurrence of Industrial disputes is
prevented. Like the old saying goes, “prevention is better then cure”.

l
e
b
r
o
t
M
L
J
d
a
u
n
i
a
p
r
t
n
i
T
J
o
e
M
h
t
o
s
d

o
s
e
g
W
C
S
d
k
r
ti
c
l
u
p
n
e
v
r
o
ti
r
t
ti
r
o
f

n
o
ti
f
e
v
f
o
n
a
f
l
i
d
e
r
g
n
S
W
M
t
I
n
a
i
r
t
s
u
d
m
l
p
c
s
o
n
i
g
r
a
e
D
C
B
S
h m
e
g
l
e
n
tt
s
i
g
d
B
n
u
o
e
C
s
r
d
e
c
ffi
t
o
n
O
C
u
D
s
e
t
u
p
i s
e
l
i
c
s
c
l
i
1. Model Standing Orders: Standing orders define and regulate terms and conditions of
employment and bring about uniformity in them. They also specify the duties and
responsibilities of both employers and employees thereby regulating standards of their
behaviour. Therefore, standing orders can be a good basis for maintaining harmonious
relations between employees and employers.

Under Industrial Dispute Act, 1947, every factory employing 100 workers or more is
required to frame standing orders in consultation with the workers. These orders must be
certified and displayed properly by the employer for the information of the workers.

2. Code of Industrial discipline: The code of Industrial discipline defines duties and
responsibilities of employers and workers. The objectives of the code are:

 To secure settlement of disputes by negotiation, conciliation and voluntary

arbitration.

 To eliminate all forms of coercion, intimidation and violence.

 To maintain discipline in the industry.

 To avoid work stoppage.

 To promote constructive co-operation between the parties concerned at all levels.

3. Works Committee: The Industrial Dispute Act, 1947 has provided for the establishment
of works committees. In case of any industrial establishment in which 100 or more
workers are employed, a works committee consisting of employees and workers is to be
constituted; it shall be the duty of the Works Committee to promote measures for
securing and preserving amity and good relations among the employees and workers.

4. Joint Management Councils:

5. Suggestion Schemes:

6. Joint Councils:

7. Collective Bargaining: Collective Bargaining is a process in which the representatives of

the employer and of the employees meet and attempt to negotiate a contract governing
the employer-employee-union relationships. Collective Bargaining involves discussion
and negotiation between two groups as to the terms and conditions of employment.

8. Labour welfare officer: The factories Act, 1948 provides for the appointment of a labour
welfare officer in every factory employing 500 or more workers. The officer looks after
all facilities in the factory provided for the health, safety and welfare of workers. He
 maintains liaison with both the employer and the workers, thereby serving as a
communication link and contributing towards healthy industrial relations through proper
administration of standing orders, grievance procedure etc.

9. Tripartite bodies: Several tripartite bodies have been constituted at central, national and
state levels. The India labour conference, standing labour committees, Wage Boards and
Industries Committees operate at the central level. At the state level, State Labour
Advisory Boards have been set up. All these bodies play an important role in reaching
agreements on various labour-related issues. The recommendations given by these bodies
are however advisory in nature and not statutory.

Machinery for settlement of Industrial Disputes:

1. Conciliation: Conciliation refers to the process by which representatives of employees

and employers are brought together before a third party with a view to discuss, reconcile
their differences and arrive at an agreement through mutual consent. The third party acts
as a facilitator in this process. Conciliation is a type of state intervention in settling the
Industrial Disputes. The Industrial Disputes Act empowers the Central & State
governments to appoint conciliation officers and a Board of Conciliation as and when the
situation demands.

Conciliation Officer: The appropriate government may, by notification in the official

gazette, appoint such number of persons as it thinks fit to be the conciliation officer. The
duties of a conciliation officer are:

a) To hold conciliation proceedings with a view to arrive at amicable settlement between

the parties concerned.

b) To investigate the dispute in order to bring about the settlement between the parties
concerned.

c) To send a report and memorandum of settlement to the appropriate government.

d) To send a report to the government stating forth the steps taken by him in case no
settlement has been reached at.

The conciliation officer however has no power to force a settlement.

He can only persuade and assist the parties to reach an agreement. The Industrial
Disputes Act prohibits strikes and lockouts during that time when the conciliation
proceedings are in progress.

2. Arbitration: A process in which a neutral third party listens to the disputing parties,
gathers information about the dispute, and then takes a decision which is binding on both
 the parties. The conciliator simply assists the parties to come to a settlement, whereas the
arbitrator listens to both the parties and then gives his judgement.

Advantages of Arbitration:

 It is established by the parties themselves and therefore both parties have good
faith in the arbitration process.

 The process in informal and flexible in nature.

 It is based on mutual consent of the parties and therefore helps in building healthy
Industrial Relations.

Disadvantages:

 Delay often occurs in settlement of disputes.

 Arbitration is an expensive procedure and the expenses are to be shared by the

labour and the management.

 Judgement can become arbitrary when the arbitrator is incompetent or biased.

There are two types of arbitration:

a) Voluntary Arbitration: In voluntary arbitration the arbitrator is appointed by both

the parties through mutual consent and the arbitrator acts only when the dispute is
referred to him.

b) Compulsory Arbitration: Implies that the parties are required to refer the dispute
to the arbitrator whether they like him or not. Usually, when the parties fail to
arrive at a settlement voluntarily, or when there is some other strong reason, the
appropriate government can force the parties to refer the dispute to an arbitrator.

3. Adjudication: Adjudication is the ultimate legal remedy for settlement of Industrial

Dispute. Adjudication means intervention of a legal authority appointed by the
government to make a settlement which is binding on both the parties. In other words
adjudication means a mandatory settlement of an Industrial dispute by a labour court or a
tribunal. For the purpose of adjudication, the Industrial Disputes Act provides a 3-tier
machinery:

a) Labour court

b) Industrial Tribunal

c) National Tribunal
a) Labour Court: The appropriate government may, by notification in the official gazette
constitute one or more labour courts for adjudication of Industrial disputes relating to
any matters specified in the second schedule of Industrial Disputes Act. They are:

 Dismissal or discharge or grant of relief to workmen wrongfully dismissed.

 Illegality or otherwise of a strike or lockout.

 Withdrawal of any customary concession or privileges.

Where an Industrial dispute has been referred to a labour court for adjudication, it shall
hold its proceedings expeditiously and shall, within the period specified in the order
referring such a dispute, submit its report to the appropriate government.

b) Industrial Tribunal: The appropriate government may, by notification in the official

gazette, constitute one or more Industrial Tribunals for the adjudication of Industrial
disputes relating to the following matters:

 Wages

 Compensatory and other allowances

 Hours of work and rest intervals

 Leave with wages and holidays

 Bonus, profit-sharing, PF etc.

 Rules of discipline

 Retrenchment of workmen

 Working shifts other than in accordance with standing orders

It is the duty of the Industrial Tribunal to hold its proceedings expeditiously and to
submit its report to the appropriate government within the specified time.

c) National Tribunal: The central government may, by notification in the official

gazette, constitute one or more National Tribunals for the adjudication of Industrial
Disputes in

 Matters of National importance

  Matters which are of a nature such that industries in more than one state are
likely to be interested in, or are affected by the outcome of the dispute.

It is the duty of the National Tribunal to hold its proceedings expeditiously and to submit
its report to the central government within the stipulated time.

Workers’ Participation in Management

Workers’ participation in management is an essential ingredient of Industrial democracy. The

concept of workers’ participation in management is based on Human Relations approach to
Management which brought about a new set of values to labour and management.

Traditionally the concept of Workers’ Participation in Management (WPM) refers to

participation of non-managerial employees in the decision-making process of the organization.
Workers’ participation is also known as ‘labour participation’ or ‘employee participation’ in
management. In Germany it is known as co-determination while in Yugoslavia it is known as
self-management. The International Labour Organization has been encouraging member nations
to promote the scheme of Workers’ Participation in Management.

Workers’ participation in management implies mental and emotional involvement of workers in

the management of Enterprise. It is considered as a mechanism where workers have a say in the
decision-making.

Definition: According to Keith Davis, Participation refers to the mental and emotional
involvement of a person in a group situation which encourages him to contribute to group goals
and share the responsibility of achievement.

According to Walpole, Participation in Management gives the worker a sense of importance,

pride and accomplishment; it gives him the freedom of opportunity for self-expression; a feeling
of belongingness with the place of work and a sense of workmanship and creativity. The concept
of workers’ participation in management encompasses the following:

 It provides scope for employees in decision-making of the organization.

 The participation may be at the shop level, departmental level or at the top level.

 The participation includes the willingness to share the responsibility of the organization
by the workers.

Features of WPM:
1. Participation means mental and emotional involvement rather than mere physical
presence.

2. Workers participate in management not as individuals but collectively as a group through

their representatives.

3. Workers’ participation in management may be formal or informal. In both the cases it is a

system of communication and consultation whereby employees express their opinions
and contribute to managerial decisions.

4. There can be 5 levels of Management Participation or WPM:

a. Information participation: It ensures that employees are able to receive information

and express their views pertaining to the matter of general economic importance.

b. Consultative importance: Here workers are consulted on the matters of employee

welfare such as work, safety and health. However, final decision always rests with the
top-level management, as employees’ views are only advisory in nature.

c. Associative participation: It is an extension of consultative participation as

management here is under the moral obligation to accept and implement the
unanimous decisions of the employees. Under this method the managers and workers
jointly take decisions.

d. Administrative participation: It ensures greater share of workers’ participation in

discharge of managerial functions. Here, decisions already taken by the management
come to employees, preferably with alternatives for administration and employees
have to select the best from those for implementation.

e. Decisive participation: Highest level of participation where decisions are jointly taken
on the matters relating to production, welfare etc.

Objectives of WPM:

1. To establish Industrial Democracy.

2. To build the most dynamic Human Resources.

3. To satisfy the workers’ social and esteem needs.

4. To strengthen labour-management co-operation and thus maintain Industrial peace

and harmony.
5. To promote increased productivity for the advantage of the organization, workers and
the society at large.

6. Its psychological objective is to secure full recognition of the workers.

Strategies / Methods / Schemes / Forms of WPM:

1. Suggestion schemes: Participation of workers can take place through suggestion

scheme. Under this method workers are invited and encouraged to offer suggestions
for improving the working of the enterprise. A suggestion box is installed and any
worker can write his suggestions and drop them in the box. Periodically all the
suggestions are scrutinized by the suggestion committee or suggestion screening
committee. The committee is constituted by equal representation from the
management and the workers. The committee screens various suggestions received
from the workers. Good suggestions are accepted for implementation and suitable
awards are given to the concerned workers. Suggestion schemes encourage workers’
interest in the functioning of an enterprise.

2. Works committee: Under the Industrial Disputes Act, 1947, every establishment
employing 100 or more workers is required to constitute a works committee. Such a
committee consists of equal number of representatives from the employer and the
employees. The main purpose of this committee is to provide measures for securing
and preserving amity and good relations between the employer and the employees.

Functions: Works committee deals with matters of day-to-day functioning at the shop
floor level. Works committees are concerned with:

 Conditions of work such as ventilation, lighting and sanitation.

 Amenities such as drinking water, canteens, dining rooms, medical and health
services.

 Educational and recreational activities.

 Safety measures, accident prevention mechanisms etc.

Works committees function actively in some organizations like Tata Steel, HLL,
etc but the progress of Works Committees in many organizations has not been
very satisfactory due to the following reasons:

 Lack of competence and interest on the part of workers’ representatives.

  Employees consider it below their dignity and status to sit alongside blue-
collar workers.

 Lack of feedback on performance of Works Committee.

 Undue delay and problems in implementation due to advisory nature of

recommendations.

3. Joint Management Councils: Under this system Joint Management Councils are
constituted at the plant level. These councils were setup as early as 1958. These
councils consist of equal number of representatives of the employers and employees,
not exceeding 12 at the plant level. The plant should employ at least 500 workers.
The council discusses various matters relating to the working of the industry. This
council is entrusted with the responsibility of administering welfare measures,
supervision of safety and health schemes, scheduling of working hours, rewards for
suggestions etc.

Wages, bonus, personal problems of the workers are outside the

scope of Joint management councils. The council is to take up issues related to
accident prevention, management of canteens, water, meals, revision of work rules,
absenteeism, indiscipline etc. the performance of Joint Management Councils have
not been satisfactory due to the following reasons:

 Workers’ representatives feel dissatisfied as the council’s functions are

concerned with only the welfare activities.

 Trade unions fear that these councils will weaken their strength as workers
come under the direct influence of these councils.

4. Work directors: Under this method, one or two representatives of workers are
nominated or elected to the Board of Directors. This is the full-fledged and highest
form of workers’ participation in management. The basic idea behind this method is
that the representation of workers at the top-level would usher Industrial Democracy,
congenial employee-employer relations and safeguard the workers’ interests. The
Government of India introduced this scheme in several public sector enterprises such
as Hindustan Antibiotics, Hindustan Organic Chemicals Ltd etc. However the scheme
of appointment of such a director from among the employees failed miserably and the
scheme was subsequently dropped.

5. Co-partnership: Co-partnership involves employees’ participation in the share capital

of a company in which they are employed. By virtue of their being shareholders, they
have the right to participate in the management of the company. Shares of the
company can be acquired by workers making cash payment or by way of stock
 options scheme. The basic objective of stock options is not to pass on control in the
hands of employees but providing better financial incentives for industrial
productivity. But in developed countries, WPM through co-partnership is limited.

6. Joint Councils: The joint councils are constituted for the whole unit, in every
Industrial Unit employing 500 or more workers, there should be a Joint Council for
the whole unit. Only such persons who are actually engaged in the unit shall be the
members of Joint Council. A joint council shall meet at least once in a quarter. The
chief executive of the unit shall be the chairperson of the joint council. The vice-
chairman of the joint council will be nominated by the worker members of the
council. The decisions of the Joint Council shall be based on the consensus and not on
the basis of voting.

In 1977 the above scheme was extended to the PSUs like commercial
and service sector organizations employing 100 or more persons. The organizations
include hotels, hospitals, railway and road transport, post and telegraph offices, state
electricity boards.

7. Shop councils: Government of India on the 30th of October 1975 announced a new
scheme in WPM. In every Industrial establishment employing 500 or more workmen,
the employer shall constitute a shop council. Shop council represents each department
or a shop in a unit. Each shop council consists of an equal number of representatives
from both employer and employees. The employers’ representatives will be
nominated by the management and must consist of persons within the establishment.
The workers’ representatives will be from among the workers of the department or
shop concerned. The total number of employees may not exceed 12.

Functions of Shop Councils:

1. Assist management in achieving monthly production targets.

2. Improve production and efficiency, including elimination of wastage of man

power.

3. Study absenteeism in the shop or department and recommend steps to reduce it.

4. Suggest health, safety and welfare measures to be adopted for smooth functioning
of staff.

5. Look after physical conditions of working such as lighting, ventilation, noise and
dust.

6. Ensure proper flow of adequate two way communication between management

and workers.
 Workers’ Participation in Management in India

Workers’ participation in Management in India was given importance only after Independence.
Industrial Disputes Act, 1947 was the first step in this direction, which recommended for the
setting up of works committees. The joint management councils were established in 1950 which
increased the labour participation in management. Since July 1975 the two-tier participation
called shop councils at shop level and Joint councils were introduced.

Workers’ participation in Management Bill, 1990 was introduced in Parliament which provided
scope for upliftment of workers.

Reasons for failure of Workers participation Movement in India:

1. Employers resist the participation of workers in decision-making. This is because they

feel that workers are not competent enough to take decisions.

2. Workers’ representatives who participate in management have to perform the dual roles
of workers’ spokesman and a co-manager. Very few representatives are competent
enough to assume the two incompatible roles.

3. Generally Trade Unions’ leaders who represent workers are also active members of
various political parties. While participating in management they tend to give priority to
political interests rather than the workers’ cause.

4. Schemes of workers’ participation have been initiated and sponsored by the Government.
However, there has been a lack of interest and initiative on the part of both the trade
unions and employers.

5. In India, labour laws regulate virtually all terms and conditions of employment at the
workplace. Workers do not feel the urge to participate in management, having an innate
feeling that they are born to serve and not to rule.

6. The focus has always been on participation at the higher levels, lower levels have never
been allowed to participate much in the decision-making in the organizations.

7. The unwillingness of the employer to share powers with the workers’ representatives, the
disinterest of the workers and the perfunctory attitude of the government towards
participation in management act as stumbling blocks in the way of promotion of
participative management.
Measures for making Participation effective:

1. Employer should adopt a progressive outlook. They should consider the industry as a
joint endeavour in which workers have an equal say. Workers should be provided and
enlightened about the benefits of their participation in the management.

2. Employers and workers should agree on the objectives of the industry. They should
recognize and respect the rights of each other.

3. Workers and their representatives should be provided education and training in the
philosophy and process of participative management. Workers should be made aware of
the benefits of participative management.

4. There should be effective communication between workers and management and

effective consultation of workers by the management in decisions that have an impact on
them.

5. Participation should be a continuous process. To begin with, participation should start at

the operating level of management.

6. A mutual co-operation and commitment to participation must be developed by both

management and labour.

Modern scholars are of the mind that the old adage “a worker is a worker, a manager is a
manager; never the twain shall meet” should be replaced by “managers and workers are
partners in the progress of business”

Collective Bargaining

Good relations between the employer and employees are essential for the success of industry. In
order to maintain good relations, it is necessary that industrial disputes are settled quickly and
amicably. One of the efficient methods of resolving industrial disputes and deciding the
employment conditions is Collective Bargaining. Industrial disputes essentially refer to
differences or conflicts between employers and employees.

Collective Bargaining is a process in which the management and employee

representatives meet and negotiate the terms and conditions of employment for mutual benefit.
Collective bargaining involves discussion and negotiation between two groups as to the terms
and conditions of employment. It is termed Collective because both the employer’s negotiators
and the employees act as a group rather than individuals. It is known as Bargaining because the
method of reaching an agreement involves proposals and counter-proposals, offers and counter
offers. There should be no outsiders involved in the process of collective bargaining.
According to Walton and McKersie the process of Collective Bargaining consists of four types
of activities:

1) Distributive Bargaining: It involves haggling over the distribution of surplus. Various

activities involved in this activity are wages, salaries, bonus and other financial issues. In
this activity, both the parties face a win/lose situation.

2) Integrative Bargaining: Also known as Interest-Based Bargaining, issues which are not
damaging to either party are discussed. It is a negotiation strategy in which both the
parties collaborate to find a win-win solution to their problems. This strategy focuses on
developing mutually beneficial agreements based on the interests of the disputants. Issues
brought up may be better job evaluation procedures, better performance appraisal
methods or training programmes etc.

3) Attitudinal structuring: Attitudinal structuring refers to efforts by negotiators to shape

their opponents' perceptions about the nature of the issues to be negotiated. By cultivating
an atmosphere of friendliness, mutual respect, trust, and cooperation, negotiators can
encourage their opponents to view issues largely in integrative terms and participate in
joint problem solving. This activity involves shaping and reshaping some perceptions like
trust/distrust, friendliness/hostility, co-operative/non-cooperative between the labour and
management. When there is a backlog of bitterness between both the parties, attitudinal
structuring is required to maintain smooth and harmonious industrial relations.

4) Intra-Organisational Bargaining: It is a type of manoeuvring to achieve consensus among

the workers and management. Even within the union there may be differences between
different groups as may be the case with the management. Intra-organisational consensus
is required for the smooth acceptance of the outcome of Collective Bargaining.
Objectives of Collective Bargaining:

1. To maintain cordial relations between the employer and employees.

2. To protect the interests of the workers through collective action and by preventing
unilateral actions from being taken by the employer.

3. To ensure the participation of trade unions in industry.

4. To avoid the need for government intervention as collective bargaining is a voluntary

collective process.

5. To promote Industrial democracy.

Characteristics of Collective Bargaining:

1. It is a group or collective action as opposed to individual action. It is initiated through the

representatives of the employees.

2. It is a flexible and dynamic process where-in no party adopts a rigid attitude.

3. It is a continuous process, which provides a mechanism for continuous negotiations and

discussions between management and the trade unions.

4. It is a voluntary process without any third-party intervention. Both workers and

management voluntarily participate in the negotiations, discuss and arrive at a solution.
That is why it is known as a bipartite process where workers’ representatives and
management get an opportunity for clear, face-to-face communication.

5. It ensures industrial democracy at the workplace; it is a self-run government in action.

6. It is a two-way process. It is a mutual give and take rather than a take home all method of
arriving at a solution to a dispute.
Process of Collective Bargaining

Preparation for Negotiation

Identifying issues for Bargaining

Negotiation

Negotiated Agreement

Ratification of Agreement

Implementation of Agreement

1. Preparation for Negotiation: Preparation for negotiation in Collective Bargaining is as

important as the negotiation process itself. Upto 83% of the outcomes are influenced by
pre-negotiation process. Such preparation is required for both management as well as the
union representatives. From the management’s point of view, pre-negotiation preparation
is required as:

 Management should decide when and how to open the negotiations/dialogue.

 Management must choose the representatives to negotiate at the negotiation table.

 Draft for likely decisions should be prepared in advance so that the final
agreement draft can be prepared as soon as the negotiation process is over.

From the employees’ side also, preparation is required for the following reasons:

 The union should collect the information related to the financial position of the
company and their ability to pay the employees.

 The union must also be aware of the various practices followed by other
companies in the same region or industry.
  The union must assess the attitudes and expectations of the employees over
concerned issues so that the outcome of negotiations does not face any resistance
from them.

2. Identifying issues for Bargaining: The second step in bargaining process is the
determination of issues which will be taken up for negotiations. The different types of
issues are:

 Wage-related issues: Include wage or salary revision, allowance for meeting

increased cost of living like Dearness Allowance (D.A), financial perks,
incentives etc.

 Supplementary economic benefits: These include pension plans, gratuity plans,

accident compensation, health insurance plans, paid holidays etc.

 Administrative issues: Include seniority, grievance procedures, employee health

and safety measures, job security and job changes.

The wage and benefits issues are the ones which receive the greatest amount of attention
on the bargaining table.

3. Negotiation: When the first two steps are completed, both parties engage in actual
negotiation process at a time and place fixed for the purpose. There a re two types of
negotiations:

Boulwarism: In this method, the management themselves takes the initiative to find out
through comprehensive research and surveys the needs of the employees. Based on the
analysis of the findings, the company designs its own package based on the issues to be
bargained. Thereafter, a change is incorporated only when new facts are presented by the
employees or their unions.

Continuous Bargaining: Involves parties to explore particular bargaining problems in

joint meetings over a long period of time, some throughout the life of each agreement.
The basic logic behind this method is that all persistent issues can be addressed through
continuous negotiation over a period of time. The success of negotiations depends on the
skills and abilities of the negotiators.

4. Initial negotiated agreement: When two parties arrive at a mutually acceptable agreement
either in the initial stage or through overcoming negotiation breakdown, the agreement is
recorded with a provision that the agreement will be formalized after the ratification by
the respective organizations.
5. Ratification of agreement: Ratification of negotiated agreement is required because the
representatives of both the parties may not have ultimate authority to decide various
issues referred to for collective bargaining. The ratification of agreement may be done by
the appropriate manager authorized for the purpose in the case of management, or trade
executives in the case of the employees. Ratification is also required by the Industrial
Disputes Act. It is important that the agreement must be clear and precise. Any ambiguity
leads to future complications or other such problems.

6. Implementation of agreement: Signing the agreement is not the end of collective

bargaining, rather it is the beginning of the process when the agreement is finalized, it
becomes operational from the date indicated in the agreement. The agreement must be
implemented according to the letter and spirit of the provisions made by the agreement
agreed to by both parties. The HR manager plays a crucial role in the day-to-day
administration implementation of the agreement.