INDUSTRIAL RELATIONS

R V KADAM
 PREFACE
For many years the University of Mumbai & other Universities in India have introduced a
subject of Industrial Relations & Labour Welfare as a part of syllabus for MBA , MMS
and for many other part time courses on Human Resource Management. The subject is
very important as the same is very useful in developing harmonious employee relations &
dealing with the Trade Unions in industry.

While teaching this subject my students always used to request me to suggest them a
reference book on this subject . This book is my humble attempt to place before them
comprehensive study material on this subject in a reader friendly form, hopefully
eliminating the need for multiple references for the preparation of the University
examination. Any suggestion from readers to enhance the usefulness of this book is
welcome & will be highly appreciated.

I sincerely thank my Guru, Late Prof. Viswanath who was a guiding force for publishing
this book. I also thank my wife Mrs. Umadevi R Kadam & my loving. daughter
Ms.Madhavi Barge for helping me in every possible way in completing & publishing this
book .

Prof. R V Kadam
Visiting Faculty
Chetana Institute of Management
Narsee Monjee Institute of Management
& Welingkar Institute of Management

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2
 INDEX

Chapter Description Page Nos.

1. INDUSTRIAL RELATIONS 04
–AN OVERVIEW

2. THEORIES & APPROACHES OF 09

INDUSTRIAL RELATIONS

3. HISTORY OF INDUSTRIAL RELATIONS 22

& TRADE UNION MOVEMENT

4. LABOUR LEGISLATION 38

5. TRADE UNIONS 41

6. INDUSTRIAL CONFLICTS 56

7. DISCIPLINE 76

8. EMPLOYEE GRIEVANCE HANDLING 86

9. COLLECTIVE BARGAINING 97

10. WORKERS’ PARTICIPATION IN MANAGEMENT 110

11. TOTAL QUALITY MANAGEMENT 118

12. MANAGING FOR HARMONIOUS 130

INDUSTRIAL RELATIONS.

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 Chapter-1

INDUSTRIAL RELATIONS –AN OVER VIEW

₪ MEANING

Industrial Relations is a collective relationship between Union and

Employer which grows out of employment. The concept also means the
relationship between employees and management in a day –to- day working of
industry. The subject of industrial relations includes:

1) Individual relations and joint consultation between employers and workers at

work place.
2) Collective relations between employers and their organizations and the Trade
Unions and
3) The part played by the state in regulating the relations.

According to Dale Yoder, industrial relations is a “whole field of

relationship that exists because of the necessary collaboration of men and
women in the employment process of an industry.”

According to the International Labour Organization (ILO), “Industrial

Relations deal with either the relationship between the state and employers’ and
workers’ organizations or the relation between the occupational organizations
themselves”.

₪ ANALYSIS OF THE DEFINITIONS:

The analysis of the definitions on industrial relations provides the following

points.

a) Industrial relations are the relations mainly between employees and employer.
b) Industrial relations are the outcome of the practice of human resource
management and employment relations.
c) These relations have emphasis on accommodating other party’s interest,
values and needs.
d) Industrial relations are governed by the system of rules and regulations
concerning work, work place and working community.

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 e) Its main purpose is to maintain harmonious relations between employees and
employer by solving their problems through grievance procedure and
collective bargaining.
f) The government influences and shapes industrial relations policies, rules,
agreements, mediation, awards, acts etc.
g) A trade union is another important institution in the industrial relations.

Trade unions influence and shape industrial relations through collective bargaining.

₪ CHARACTERISTICS OF INDUSTRIAL RELATIONS

Characteristics of Industrial Relations include:

I. Industrial relations are outcome of employment relationship in an industrial

enterprise.
II. Industrial relations develop the skills and methods of adjusting to and
cooperating with each other.
III. Industrial relations system creates complex rules and regulations to
maintain harmonious relations.
IV. The Government shapes the industrial relations through laws, rules,
agreements, awards, acts, etc.
V. The important factors of industrial relations are employees and their
organizations, Employer and their associations and Government.

₪ FACTORS INFLUENCING INDUSTRIAL RELATIONS

Industrial relations are influenced by various factors, viz., institutional

factors, economic factors and technological factors.

(1) Institutional Factors: These factors include government policy, labour

legislations, voluntary arbitration, collective agreements, Labour courts,
employers’ federations, social institutions like community, caste, joint family,
creed, system of beliefs, attitudes towards work, system of power status etc.

(2) Economic Factors: These factors include economic organizations, like

capitalist, communist , mixed etc., the structure of labor force, demand and
supply of labor force etc.

(3) Technological Factors: These factors include mechanization

automation, rationalizations, computerizations etc.

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 (4) Social and cultural Factors: These factors include population, religion,
customs and traditions of people , cultures of various groups of people etc.

(5) Political Factors: These factors include political system in the country,
political parties and their ideologies, their growth, mode of achievement of their
policies, involvement in trade union etc.

(6) Governmental Factors: These factors include Government policies like

industrial policy, economic policy, labor policy, export policy etc.

₪ FIVE ACTORS OF INDUSTRIAL RELATIONS

According to John T. Dunlop, a professor of Harvard University, there are

three major participants or actors of industrial relations, viz., workers and their
organizations, management and government. Over a period of time two more
actors got added viz. Judiciary & Customer.

I. Workers and their Organizations: The workers play an important role

in industrial relations. It includes their age, educational background,
family background, psychological factors, social background, culture,
skills & attitude towards work. Workers organizations are prominently
known as trade unions. The main purpose of trade union is to protect
the workers’ economic interest through collective bargaining and by
bringing pressure on management through economic and political
tactics.
II. Employers and their Organizations: Employer is crucial factor in
industrial relations. He employs the worker, pays the wages and various
allowances, regulates the working relations through various rules,
regulations and by enforcing labour laws. He expects the worker to
follow the rules, regulations and laws. He further expects them to
contribute their resources to the maximum. The difference between the
demands of the worker and employer results in industrial conflicts.
Normally employers have higher bargaining power than the workers.
But their bargaining power is undermined when compared to that trade
union. Employers form their organizations to equate (or excel) their
bargaining power with that of trade unions. These organizations protect
the interest of the employer by pressurising the trade unions and
government.
III. Government: Government plays balancing role as a custodian of the
nation. Government exerts its influence on industrial relations through
its labour policy, industrial relations policy, implementing labour laws,
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 the process of conciliation and adjudication by playing the role of
mediator etc. It tries to regulate the activities and behaviour of both
employees’ organizations and employers’ organizations.

IV Judiciary: Judiciary plays a vital role of interpreting the Labour Laws

& resolves the disputes between the actors. Over a period of time it has
taken a lead in shaping industrial relations by its landmark judgments.

V Customer: With the passing of Consumer Protection Act, 1987 &

customer being treated as a king in today’s competitive environment the
customer has a direct impact on industrial relations

₪ SCOPE OF INDUSTRIAL RELATIONS

Industrial relations are relation between employees and employer in their

day-to-day work. Hence, it is continuous relationship. The scope of industrial
relations include:

a) Relationship among employees, between employees and their superiors

or managers.
b) Collective relations between trade union and management. It is called
union- management relations.
c) Collective relations among trade unions, employers’ associations and
government.

Scott, Clothier and Spriegal remarked that industrial relations have to

attain the maximum individual development, desirable working relationship
between management and employees and effective moulding of human
resources. Thus, the scope of industrial relations seems to be very wide. It
includes:

1) The establishment and maintenance of good personnel relations in the

industry,
2) Ensuring manpower development
3) Establishing a close contact between persons connected with the
industry and between the management and the workers,
4) Creating a sense of belongingness in the minds of employees
5) Stimulating production as well as industrial and economic development
and establishing a good industrial climate and peace .

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₪ OBJECTIVES OF INDUSTRIAL RELATIONS

The primary objective of industrial relations is to maintain cordial

relations between employees and employer. The other objectives are:

(i) To promote and develop harmonious labour management relations;

(ii) To enhance the economic status of the worker by improving wages,
benefits and by helping the worker in evolving sound family budget;
(iii) To regulate the production by minimizing industrial conflicts
through state control;
(iv) To socialize industries by making the government as an employer;
(v) To provide an opportunity to the workers to have a say in the
management and decision-making;

₪ FUNCTIONS OF INDUSTRIAL RELATIONS

Functions of Industrial relations include:

(i) To establish communication between workers and the management in

order to bridge the traditional difference between them.
(ii) To establish a rapport between managers and other employees.
(iii) To ensure creative contribution of trade unions to avoid industrial
conflicts to safeguard interests of workers on the one hand and the
management on the other hand, to avoid unhealthy, unethical
atmosphere in an industry.
(iv) To lay down such considerations which may promote understanding,
creativity and co-operation to raise industrial productivity & to ensure
better workers’ participation.

  

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 Chapter-2

Theories and Approaches of Industrial Relations

₪ INTRODUCTION

Industrial relations constitute one of the most delicate and complex

problems of modern industrial society. It is a dynamic concept which depends
upon the pattern of society, economic system and political set-up of a country.
It is an art of living together for the purpose of production, productive
efficiency, human well-being and industrial progress. It comprises of a network
of institutions, such as, trade unions, collective bargaining, employers, the law
and the state. The knowledge of such institutions is important if we have to
understand the industrial relations phenomena.

₪ INDUSTRIAL RELATIONS – A SOCIAL SCIENCE

Industrial Relations is a basically a social science. Therefore it put its

impact on other social sciences like sociology , psychology, law ,history,
politics, economics, accounting and other elements of management studies.
Therefore to solve Industrial relations problem it is necessary to take help
of above mentioned social sciences.

1) Industrial sociology explains the social background of workers which is

essential for understanding Industrial relations.
2) Industrial psychology clarifies certain concepts and provides important
tools in areas such as recruitment, placement, 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.
3) Labour laws and their interpretation by tribunals and courts contributes
to the growth of industrial jurisprudence.
4) Political aspects are also important in industrial relations, particularly in
developing economy dominated by centralized planning.

₪ THEORIES AND APPROACHES OF INDUSTRIAL RELATIONS

There are various Approaches and Theories of Industrial relations

providing an integrated view of the activities in this field. These approaches and
theories help us in analyzing Industrial relations to evolve a relevant frame
work suitable for India.
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Specifically the Approaches of Industrial Relations include:

1) The Systems Approach

2) The Oxford Approach
3) The Industrial Sociology Approach
4) The Marxist Approach
5) The Pluralist Approach
6) The Human Relations Approach
7) The Gandhian Approach

I) THE SYSTEMS APPROACH:

An Industrial relations system may be defined as totality of power

interactions of participants in the workplace. An Industrial relations system
includes all the individuals and institutions that interact at the work place. An
industrial relations system have 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.

The dimensions of Industrial relations system are:

(i) Participants: The Participants in the industrial relations sphere are

composed of duly recognized representatives of the parties interacting
in the several roles within the system.
(ii) Issues: The power interactions of the participants at work place create
industrial relations issues. These issues and the consequence of power
interactions find their expression in a web of rules governing the
behaviour 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,
grievance settlement practices, etc. 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 in resolving while, at the same time,
the other participant is highly concerned about resolution of the same.
These issues may serve to delimit the systems boundaries.
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₪ THE FOLLOWING ARE SOME OF THE FAMOUS CONTRIBUTERS
OF THE SYSTEMS APPROACH IN INDUSTRIAL RELATIONS

Robert Dubin: In his systems approach of industrial relations, Dubin used

concepts such as inter-group (union and management )power interactions,
boundaries of the social system and the functions performed by the system.
According to him union militancy is greatest when the union bargains for the
minimum sources of attachment to work, such as wages, hours of work and
working conditions. As the range of bargaining issues increases, union
militancy decreases. Further, he observed that collective bargaining is a great
social invention that has institutionalized industrialized conflict.

Robert Cox: The most detailed classification of the industrial relations systems
is found in Robert W. Cox’s book on Approaches to a futurology of industrial
relations(1971). Cox enumerates the following systems:

a) The peasant-lord system (purely paternalistic);

b) The primitive market system (wherein first generation industrial
workers migrating to urban areas from rural communities );
c) The small manufactory system (workers getting organized, the
government willing to intervene );
d) The lifetime commitment system as in Japan;
e) The bipartite system of which collective bargaining is the main function;
f) The tripartite system where the government also plays an important
role, as in India;
g) The corporate-bureaucratic system in countries where employers and
workers organizations are semi-autonomous as in the UK;
h) The mobilizing system, where the elite in political power determines
worker and employer behaviour, as in communist countries at the initial
stages; and
i) The socialist system where a contractual employment relationship is
established between the parties.

He developed an interesting framework in which different industrial

relations systems are related to their specific environments.

Dr. Kenneth Walker: Dr. Kenneth Walker proposed building of multi-

dimensional and interactive models of industrial relations system. He argued
that the basic barrier in any theories of industrial relations has been the

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inadequate importance given to psychological models of human behavior in
work situation. He therefore proposed a more adequate model showing:

a) calculating and emotional;

b) cooperative and conflicting; and
c) expressive and instrumental human behaviour.

Such a model according to Walker, tends itself to effective integration with

the industrial relations theory .

John T. Dunlop: The most important contribution to systems approach is from

Prof. J T Dunlop of Harvard University. In his book on Industrial Relations
Systems(1958)he presented an analytical framework of industrial relations. He
has laid down a generalized industrial relations framework which is applicable
to all the three broad areas of industrial relations:

(i) Industrial relations within an enterprise, industry or other segment of a

country and a comparison among such sectors;
(ii) Industrial relations within a country as a whole and a comparison among
countries;
(iii) Industrial relations in the course of economic development

According to Prof. Dunlop an industrial relations system is comprised of

certain actors, certain contexts, and an ideology which binds the industrial
relations system together, and a body of rules created to govern the actors at
the workplace and work community. Thus there are three sets of
independent variables;

1) The ‘Actors’
2) The ‘Contexts’ and
3) The ‘Ideology’ of the system.

1)THE ACTORS IN A SYSTEM: The actors are:

a) Hierarchy of managers and their representatives in supervision,

b) A hierarchy of workers and any spokesmen, and
c) Specialized governmental agencies concerned with workers, enterprises
and their relationships. These first two hierarchies are directly related to
each other. The managers have responsibilities at various levels to issue
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 instructions and the workers at each corresponding level have the duty
to follow such instructions. The formal hierarchy of workers may be
organized 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 they override the hierarchies of
managers and workers on almost all matters. In some other industrial
relations systems, the role of the specialized governmental agencies, for
many purposes, may be minor or restricted.

2) THE CONTEXTS OF A SYSTEM: In an industrial relations

system the contexts or the environment play important role. The
environment in which the actors interact are the

(i) Technological characteristics of the workplace

(ii) The market constraints on the actors, and
(iii) The locus and distribution of power in the larger society.

(i) The technological features of the workplace have a very far-reaching

consequence for industrial relations system e.g. the mining industry has
a different technological context as compared to the manufacturing
industry. Thus the place of work , the methods of work, the mode of
living, etc. are different for different type of industries. Apart form the
characteristics of the work place, the development of technology also
affects industrial relations.
(ii) The market constraints are important environmental context which is
fundamental to an industrial relations system. The product market may
vary in the degree and character of competition. The product may face
pure competition or, monopolistic competition or product
differentiation, or have monopoly. These constraints are less operative
in socialist than in capitalist countries. The relevant market may be
local, national or international, depending on the industrial relations
system.
(iii) The locus and distribution of power among the actors in the larger
society gets reflected within the industrial relations system.

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. This ideology or a set of ideas and belief commonly held by
the actors helps to bind or to integrate the systems together as an entity. Each
industrial relations systems contains its ideology or share understandings. The
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ideology defines the role and place of each actor and the ideas which each actor
holds toward the place and function of the others in the system. An Industrial
relations systems requires that these ideologies are sufficiently compatible and
consistent so as to permit a common set of ideas which recognize an acceptable
role for each actor.
The actors in a given context establish rules for the workplace and work
community, including those governing the contracts among the actors in an
industrial relations system.

These rules are broadly grouped into three categories;

(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 Dunlop’s Theory of Industrial Relations System is summarized as follows:

(1) Industrial relations system is an analytical enquiry into the structure

and process of the dynamics of relations between management, workers
and the government.
(2) Industrial relations system is subsystem of the more general total social
system of an industrial society. Such a society is affected by a number
of external influences like international relations, global conflicts as
well as economic, socio- political and technological factors, within the
country.
(3) These interactions lead to a formulation of a web of rules (eg. Labour
law, voluntary codes, collective agreements, etc.) Which govern the
behaviour of the actors in the industrial relations system.
(4) These interactions take place in an environment composed of economic
constraints and opportunities and technological development and power
relations in the social structure.

Dunlop’s concept of industrial relation system has been criticized on the

following grounds:

(i) It is essentially a static model of industrial relations from which it is

difficult to explain the changes in industrial relations;
(ii) It concentrates on the structure of the system, ignoring the process
within it;
(iii) It tends to ignore the essential elements of industrial relations like the
nature and development of conflict itself;
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 (iv) It focuses on formal rules and neglects important informal rules and
informal processes;
(v) It does not explain how inputs into the system are converted into
outputs;
(vi) It is environmentally biased, and provides no relation between the
“internal” plant level systems and the wider systems;
(vii) It favors an analytical approach based on comparison rather than a
problem solving approach.
(viii) It makes no special provision for the role of individual personalities
in industrial relations as the actors are being viewed in a “structural”
rather than in a “dynamic” sense.

II) THE OXFORD APPROACH

Mr. Allen Flanders is exponent of this approach. According to Flanders

every business enterprise is a social system of production and distribution and
it has structured pattern of relationships. The code of work rules, wage
structure, internal procedure of joint consultation and grievance procedure is an
internal part of an industrial Relation system.

Flanders views trade unions are external organizations which exclude

collective agreement from the sphere of internal regulation. According him
collective bargaining is central to the industrial relations system. The rules of
process of collective bargaining are determined by political institutions
involving power relationship between employers and employees.

The “Oxford Approach” can be expressed in the form of an equation;

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

This approach has a great influence on the Industrial relations thinking in

U.K. It also formed a theoretical base for the enquiry and the recommendation
of the ‘Donovan commission’ (1965-68).
The Oxford approach is criticized on the following grounds :

a. It provides a narrow comprehensive frame work for analyzing industrial

relations problem.
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 b. It gives more importance to the political process of collective bargaining.
c. Institutional power factors between parties are viewed as of paramount
importance. While variables such as technology, market , status of
parties, ideology are not given importance.

III) THE INDUSTRIAL SOCIOLOGY APPROACH

Although in the United Kingdom, there has been a growing acceptance of

the rule determination approach, one industrial sociologist, G. Margerison,
holds the view that the core of Industrial relations is the nature and development
of the conflict itself. Margerison argued that conflict is the basic concept that
should from the basis of study of industrial relations. He criticized the prevalent
approach to industrial relations which was more concerned with studying the
resolution of industrial conflict than its generation. According to his 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 it 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.’’ Instead it suggests a method of inquiry
which attempts to develop sociological models of conflicts.

IV) THE MARXIST APPROACH

Marxist approach depends upon the class conflict in the society. 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 Marxist scholars rather than directly from the works of Marx
himself., According to Marxists, industrial relations are in the first instance,
market-relations. The Marxist approach is primarily oriented towards the
historical development of the power relationship between capital and labour. In
his approach, Industrial relations are equated with 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 maximize their profits. The lower
the price paid by the owner of the means of the production for the labour he
16
employs, the greater is his profit. The Marxist analysis of industrials relations,
is not seen as a comprehensive approach as it only takes into account the
relations between capital and labour. It is rather, a general theory of society and
social change which has implications for the analysis of industrial relations
based on Marxian theory.

V) THE PLURALIST APPROACH

Pluralism is a major theory in labour –management relations. It has many

powerful advocates. 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 incident of strikes as the societies get industrialized and develop
appropriate institutional framework. They claim that there has been a decline in
incidence of strikes all over the world in spite of an increase in union
membership. The theories of pluralism were evolved in the mid-sixties and
early seventies when England witnessed a dramatic resurgence of industrial
conflicts. The recent theories of Pluralism emanates from British scholars and
in particular from Flanders and Fox. According to Flanders, conflict is inherent
in the industrial system. He highlighted the need of formal system of collective
bargaining as a method of conflict resolution.

He distinguishes between two distinct aspects of relationship between

workers and management.

1) 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.

2) 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 organizations and participation
of the union in joint decision making.

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(VI) THE HUMAN RELATIONS APPROACH

According to Keith Davies, human relations are “the integration of people

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

The goals of human relations are:

(a) To get people to produce,

(b) To cooperate through mutuality of interest and
(c) To get satisfaction from their relationships.

The human relations school founded by Elton Mayo and later propagated
by Roethlisberger, Whitehead, W.F. Whyte and Hofmans offers a coherent
view of the nature of industrial conflict and harmony. The human relations
approach highlights certain policies and techniques to improve employee
morale, efficiency and job satisfaction. It encourages the small work group to
exercise considerable control over its environment and in the process helps to
remove a major irritant in labour-management relations.

Criticism : H.R approach was criticised by Marxists, pluralists, and others, on

the ground that it encouraged dependency and discourage individual
development and ignored the importance of technology and culture in the
industry. However, it must be admitted that the human relations school gave
more importance to certain aspects such as communication, management
development, acceptance of workplace as a social system, group dynamics,
participation in management, etc.

(VII) THE GANDHIAN APPROACH

The common people of India recognise Mahatma Gandhi as a great

national leader but very few know that he was also a trade union leader who
established a trade union for the Mill workers of Ahmedabad. His approach to
industrial relations was modern & unique.

Gandhiji had immense faith in the goodness of man and believed that
many of the evils of the modern world have been brought about by wrong
18
systems and not by wrong individuals. He insisted on recognizing each
individual worker as a human being. He laid down certain conditions for a
successful strike. They were

(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 should never be molested.

He was not against strikes but pleaded that it should be the last weapon in
the armoury of industrial workers and hence should not be resorted to unless all
peaceful and constitutional methods 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.

He recognized the need for higher productivity and pleaded that “the
management should share with the workers the gains from higher productivity.”
He also laid stress on the importance of job enrichment. He always believed
that harmonious relations between labour and management is powerful stimulus
to economic and social progress. According to him industrial peace was an
essential condition not only for the growth and development of the industry
itself but also, for the improvement in the conditions of work and wages. At the
same time, he not only endorsed the worker’s right to adopt the method of
collective bargaining but actively supported it. He advocated voluntary
arbitration and mutual settlement of disputes.

₪ THEORIES OF INDUSTRIAL RELATIONS

Basically there are two main groups which proposed theories of industrial
relations One group lays emphasis on environmental factors like state of
technology in production, supply and demand in the product market and the
labour market, the legal-political relationships. etc. The other group stresses on
cause and effect relationship stemming primarily from factors endogenous to
the plant. The environmental theorists have been primarily economists and to a
smaller extent lawyers , political scientists and sociologists.
19
 The first one which stress external factors and the second one internal
factors have lengthy traditions in Industrial relations literature. Prof. John
Dunlop is noted exponent of the externalist theories. The internalist or in-plant
theories of Industrial relations have their origins in the ‘human relations school’
propounded by Elton Mayo, Roethlisberger, Dickson, etc.

These theories stress the factors influencing employees motivation,

attitudes and morale and they analyse the forms of management leadership.
These theories have been significantly enriched by the additional dimensions
provided by theories of organizational behaviour. The theorists in this domain
are customarily psychologists and sociologists. A full-fledged theory of
industrial relations requires an integration of both the approaches of externalist
and internalist.

The subject of Industrial relations has undergone several changes because

of the vital contributions made by number of disciplines. In developing
theoretical models in industrial relations it become necessary to appreciate the
contributions made by various social sciences. Such models can be used for
analyzing concrete situations and to build a systematic and comprehensive
theory of Industrial relations.

A general theory of Industrial relations must:

(i) Incorporate both the collective and consensus factors

(ii) be able to explain change
(iii) have some prospective application for outlining possible futures; and
(iv) focus attention on solving problems.

The participants of Industrial relations consider theory as the opposite of

practice. Nevertheless, any systematic practice implies some theory. Dunlop
complained of the lack of theory in the field of Industrial relations.. Levin wrote
that ‘there is nothing so practical as a good theory.’ There are many instance of
the influence of theories on practice.

Industrial relations theory might be useful to participant if it could help

them in one or more of the following ways :

(a) to understand the present Industrial relations situation;

(b) to forecast trends;
(c) to bring about desired changes in the present or the future
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 Understanding what is happening is the first step in dealing with a
situation. Thus if a theory can bring some degree of order in to perceptions of
current events it can be helpful in promoting orderly thinking. For example, the
Donovan commission identified the malaise of British industrial relations to the
existing gulf between the informal and formal system of industrial relations.
Whether the diagnosis was correct or not, it provided an organizing idea for the
consideration of action programmes and helped to clarify thinking. The coal
mining industry was torn by industrial conflict in practically all countries until
it was mechanized. While this was certainly not the sole factor in the
transformation of industrial relations in this country, a theory that directed
attention to it as a strategic factor might have been useful to those concerned in
formulating policy for the industry.

A complete understanding of the present situation should make it possible

in principle to forecast trends and foresee its probable evolution. Clearly, the
more industrial relations theory enable such forecasting, the more useful it will
be to the practitioners, But on the whole, Industrial relations theory has had
relatively little to say about the future.

The third test of usefulness of Industrial relations theory is the extent to

which it helps practitioners to bring about or avoid certain changes in present or
future Industrial relations. This implies that the theory indicates what are the
important factors to operate on, and what will be the effects of specific
operations on these factors.

CONCLUSION
To sum up, one the most difficult attempts in Industrial relations is to
build up theory and to generalize on its activity which is highly dynamic.
Hence, theorizing in the field of Industrial relations is still at an incipient stage.
A host of factors, both internal and external, influence the shape of Industrial
relations activity. The performance of industrial organisation is in the context of
pressure, tensions and conflicts and is mainly related to power politics, cultural,
political and other differences. An intermix of these dynamic factors determine
the shape of relations in an organization.

  

21
 Chapter-3

HISTORY OF INDUSTRIAL RELATIONS & TRADE UNION

MOVEMENT

₪ INTRODUCTION

Industrial relations plays a crucial role in establishing and maintaining

industrial democracy. In India, it has passed through, several stages. A number
of factors – social, economic and political - have influenced industrial relations
in India.

Industry means large scale production of material or goods by machinery

with the efforts of large numbers of workmen. When we think of industry in
relation to India we must realise that for centuries , while Europe & America
had taken to industry & were making rapid progress, India was far behind them.
The causes of India’s backwardness in this matter were two fold:

1) In the initial period the Moghul Empire never encouraged trade & was
engaged in retaining its power & therefore there was instability in trade.
2) In the later period India went under British rule & this rule decided the
industrial progress which was full of constraints.

₪ ESTABLISHMENT OF INDUSTRY IN INDIA :

One of the first industries to be established in India was Indigo industry.

Indigo is a blue dye, formerly obtained from plant. It was produced extensively
in India for many centuries. It was used in large quantities in the Textile
industry in Great Britain. Formerly that industry had other sources of supply but
the slave trade was abolished in many parts of the world & so the production of
indigo suffered a severe setback. Therefore in 1780 the East India company
brought planters from the West Indies & else where and settled them in Bengal
to exploit this lucrative trade.

Another industry established in India after 1833 was Tea Plantations when
Britishers planned to grow tea in India in some parts of the country where
required natural climate existed particularly in Bengal & Assam. After initial
period of experimentation the venture succeeded on a large scale giving great
scope for profit. Soon large areas were brought under cultivation. This required
large number of labour. Therefore some laws were enacted by British Rulers

22
to assist British & other European planters to obtain & retain labour on easy
terms. Those laws were

1) Workmen’s Breach of Contract Act, 1859

2) Plantation Act, 1863.

The former Act provided the quick remedy to any employer against a
workman who refused to work or tried to escape. Under the latter act the
Planters themselves were authorized to arrest absconders without warrant. The
poor coolies were often hunted like wild beasts & were given inhuman
punishments.

Meanwhile in Europe the industrial revolution was in full progress. James

Watt (1736 –1819) invented steam engine. In 1769, Ark Wright invented
Spinning Machine and in 1787 Cartwright invented first power loom for
weaving fabric.

In 1849, a railway was first established in India & steam power was
introduced in Indian factories. Cotton mills run by the steam power were later
established in Bombay, Ahmedabad , Sholapur, Calcutta and Nagpur. In 1874,
Jute Mills were established in India. The cotton industry was mainly in the
hands of the Indians but in the initial period the Jute industry was mainly in the
hands of the Britishers.

However the working & living conditions of workers working in these

Cotton & Jute Mills were pathetic. The hours of work were long , usually 12 to
15 hours a day. Even women & children suffered under the most oppressive
conditions of labour. There was no limit on hours of work. There was no
Sunday, no holiday. There was no fixed starting or closing time. And when they
died or were maimed in the machines there was no value to their life or limb.

₪ THE INITIAL EFFORTS BEFORE THE FIRST WORLD WAR :

The history of trade unionism in India can be traced to the third quarter of
the nineteenth century. However at that stage of its development it hardly be
called as labour movement in the real sense of the term. It involved the efforts
of some philanthropists to improve the living conditions & social status of
industrial workers. These efforts were related to the social welfare & promotion
of education among workers. For example Sorabji Shapurji Bengalee initiated a
protest against the appalling conditions of factory workers and stressed the
need for legislation to improve these conditions.
23
Bombay Mill Hands Association:

Mr. Narayan Meghaji Lokhande is considered as the founder of the

organized labour movement in India. He organized a protest on behalf of the
workers in Bombay Which resulted in the passing of the first Factories Act in
1881. He successfully negotiated with the Mill owners of Bombay in 1890 for a
weekly holiday for the workers. He also formed Bombay Mill Hands
association & started the publication of “Dinbandhu” (friend of the poor) to
highlight the plight of common workers.

Decline & Uplift:

The first organisation formed in 1897 and registered under the Companies
Act was the Amalgamated Society of Railway Servants in India & Burma.
However the growing labour movement was declined due to widespread
famine, plague and trade depression during the close of the nineteenth century.
In 1904 when the trade picked up, several cotton mills were established in the
country. However in absence of any legislation on working hours, the workers
were compelled to work for long hours. In 1911, legislation was passed limiting
the daily hours of work in textile mills to twelve hours for adults and six hours
for children. During the period between 1904 & 1911 there was significant
growth in trade unionism in India. In 1911, a ‘ Kamgar Hithwardhak Sabha
(Worker’s Welfare Association) was established in Bombay to resolve disputes
between employers & workers. This followed the outbreak of the First World
War causing great misery to the working class in view of rising prices of
essential commodities. Indeed just after the war the labour movement in India
took positive turn.In addition to the First World War, the other factors
contributing to the growth of labour movement in India included the influence
of political leaders such as Lokmanya Bal Gangadhar Tilak & Mahatma
Gandhi, the establishment of International Labour Organisation & the Russian
revolution.

₪ THE FIRST STAGE IN TRADE UNION MOVEMENT (1919 – 1930)

Just after the First World War a series of strikes appeared in Indian
industries. Among these are included strikes of Buckingham & Carnatik Mills
and cotton mills of Bombay which occurred as a result of bad working and
living conditions, lack of amenities and victimization of workers by the
supervisors. This resulted in the amendment to the Factories Act . In 1920, All
24
India Trade Union Congress, a representative Union was formed to nominate
delegates to the Annual Conference of ILO as well as labor representatives in
the Central Legislative Assembly and the provincial Legislative Councils.

Spread of trade Union activities :

The AITUC proposed to accomplish the economic , social & political

interest of the workers by co-operating with and coordinating the activities of
all labour organizations and extending trade unionism to all parts of the country.
It provided affiliation to several principal trade unions. Although it attempted
to safeguard the general interests of the workers as whole, it could not
accomplish the individual and general grievances of different industries .This
led to the formation of several federations for different industries.

The AITUC advised the government in the formulation of labor legislation

and maintained liaison with the international organizations in other parts of the
world for furthering the cause of the workers. All this provided great
momentum to the formation of several trade unions in the country. The Indian
Trade Union Act,1926,which will be discussed subsequently, was the land mark
in the history of trade union in the country. It provides not only legal status to
the registered trade unions, but raise their prestige in the eyes of the public as
well as the employer.

Fragmentation

In 1927 ,as result of international events, there appeared a conflict among

labour leaders leading to the fragmentation of the ‘rightists’ & ‘leftists’ trade
unions in the country. This conflict in leadership confused the workers and
several strikes were utter failure. In the Trade Union Congress session at
Nagpur in 1926 , the leftist appeared powerful and the AITUC was captured by
them. The minority left the organization and established All India Trade Union
Federation.

Employer Hostility

The attitude of the employers towards the trade unionism was marked by
hostility. Several employers attempted to form ‘yellow’ union and weaken the
organizational activities strength of the labour organizations.They also refused
to recognize the registered trade union on the ground that they were either led
by outside leader or dismissed workers. The attitude of government was also
indifferent.
25
₪ THE SECOND STAGE IN TRADE UNION MOVEMENT (1930-39)

The second period (1930-39) was marked by several unfavorable factors

causing a lull in trade union activities. These factors included economic
depression diversion of attention of political leader from trade unions the
prosecution of the communist leader in the Meerut conspiracy case and the
failure of Bombay textile strike in 1929.the employers took full advantage of
these factors and heavily exploited There occurred a further split in the Trade
Union Congress.However ,the All India Railways Federation was marked by
unity attempted to accomplish the demands and grievance of its members. It
also attempted to unify the trade union movement in the country.

Ultimately, in April 1938,the two organizations merged together at the

Nagpur session. During this period, the attitudes of the employer did not change
and they continued to victimize the workers for union activities.However,there
was slight change in attitude of the employers subsequently. several legislative
measures were taken which included the payment of wages act,1938.The
leaders of the congress party were given part in the administration of seven
provinces in 1937 which caused a great deal of expectation among workers. The
government for the first time used section 144 of the Cr.P.C. against the
employer to terminate the lock out in Madurai Mill as well as against the
workers for their illegal strike in Madras.

₪ THE THIRD STAGE IN TRADE UNION MOVEMENT(1939-47)

The period of(1939-47) was marked by emergency in view of the

outbreak of the Second World War. The All India Trade Union Congress
declared its resolution not to support the British government. A separate
organization called the Indian federation was formed. This organization
received the full support of the government because of its support to the war.
Several nationalist leaders were arrested and the communist leader dominated
the All India Trade Union Congress and the Indian federation of labour
strengthened its position. The government nominated the representative of the
IFL to attend the International Labour Conference.

Because if inflation and falling real wages of the workers, there was a great
deal of labour agitation. Propelled by the threat to direct action, the government
took the several steps to improve the condition of workers. Among these
measure were included the establishment of a conciliation board in Bombay and
a Directorate of cost of living index scheme, enactment of the Industrial
26
Statistics Act,1942, appointment of Rege committee (1944) and the creation of
the office of the Chief Labour Commissioner in 1945 and the labour bureau in
1946. Despite these efforts the industrial relations was marked by several
strikes. To control the situation rule 81-A was added to the Defence of India
rules which prohibited strikes and lockouts and empowered the government to
refer any industrial dispute to conciliation or adjudication. In addition, the
National (technical personnel) Ordinance of 1940 and Essential Service
(maintenance) Ordinance of 1941 came in to force to regulate conditions of
employment. As a result of these ordinances neither the workers could refuse
work nor could the employers dismiss them.

Trade Union Solidarity

The trade union membership rose from 399000 in1938-39 to 889000 in

1944-45. There was slight change in attitude of the major employer and they
started providing welfare measures to workers in view of huge profit. Some of
them also tended to recognize the labour union. The attitude of government was
also changed to seek the cooperation of workers as a measure to increase
production in defense factories. Several fringe benefits were provided to the
workers. The Bombay Industrial Relations Act,1946 passed which for the first
time compelled the employers to recognize trade union for collective bargaining
purpose.

Tripartite joint consultations were started and the first Indian Labour
conference was held in August 1942. A Standing Committee was also
established. While the Indian Labour Conference met annually ,the standing
Committee used to meet frequently to promote harmonious industrial relations.
A significant event of this period relates to adaptation of the Philadelphia
charter at the International Labour Conference which declared that “poverty
anywhere is a danger to prosperity everywhere”.

₪ INDUSTRIAL RELATIONS IN POST INDEPENDENCE PERIOD

The fourth period (1947-56) opened with several socio-economic problems

in partition of the country. The inflation increased and the real wages came
down and cotton textile industries suffered heavily because the jute and cotton
producing areas went to the Pakistan. This caused huge unemployment and
great crisis in the Indian economy. The workers suffered severe financial strains
and accordingly to strikes which were the highest since 1939. Again there was
marked disunity in trade unions. A significant event of this period was
Industrial Truce Resolution at a Conference of labor management
27
representatives held in New Delhi in December 1947 under the chairmanship of
Pandit Jawaharlal Nehru with a view to handling industrial peace and averting
lockouts strikes and showing down of production during three years.

FORMATION OF THREE CENTRAL TRADE UNIONS

During this period three central trade unions were formed. These included
Indian National Trade Union Congress, Hind Mazdoor Sabha and United
Trade Union Congress. The Indian National Trade Union Congress was formed
at a conference held in New Delhi in May 1947, under the chairmanship of the
Sardar Vallabhbhai Patel. The objectives of the INTUC were in line with those
of the congress party. It purported to establish an order of society which is free
from hindrances to an all-round development of its industrial members which
tends to aggressively remove social political and economic exploitation and
inequality as the anti-social conservation power in any from. It stress
democratic and peace measures to place industry under national ownership and
control in a suitable manner.

The Ahmedabad Textile Labour Association provided it with huge

membership and long experience in a labour work, its claimed membership in
1947 was 4, 12, 193, from 227 unions while it rose to 19,96,499 from 2046
unions in 1966. The INTUC has formed several federations in the textiles,
transport, sugar , plantations, docks, jute, mines, railways posts and telegraphs
and government of India presses and banks.

The socialist leaders visualized that in the INTUC their interests would
not be represented. They realized the need for an All-India-Labour Organization
which could pursue socialist interests. Accordingly in Calcutta on December
24,1948 a new organization called the Hind Mazdoor Sabha was founded.
Although this organization represented other groups as well it was a part of the
Praja socialist party which neither allied to the Congress nor to the
Communists. It purported to establish a democratic socialist society in which
workers would have an opportunity for their total physical and mental growth.

Several leaders who did not agree with principle and objectives of the
HMS, met at Calcutta on April 30,1949 and formed a new organization called
the United Trade Union Congress.

28
SUBSEQUENT DEVELOPMENTS

In addition to these three central unions, the All India Trade Union
Congress, established in 1920, is also at present a powerful central union It is
dominated by the communists and purports to socialize and nationalize the
means of production, distribution and exchange using radical measures.
Subsequently, the Center of Indian Trade Unions (the CITU) was established in
1970 by the Marxist Communist Party. Bhartiya Mazdoor Singh established in
1955, A trade union wing of Jana-Sangh; Hind Mazdoor Panchayat, established
by in 1965,the Fernandes Group; and National Labor Organization, established
in 1972, a trade union wing of Congress (O) Party. In addition there are several
Independent Federations including the Indian Federation of Independent Trade
Unions, the Indian Federation of Working Journalists, the All India Bank
Employees’ Association, National Federation of Indian Railwaymen .All India
Ports and Dock Workers’ Federation, National Federation of Posts and
Telegraphs Workers and the All India Mine Workers’ Federation.

INDIAN LABOUR CONFERENCE

Another development in the immediate post-Independence period was the

setting up of the Indian Labor Conference (ILC ), a tripartite body to look into
IR problems in India. It was constituted with the objective of establishing co-
operation between the government, the employers and the trade unions. It held
its first meeting in August 1942. It met once a year to discuss of view reading to
labour-management relations. The various points of view regarding a particular
issue were discussed and recommendations made which were subsequently
formulated in the form of legislation. However , since the early 1970s the
Indian Labour Conference met only sporadically depending on the issues and
concerns of the Labour Ministry.

CHANGE IN ATTITUDE OF THE GOVERNMENT

An important characteristic feature of IR in the post-Independence period

was the change in the government’s attitude towards labor and their problems.
Many labour laws were enacted to protect the interests of industrial workers
during 1947 to 1956. These laws cover many issues concerning labour such as
seniority, wage rates, paid holidays disciplinary matters social security etc.
However, in 1957, the emphasis shifted from legal enactments to voluntary
arrangements. In fact the period between 1957 and 1965 can be regarded as an
attempt to move away from legalism to voluntarism which had dominated IR in
India. As a result the code of discipline was introduced in 1958.
29
THREE WARS

Subsequent to this period many political and international events affected

the course of industrial relations. With Nehru’s passing away in 1964 the
phalanx-like structure of the congress party started eroding. Between 1962 and
1971 India fought three wars, one with China and two with Pakistan. Added to
this was the difficult economic situation. Recently we also experienced a
Kargil conflict.

NATIONAL COMMISSION OF LABOUR

In 1966, the National Commission of Labour (NCL) was appointed by the

government to look into labour matters and make recommendations. It
submitted is report in 1969.
Some of the significant recommendations of NCL were processed by
ILC and the Standing Labour Committee in 1970 and 1971 respectively and the
major policy decisions were taken up for implementation. Some of these
recommendations relate to the statutory recognition of representative union as a
sole bargaining agent to be determined by the verification of paid membership
and the appointment of Industrial relations commissions (IRCs) in the States
and at the Center instead of the present tribunals. These recommendations were,
however, never implemented, though some of them are in various stages of
implementation, as for instance those relating to workers training, induction and
education, working conditions, social security, labour administration, etc.

NATIONAL EMERGENCY

The early 1970s witnessed considerable industrial strife and loss of a

large number of mandays. A significant trend during this period was the fact
that ILC, which was active till 1971 did not meet from 1972 to 1976. when
Emergency was declared in June 1975, the National Apex Body (NAB) was set
up in place of the tripartite ILC in consonance with the government’s 20-point
programme. The National Apex Body and some state apex bodies (SABs) were
bipartite in composition. The National Apex Body consisted of 23 members (12
representing workers and 11representing employers.) It met six times during
1976 for reviewing industrial relations and labour matters, with the government
acting as an arbitrator. (These bodies did not have a long tenure, and during the
Janata Government they were abolished and ILC was revived once again in
May 1977.) During emergency (1975-77), there was considerable tightening of
30
discipline in the Industrial as well as general environment. But after emergency,
with the change in the political leadership, there followed a period of
reconciliation and active trade union activity. The Janata Government set up a
number of committees to review industrial relations practices.

VIOLENCE IN INDUSTRIAL RELATIONS

In the late 1970s and early 1980s Industrial relations in India were
characterized by violence (especially in the Thane Belapur area and in
Modinagar ). For instance, on June 29, 1981 the president of the HMS workers’
Union was beaten and murdered and on the same day another worker was
murdered (India Today, July 1 to 15, 1981,p.26). On July 24, 1981 the
Managing Director Of Bombay Tyres Company was assaulted. In another
incident a worker of Wellman India, a company in the Thane area was
murdered (Business India, sept.28, Oct. 11, 1981, p. 40-51). The violence
continued even in 1990s as Mr. Shankar Guha Niyogi & Dr. Datta Samant two
union leaders also became the victims of industrial violence. Besides these
instance newspapers and their reports indicate violence. in labor management
relations.

Impatience to have quicker settlements and rising expectations are the

main reasons why workers resort to violence. They are fast losing confidence in
the establishment and are getting impatient with the weak collective bargaining
situations prevailing where every problem is taken to government labour
machinery and courts which take a long time to resolve the issues.

In the mid 1970’s, a significant change was noticed in the form of the
emerging independent union leaders like Mr. R.J. Mehta and Dr. Datta Samant
in Mumbai. They posed a big challange to the centralized trade unions. The
trade union movement entered in more militant phase. The emergence of
‘independent’ trade union leaders changed scene of collective bargaining. The
slowly changing equations within the industrial setting were bringing about a
change in employer employee relations. There was interaction between
employers and employees. The reason may be modernization and
mechanization of manufacturing sector. The unemployment was increasing.
The belief that big industry would solve the problem of ever-increasing amount
of unemployment was found to be fully misplaced and led to gross over staffing
and inefficiency

According to National Sample Survey, employment in the organized

sector increased by 2 percent per annum during the period from 1977/78 to
31
1987/88.This could absorb the unemployment backlog of 10.8 million which
existed in 1977/78.The reason for this shrinking position of organized sector
was increasing industrial sickness. In the beginning of the 1980s industrial
sickness was increasing at the rate of 7.5 percent annually. Maharashtra and
west Bengal, the two most industrialized states were on the top of the list.
Traditional industries like textiles and jute proved totally uneconomical and
their industrial relations were deteriorating. It witnessed the historic strike
which failed bringing lot of miseries to workers and their families. Its failure
changed the scene of trade unionism as well as the equations between
employers and employees. Industry level wage agreements were reducing and
were being replaced by unit level agreements. This resulted in increase of
independent unions.

The 1990’s witnessed increasing downsizing of units and retrenchment of

the workers. If the productivity linked wage agreements were the order of the
day in the 1980’s it was voluntary schemes in the 1990’s.

THE NEW ECONOMIC POLICY –BACKGROUND AND NATURE

The economic conditions of India in 1991 were such that they

necessitated some crucial and bold measures to turn it around. As one of the
leading developing countries, India could not afford to be a just passive
observer in a rapidly changing world. To move with the times radical changes
were required to be taken especially with a view to strengthen the economic
base and its super structure. In July 1991, thus the new economic policy and
with it New Industrial Policy (NIP) was announced. At that time there were
mixed responses to the policy from various sections of the people. Some
appreciated such a bold step, some others were skeptical and a few others
expressed reservations.

Today, it is nearly more than 18 years have passed since the

announcement of NIP and it will be interesting to assess is impact on the Indian
economy especially as it relates to the working class. The impact has been
widespread , deep and long lasting. It is therefore of utmost importance that we
analyse what the NIP has really meant to the working class.
A brief description of the industrial scene in India since independence
would provide an understanding of the varied changes the industrial policy of
1991.

INDUSTRIAL POLICY SINCE INDEPENDENCE

32
 India’s basic approach to problems of Industrializations has been guided
by the philosophy and thinking popularized by Pandit Nehru and other congress
leaders before independence. Along with the political independence it was
economic independence which was in the forefront of the planning agenda.
India’s economic policies are to be seen from this stand point.

The industrial policy Resolution of 1956 has generally been accorded the
status of an “economic constitution”. It remains today the most important
declaration of the basic approach and of the major objectives of industrial
planning in India. It has been the guiding force the country’s five year plans
since 1956 and the touch stone for assessing industrial projects or determining
priorities. It is this resolution which propelled India to state intervention in
order to enforce a certain pattern of industrial development and mode of
utilization of resources. In a sense it carried forward the preparatory work done
for drafting the Industrial Policy Resolution of 1948, just after independence.

The resolution of 1948 was geared to a continuous increase in production

by all means in conjunction with measures to secure equitable distribution.
While conceptualizing a mixed economy it laid great emphasis on state’s
programmes and it’s active role in development of industries.

In 1951, the industries (development & Regulation ) Act, was placed on

the statute book. It’s basic objectives were to empower government to license
the establishment of fewer Industrial capacities, thus directing investment into
desired channels of Industrial growth taking into account the national goal of
development and also to regulate, generally, location of industrial enterprises
to generate balanced regional development.

In 1954, the policy premises highlighted a favour for “Socialistic Pattern

of society “The revised policy of 1956 provided a more precise direction
towards accelerating the rate of economic growth and speeding up
indusriazation, in particular expanding public sector and building up a large
scale cooperative sector. The policy and stress on the State assuming a
predominant and direct responsibility for setting up new industrial undertakings
in conjunction with permitting private sector to develop and expand.

The need for planned change necessitated existence of public utility

services (which are of basic and strategic importance to the country) in the
public sector .But soon the extent of centralization was realized to be relatively
high in view of its disadvantage which started arising in different sectors of the
economy in the seventies.
33
 In 1969, the Monopolies and Restrictive Trade Practices Act, (MRTP) was
enacted to regulate business according to their investment input . The Industrial
Licensing Policy in 1970 took note of the provisions of the MRTP Act and
consolidated core industries of importance to national economy. Establishment
of industries were limited to those not reserved for public sector or small scale
sector.

The government declared Industrial Licensing Policy in 1970 and also in

1973. The policy statement of 1973 purported to promote , whenever feasible
and appropriate industries in medium , small scale and ancillary sectors. It also
liberalized certain components of industrial licensing procedures.

The 1977 industrial policy statement was guided by decentralization and

an expanding role for the medium, small and tiny sectors in industry. The
industrial policy statement of 1980 endorsed the Resolution of 1956. It stressed
varied socio-economic objectives such as optimum utilization of installed
capacity, higher productivity, employment generation , correction of regional
imbalances strengthening of the agricultural base, promotion of export oriented
industries and economic federalism and consumer protection. Liberalization of
industrial licensing policy and procedures to accomplish a fast industrial growth
was taken up as a continuing exercising.

The policy from1984 onwards revealed commitment to technological

upgradation of the industrialization. The planning and policies since then were
all geared to the acceleration of the rate of industrial growth. The aim was to
increase productivity, reduce costs and improve quality. The focus was on
opening the domestic market to increase competition and prepare the industry to
stand on its own and face the international competition. The public sector was
liberated from number of constraints and allowed a larger measure of
autonomy. The technological and managerial modernization of industry was
used as the key instrument and improving productivity and competitiveness in
the world. These measures tended to generate perceptible changes. However it
was also visualized that this phase was devoted to demand oriented
industrialisation for the selected classes and technological uprgation became
the key of industrial policy.

The economic (industrial) policy of July 1991, is considered as package of

reforms initiated by the government with a view to overcome the crisis facing
the economy.

34
 The basic thrust of the new policy relates to the opening up of Indian
industry competition from abroad and in running public sector along
commercial lines. Accordingly

 The process of liberalizations will permit for free inflow of foreign

capital and technology by relaxing the existing controls on foreign
investment and technical collaboration.
 It virtually does way with the system of industrial licensing and MRTP in
present from thereby reducing the government controls over the pattern
of industrial growth;
 It limits the public sector to select strategic and infrastructure areas while
beginning a process of disinvestments by the state.
 The policy for the small scale industries declared a week later also
contributes the overall strategy of liberalizations.
 Large and medium sized enterprises have been permitted to hold up to 24
per cent equity in small scale units in a bid to encouraged subcontracting
and thereby also to decentralize the production.
 The investment limit for the tiny sector has been more than doubled from
Rs.2 lakhs to Rs.5 lakhs while the limits for the other units in the small
sector remaining unchanged.
 In last ten years we have been experiencing lot of new initiatives from
Indian corporates in the form of TQM, BPR & Unions out of compulsion co
operating with the management to make these initiatives successful. Many
industries have shifted their manufacturing base from Mumbai & went to
industry friendly states like Gujarat, Haryana & Himachal Pradesh. Some have
opened their Units in China This is going to result in international dimension to
our IR strategy.

NEW TRENDS IN INDUSTRIAL RELATIONS

The following new trends in industrial relations have emerged due to new
economic policy and globalization.

1) Diverse Trends in Labor and management Relations.

2) The Impact of Contextual Factors.
3) Changing Roles of the Principal Actors.
4) Tripartism
5) Cooperative collective Bargaining.
6) Increasing Diversity and the Rise of New Generation of Workforce.
7) National Systems Of Industrial Relations.

35
 The roles of the government, employers, and trade unions are changing.
The government is increasingly under pressure to become facilitator than
regulator and controller. Legal reforms are taking place in several countries. In
India for example we have varied changes which include the industrial and
labour policy changes in Kerala; the easing of requirements of labour
inspections of Rajasthan; the relatively higher cases of approvals for closure,
retrenchment etc. in Tamil Nadu; cancellation of the registration of a few
thousand unions in West Bengal for non-submission of statuary returns to the
Registrar of Trade Unions. Thus rapidly changing economic scenario is
compelling the states to come out of the socialistic welfare mould. At present
states are now competing for investments. West Bengal the communist bastion
is leading in attracting foreign investment.

Likewise the role of employers is also changing; Take for example the
post globalization and liberalization situation in India. Some domestic
companies found that their foreign debt on capital investment multiplied
overnight due to devaluation. It was also noted that fresh capital for long term
capital and working capital needs could only borrowed in India at much higher
interest rates than their competitors from overseas.

The employers and their organizations are facing new challenges

worldwide. The role of private sector as the engine of development has assumed
relevance and credibility.

Finally the role of trade unions is also changing globally. Their

membership is declining in traditional industries. The locus of control is
shifting away from blue collar to white collar workers and managers due to
revolutionary technological changes, in India trade union may decline in the old
industries. It may also be difficult to organize in a new High-tech industries.
However there exists vast untapped informal sector which holds much promise
for the resurgence of trade union movement.

Tripartism is coming under increasing pressure. Due to economic

pressures there is shift towards bipartism. It indicates the need for redefining
the relationship among the actors in crucial ways. State is gradually
withdrawing from the situation.

There is worry relating to company survival. The class struggle may

soon disappear. The workers and unions may agree to varied trade-offs between
wages and jobs and cuts or freezes in their wages benefits and even basic
worker trade union rights. This is likely to occur because of the need to save
36
companies from liquidation and preserve threatened jobs. Adjustment pressures
for survival at enterprise levels may provide more involvement to local unions
than national unions. Accordingly local union leaders may enjoy more power at
the expense of national leadership.

The diversity of workforce is intensifying. The process of globalization

is facilitating expatriate employment. A new generation of knowledge workers
is emerging. They show commitment and use initiative if the management work
through consensual process. There is a trend towards direct two way
communication effective grievance redressal systems and empowerment.

CONCLUSION :

Formerly, the output of Industrial relations was measured in terms of

network of rules and regulations, strikes and lockouts, grievances and
indiscipline etc. At present the search for identifying positive parameters has
begun because the traditional measures are inadequate. Issues like productivity
and quality of production are not the responsibilities of the management alone.
It has become the joint responsibility of management and the union. The world
is changing & we have to change.

  

37
 Chapter-4

LABOUR LEGISLATION

Labour Legislation is another important area which has a great impact on

the industrial relations system. Labour Legislation had been instrumental in
shaping the course of the industrial relations in India. Establishment of social
justice has been the principal which has guided the origin and development of
labor legislation in India. The setting up of the International Labour
Organization gave an impetus to consideration of welfare and working
conditions of the workers all over the world and also led to the growth of labour
laws in all parts of the world; including India. Some of the other factors which
gave impetus to the development of labour laws in India were the Swaraj
Movement of 1921-24 and the appointment of the Royal Commission of Labour
in 1929.

₪ THE OBJECTIVES OF LABOR LEGISLATION

The objectives of labor legislation are to:

(i) protect workers from exploitation;

(ii) strengthen industrial relations;
(iii) provide machinery for settling industrial disputes and welfare of
workers.

Labour legislation in India has a history of over 150 years. Beginning

with the Apprentice act, passed in 1850, to enable children brought up in
Orphanage to find employment when they come of age several labour laws
covering all aspects of industrial employment have been passed.
The labour laws regulate not only the conditions of work of industrial
establishment but also industrial relations, payment of wages, registration of
trade unions, certification of standing orders etc. In addition , they provide
social security measures for workers. They define legal rights and obligations of
employees and employers and also provide guidelines for their relationship.
In India , all laws emanate from the Constitution of India. Under the
Constitution labour is a concurrent subject; i.e. both the central and state
governments can enact labour legislation with the clause that the state
legislature cannot enact a law which is repugnant to the Central law. A rough
estimate places the total number of enactments in India to be around 160.
The Apprentice Act of 1850, was followed by the Factories Act of 1881,
and the first State act was the Bombay Trade Disputes (and conciliation)
38
Act,1934, followed by the Bombay industrial disputes Act, 1938, which was
amended during the war years. This was replaced by the BIR Act, 1946.

The Central government at this time introduced the Industrial Employment

(standing orders) Act, 1946. In 1947, the government replaced the Trade
Disputes Act with the Industrial Disputes Act, which was later modified. This
law is the main instrument for the government intervention in industrial
disputes.

After independence many laws concerning social security and regulation

of labour employment were enacted such as the ESI Act, 1948 ., EPF &
Miscellaneous Provisions Act, 1952 ,. Payment of Gratuity Act, 1972, Equal
Remuneration At,1976, etc.

We will discuss these Acts under three broad categories.

1. Protective and employment legislation

2. Social security legislation and
3. Regulatory legislation

1.Protective and Employment Legislation

The following acts can be grouped under this category. Factories Act ,
Payment of Wages Act Minimum wages Act , Equal Remuneration Act,
Payment of Bonus Act, Apprentice Act Employment Exchange (compulsory
Notification of Vacancies) Act. Some of this concerned with the health and
safety of the worker at his workplace. Others protect the worker by ensuring
that he gets paid for the work done at the end of each month.

2.Regulatory Legislation

The Industrial Disputes Act, 1947, Industrial Employment (standing

orders) Act, 1946 and the trade union acts, 1926, etc. come under this category.
The Industrial Disputes Act, 1947, basically provides for the investigation and
settlement of industrial disputes. Its main objective is to provide for a just
settlement of disputes by negotiation, conciliation, meditation, voluntary
arbitration, and compulsory adjudication. The Act places constraints on strike
and lockouts. It provide for a works committee at the plant level to ensure that
management and worker contribute to the efficient day-to-day working of the
enterprise.

39
 The Industrial Employment (Standing Orders) Act, 1946, requires
management to specify the terms and conditions of employment and
communicate these to the workers. The Trade Union Act, 1926, is the enabling
legislation for the formation of trade unions.

3.Social Security Legislation :

Before Independence, in 1923 the British Government by the enacting the

Workmen’s Compensation Act provided some social security to the industrial
workers. The benefit provided by this act was however limited to compensation
for injury caused by accident. Besides the cost of compensation was to borne
entirely by the employer.
After independence, by enacting the Employees State Insurance Act,
1948, the government introduced a scheme of social insurance for the industrial
workers. Under this scheme workers are required to contribute to a social
insurance fund which is utilized for conferring benefits such as sickness benefit
, maternity benefit , medical benefit etc.

40
 CHAPTER :- 5

TRADE UNIONS

Trade unions are the major component of the modern industrial relations
system. A trade union of workers is an organization formed by workers to
protect their interests, improve their working conditions, etc. All Trade unions
have objectives or goals to achieve, which are contained in their constitution
and each has its own strategy to reach these goals.

₪ MEANING

The term Trade union has been defined in various ways by different authors.
Some view that they are only associations of employees or persons working in
industry and wage earners engaged in one or more professions, undertaking or
business while others view that these also include employer’s organizations and
friendly societies.
According to G.D.H. Cole, a Trade unions means, “ an association of
workers in one or more professions – an association carried on mainly for the
purpose of protecting and advancing the members’ economic interests in
connection with their daily work.”
Dale Yoder defined a Trade union as an “ a continuous long term
association of employees, formed and maintained for the specific purpose of
advancing and protecting the interest of the members in their working
relationship.”
According to S. D. Punekar, “ a union is a continuous association of
persons in industry –whether employer or independent workers- formed
primarily for the purpose of the pursuit of the interests of its members of the
trade the represent.”
Indian Trade Unions Act, 1926 defines trade union as “ any combination
whether temporary or permanent formed primarily for the purpose of regulating
the relations between workmen and employers or between workmen and
workmen, between employers and employers or for imposing restrictive
conditions on the conduct of any trade or business and include any federation of
two or more trade unions.”

₪ CHARACTERISTICS OF TRADE UNIONS :

An analysis of the above definitions on Trade unions reveals the following

characteristics of trade unions :

41
 (1) The trade union is an association either of the employers or employees
or of independent workers.
(2) Trade union is relatively permanent combination of workers.
(3) Trade union is an association of workers who are engaged in securing
economic benefits for their members.
(4) The character of trade unions has been constantly changing.
(5) The origin and growth of Trade Unions has been influenced by the
number of ideologies.

₪ FUNCTIONS OF THE TRADE UNIONS :

The basic function of union is to protect and promote the interest of the
workers and conditions of their employment. The other functions are :

(1) Achieving higher wages and better working and living conditions for
the members;
(2) Acquiring the control of industry by workers;
(3) Minimizing the helplessness of the individual worker by making them
stand collectively and increasing their resistance power through
collective bargaining; protecting the members against victimization and
injustice of the employers;
(4) Raising the status of workers as partners of industry and citizens of
society by demanding increasing share for workers in the management
of industrial enterprises;
(5) Providing a worker self – confidence and feeling that he is not simply a
cog in the machine;
(6) Imbibing sincerity and discipline in workers; and
(7) Taking up welfare measures for improving the morale of workers.

₪ TRADE UNIONS IN INDIA

Until the middle of the nineteenth century, except coal mining, there was
no industrial activity in the country in the modern sense. The setting of textiles
and jute mills and laying of the railways since 1850 paved the way for
emergence of labour movement in India.

The origin of the movement can be traced to sporadic labor unrest dating
back to 1877 when the workers of the Empress Mills at Nagpur struck work
42
 following a wage cut. In 1884, Bombay textile workers demanded improvement
in wages and working conditions. it was estimated that there were 25 strikes
between 1882 and 1890.

The first two organizations to be formed on the lines of modern Trade Unions
were :

1) The Textile Labor Association at Ahmedabad ( movement started in

1917 with a strike for wage rise, but the Association was formed in
1920) led by Anusuyaben Sarabhai and
2) The Madras Labor Union (1918) led by B. P. Wadia.

The Nationalist Home Rule movement and the difficult conditions after
World war I led to the growth of union movement in early 1920s.The political
leaders of that time, philanthropists and social workers took the initiative in
organizing industrial workers at major centers either for political reasons or
because they were moved by the wretched conditions of the workers.

In 1920, the All India Trade Union Congress (AITUC) was formed
because of the need to have a national centre of labour to depute delegates to
the International Labour Organization (ILO) formed in 1919. By 1924, there
were 167 trade unions with a quarter million members.

The conditions after the war , the growing interest in unionism and the
spate of strikes led the Government to consider legal initiatives in 1920s.The
Indian Factories Act, 1922 enforced a 10- hour work day. The Indian Trade
Union Act of1926 made it legal for workers to organize and protest, and
exempted actions flowing out of legitimate Trade Union activity from the
purview of civil and criminal proceedings. This Act still continuous to be the
basic law governing Trade Unions in the country.

Ideological differences within the AITUC led to a three-way split

between communists led by M.N.Roy and Dange, nationalists lead by
Mahatma Gandhi and Nehru and moderates led by N.M. Joshi and V.V.Giri .
While party ideology was supreme for the communist the main preoccupation
of the nationalists was Independence. The moderates however wanted to pursue
trade unionism in its own right and not subjugate it completely to broader
political aims or interests, the moderates and the communists broke away from
the AITUC in the 1920s & 1930s , but rejoined AITUC by 1940. In May
1947, however, the Indian National Trade Union Congress ( INTUC) was
formed by nationalists and moderates, since by then the communists had
43
acquired control over AITUC. The congress socialists who stayed in AITUC at
the time of formation of INTUC subsequently formed the Hind Mazdoor Sabha
(HMS). Years later, the HMS was split up with a faction of socialists forming
the Bhartiya Mazdoor Sangh (BMS).And again when there was split among the
communists the United Trade Union Congress (UTUC) and Centre of Indian
Trade Unions (CITU) were formed. Later a splinter group of UTUC formed
another federation, i. e; UTUC Lenin Sarani. With the birth of regional parties
since the 1960s, almost each regional party now has a Trade Union wing. Thus,
the origin and growth of Trade Union movement in India is riddled with
fragmented politicization.

₪ CENTRAL TRADE UNIONS IN INDIA

1. INTUC : Indian National Trade Union Congress.

2. AITUC : All India Trade Union Congress.
3. HMS : Hind Mazdoor Sabha.
4. UTUC : United Trade Union Congress.
5. CITU : Centre Of Indian Trade Unions.
6. BMS : Bhartiya Mazdoor Sangh.
7. NFITU : National Front of Indian Trade Unions.
8. TUCC : Trade Union Co-ordination Centre.
9. NLO : National Labor Organization.

₪ UNION STRUCTURE

The structure of the Trade Unions in India varies from organization to

organization. However the structure can be classified into 4 types viz.:

(1) Craft Unions

(2) General Unions
(3) Industrial Unions and
(4) Federations.

(1) Craft Unions : If the workers of the same craft or category of the job form
their union that union is called Craft Union. These unions are called as
horizontal unions. The basic logic behind the formation of such unions is
that the workers belonging to the same craft do face similar problems-
mostly non-managerial personnel from such unions. Examples of craft
unions are Drivers Association , Signalling Staff Union in Indian
Railways.

44
 Advantages of Craft Unions :

(i) Craft Unions give most stable relationship.

(ii) They provide necessary training through apprenticeship.
(iii) They have strong bargaining power as they comprise of skilled
employees.
(iv) They secure high wages and better benefits to their members.

Disadvantages of Craft Unions :

(i) Employer can play one union against another and can also break the
unions.
(ii) Craft Unions have become irrelevant in the modem days due to
increasing generality of service conditions of all classes of employees.
(iii) These unions keep majority of workers outside the union.

(2) General Unions : If the workers of any industry, any region and of any
job or occupation form their union in order to protect the overall interests
of the workers, such union is called General Union.

(3) Industrial Unions : If the workers of different categories form their

Unions that union is called Industrial Union. These unions are also called
“vertical” unions. The logic behind the formation of these unions is that
workers of the same industry have the common problems and they are
governed by same rules and regulations and are administered by same
management. Moreover, the problems of all the same industry are more or
less common. The importance of these unions has been increasing in recent
times.

Advantages Of Industrial Unions :

According to National Commission on Labor, 1969, the advantage of

industrial unions are :

(i) They provide joint facility for collective bargaining.

(ii) They introduce the measure of uniformity in the principle governing
all aspects of service and working conditions.
(iii) They coordinate sectional claims of different levels and different
natures of employees within an industry.

45
(4) Federation and Confederation : Industrial unions, either of same industry
or of the different industry may form their association in order to improve
Trade Unions Unity/ strength. Such Union of Unions is called Federation.
During the critical situation Unions/ Federation in different industries may
resort to concerted action without losing their individuality. In such
situations the federations form their association and such an association is
called Confederation.

₪ PROBLEMS OF TRADE UNIONS :

The Trade Unions in India face several problems as follows

₪ OUTSIDE POLITICAL LEADERSHIP

The leadership of most of the trade unions in India has been outside
leadership mainly drawn from political parties. The labour movement in India is
deeply involved in the politics and most of the political leaders are also drawn
from Trade Unions. For example, Lok Nayak Jayprakash Narain, Former
President of India , Mr. V.V. Giri , Former Union Ministers A. P. Sharma and
George Fernandes , all worked as Trade Union Leaders.

In Mumbai we had Dr. Datta Samant, R J Mehta, H N Trivedi, Mr. Raja

Kulkarni who were basically political leaders & lead unions. Thus outside and
political leadership has been playing a pivotal role in Indian Trade Union
Movement due to the inability of insiders to lead their movement , low
education standards and poor command over English language which is still the
principal language of labour legislation and negotiations, insufficient
knowledge of labour laws , unsound financial position, fear of victimization by
the employer and lack of leadership qualities. The main reason for this trend is
that the Trade Union Act, 1926 itself permit outside leadership. Sec.22 of the
Act requires that ordinarily not less than half of the office bearers of the
registered union shall be actively engaged or employed in an industry to which
the union relates. Thus, this provision provide the scope of outsiders to the tune
of 50 % of the office bearers. The Royal Commission on Labour (RCL) 1931
recommended for the reduction of the statutory limit of outsiders from ½ to 1/3
but no efforts are taken in this direction.

₪ UNION RIVALRY :

The formal base for a trade union organization is provided by Indian

Trade Union Act, 1926. The relevant article reads as follows :
46
 “ Any seven or more members of the Trade Unions may be subscribing
their names to the roles of the Trade Union and by otherwise complying with
the provisions of this Act with respect to the registration, apply for registration
of the Trade Union under this Act. ( As per recent amendment the minimum
number of members required to make an application for registration is increased
form seven to at least 10 % or one hundred of workmen whichever is less).

This provision in law has led to the formation of multiple unions and
resulted in Inter-union rivalry in different industries. But Inter-union rivalry
breaks the very purpose of trade unions by weakening the strength of collective
bargaining.

On the other hand the existence of a single and strong union not only
protects the interests of employees more effectively but also halts the various
unproductive activities of the unions and forces the leaders to concentrate on
the strategic issues. Further it helps to bring about congenial industrial relations
by bringing about system of orderliness is dealing with the employees and by
facilitating expeditious settlement of disputes.

The state of rivalry between two groups of the same union is called as
Intra-union rivalry. Inter and intra union rivalries have been a potent cause of
industrial disputes in the country. They are responsible for weak bargaining
power of trade unions in collective bargaining. These rivalries are responsible
for a low growth of trade union movement in the country.

Union rivalry has been the result of :

(i) The desire of political parties to have their influence on the industrial
workers;
(ii) Personal- cum-factional politics of the local union leaders;
(iii) Domination of union by outside leaders;
(iv) Attitude and policy of the management, i.e. divide and rule policy;
(v) The legal framework of the trade unions and the nature of industry and
workers.

Impact of Union Rivalry on Union Strength :

Union rivalry affects the union strength in the following ways:

47
 i. Because of the multiple trade unions at the plant level each union
command only a negligible proportion of workers of an establishment
and does not enjoy the confidence of most of the employees.
ii. These splinter unions have assumed only a limited range of functions.
Instead of diverting member’s energies towards constructive and co-
operative activities, they have encouraged strife , disloyalty and non-
cooperation.
iii. Most of the trade unions have failed to realize the importance of
mutual help and welfare activities.
iv. Due to lack of bargaining power these unions take most of the disputes
to Judiciary and overburden it.

SMALL SIZE OF UNION MEMBERSHIP :

Size of membership of trade unions determines their strength and financial

soundness which in turn determines the activities undertaken by them and their
ability to protect employees interest. The size of membership and successful
functioning of trade unions are interrelated and interdependent. The size of
membership of trade union in India over the years has been declining and
consequently the union faces the problems of the size. The small size of the
unions is due to the following reasons.

i. The fact that any seven workers can form a union under the Trade
Union Act of 1926, and get it registered, as a result large number of
small unions have grown. (As per recent amendment the minimum
number of members required to make an application for registration is
increased form seven to at least 10 % or one hundred of workmen
whichever is less).
ii. The structure of the trade union organization in the country- which is in
most cases the factory or the unit of employment; so whenever the
employees in a particular factory or mine are organized, a new union is
formed.
iii. Unionisation in India started with the big employers and gradually
spread to smaller employers. This process is still continuing and has
pulled down the average membership. Though the number of unions are
increasing average membership is declining.
iv. Rivalry among the leaders and Central Organisations has resulted in
multiple unions, thereby reducing the average membership.

48
FINANCIAL POSITION :

Sound Financial position is an essential ingredient for the effective

functioning of Trade Unions, because in the process of rendering services or
fulfilling their goals, Trade Union has to perform the variety of functions and
organize programmes which require enormous financial commitments. Hence,
it is imperative on the part of Trade Union to strengthen its financial solvency.

But it is the felt that the income and expenditure of Trade Unions in India
over the years is such with few exceptions, that the financial position of the
unions is generally weak affecting their functioning. It is opined that the Trade
Union could be more effective, if they paid more attention to strengthening their
organizations and achieving a higher standard of financial solvency.

The primary source of income to the Unions is membership subscription.

The other sources of union finances are donations, sale of periodicals etc. The
items of expenditure include allowances to office-bearers, salaries to office
staff, annual convention , meeting expenses , rent , stationary, printing, postage,
telegrams etc.

Most of the Trade Unions in India suffer from excess of expenditure over
income. This unsound financial position is a mostly due to low membership and
low rate of membership fee. Trade Union Act ,1926 prescribe the membership
fee at 25 paisa per member per month. But the National Commission on Labour
recommended for the increasing of the rate of membership subscription from 25
paisa to Rs.1/- in the year 1990. But the Government did not accept this
recommendation.

₪ THE TRADE UNIONS ACT , 1926

OBJECT :

The main Object of the Act is to provide for the registration of Trade
Unions and to confer on registered Trade Unions certain protection and
privileges.

DEFINITION OF TRADE UNION :

Trade Union means combination of workmen formed for the purpose of

regulating the relations between workmen and employers. The definition of
trade includes a combination formed for the purpose of regulating the relations
49
not only between workmen and employers but also between workmen and
workmen or between employers and employers.

REGISTRATION OF TRADE UNIONS :

(i) At least seven members of the “Trade Union” have to make an

application in the prescribed form and accompanied by the prescribed
fee to the Register that the Trade Union. The application must be
accompanied by the copy of rules of the Trade Union and should give
particulars about its name and address, its members and its officers.
(As per recent ammendment the minimum number of members
required to make an application for registration is increased form
seven to at least 10 % or one hundred of workmen whichever is less).
(ii) The Registrar, if he is satisfied that the trade union has compiled with
all the requirements of the act, will register the trade union and issue a
certificate of registration to it.
(iii) The certificate of registration will be conclusive evidence that the
trade union has been duly registered under the act.

The Trade Union Act, 1926, does not make registration of a Trade Union
compulsory. But it is advisable to get Trade Union registered under the act
confers many rights on a registered Trade Union.
Section 9-A requires that registered Trade Union shall at all times continue
to have not less than ten percent or one hundred of the workmen, whichever is
less, subject to a minimum of seven, engaged or employed in an establishment
or industry with which it is connected, as its members.

LEGAL STATUS OF REGISTERED TRADE UNION :

(a) A registered Trade Union is a body corporate having a perpetual

succession and a common seal.
(b) It has power to acquire and hold both movable and immovable
property and to enter into contracts.
(c) It can sue and be sued by its own name.
(d) Its office bearer or member cannot be prosecuted for criminal
conspiracy for following its legitimate objects.
(e) No legal proceedings can be filled in any Civil Court against it in
respect of any act in furtherance of a trade dispute even if such act
(i) induces some other person to break a contract of employment
or

50
 (ii) is in interference with the trade business or employment of
some other person, or
(iii) is in interference with the right of some other person to
dispose of his capital or of his labor as he wills.
(f) Any agreement between its members is not void or void able even if
its objects are in restraint of trade.

The immunity from civil suit is not available in respect of acts which are
unlawful, tortuous or violent and which fall out the umbrella of protection of
section 18 of the act.

CANCELLATION OF REGISTRATION :

The Registrar of Trade Unions can withdraw or cancel a certificate of

registration of trade unions if-

(a) the trade union applies for its cancellation;

(b) the registrar is satisfied that the certificate has been obtained by fraud or
mistake;
(c) the trade union has ceased to exist;
(d) the trade union has willfully contravened any provision of the Act.

SCOPE OF THE POWER OF THE REGISTRAR OF TRADE UNIONS :

The Registrar can invoke the power of cancellation of registration of a

trade union only if there is sufficient material before him to establish that the
Trade Union concerned has committed willful contravention of any provision of
the act. In other words, unless the international violation of any provision of the
act is established, the Registrar cannot invoke the said power.

FUNCTIONS OF THE REGISTRAR OF TRADE UNIONS :

The Registrar of Trade Unions performs the following functions:-

(a) Registrations of the Trade Unions.

(b) Withdrawal or cancellation of Registrations of the Trade Unions.
(c) Sanction of prosecutions for the offences committed under the Trade
Unions Act, 1926

RIGHTS OF MEMBERS :

51
Every office bearer or member of registered Trade Unions has a right to inspect
the books accounts and also the list of members of the Trade Unions at such
times as may be provided for in the rules of the Trade Unions. For being
qualified to be chosen as an office bearer of a Registered Trade Unions person

(i) must have attained the age of 18 years;

(ii) must not have been convicted of any offence involving moral
turpitude and sentenced to imprisonment, unless a period of 5 years
has elapsed since his release.

RIGHTS OF UNION :

The Act provides that not less than one half of the total number of the
office bearers of a registered Trade Union to constitute a separate fund for the
promotion of the civic and political interest of its members. Contribution to the
fund will be optional and no member will be compelled to contribute to the
fund consequently, a member who does not contribute to the fund shall not to
be deprived of any benefits of the Trade Union.

A registered Trade Union can change its name with the consent of not less
than two thirds of the total number of its members and after following the
procedure prescribed under the Act.

AMALGATION AND DISSOLUTION

1) It is permissible for any two or more registered Trade Unions to

become amalgamated together as one Trade Union. This can be done
after the votes of at least one- half of the members of each or every
such Trade Union is recorded and at least sixty per cent of the votes
recorded are in favour of the proposal.
2) The dissolution of registered Trade Union shall be effected in
accordance with the rules of the Trade Union and notice of the
dissolution shall be sent to the Registrar of the Trade Unions. The
funds of the dissolved Trade Union shall be divided in accordance
with the rules of the Trade Union. If the rules do not provide for the
distribution of funds, the Registrar shall divide the funds among the
members proportionate to the amounts contributed by them by way of
subscription during their membership.

REGISTERS AND RETURNS

52
 Every registered Trade Union is required to maintain the following books and
registers

i. register of membership and subscription,

ii. register of receipts, and disbursements for the general fund account,
iii. minutes book of meetings,
iv. register of receipts and disbursements for the political fund,
v. a file of vouchers

Every registered Trade Union is required to submit to the Registrar of

Trade Unions annual returns of receipts and expenditure as well as assets and
liabilities in the prescribed form by the 30th day of April in each year.

TRADE UNION RECOGNITION :

Basically, employer has no obligation to recognize any Trade Union for the
purpose of bargaining or otherwise. Initially, employers were hostile towards
Trade Unions. There was no provision existed in any state for the recognition of
Union before 1946. Bombay Industrial Relations Act, 1946 provided for the
recognition of representative union in the local area. This act was also applied
in Gujarat and in a modified version in Madhya Pradesh and Rajsthan. The
criteria accepted at the 15th Tripartite Labor Conference in 1958 is followed in
the rest of the country.

The criteria for Recognition are :

i. If there is more than one union in a company, the union claiming

Recognition should have been functioning for at least one year.
ii. The membership of union should cover at least 15 % of the workers in
the company concerned. Membership should be counted only for those
who had paid their membership fee for at least 3 months during the
period of six moths immediately precede the reckoning.
iii. A union may claim recognition for an industry in local area, if it has a
membership of at least 25 % of the workers of that industry in that area.
iv. Once a union is recognized, these should be no charge for a period of two
years.
v. If these are several unions in an establishment the one with the largest
membership should be recognized.

53
RECOGNITION UNDER THE MAHARASHTRA RECOGNITION OF
TRADE UNION & PREVENTION OF UNFAIR LABOUR PRACTICES
ACT, 1971

This Act was passed towards the end of 1971. According to this Act :

(1) A trade union must be registered under the Trade Union Act, 1926.
(2) Only a registered trade union can be recognized.
(3) There should be one union in one industry or undertaking or in more
than one undertaking in a “local area”.
(4) The recognized union becomes the sole bargaining agent and its
recognition cannot be challenged within a period of two years of its
registration as a recognized union.
(5) The unrecognized minority unions have two rights, viz (a) to meet
and discuss with an employer or his representative the grievances of
an individual member relating to his discharge, removal,
retrenchment, termination of service and suspension, and (b) to appear
on behalf of its members employed in the undertaking at any domestic
or departmental enquiry held by the employer.
(6) A union can apply for registration as the recognized union for an
undertaking to the Industrial Court, set up under this Act, if during the
preceding period of six months it has not less than 30 % of the total
number of employees employed in that undertaking as its members.
(7) The Industrial Court would indicate its intention to consider the
application on the notice board of the undertaking and the employer or
employee may, within prescribed time, show cause why recognition
should not be granted to the applicant union. While considering the
objections if the Industrial Court is satisfied that those are not valid,
it would grant recognition to the applicant union and issue a
Certificate of recognition. If it reaches the conclusion that any of other
existing unions, with 30 % or more membership, has the largest
membership, it may issue a Certificate of recognition to that union.
(8) There shall not at any time be more than one recognized union in
respect of the same undertaking. the Industrial Court shall not
recognize any union, if it is satisfied that the application for its
recognition is not made bonafide in the interest of the employees, But
is made in the interest of the employer to the prejudice of the interest
of the employees.
(9) The Industrial Court shall not recognize any union, if at any time
within six months immediately preceding the date of application for
recognition, the union has instigated, aided or assisted the
54
 commencement or continuation of a strike which is deemed to be
illegal under the Act.

RIGHTS OF THE RECOGNIZED UNIONS :

The recognized unions under the Act, have rights as have been recognized
under the code of discipline, 1958.this include :

a) right of “ check-of ” ,
b) use of the notice board on the premises of the undertaking;
c) to appoint its nominees on the works committee ; and
d) to represent an employee in any proceeding under Industrial Disputes
Act.

The right of the un-recognized unions comprise :

(a) the right to discuss with the employer the grievances of a member
relating to his discharge, removal, dismissal, or suspension, and
(b) to appear on his be half in any domestic or departmental enquiry.

In regard to prevention and settlement of industrial disputes, the

recognized unions have the right:

1) To hold discussions on the premises of the undertaking with the

employees concerned, who are the members of the union, but so as
not to interfere with the due working of the undertaking;
2) To meet and discuss with an employees or any other person
appointed by the management in that behalf, grievances of employees
employed in the undertaking; and
3) To inspect, if necessary, in an undertaking any place where an
employee of the undertaking is employed

  

55
 Chapter –6

INDUSTRIAL CONFLICTS

₪ INTRODUCTION

Disputes between employees and employer take place due to conflict of

interest between capital and labor. Profit maximization goal of management and
profit sharing or wage maximization goal of workers contradict each other.
This diversified goal of management and labour result in dispute of interest and
consequently industrial conflicts. These disputes are also called as ‘conflicts of
interest’ or ‘conflicts of rights’.

Industrial peace broadly implies the absence of industrial unrest or the

existence of a harmonious relationship or cooperation between labor and
capital. Industrial peace is a condition where labor and management work
together harmoniously towards their socially desirable goals.

₪ DEFINITION OF A DISPUTE

According to Section 2(k) of the Industrial Disputes Act, 1947, “Industrial

disputes means any dispute or difference between employers and employers, or
between employers and workmen or between workmen and workmen, which is
connected with the employment or 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

conditions:

(I) There must be a dispute or a difference

(a) between employers and employers (such as wage-warfare where labour

is scarce);
(b) between employers and workmen; and
(c) between workmen and workmen;

(II) It is connected with the employment or non-employment or the terms of

employment or with the condition of labour of any person (but not with the
managers or supervisors), or it must be pertaining to any industrial matter.

56
 By incorporating Section 2A in the Industrial Disputes Act,1947, a right
has been given to the individual workman to raise an industrial dispute with
regard to termination, discharge, dismissal, or retrenchment of his service even
though no other workman or any trade unions of workmen has raised it or is a
party to dispute.

Industrial unrest, thus, takes an organized form when the workers make
common cause for their grievances against employers through manifestations of
strikes, demonstrations, picketing, morchas, gate meetings, gheraos, etc.

₪ CAUSES OF INDUSTRIAL CONFLICTS

It is not easy to identify a single factor as a industrial conflicts as
multifarious causes blended together result in industrial disputes. The basic
causes of disputes can be identified through in-depth probe through surface
manifestation appear to be responsible for conflict.

Causes of industrial conflicts may be grouped into four categories, viz.:

(A) Industrial factors;

(B) Management’s attitude towards workers

(C) Government machinery; and

(D) Other causes.

(A) INDUSTRIAL FACTORS

“Under this category, some of the causes of a dispute may be:

(i) An industrial matter relating to employment, work ,wages, hours of work,

privileges, the rights and obligations of employees and employers, terms
and conditions of employment including matters pertaining to

(a) Dismissal or non-employment of any person;

(b) Registered agreement, settlement or award; and
(c) Demarcation of the functions of an employee

(ii) An industrial dispute which connotes any difference which has been fairly
defined as is of
real substances; i.e., a matter in which both parties are directly and
substantially interested; or Which is a grievance on the part of a worker
57
 which the employer is in a position to redress or which is such as the parties
are capable of settling between themselves or referring it to a adjudication.

(iii) Disputes often arise because of

(a) The rapidly increasing population which has no opportunities for gain
employment;
There is, therefore, no improvement in the standard of living of
employees who put forward demand for higher wages which, if not
conceded often lead to strained industrial relations and strikes
(b) Rising unemployment.

(iv) The galloping prices of essential commodities, their shortages and/or non-
availability, all these erode the value of money, as a result of which the real
wages of the workers go do n which create dissatisfaction among the workers,
compelling them to demand higher wages.

(v) The attitude and temperament of industrial workers have changed because
of their adoption of urban culture and the consequent change in social
values, the growth of public opinion and progressive legislation enacted for
their benefit. They are, therefore, very conscious of their rights and will not
put up with any; injustice or wrong done to them.
(vi) The trade unions have often failed to safeguard the interests of workers.
The reasons for this state of affairs are

a) Rivalry among, and multiplicity of trade unions have destroyed solidarity

of the Working class;
b) Non-recognition of some trade unions as “bargaining agents” of the
members;
c) Compulsory adjudication has made trade unions seem redundant for the
wages and working conditions of industrial employees as it can now be
determined by courts tribunals, and Wage Boards
d) Trade unions generally do not bother about any aspect of the lives of
industrial labour except their wages;
e) Trade union leaders who are themselves industrial workers have become
an eye-sore;
f)Trade unions generally function on the basis of caste, language, or
communal considerations, which ‘divide’ rather than ‘unify’ industrial
labor;
g)Trade union leadership aim at fulfilling ulterior motives leading to
thwarting the attempts of trade union unity
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(B) MANAGEMENT ATTITUDE TOWARDS LABOUR

(i) Management generally is not willing to talk over any dispute with
their employees or their representatives or refer it to ‘arbitration’
even when trade unions want them to do so. This enrages the workers.
(ii) A management’s unwillingness to recognize a particular trade union
and the dilatory tactics to which it resorts while verifying the
representative character of any trade union have been a very source of
industrial strikes.
(iii) Even when representative trade unions have been recognized by
employers, they do not, in a number of cases, delegate enough
authority to their officials to negotiate with their workers, even though
the representatives of labour are willing to commit themselves to a
particular settlement.
(iv) When, during negotiations for the settlement of dispute, the
representatives of employers unnecessarily and unjustifiably take the
side of the management, tensions are created, which often lead to
strikes, go-slow or lock-outs.
(v) The management’s insistence that they alone are responsible for
recruitment, promotion, transfer, merit awards, etc., and that they need
not consult their employees in regard to any of these matters,
generally annoys the workers who become un-cooperative and
unhelpful and often resort to strikes.
(vi) The services and benefits offered by a management to its employees
do promote harmonious employer-worker relations. But a large
number of managements have not taken any steps to provide these
benefits and services for their workers.

(C) GOVERNMENT MACHINERY

i. Though there is a plethora of enactments for promotion of harmonious

relations They are ineffective and unsatisfactory in most cases due to

(a) Their irrelevancy in the context of the challenges of present

industrial climate/culture, as many have not been convinced of their
utility satisfactorily;
(b) Incapability of understanding and addressing imperatives of
development;
(c) Improper and inadequate implementation by many employers.

59
 ii. The government’s conciliation machinery has settled very negligible
number of disputes because:

(a) Both employers and employees have very little confidence in it;
(b) Both have become litigation-minded;
(c) The number of conciliation officers are less and the number of cases
referred to them are more.
(d) The officers associated with conciliation proceedings have very little
training in handling the problems or disputes which are referred to them.

(D) OTHER CAUSES

Among these the following may be included:

(i) Affiliation of the trade unions with the political party. Each political
party, therefore, somehow, “engineers” strikes, gheraos and bandhs to
demonstrate its political strength.
(ii) Political instability, Centre State relations and sometimes local issues
are reflected in industry resulting in industrial conflict.
(iii) Other potential factors, such rampant corruption in industry and public
life, easy money, conspicuous consumption, permissive society,
character crisis and general break down in the national morale are also
responsible for industrial conflicts.

₪ TYPES OF INDUSTRIAL CONFLICTS

Industrial conflict may take following two forms - strike and lock-out.
They are weapons in the hands of employees , their unions and employers

STRIKE & LOCK-OUT

According to section 2(q) of the Industrial Disputes Act, 1947 strike is “a

cessation of work by a body of persons employed in any industry, acting in
combination or a concerted refusal under a common understanding, of a number
of persons who are or have been so employed to continue to work or to accept
employment.”

According to section 2(1) of the Industrial Disputes Act, 1947 lockout

means “the closing of a place of business of employment or the suspension of
work, or the refusal by an employer to continue to employ any number of
persons employed by him.”
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 Strikes are divided into primary strikes and secondary strikes. Primary
strikes are generally against the employer with whom the disputes exist. They
take the forms of stay away strike, sit-in, sit-down, pen-down, tools –down, or
mouth-shut strikes, go slow, work-to-rule, token or protest strike, lightening or
wildcat strike, picketing or boycott.

PRIMARY STRIKES

Stay away strike: In this strike, workmen stay away from the work places.
They organize rallies, demonstrations etc.

Stay in strike or sit-down strike: In this strike, workmen come to the place of
work, they stay at the work place but they don’t work.

Tools-down, Pen-down or Mouth-shut strike: In this strikers lay down their

tools in case of factory workers, lay down their pens in case of office workers
and shut their mouth in case of teachers.

Token or Protest Strike: It is of very short duration and is in the nature of

signal for the danger ahead. In this strike the workers do not work for an hour or
a day.

Lightening or Wildcat Strike: In this strike, the strikers strike the work without
any prior notice or with a short notice.

Go Slow: In this strike, the workers intentionally reduce the speed of work.

Work to Rule/Work to Designation: In this strike, the strikers undertake the

work according to rules or job description.

Picketing: It is an act of posting pickets and implies machinery or patrolling of

the workmen in front of the premises of the employer.

Boycott: It aims at disrupting the normal functioning of the enterprise.

Gherao: It is a physical blockade of a target by encirclement or by any other

means, intended to block the regress and ingress from and to a particular office,
workshop etc.

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Hunger Strike: This type of strike is resorted to either by the leaders of the
union or by some workers all at a time or in small batches for a limited period
or till the time disputes are settled

Secondary Strike: Secondary strikes are against a third party. These strikes are
sympathetic strikes.

Other Strikes: These strikes are in the form of general, particular, political and
bandhs.

₪ PREVENTION OF STRIKES

According to Laski, “a strike is unjust in that it is an appeal to force in a

matter of disputed right; it is inhuman because of the misery it causes to the
workers; it is wasteful of resources of capital and labour; it is wicked because it
stirs up hate; it is anti-social, as it denies and disrupts the solidarity of the
community.

The following suggestions may help management in preventing strikes.

i. It should adopt a well – defined, precise, clear and progressive

personnel policies aiming at the maintenance of good industrial
relations in the undertaking.
ii. It should ensure an effective administration and timely implementation
of these policies.
iii. It should adopt fair and reasonable recruitment, promotion and wage
policies and ensure their proper implementation
iv. It should ensure an effective two-way system of communication. This
will help the management to create a favorable atmosphere of goodwill,
and faith in the organization and enable the workers to appreciate the
management policies in their right perspectives so that no
misunderstanding is created between them.
v. It should provide just and humane conditions of work, along with
suitable welfare activities for the benefit of the workers and develop
close personal contacts with the employees at all levels.
vi. It shall evolve and adopt a suitable and speedy Grievance Procedure
for redressal of the grievance of the workers.
vii. It shall give recognition to a representative union & should have
pragmatic approach towards union activities.
viii. It should encourage joint consultation at different levels & encourage
collective bargaining for resolving the difference between them.
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₪ PREVENTION AND RESOLUTION OF INDUSTRIAL CONFLICT
1) Prevention of Industrial conflict

The important preventive measures are as follow

a) Labour welfare officer

b) Tripartite and Bipartite Bodies

c) Standing orders

d) Grievance procedure
f) Strong trade unions

g) Profit sharing

2) Resolution of Industrial Conflict

₪ INDUSTRIAL DISPUTES ACT, 1947

OBJECT :
The object of the Act is two fold:

(1) to improve the service conditions of industrial workers and

(2) to bring industrial peace which would in its turn accelerate productive
activity of the country resulting in its prosperity.
APPLICABILITY :

The Act is so comprehensive that it covers every kind of organized and

systematic activity undertaken by the employer with the co-operation of the
employees for the production and /or distribution of goods and services which
satisfy human desires & wants , irrespective of who undertakes it and with
what motive it is undertaken.

PERSONS COVERED BY THE ACT

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 Every person employed in an industry to do any manual, unskilled,
technical, operational, clerical or supervisory nature of work is covered by the
Act.

But it does not include a person

(i) who is subject to the Air Force Act ,1950 or the Army Act, 1950 or
the Navy Act, 1957 or

(ii) who is employed in Police or Prison service or

(iii) who is employed in a managerial or administrative capacity, or

(iv) who is employed in a supervisory capacity and draws more than

Rs1,600 per moth as his wages, or

INDUSTRY
The word industry has a wide meaning and it includes any business, trade,
undertaking, manufacture or calling of employers or any calling, service,
employment, handicraft, or industrial occupation or avocation of a workman.

INDUSTRIAL DISPUTE :

1) A dispute or difference between employers and employers or between

employers and workmen or between workmen and workmen the
employer which is connected with the employer which is connected
with the employment or non-employment or the terms of employment
or with the conditions of labour of any person is called an industrial
dispute.

2) An industrial dispute generally comes into existence when a demand

is made by the workmen on the employer about any matter connected
with the employment or non-employment or the terms of employment
or with the conditions of labour of any person, and the employer
refuses to concede the demand. The demand need not necessarily be
made in writing. It need not necessarily be made directly on the
employer.

3) Ordinarily an individual dispute, i.e., a dispute relating to an

individual workman, is not treated as an industrial dispute. Such
dispute is treated as an industrial disputes only when it is supported
either by the union to which the work man belongs or by a group of
64
 work men .An exception has been, however, mad in the case of an
individual disputes connected with or arising out of the dismissal,
discharge, retrenchment or termination of service of any workman.

AUTHORITIES UNDER THE ACT

The following are the principal authorities under the act and their duties
in brief are as follows :

1) Conciliation officers-for holding conciliation proceedings and

promoting the settlement of disputes;
2) Labour courts-for deciding individual disputes relating to matters
specified in scheduled II to the Act;
3) Industrial Tribunals : for deciding mainly the collective disputes
relating to matters specified in Schedule III to the Act.
4) National Tribunals –for deciding disputes involving questions of
national importance of affecting establishments situated in more than
one state.

The Industrial Tribunals are different from the Civil Courts. The Civil
Courts have power to enforce existing contracts. The Industrial Tribunal have
power to modify existing contracts or to impose new contracts.

NOTICE OF CHANGE

If the employer proposes to effect any change in the conditions of service

applicable to the workmen employed by him in respect of any matter specified
in schedule IV which contains important service matters like wages hours of
work, etc.

(a) he must give to the workmen a notice of proposed change;

(b) after giving such notice he must wait for 21 days for effecting the
proposed change;

The object of the notice is to afford to the workmen an opportunity to

consider the effect of proposed change and to represent their point of view on
the proposal.

CONCILIATION PROCEEDINGS

65
 When an industrial dispute arises or is apprehended in a public utility
service and a notice of strike has been given under section 22 in respect there of
it is incumbent on a conciliation officer to hold conciliation proceeding in
respect of that dispute. In other cases it is not incumbent on him to do so and he
may not at his discretion hold conciliation proceedings.

A conciliations officer has no power to decide a dispute. He is entrusted

with the duty of inducing the parties to the come to a fair and amicable
settlement of the dispute. If he succeeds in his efforts and brings about a
settlement he has to make a report of the settlement to the Government.

BINDING EFFECT OF AWARDS & SETTLEMENT

An award or a settlement; arrived at in the course of conciliation

proceedings is biding on;
(a) all parties to the dispute
(b) the heirs successors or assigns of the employer in respect of his
establishment;
(c) all persons in the establishment whether employed on the date on
which the dispute arose or subsequent to that.

BIDING EFFECT OF SETTLEMENT ARRIVED AT OTHERWISE THAN

IN THE COURSE OF CONCILIATION PROCEEDINGS

Unlike an award or a settlement arrived at through conciliation a settlement

arrived at otherwise than in the course of conciliation proceedings has restricted
application and it is biding only on the parties to it and none other.

PERIOD OF OPERATION OF A SETTLEMENT OR AN AWARD

1) A settlement remains in operation for such a period as is agreed upon

by the parties and if no such period is agreed upon for a period of six
months from the date on which it is signed by the parties.
2) An award remains in operation for a period of one year from the date
it becomes enforceable.
3) A settlement or an award continues to be biding on the parties even
beyond the said periods unit is terminated by a party by giving notice
to the other party.

REFERENCE OF DISPUTES

66
 The Government has discretion to refer or not to refer a dispute to Labour
Court or Industrial Tribunal or National Tribunal for adjudication. The
Government can use the power of making a reference on consideration of the
failure report received from the conciliation officer or on its own motion. If the
government decides not to make a reference then it bound to record reasons for
doing so and communicates them to the parties.

CIRCUMSTANCES IN WHICH THE GOVERNMENT MAY REFUSE TO

MAKE A REFERENCE

The courts have observed that the Government may refuse to make
reference where the claim is;
(a) perverse or frivolous;
(b) put forth for extraneous and irrelevant reasons;
(c) such that its impact on the general relations between the employer
and the employees in the region is likely to be adverse;
(d) belated;
(e) trivial.

VOLUNTARY ARBITRATION

When an employer and his workmen voluntary refer any existing or

apprehended industrial dispute between them to arbitration of any person of
their choice it is called a voluntary reference to arbitration. Like a Labour Court
or a Tribunal the Arbitrator has to investigate the dispute and submit his award
to the Government.

POWER OF COURTS

Labour Courts or Tribunals are now expressly empowered to set aside

any order of discharge or dismissal and direct reinstatement of discharged or
dismissed workman if they are satisfied that the order of discharge or dismissal
was not justified.

If a Labor Court or Tribunal, while deciding a dispute about discharge or

dismissal, finds, either because the misconduct did not warrant punishment by
way of discharge or dismissal and that the discharge or dismissal was not
justified, it can substitute any lesser punishment for discharge or dismissal. In
such cases the jurisdiction of Labor Courts and Tribunals is thus no more of a

67
supervisory nature and these authorities exercise the jurisdiction which has
characteristics of appellate power.

Where in any case, a Labor Court or Tribunal by its award directs

reinstatement of any workman and the employer prefers any proceedings
against such award in a High Court and Supreme Court, the Employer is liable
to pay such workman, during the period of pendency of such proceedings, full
wages last drawn by him, inclusive of any maintenance allowance admissible to
him under any rule.

The payment which is required to be made by the employer to the

workman during the pendency in the High Court or the Supreme Court is in the
nature of subsistence allowance which would not be refundable or recoverable
from the workman even if the award of the Labour Court or Tribunal is set
aside by the High Court or the Supreme Court.

ILLEGAL STRIKE

The Industrial Disputes Act, 1947, puts certain general restrictions on the
freedom of the workmen employed in any establishment to go on strike. In
addition to these general restrictions the Act also puts certain special restrictions
on the freedom of the workmen employed in any public utility establishment to
go on strike. Strikes in public utility establishment are considered to be more
serious than those in other establishments and they are, therefore , subjected to
additional restrictions.

The following are the instances of an Illegal Strike on the part of workmen
employed in any establishment :-

(1) A dispute might have been referred to a Board of Conciliation so that

it is amicably settled between the parties. A strike restored to during
the pendency of proceedings before a Board of Conciliation is,
therefore, treated as an illegal strike.
(2) A dispute might have been referred to a Labour Court, Industrial
Tribunal, National Tribunal for adjudication. In such circumstances
the parties are expected to wait for an award. A strike resorted to
during the pendency of proceeding before any of the authorities is
therefore treated as an illegal strike.
(3) A dispute might have been referred to an arbitrator for arbitration. In
such circumstances the parties are expected to await an award. A

68
 strike resorted to during the pendency of proceedings before an
arbitrator is therefore treated as an illegal strike.
(4) Settlement and award are biding on the workmen and the workmen
are not a supposed to make any demand inconsistent with a settlement
or award while it is in operation. A strike resorted to during the period
in which a settlement or award is in operation and if it is in respect of
any matter covered by the settlement or award is therefore treated as
an illegal strike.
(5) Note : A strike resorted to during 7 days after the conclusion of
proceedings before a Board of conciliation ; or during 2 months after
the conclusion of proceedings before a Labour Court, Industrial
Tribunal or National Tribunal; or during 2 months after the
conclusion of proceedings before an arbitrator; is also treated as an
illegal strike.

A strike restored to by workman employed in public utility establishments is

illegal : -

1) If they do not give employer notice of the strike within 6 weeks before
commencing the strike; or
2) If they go on strike within 14 days of giving such notice; or
3) If they go on strike before the expiry of the date specified in such
notice for commencing the strike; or
4) If they go on strike during the pendency of any conciliation
proceedings before a conciliator and during 7 days after the
conclusion of such proceedings;.

Note:- A strike restored to by workman employed in a public utility

establishments during the pendency of any conciliation proceedings before a
conciliator is illegal while such a strike on the part of workmen employed in
other establishments is not illegal.

LOCK-OUT

When an employer temporarily refuses to continue to employ a body of

persons (i.e.; without effecting a termination of their service) ( to coerce them to
accept his point of view and to accept some demands) he is said to have
effected to “lock-out”.

Improper and inadequate implementation by many employers.

69
 Note:- The Act, treats strike and lock-out on the same footing. The provisions
of the Act relating to the strike and lock-out are, therefore, almost the same. The
same circumstances, as those which make a strike illegal; make a lock-out
illegal.

LAY- OFF COMPENSATION

When a workman is not given work on account of shortage of coal, power

or raw materials or the accumulation of stocks or the breakdown of machinery
or natural calamity, he is said to be laid-off. When a workman who is in service
for one year or more is laid-off he is entitled to be paid for the days on which
he is laid –off, lay- off compensation at the rate of 50% of his basic wages
and dearness allowance.

Note:- The provision is not applicable to establishment employing less than 50

workmen.

Circumstances in which a workman who has been laid off is not entitled
to any compensation
A workmen who has been laid off is not entitled to any compensation.
(i) If he refuses to accept any alternative employment in the same
establishment or in any other neighbouring establishment belonging
to the same employer:
(ii) If he does not present himself for work at the appointed time at least
once a day.
(iii) If he is laid off due to a strike or slowing down of production resorted
to by any workmen in another part of the establishment.

RETRENCHMENT COMPENSATION

Meaning of retrenchment :

The termination of the service of workman for any reason whatsoever is

called retrenchment.

Retrenchment however does not include :

(1) termination as punishment or

(2) voluntary retirement or
(3) retirement on reaching the age of superannuation or of employment
(4) termination as a result of non-renewal of contract or
70
 (5) termination on the grounds of continued ill-health.

Conditions for effecting the retrenchment of a workman :

lf an employer wants to retrench any workman who is in his service for one
year or more:

(1) he must give to the workmen one month’s notice in writing showing
the reasons for retrenchment or one month’s wages in lieu of such
notice
(2) he must also pay to the workman at the time of effecting the
retrenchment compensation at the rate of 15 days average pay for
every completed year of service and
(3) he must serve on the Government notice in the prescribed manner

The Procedure for retrenchment of workmen and re-employment of retrenched

workmen

The procedure for retrenchment of workmen and re-employment of

retrenched workmen, in short is as follows:

1) Ordinarily the workman who was employed last should be retrenched

first.
2) If the employer who had effected retrenchment proposes to employ any
person he should first re-employ retrenched workmen.

Retrenchment effected without complying with the above provisions is

illegal, invalid and void. In such a case the retrenched workman continues in
employment and is entitled to reinstatement.

COMPENSATION FOR CLOSURE :

When an undertaking is transferred from one employer to another or when

it is closed down for any reason, the workmen of that undertaking who have
been in continuous service for one year or more are entitled to receive notice or
notice wages and compensation as if they had been retrenched.

Notice of Closure :

If any employer intends to close down his undertaking, he has to serve on

the Government, at least 60 days before the date of the intended closure. A
71
notice giving the reasons for the closure. This provision is intended for giving
intimation of the closure and not for obtaining permission for the closure. The
object of the provision is to prevent the sudden closure of any undertaking.

Note :- This provision is not applicable to an undertaking employing less than

50workmwn or an undertaking set up for construction work or project.

Permission for lay- off, retrenchment and closure :

If any employer of an industrial establishment in which one hundred or

more workmen are employed wants to lay-off or retrench any workman or
close down an undertaking, he is required to obtain prior permission of the
appropriate Government .
The intention of the Parliament in requiring large undertakings to seek
prior permission of the Government to lay- off or retrench workmen or to close
down an undertaking was that the Parliament wanted to prevent large scale lay-
offs, retrenchments and closures by large companies.

Procedure for obtaining permission for laying-off retrenching workmen or

closing down an undertaking.

(1) If any employer of an Industrial establishment in which one hundred

or more workmen are employed intends to take any of these three
actions, he has to make an application to the appropriate
Government for permission, giving reasons for the intended action.
(2) The employer can take the intended action if permission is granted
or no communication is received granting or refusing to grant
permission within 60 days from the date of the application.
(3) The appropriate Government can, either on its own motion or on the
application made by the employer or any workman, review its order
or refer the matter to a Tribunal for adjudication.
(4) Subject to the above provision the order of appropriate Government
is final and binding.
(5) An action taken in contravention of these provisions will be deemed
to be illegal.

PROTECTION DURING PENDENCY OF PROCEEDINGS :

The law has put restrictions on the freedom of the employer to dismiss a
workman who is concerned in the pending dispute.

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 An employer cannot dismiss a workman concerned in a pending dispute
without following a certain procedure. A different procedure is laid down

(i) for dismissing such workman for a misconduct connected with a

pending dispute;
(ii) for dismissing such workman for a misconduct not connected with
the pending dispute; and (iii for discharging or dismissing such
workman if he is recognized as a protected workman.

Procedure for dismissing a workman for misconduct connected with the

pending dispute :

If an employer wants to discharge or dismiss a workman for a misconduct

during the pendency of any conciliation, arbitration or adjudication proceeding
in respect of a dispute in which the workman is concerned and if the
misconduct is connected with the dispute, the employer must make an
application to the authority before which proceeding is pending and obtain its
previous written permission to do so. Otherwise discharge or dismissal will be
invalid and inoperative in law.

Procedure for dismissing a workman for misconduct not connected with the
pending dispute :

If an employer wants to discharge or dismiss a workman for a misconduct

during the pendency of any conciliation, arbitration or adjudication proceeding
in respect of a dispute in which the workman is concerned and if the
misconduct is not connected with the dispute, the employer must at the time of
discharge or dismissal, pay to the workman wages for one month and make an
application to the authority before which the proceeding is pending and obtain
its approval for the discharge or dismissal . Otherwise the discharge or
dismissal will be invalid and inoperative in law.
Grounds on which the grant of approval sought under section 33 (2) (b) of the
act for discharging or dismissing a workman can be refused.

Some of the grounds on which the grant of approval sought under section
33 (2) (b) of the act can be refused are as follows :

(1) The order of discharge or dismissal is perverse and unreasonable

(2) There is no evidence in support of the finding;
(3) The finding is inconsistent with the evidence;
(4) It rests on conjectures, surmises and suspicion;
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 (5) No person properly instructed as to the relevant law acting judicially
could have come to the conclusion that the concerned workman
deserves the punishment of discharge or dismissal.

Procedure for discharging or dismissing a workman who is recognized as a

protected workman and who is concerned in a pending dispute

If an employer wants to discharge a protected workman for a misconduct

or even otherwise or to dismiss a protected workman during the pendency of
any conciliation, arbitration or adjudication proceeding in respect of a dispute
in which the workman is concerned and if the misconduct is not connected with
the dispute, the employer must make an application to the authority before
which the proceeding is pending and obtain its previous written permission to
do so otherwise discharge or dismissal will be invalid and inoperative in law.

SPECIAL PROVISION FOR ADJUDICATION

Remedy for a workman who is dismissed in contravention of section 33 :

If a workman is discharged or dismissed in contravention of the provisions
of section 33, he can make a written complaint about the contravention to the
authority before which the dispute is pending. On the receipt of complaint the
authority will adjudicate upon the complaint as if it were dispute referred to it
and submit its award to the Government. The authority has not only to decide
whether there has been contravention of section 33 but also to go into the merits
of the complaint and grant an appropriate relief to the complainant.
Note :- If the authority before which the dispute is pending happens to be a
conciliation officer, he has to take such complaint into account in mediating in
and promoting the settlement of such disputes ( as he has no power to
adjudicate upon the complaint ).

RECOVERY OF MONEY :

(1) If any money is due to a workman from his employer under a

settlement or an award or under the provisions of the chapter V-A or
chapter V-B, the workman can make an application to the
Government for the recovery of the money due to him. If the
Government is satisfied that any money is so due, it will issue a
certificate for that amount to the Collector. The collector can then
recover the amount as an arrear of land revenue.
(2) An application to the Government can be made by the workman
himself, or any other person authorized by him, or in the case of the
74
 death of the workman his assignee or heir. Such application has to
be made within one year from the date of which the money became
due to the workman from the employer.
(3) If any workman is entitled to receive from his employer any money
or any benefit which is capable of being computed in terms of
money and if any dispute arises as to the amount of money due or as
to the amount at which such benefit should be computed, then the
workman can make an application to the Labor Court for
determination of the amount due or for the computation of the
benefit. Any amount found due by the Labour Court can be
recovered in the same manner as provided for in para (1) above.

  

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 Chapter-7

MANAGEMENT OF DISCIPLINE

₪ INTRODUCTION

Employee Discipline is the back bone of industrial relations. The function

of management is to keep an enterprise going on smoothly, efficiently and
profitably. For this a workforce has to accept certain reasonable standard of
behaviour at the workplace. Effective employees’ performance depends on his
willingness to carryout the orders of their superiors and to abide by the rules
and norms of organization.

₪ IMPORTANCE OF DISCILPINE :

Discipline means orderliness, obedience and maintainance of proper

behaviour by employees and check or restraint on the liberty of individual. It
corrects , moulds and strengthens the individual behaviour. It is also a force
which promotes an individual or group to observe certain rules, regulations and
procedures that are considered to be necessary for the attainment of an
objective.

Discipline implies a state of order in an organization. It means proper

appreciation of the hierarchical superior- subordinate relationship. In other
words it is an adherence to established norms and regulations. It corrects
improper conduct and thus acts as a force leading to the observance of rules and
regulations.

MAJOR ASPECTS OF DISCIPLINE :

There are 3 major aspects of discipline

Negative Discipline:-

Negative discipline involves force or an outward influence. It is the

traditional aspect of discipline and is identified with ensuring that
subordinates adhere strictly to rules and punishment is meted out in the
event of disobedience or indiscipline. As you can see, in this perspective
strict penalties are levied for the violation of rules. It is in fact, the fear of
punishment that works as a deterrent in the mind of the subordinate.

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 Approaching discipline from this kind of perspective has been proving
increasingly ineffective for various reasons.

Positive Discipline:-

In this type of discipline subordinates comply with the rules not from
fear of punishment; but from the desire to cooperate in achieving the
common goal of the organization. In positive discipline willingness to
comply is most important. The emphasis here is on cooperative efforts to
secure compliance to organizational norms. It promotes emotional
satisfaction instead of emotional conflict and the increased cooperation and
coordination reduce the need for formal authority. This approach to
discipline will help organisation to achieve both individual needs of the
subordinates and organizational goals. It would therefore motivate
employees to work with zeal and fulfill their needs. The positive concept
of discipline assume a certain degree of self-discipline.

Discipline as Self-control :

Discipline at one level means training that corrects, moulds,

strengthens or perfects the behavior. Discipline in this sense refers to the
development of an individual i.e.;. one’s efforts at self –control for the
purpose of adjusting oneself to certain needs and demands. This is nothing
but what you would call self-discipline. It is extremely important to have
this kind of self- discipline both in superior and in the subordinates for
effective and efficient achievement of organizational objectives. Here
again the emphasis is on establishing and ensuring a minimum degree of
orderliness. This orderliness is obtained in the modern work context by
increasing the degree and extent of compliance by subordinates.

₪ INDISCIPLINE

Indiscipline refers to the absence of discipline. Indiscipline, therefore,

means non conformity to formal and informal rules and regulations. Indiscipline
often leads to chaos, confusion and reduces the efficiency of the organization.
it often leads to strikes, go-slows, absenteeism, resulting in loss of production,
profits and wages.

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FORMS OF INDISCIPLINE

Absenteeism, insubordination, violation of plant rules, gambling,

incompetence, damage to machine, and property , strikes,dishonesty and other
forms of disloyalty lead to industrial indiscipline. These are all forms of
misconduct against the management. If an act of employee is prejudicial or
likely to be prejudicial to the interests of the employer or to its reputation. It is
a misconduct. The act of an employee can become a misconduct in following
cases :

a) Where the act of workman is inconsistent with the peaceful discharge

of his duty towards his employer ;
b) Where the act of the employee makes it unsafe for the employer to
retain him in service;
c) Where the act of employee is so grossly immoral that all reasonable
men would not trust that employee;
d) Where the conduct of the employee is such as to open before him
ways for not discharging his duties properly;
e) Where the conduct of the employee is such that the employer cannot
rely on his faithfulness;
f) Where the conduct of the employee is insulting and indecent;
g) Where the workman is abusive or he disturbs the peace at the place of
his employment; and
h) Where the employee is habitually negligent in respect of the duties for
which he is engaged.

HOW TO CONTROL INDISCIPLINE:-

There are following five approaches to control indiscipline:-

1) The Judicial Approach: it is commonly followed in India. Various

kinds of misconduct are listed in the standing orders and penalties are
also mentioned. The decisions of Supreme Court on various cases also
serve as guidelines. This approach is elaborated upon subsequently.
2) The Human Relations Approach: It calls for treating an employee as a
human being. It considers employee’s total personality and
behaviour while correcting faults that contribute to indiscipline.
Factors like his total personality , his interaction with his colleagues,
his family background, etc. are considered and then appropriate
punishment for misconduct is awarded.
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 3) The Human Resources Approach: This approach calls for treating
every employee as a resource and an asset to the organization. Before
punishing the worker, the cause for indiscipline has to be ascertained.
An analysis of the cause is made, to find out whether indiscipline is
due to the failure of his training and motivating system or the
individual’s own failure to meet the requirements, and accordingly
corrections are made.
4) The Group Discipline Approach: The management in this approach
sets and conveys well established norms and tries to involve groups of
employees. The group as a whole controls indiscipline and awards
appropriate punishments. The trade union may also act as a
disciplinary agency.
5) The Leadership Approach: In this case, every supervisor or manager
has to guide, control, train, develop, lead a group and administer the
rules for discipline.

₪ JUDICAL APPROACH TO DISCIPLINE

The Industrial Employment (Standing Orders) Act was passed in 1946

with the primary objective of improving the Industrial relations climate. This
was sought to be achieved by standardizing conditions of employment
including the procedures for disciplinary action. This Act is applicable to
industries all over India employing 100 or more workmen on any day of
preceding 12 months. Both the Central and the State Governments may apply
this Act to any establishment employing even less than 100 workmen and may
exempt conditionally or unconditionally any establishment from any or all
provisions of the Act. Al though the Act is central legislation. It is administered
by both the Central and the State Governments in their respective spheres.

MEANING OF STANDING ORDERS :

Standing Orders are the rules of conduct for workmen employed in the
industrial establishment relating to matters like attendance, leave, misconduct
etc.

MODEL STANDING ORDERS :

“Model Standing Orders” means the standing orders prescribed by the

Central Government or State Government for the purpose of the Act to serve as

79
a model. They provide a pattern of the rules of conduct relating to the various
matters specified in the Schedule appended to the Act.

CERTIFICATION OF STANDING ORDERS :

The procedure of Certification of Standing Orders is as follows :

(a) The employer has to prepare a draft of the standing orders which he
proposes to adopt for his industrial establishment. The draft must take
provision for every applicable matter specified in the Schedule
appended to the Act. It must be in conformity with the provisions of
the Act and also in conformity with the prescribed Model Standing
Orders.
(b) The employer has then to submit the draft Standing Orders prepared
by him to the Certifying Officer for adoption in his industrial
establishment, which he has to do within in six months from the date
on which the Act becomes applicable to his industrial establishment.
(c) After receiving the draft Standing Orders the certifying officer has to
call and hear the employer and the workmen concerned and decide
whether or not any change is necessary in the draft to make it
certifiable under the Act. The Certifying Officer has then to certifying
the draft Standing Orders after passing the necessary order.
(d) If the employer is aggrieved by the order of the Certifying Officer he
has to prefer an appeal to the Appellate Authority, for the necessary
relief. The order of the Appellate Authority will be final.
(e) If any workmen or trade union is aggrieved by the order of the
Certifying Officer, he or it also can file an appeal to the Appellate
Authority.
(f) Standing Orders come into operation on the expiry of thirty days from
the date on which authenticated copies thereof are sent by the
Certifying Officer to the employer.

MODIFICATION OF STANDING ORDERS :

Standing Orders finally certified are not allowed to be modified for six
months from the date on which the standing orders or the last modification
thereof came into operation. An application for modification of the standing
orders can be made there after by an employer or workmen to the Certifying
Officer. While dealing with such application the Certifying Officer will follow
the same procedure as that for certification of standing orders.

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DISPLAY OF STANDING ORDERS :

The employer must prominently display the text of the standing orders in
English as well as in the language understood by the majority of his workmen, on
special board, at or near the main entrance of the establishment and also in all
departments of the establishment.

BIDING NATURE OF STANDING ORDERS :

Certified standing orders framed in accordance with the Industrial

Employment (Standing Orders) Act have the force of law like any other
statuary instrument and hence they are biding on the employer and the
workmen.

₪ DISCIPLINARY ACTION

The management of an industry has a right to maintain disciplinary control

over the employees. However, this control cannot be exercised at the sweet will
the employer. Disciplinary action to be taken by an employer against erring
unionized employees is governed by the provisions of industrial Employment
(Standing Orders) Act, 1948. Apart from regulating the terms and conditions of
employment, the standing orders lay down various acts of omissions and
commissions which constitute a misconduct. But neither the standing orders
nor any other legislation gives the exact procedure to be adopted in
disciplinary action. The procedure of disciplinary action has been evolved on
the basis of judicial decisions of the various High courts and Supreme Court on
various cases of dismissal.

₪ PRINCIPLES OF NATURAL JUSTICE

There are two principles of natural justice which are universally recognized
as fundamental to the dispensation of justice

(i) The proceeding must be free from prejudice or bias of any kind.
(ii) The accused person must be given adequate opportunity to present his
defense to prove his innocence

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₪ PRINCIPLES OF NATURAL JUSTICE AND DISCIPLNARY ACTION

1. Only a disciplinary authority can initiate disciplinary proceedings.

2. The issue of charge sheet is an essential requirement.
3. A person who is biased against the charge sheeted employee is not
eligible to hold the enquiry.
4. The charged employee should be allowed to be defended by the defense
counsel.
5. All evidence should be recorded in the presence of the charge sheeted
employee.
6. Report of the enquiry should be a reasoned document.
7. If the report of the enquiry is adverse to the charge sheeted employee a
copy of it should be supplied to the charge sheeted employee for his
observation.

PROCEDURE OF DISCIPLNARY ACTION

STEP 1- ISSUING THE CHARGESHEET

1. The charge sheet is issued on receipt of written complaint and after

making the preliminary investigation as to whether a prima-facie case is
made out against the workman.

2. The charge sheet is to be drafted in a clear and unambiguous language

giving precise details regarding the incident, date, time and place and
referring to the misconduct alleged as laid down in the Standing Orders.
Proper and sufficient time should be given for his explanation to the
charges leveled against him.

3. The charge sheet should be signed by the Disciplinary Authority who is

formally empowered to sign such documents under Standing Orders.

Suspension Pending Inquiry

When the charge leveled against the workman is of serious nature and
where it is considered that his continued physical presence in the premises of
the factory / establishment might prejudice evidence to be produced at the
Inquiry, he may be suspended pending inquiry.

STEP – 2 SERVING THE CHARGESHEET

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 1. The charge sheet should be served in a person after obtaining
workman’s signature on the carbon copy. If he refuses to accept the
same, the refusal should be so recorded in presence of at least two
witnesses who should then endorse such refusal on the carbon copy.

2. If the charge sheet could not be served in a person, it should be sent by

the Registered A.D.To his last known address. If the letter is delivered
to the workman or returned with postal remark “refused”, the charge
sheet is deemed to be served.

3. In the event of non-delivery of the charge sheet, the same is to be

published in a local newspaper having wide circulation.

STEP 3 – CONSIDERATION OF THE EXPLANATION

1. After the charge sheet has been served on the workman, he may submit
his explanation in replay to the charge sheet within time specified for
the reply or he may request for a more time to submit his explanation.
(Which may be given if reasonable)

2. In case the workman admits the charge which is of a minor nature and
begs for pardon, detailed inquiry need not be held and decision may be
taken accordingly on the charge sheet. If the misconduct is serious
enough to warrant discharge or dismissal, the management should still
hold a proper inquiry, notwithstanding the admission of the charges.

3. In case the workman submits an explanation denying the charges

leveled against him , a proper inquiry should be held before awarding
any punishment.

4. In case the workman fails to submit any explanation within the

specified time, the management should proceed further to conduct the
inquiry.

STEP 4 : PROCEDURE OF DOMESTIC ENQUIRY

Parties of Domestic Enquiry:

1.Enquiry Officer
2.Management Representative
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 3.Chargesheeted Workman
4.Defence Counsel
5.Interpeter If Required
6.Typist

Procedure Followed In Domestic Enquiry :

1. Preliminary questions

2. Management representative leads the evidence in support of the charges.

i) Bring material / documentary evidence on Record

ii) Examine witnesses in support of the charges

3. Defense counsel cross examines the management’s witness

4. Defense counsel leads the evidence in defense of the charges. He

i) Bring material / documentary evidence on record

ii) Examine witnesses in support of the charges
iii) Record the statement of charge sheeted workman

5. Management Representative can cross examine the defense witnesses as

well as charge sheeted workman.

STEP – 5 FINDINGS OF ENQUIRY OFFICER

1. After the inquiry is over the, enquiry officer submits his findings to
Disciplinary Authority in which he analyse the evidence on record and
comes to a conclusion regarding whether the charge has been proved or
not.

2. His conclusion should indicate that he has applied his mind, by

accepting of rejecting any particular evidence and facts as brought out
during the inquiry.

3. In the absence of any direct evidence, the inquiry officer may rely on
circumstantial evidence but has to give clear and valid reasons for his
conclusion.

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STEP - 6 DECISION OF DISCIPLINARY AUTHORITY

1. The Disciplinary Authority who has to pass the order for punishment or
other wise should himself be satisfied of the Findings. If he agrees with
the Inquiry Officer that the charges are proved, he may pass the order
accordingly. He is not always bound by the conclusion of the Inquiry
Officer and he can differ either way.

2. Punishments
Disciplinary Authority can pass any of the following punishments

(i) Warning
(ii) Deduction of wages under payment of wages Act
(iii) Suspension from 1 to 4 days
(iv) Withholding of normal increment
(v) Dismissal

3. Criteria for deciding the punishment

While deciding the punishment the disciplinary authority should follow
following criteria

i. Seriousness of the charge

ii. Past record of the employee
iii. Precedents

GUIDELINES OF THE SUPREME COURT ON DISCIPLNARY ACTION

Once it is established that the employee has been guilty of misconduct the
discretion as to what punishment should be imposed on him is with the
management. The court will interfere only under following circumstances.

(i) When there is want of good faith

(ii) When there is victimization or unfair labour practice
(iii) When the management has been guilty of basic error or violation of
the principles of natural justice
(iv) When on the material facts the enquiry findings are completely baseless
or perverse.
(v) When there is disproportionate punishment.

  
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 Chapter-8

EMPLOYEE GRIEVANCE HANDINLING

₪ WHAT IS A GRIEVANCE?

A grievance can be defined as any discontent or dissatisfaction with any

aspect of the organization. It can be real or imaginary, legitimate or ridiculous,
stated or unvoiced, written or oral. It must, however find expression in some
from or the other.

Discontent or dissatisfaction per se is not a grievance. They initially find

expression in the from of a complaint. When a complaint remained unattended
and the employee concerned feels a sense of lack of justice and fair play, the
dissatisfaction grows and assumes the status of a grievance.

Usually grievances relate to problems of interpretation or perceived non-

fulfillment of one’s expectation from the organisation.

INDIVIDUAL OR COLLECTIVE (GROUP) GRIEVANCES :

The International Labour Organization (ILO) defines a grievance as a

complaint of one or more workers with respect to wages and allowances,
conditions of work and interpretation of service conditions covering such areas
as overtime , leave, transfer, promotion , seniority , job assignment and
termination of service. The National Commission on Labour observed that
“complaints affecting one or more individual workers in respect of their wage
payments overtime , leave, transfer, promotion, seniority, work assignment and
discharge would constitute grievances.”

It is important to make a distinction between individual grievances and

group grievances, If the issue involved relate to one or a few individual
employees, it need to be handled through a grievance procedure, but when
general issues with Policy implications and wider interest are involved they
become the subject matter for collective bargaining Ideally in individual
grievance redressal trade unions should have less or no role while in grievances
of a collective nature and wider ramifications, trade unions need to be involved.

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₪ WHY GRIEVANCES?

Grievances may occur for a variety of reasons :

Economic: Wage fixation , wage computation, overtime, bonus, etc. Employees

feel they are getting less than what they ought to get.

Work Environment: Poor working conditions , defective equipment and

machinery, tools, materials, etc.

Supervision: Attitude of the boss towards the employee. perceived notions of

favoritism , nepotism, bias etc.

Work Group: Strained relations or incompatibility with peers, feeling of neglect

and victimization.

Work Organization: Rigid and unfair rules , too much or too less work
responsibility, lack of recognition , etc.

S. Chandra’s study on grievance procedure and practices revealed the

following as some of the main causes of employee grievances:

1 Amenities 9 Nature of job

2 Compensation 10 Payments
3 Conditions of work 11 Promotions
4 Continuity of service 12 Safety environments
5 Disciplinary action 13 Superannuation
6 Fines 14 Claims
7 Leave 15 Transfers
8 Medical benefits 16 Victimization

The list is indicative and not comprehensive.

The apparent causes or sources of grievances may not be the real ones.
There is need for deeper analysis of the policies , procedures, practices ,
structures and personality dynamics in the organization to arrive at the real
causes of grievances.

Grievances stem from, management policies and practice when they lack
consistency, uniformity , fair play and the desired level of flexibility.
Grievances also may arise because of intra personal problems of individual
87
employees and union practices aimed at reinforcing and consolidating their
bargaining strength. The absence of a proper two way flow of communication
can indeed be a fertile ground for breeding grievances.

₪ EFFECTS OF GRIEVANCES

Grievances can have several effects which are essentially adverse and
counterproductive to organizational purposes.
The adverse effects include:

a) Loss of interest in work and consequent lack of morale and commitment

b) Poor quality of production
c) Low productivity
d) Increase in wastage and costs
e) Increase in employee turnover
f) Increase in absenteeism
g) Increase in the incidence of accidents
h) Indiscipline
i) Unrest, etc.

₪ HOW TO HANDLE GRIEVANCES

Employee grievances are essentially human problems real or imaginary .

Whatever be the cause the approach should be humane. Sensitivity and empathy
are required in handling grievances diligently. So they need to be handled with
care.

Employee grievances have to be handled promptly. An aggrieved

employee suffers form a sense of injustice being done to him. Recall the adage
justice delayed is justice denied. The need to handle grievances promptly
cannot be over emphasized . In a good many cases trivial issues concerning one
or a few employees become collective issues and are blown out of proportion
causing unavoidable loss and bitterness because they were not dealt with
properly and promptly.

Employee grievances will have to be settled at the level at which they

occur in order to avoid the feeling of injustice at the interacting group level. If a
worker has a grievance about a supervisor and if it is redressed not at the
concerned supervisor’s level but one or two levels above him the employee
continues to be dissatisfied about the supervisor because he has not been able to
resolve it someone else had done it. So the loyalties change. In the process,
88
supervisory authority gets eroded. Hence , it is important to have the grievances
settled preferably at the level at which they occur.

When grievances occur it is important to make sure that they do not recur.
If more grievances occur over the same issue time and again more number of
employees is found to have a similar grievance the focus should shift from
person and (grievance) procedure to policy and practices. An archaic rule may
continue to be the cause of much irritation among many employees . Then it is
appropriate to take a relook at the particular aspect of policy and alter or modify
the same rather than get bogged down with redressing each and every case. If
some grievances are recurring in nature , the strategy should prevent rather than
cure them.

₪ THE DISCOVERY OF GRIEVANCES

Knowledge about grievances is important in handling them. Upward

channels of communication provide the dependable sources for discovery of
grievances. One can also come to know grievances through gossip and
grapevine or through unions. It is always preferable to have first hand
knowledge based on observation and through direct communication from the
employee concerned. Some of the important ways of discovering grievances
are briefly outlined here.

DIRECT OBSERVATION
A good manager must know how his subordinates behave in ordinary
circumstances. When significant changes in that behavior occur , it is sure to
affect performance. Absenteeism, late coming, indifference towards work etc.
are some of the forms in which discontent and dissatisfaction find expression. A
careful analysis of grievance rates, sates, accident rates , requests for transfer ,
indiscipline etc. may reveal general patterns that are not easily discernible in the
first instance.

GRIEVANCE PROCEDURE

The most important channel through which discontent and dissatisfaction

can be communicated is through grievance procedure. A grievance procedure
provides an avenue and an opportunity to ventilate his grievances. The dilemma
most managers face is whether and how far they should encourage or
discourage grievances. If management does not induce employees to express
their grievances, unions will do so . Discouraging employees from expressing
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grievances means ignoring grievances. When they simmer and burst
management find it beyond their capacity to deal with them effectively. Thus it
is important to have a grievance procedure to process grievances. This aspect is
discussed separately in detail in a subsequent section in this chapter.

GRIPE BOXES

The gripe box is a facility to file anonym oust complaints about the varies
causes of discontent and dissatisfaction in the organisation It is different from
the suggestion scheme system that may be in vogue in a company. In this case
anonymity is assured and there is no reward or punishment. The limited purpose
is to let the management know what the employees feel with out fear of
victimization.

OPEN-DOOR POLICY

Most organizations preach open – door policy but do not practice it. The
policy is good and democratic but usually infective and at times counter-
productive. Organizations would do well to have a grievance procedure. If a
grievance procedure exists open –door policy becomes redundant.

EXIT INTERVIEW

Employees usually quit organizations due to dissatisfaction or better

prospects elsewhere. It requires certain skill to get to know the real reasons for
leaving the job. Exit interviews if conducted effectively can provide vital
information to improve personnel policies and identify the weaknesses and
strengths of the organization. Some organization mail an exit questionnaire
three months after an employee leaves so that he need not fear about a poor
reference and give the truth without fear or favour.

OTHER CHANNELS

Group meetings , periodical interviews with employees , collective

bargaining sessions are some of the other channels through which one can have
information about employee discontent and dissatisfaction before they become
grievances or disputes. Each channel referred to above serves the purpose in a
different way. Using more than one channel is desirable because it may not be
possible to get information about all type of dissatisfaction form one channel.
For example the type of information one can get through grievance procedure

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would be perceptibly different form what one can get from a gripe box or an
exit interview

₪ THE PROCESSING OF GRIEVANCES

As already discussed there are valid reasons to have the grievances

processed through a machinery or procedure. A grievance procedure can be
voluntarily established by the management or installed as result of a collective
agreement to that effect. Whether unionized or not organizations should not
wait for unions to raise their voice and use the strength in establishing a
grievance procedure.

We shall consider two examples the first being an industry procedure and
the other at the plant level.

The Textile Labour Association and the textile mill owners of Ahmedabad
have had well formulated and smooth procedure for several years. In fact, even
though the agreement provides for outside conciliation in case there is a failure
of the various earlier steps to mitigate the grievance a proportionately small
number has been referred to conciliation.

In the mills , each department have a union shop representative (Pratinidhi)

who takes up the employee’s grievance to the department head and if necessary
to higher levels. The union tries to keep a ratio of one representative for every
hundred workers. If there is no resolution at this stage the matter is taken over
by the union officials starting with the lower level inspectors of the union who
go to the mill , interview the grievant and then discuss the situation with the
department head. Failure at this stage brings in the higher functionaries of the
union who discusses the issue with the top management of the mill and if
necessary with the mill owners’ association. Failure even at this stage leads to
conciliation and arbitration processes set up by the parties i.e. the management
and the union on behalf of the aggrieved employee.

We consider next a unit level procedure as followed in Tata Iron and Steel
Company (Works). The procedure consists of several stages. At stage I, the
worker with a grievance fills in a form and submits it to the shift in charge for
consideration . If he is not satisfied with the decision he goes on to Stage2 ,
where his grievance is considered by the department head. If he is still
dissatisfied he forwards it to the appropriate chairman of the Zonal Works
Committee (ZWC) of which there are six for works and one for the non-factory
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staff (departments are clustered together and are covered by one
committee).Each Zonal Works Committee consists of five management and
five union representatives and they work on the basis of a unanimous decision
which is final and binding on both parties . The Zonal Works Committee
considers individual grievances pertaining to promotion, suspension, discharge,
dismissal and disciplinary matters.

If the Zonal Works Committee cannot reach a unanimous decision the

grievance is referred to the Central Works Committee which consists of
representatives of top management and union officials. Again the unanimity
principle operates here and a decision is binding on both parties If how ever no
unanimous decision is reached in this committee , the matter is referred to the
Chairman of the company for the final decision.

The National Commission on Labour has suggested a model grievance procedure.

₪ MODEL GRIEVANCE PROCEDURE:

The Code of Discipline adopted in the 16th session of Indian Labour

conference has highlighted the need for a grievance procedure. The principles
and procedure
which constitute the model are :

1) An aggrieved employee shall first present his grievance verbally in

person to the officer designated by the management for this purpose.
The answer shall be given within 48 hours
2) If the worker is not satisfied with the decision he shall accompanied
by a department representative present his grievance to the head of the
department who has to settle the grievance within three days.
Otherwise he shall have to record reasons for delay
3) In case the workman is not satisfied with the decision of the
departmental head, he may request him to refer the case to the
Grievance Committee
4) The committee considers the matter and makes its recommendation to
the manager with in seven day of receipt of the grievance. If this is
delayed, reason is to be recorded Unanimous recommendations of the
Grievance committee shall be implemented by the management.
Whether there is unanimous decision by the committee or not the
aggrieved workman is enisled to know the decision through the

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 personnel officer within three days of the receipt of the grievance
committee’s recommendations
5) If dissatisfied with the committee’s or the manager’s decision the
workman has a right of appeal to the high tier of management for
revision. The workman may take his union official along with him for
dissuasion. The management has to inform him, of its decision within
a week. At any stage where the aggrieved person is not satisfied he
has to prefer an appeal within 72 hours of the receipt of the decision
or if no decision is reached the appeal is to be made on expiry of the
stipulated period and
6) If the workman is still not satisfied with the decision of the
management, the union may ask for voluntary arbitration in the
matter. In case the management agrees, the matter is referred to an
arbitrator whose decision is binding on both the parties.

If is left to the union and the employer of a particular concern to draft the
procedure suiting to local conditions keeping in mind those principles:

1) It should be simple and easily understood by workers.

2) It should be settled at the lowest level of the grievance procedure.
3) It is necessary to fix a time limit for expeditious redressal.
4) It should provide for reference of different types of grievances to
appropriate authorities or bodies.
5) It should be in conformity with existing legislation.
6) It is desirable to involve the union in framing grievance procedure and
in its implementation

RECOMMENDATIONS:

The National Commission on Labour has recommended for a statutory

backing for the formulation of an effective grievance procedure which should
be simple, flexible and more or less on the lines of the present Model Grievance
procedure. It should be time –bound and have a limited number of steps say,
approach to the supervisor then to the departmental head, and thereafter a
reference to the ‘Grievance committee’ consisting of management and union
representatives. It should be made applicable to only those units which employ
more than 100 workers. Settlement of an individual grievance should be prompt
and quick in giving relief to the worker as it is natural that during the period of
suspension a worker cannot whole heartedly devote his energies to work.

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 A Grievance procedure whether formal of informal , statuary or voluntary ,
has to ensure that it gives a sense of satisfaction.

₪ THE ROLE OF PERSONNEL DEPARTMENT IN GRIEVANCE HANDLING:

1. To devise a sound grievance procedure which can serve as an

effective upward communication in the organization.
2. To train the staff people especially the front line supervisors in
effective handling and in counseling skills.
3. To advise the line people about the importance of a sound grievance
handing system and its implementation.
4. To implement promptly the decisions taken by the grievance
committee, the personnel department should maintain effective and
close liaison with all concerned.
5. To maintain records of the activities of the grievance committee such
as meetings held , actions taken and implemented ,etc.
6. To take necessary follow-up action , review the procedure, and if
necessary, modify the existing procedure to suit the changing
circumstances.
7. 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 organization.

It may be emphasized that the grievance handling is not the monopoly of a

specialist or of a functional department. The role of Personnel Department
should be to lay down the procedure and to advice on its administration. It is the
function of the Personnel administrator to carefully study the grievance in order
to discover any patterns in them-satisfaction and the sources of dis- satisfaction
must be brought under scrutiny. The personnel department should help remove
employee dis-satisfactions –present and potential by assisting management in
the establishment and implementation of a suitable machinery that will bring
about a redressal of employee grievances quickly , cheaply and satisfactorily. It
must help the line managers particularly supervisor in the formulation and
implementation of policies , programmers and procedures in handling
grievances. The personnel division may arrange training courses for
management , executives and supervisors in handling grievances.

ADVANTAGES OF GRIEVANCE PROCEDURE

a) Aggrieved employees know what to do if they have a grievance and

where to look for or appeal to.
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 b) Check on arbitrary management decision by providing for appeals in
at lest three levels above the level at which such grievance occur.
However the less frequently the higher levels are used the more
effective they become.
c) Promote fair and equitable treatment and personnel practices having
regard to the rights of the employee. The superiors will be more
careful in their arbitrary use of power and authority
d) Assist in minimizing discontent and dissatisfaction that may have
adverse effects upon cooperation and productivity.

₪ ROLE OF MANAGER IN GRIEVANCE HANDLING

At any stage of the grievance machinery the dispute must be handled by

some member of the management. In grievance redressal the responsibility lies
largely with the management and as already discussed grievances should be
settled promptly at the first stage itself. The following steps will provide a
measure of guidance to the manager dealing with grievances.

Acknowledge Dissatisfaction: Managerial/supervisory attitude to

grievances is important. They should focus attention on grievances not turn
away from them. Ignorance is not bliss, it is the bane of industrial conflict.
Negative attitude on the part of supervisors and managers would aggravate
the problem.

Define the Problem: Instead of trying to deal with a vague feeling of

discontent the problem should be defined properly. Sometimes the wrong
complaint is given. By effective listening one can make sure that a true
complaint is voiced.

Get the Facts: Facts should be separated from fiction. Though grievances
result in hurt feelings the effort should be to get the facts behind the
feelings. There is need for a proper record of each grievance.

Analyze and Decide: Decisions on each of the grievances will have a

precedent effect. While no time should be lost in dealing with them it is no
excuse to be slip-shod about it. Grievance settlements provide
opportunities for management to correct themselves, and thereby come
closer to the employees. Horse-trading in givievance redressal due to
union pressures may temporarily bring union leadership closer to the
management but it will surely alienate the workforce away from the
management.
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 Follow up: Decisions taken must be followed up earnestly. They should be
promptly communicated to the employee concerned. If a decision is
favourable to the employee, his immediate boss should have the privilege
of communicating the same.

Some of the common pitfalls that management commit in grievance

handling relate to

(a) stopping the search for facts too soon

(b) expressing a management opinion before gathering full facts
(c) failing to maintain proper records
(d) arbitrary exercise of executive discretion and
(e) settling wrong grievances.

₪ GRIEVANCES AND INDUSRIAL RELATIONS

One of the problems in industrial relations scene in India is the lack of an

appreciation of the distinct boundaries between grievance procedure and
collective bargaining . Individual grievances often become the subject matter
for collective bargaining and industrial disputes. The institution of Labour
Welfare Officer under Factories Act, 1948 and Works Committee under the
Industrial Disputes Act ,1947 apparently have a positive role to play in
grievance redressal. The code of discipline, which was a voluntary self
enforcing type of code formulated in 1958, suggested a grievance procedure.
The Industrial Disputes (Amendment) Act. 1982 provided for compulsorily
setting up of Grievance Settlement Authorities in undertakings employing 50 or
more workers. This particular aspect of the 1982 amending Act has not yet been
enforced by the Government.

  

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 Chapter-9

COLLECTIVE BARGAINING

₪ NATURE AND SCOPE OF COLLECTIVE BARGAINING

Industrial relations is inherently a bipartite relationship. Parties to this

relationship include union and management , representing workers and
employer respectively. Similar to other relationships, the union management
relationship is also highly fragile and complex it is because of the divergence of
interests, perspectives, expectations, value systems and goals of the two parties.
Consequently there is immense possibility of misunderstanding and conflict at
any point of time in organizational setting over the terms and conditions of
employment. As the organizations find it difficult to survive and grow in an
environment of conflict and misunderstanding it is desirable that both the
parties sit together to resolve the differences and conflicts through mutual
discussions and negotiations without the intervention of a third party. This
process of resolving the differences between union and management in the
absence of any third party is widely designated as collective bargaining.

DEFINITION

The term “ Collective Bargaining “ was coined by Sydney and Beatrice

Webb in England and also by Gompers in U.S.A. Probably it means “to bar
the gains (of others) collectively.” Collective bargaining- contract negotiation
and administration – involves the relations between employers operating
through their representatives and organized labor. It covers not only formal
labour agreements but also the day –to- day relations between the management
and the trade unions. In a bulletin issued by the ILO in 1960, collective
bargaining has been defined as negotiations about working conditions and terms
of employment between an employer, a group of employers or one or more
employers’ organizations on the one hand and one or more representative
workers’ organizations on the other with view to reaching agreement. The
process is collective because issues relating to terms and conditions of
employment are solved by representatives of employees and employers in
groups rather than individuals. The term bargaining refers to evolving an
agreement using methods like negotiations, discussions, exchange of facts and
ideas, rather than confrontation.
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 According to Harbinson Collective bargaining is a process of
accommodation between two institutions which have both common and
conflicting interests and it aims at attainment of the commonly held goals of a
free society.

In the National Labor Relations Act of the United States, collective

bargaining finds a place. The Act , in section (8) d, defines collective
bargaining as “the performance of mutual obligation of the employer and the
representative of the employees to meet at a reasonable time and confer in good
faith with respect to wages, and other terms and conditions of employment or
the negotiation of an agreement or any question arising there under , and the
execution of written contract incorporating any agreement reached if requested
by either party, but such obligation does not compel either party to agree to a
proposal or require making of a concession.

SALIENT FEATURES OF COLLECTIVE BARGAINING :

Some of the salient features of collective bargaining are as follows :

1. It is a ‘group’ process, wherein one group representing the employers

and the other representing employees sit together to negotiate terms
of employment.
2. It is the process in the sense that consists of a number of steps. The
starting point is the presentation of the charter of demands and the last
stage is reaching of an agreement, or a contract which would serve as
the basic law governing labour – management relations over a period
of time in an enterprise.
3. Negotiations form an important aspect of the process of collective
bargaining i.e., there is considerable scope for discussion, compromise
or mutual give and take in the collective bargaining deliberations
rather than confrontation.
4. It is bipartite process. The employers and the employees are the only
parties involved in the bargaining process. There is no third party
intervention. The conditions of employment are regulated by those
directly concerned.
5. It is a process of retreat without seeming to retreat. Workers generally
want to get the maximum and employers want to give minimum. If
the parties want to reach an agreement, they will have to retreat from
the position first taken by them and will have to accept less than what
is demanded and give more than what is offered.
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 6. It is a process of persuasion and reasoning which may enable parties
to arrive at some amicable settlement or agreement.
7. It is a power relationship in which management tries to retain its right
to manage and unions to safeguard their interests so as to strengthen
their hold over the workers.

Flanders identifies the distinctive nature of collective bargaining to be

basically a political institution in which the rules are made by the trade unions
of workers, employers and corporations/ organizations.

Secondly, since the two aspects of administration and legislation are

interlinked, there is considerable degree of joint regulation by both the parties,
governed by the conventions and customs that prevail at the enterprise level.

Thirdly, collective bargaining is not merely an economic process, but more

a socio-economic one. The values, aspirations and expectations also play a
significant role.

₪ THE PROCESS OF BARGAINING

Collective bargaining is a process. Broadly it consists of three stages as

indicated below :
1) Negotiation of Agreement.
2) Implementation of Agreement.
3) Renewal and Revision of Agreement.

1) Negotiation of Agreement :

After receiving the points in disputes or matters to be settled, parties start

Negotiations and try to arrive at an agreement. For this, both the parties have to
make necessary preparations for justifying their respective stands. Agreements,
when possible, reflect a sense of compromise in a give and take spirit and also
manipulation of power equilibrium between the parties. The signed agreement
becomes a contract between the parties.

2) Implementation of Agreement :

Arrangements are also to be made for Implementation and for attending to

complaints arising out of interpretation of the agreement which specify the
modus operandi to resolve disputes or problems arising out of or in the course
of the agreement.
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3) Renewal and Revision of Agreement
Normally agreements mention the period of their operation after which
they can be terminated, renewed or revised. Sometimes provision is made for
the revision of the agreement during the period of its operation to meet the
contingencies arising from changes in economic and other conditions.
Managements, therefore, might have to start informal consultations for its
revision during its operation, or when it is about to expire. Unions generally
start demanding the revision of the agreement before its expiry. Thus collective
bargaining could well be a continuous and it does not end with signing of the
agreement as it has to be publicized, administered or implemented, followed up
and revised if need be, or as specified.

₪ PREREQUISITES FOR COLLECTIVE BARGAINING &

AGREEMENT

The following are prerequisites for the success of collective bargaining :

1) Employees and employers should have freedom of association and

form their unions or organizations. The question of collective
bargaining does not obviously arise without union, particularly for
employees.
2) The parties concern should have mutual trust and confidence and
respect for each other and also willingness to settle matters by
negotiations. During negotiations they must avoid unfair practices
which may vitiate the atmosphere conducive for bargaining. There
should be greater emphasis on accommodation than on conflict and
regard should be shown for the rights and responsibilities of one
another.
3) There should be semblance of parity in the strength of both the
parties i.e., the employers and the union for real and effective
bargaining to occur.
4) Right of employers and employees to strike and lock out must be
recognized subject to national interest, as this alone can ensure
freedom of collective bargaining. Even where the government
provides a regulatory framework there should be sufficient
opportunity for both the parties to negotiate and set norms or
regulations.
5) Both the parties should select such representatives who are duly
authorized to give and take, and could observe proper rules of
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 bargaining and avoid break down of dialogue as far as possible. The
bargaining has to be factual and discussion based on facts properly
assessed by joint investigation, if possible.
6) The Government should actively encourage collective bargaining as a
method of settling not only industrial disputes but also overall
employer and employee relation. Possible steps that the Government
can take in this direction are:

a) Announcing a policy at the Central and State level with sufficient

clarity that the Government is in favour of bipartite settlement
of disputes at plant, industry, regional and national levels, and
will minimize their interventionist approach.
b) Making employers recognize unions as bargaining agents and
frame suitable rules for such a recognition to be observed both
by employers and unions.
c) Encourage collective agreements by conferring on them
legitimacy and validity, provide the help of conciliation
machinery to parties to resolve their difference when necessary
and prohibit unfair labour practices.

PREPARATIONS FOR NEGOTIATIONS

The success of collective bargaining is directly proportionate to the

thoroughness of the preparation. As collective bargaining is a continuous
process, it should be given serious consideration and needs careful advance
planning. These preparations will create confidence on each side of the
bargaining table, expedite negotiations and lead to more constructive thinking.
The preparation which unions and employers should make before going to the
negotiation table could be discussed as hereunder.

UNIONS’ PREPARATION

a) Consider the implications, feasibility and financial capacity of the

organization while formulating demands.
b) Study the existing terms of employment and conditions of work and
compare them with the comparable industry in the local area /region /
country for preparing a statement of demands.
c) Consult shop representatives and discuss with the members of the
union to asses their requirements before formulating the demands.
d) Analyse past or existing agreements for preparation of a new
demands or change.
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 e) Review grievances and arbitration decisions in order to build or
modify existing agreements.
f) Compare the current agreements with other agreements in that area or
industry negotiated by the same or sister unions, thereby strengthening
the bargaining position.
g) Obtain economic information on issues to be advanced in negotiation
along with data relating to the proposals and demands submitted.
h) The statement of demands should be clear and self-explanatory so as
not to give rise to any misunderstanding.
i) Inform all members about the demands to be raised with the employer
/ employer’s organizations and their implications.
j) Advise members not to resort to anything which might jeopardize the
smooth negotiations during collective bargaining.

EMPLOYER’S PREPARATIONS

a) Anticipate statement of demands from the union once it has been

recognized as a collective bargaining agent.
b) Study agreements in other comparable units / industry / area and find
out important provisions agreed upon; analyse them and find out to
what extent they could be accepted if the same or similar demands are
raised.
c) Analyse grievances and arbitration awards, in particular those
grievances that arise repeatedly under the same agreement and look
for poor and unworkable clauses which call for revision.
d) Conduct meetings with supervisions and other lower echelons and
record their experiences of working with exiting or past agreements,
thus providing information for possible changes.
e) Meet representatives of other companies for the purpose of
exchanging view points regarding terms of employment and
conditions of work applicable there in and the working of agreements.
f) Study provisions of various labour laws to ensure that the terms of
agreement when arrived at are in accordance with and not contrary to
the law.
g) Study and obtain economic information of company, area and industry
as well as the national policies before starting negotiations.
h) Examine the labour relations policy of the company and the charges,
if any , on the anvil.
i) Examine the attitude and assistance rendered by the union and shop
stewards in the implementations of the existing or past agreements
and various methods adopted.
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 j) Get full clarification of various demands submitted for collective
Bargaining before actual negotiations start and take tentative decisions
thereon without being rigid.
k) Select the right negotiator or a team of negotiators in advance.

TECHNIQUES OF BARGAINING

No hard and fast rule can be laid down with regard to the bargaining
techniques but the following should be kept in view :

a) Take up one issue at a time.

b) Decide the total monetary increase and then allocating it over the issues
involved.
c) Make a tentative agreement on an issue and do finalisation depending
upon the completion and signing of the entire contract.
d) Learn the value of changing the subject when awkward situation arises.
e) Be a good listener.
f) Learn to identify techniques which give best results
g) Qestion the evidence offered.
h) Use only verified data and facts.
i) Sidetrack unrealistic demands without ridicule.
j) Be factual rather than emotional.
k) Use proper language which assists in bargaining.
l) Try to create an atmosphere of trust.
m) Do not threaten to strike or lockout.

DRAFTING OF AGREEMENT

The following precautions may be taken in drafting the agreement so that it

could be implemented without much difficulty.

a) Before commencing drafting of collective agreement the draftsman

should try to conceive the whole design of it.
b) Care should be taken to see that nothing is omitted or admitted at
random.
c) Technical or legal terms used should be precise and accurate.
d) The agreement should be readily understandable to laymen. There
should not be any ambiguity.
e) A well- drafted document should be clear to any person who has basic
knowledge of the subject matter.
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f) A draftsman should satisfy himself as to what he means to say, what
he does not mean to say and what he need not say.
g) The choice of words should be appropriate to convey the right
meaning of it. The drafts man should use familiar words with precise
meaning.
h) The choice of right words is advantageous both to the reader and
writer and as such the writer should be direct, simple, brief, vigorous
and lucid.
i) Word should always be used in the same sense, and the active voice is
preferable to the passive voice.
j) Sentences should be clear and short.
k) Before finally passing a draft, the draftsman should reconsider it. He
must be satisfied that draft means what he intends, that the terms are
clear, definite and understandable and that the requirements of the law
have been properly understood.
l) Before drafting an agreement, the parties should make a thorough
study of the data on the subject to appreciate the consequences,
implications, and effects in diverse situations and reactions that may
follow. An understanding of the socio-economic structure and state
of industrial relations will also help in the proper drafting of the
agreement.

The draft agreement should contain :

a) Names of the representatives of parties, their designations and the

organization to which they belong to
b) Reference of the union’s request for collective bargaining,
preamble, and purpose of the agreement
c) Reference of all demands irrespective of whether they have been
dropped, withdrawn or cancelled
d) period of operation
e) notice period of termination of agreements
f) Dates of implementation of various items covered in the
agreement.
g) Provisions in conformity with the law
i) Collective agreement as far as possible should be self- explanatory.
j)Collective agreement dealing with a number of subjects could be
made clearer if the document is divided in logical order in parts and
paragraphs with the use of numbers and letters for paragraphs and
sub-clauses. Logical arrangement would also minimize the risk of
commission or repetition.
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 ADMINISTRATION OF AGREEMENT

If anything is more important to collective bargaining than the contract

itself, it is how the parties apply the contract and live under it from day-to –day.
Progress in collective bargaining is not measured by the signing of the
agreement, but by the fundamental human relationships which develop during
its administration, interpretation and enforcement. The administration of the
contract has two basic parts :

(i) The introduction of the contract after it is signed by the parties and
training of the line managers in understanding the contract.
(ii) Contract alteration and revision during its term including possible re-
opening of negotiations on specific issues may be done under the
following conditions:

a) Circumstances may alter making changes in the contract

necessary
b) Some clauses are kept purposely vague to be taken care of later
when the contract is finalized
c) The company may restrict isolated agreements and
understandings arrived at individually
d) No contract yet devised is so comprehensive as to over all
conceivable problems which might arise.

₪ DEVELOPMENT OF COLLECTIVE BARGAINING

The story of the development of collective bargaining is the story of the

rise and growth of trade unionism itself. Like Trade unionism, collective
bargaining too developed at first in a Great Britain in response to conditions
created by the industrial revolution. Early attempts at collective bargaining did
not succeed, partly owing to reluctance on the part of the employers to negotiate
with workers, but primarily due to the legal restraints imposed on the formation
of unions under the combination laws. After the repeal of these Acts, in 1824,
trade unions were relived of the stigma of illegality, and so collective
bargaining began to gain strength and status. Another factor which stimulated
collective bargaining was the enactment of a series of Trade Union Acts
between 1871 and 1876 by which Trade Unions were granted the right to
peaceful picketing in labour disputes, protection in respect off their funds and
were permitted to acquire a definite civil status by registering themselves with
the Registrar of Friendly Societies.
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 Initially collective bargaining centered around the settlement of wages and
other questions at the unit or factory level. At the turn of the 19th century,
collective bargaining shifted from the company to national level.

After 1904 national agreements became the rule in collective bargaining.

The pattern of bargaining based on voluntary agreements between employers
and employees is now the principal feature of employers and employees in the
United Kingdom.

From Great Britain, the idea of collective bargaining spread to France,

Germany and other countries of the continent and the United States. In the U. S;
collective bargaining developed in the same way as in the U.K There also, early
attempts were frustrated by court decisions which labeled trade union as illegal
conspiracies and also by the employer’s opposition. It is only when the
Government recognized the right of the employees to organize and bargain
collectively in 1877 that the collective bargaining started taking roots. It was
aided very much by the legal authority derived from number of Acts, such as
the National Industrial Recovery Act of 1933, the N.L. Relations Act of 1935
(Wagner Act ) and the Labour Management Relations Act of 1947 ( Taft and
Hartley Act.)

After a century of growth and development, collective bargaining has

become the gospel of Industrial relations in many countries. Today it regulates
wages and the conditions of the employment of one-third of non-agricultural
labour force in the U.S. and of about half of the labor force in Switzerland,
Austria , Belgium, The Federal Republic of Germany, Luxembourg, the
Scandinavian countries and the U.K.

COLLECTIVE BARGAINING IN INDIA

Collective bargaining in India grew at par with the growth of Trade

Unionism. Collective bargaining agreements for the first time were made at
Ahmedabad Cotton Textile Industry. The main purpose of the agreement was
regulation of management and labour relationships. But there was no
considerable growth until the second world war. Even this growth during the
second world war was not the result of the management and unions’ influence
but due to the Government’s efforts. There was not much awareness of
Collective Bargaining and its importance at that period.
Only after independence, there was considerable growth in Collective
Bargaining. Trade Unions gained importance after independence. From
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management’s side, there emerged a new class of managers, who saw the
labour with sympathy and understanding. But Collective Bargaining process
took place mainly at plant level and organization level unlike Western countries
where the agreements are reached at industry level. Another flow of Collective
Bargaining process in India is that it is mostly used for basic monitory benefits.
In recent years Collective Bargaining is gaining momentum.

FACTORS INHIBITING COLLECTIVE BARGAINING IN INDIA

In India Collective Bargaining has not made much progress as in

developed and in some developing countries and its influence on Industrial
relations is general and determination of wages and other conditions of
employment is only marginal. This limited development of Collective
Bargaining in India can be attributed to the following factors:

a) Many employers and managements refuse to accept the fact that trade
unions have come to stay. They do not like their employees forming or
joining any unions. With such an attitude the question of recognizing or
negotiating with the union voluntarily does not arise.
b) Trade union movement still covers only a small portion of the total
industrial employment. Besides the unions are too weak to bargain
collectively on account of their small membership, poor financial
resources, their multiplicity, inter-union and intra-union rivalry,
politicization and poor leadership.
c) Excessive regulation of Industrial relations by legislation and readily
available Government intervention for settlement of industrial disputes
by conciliation or compulsory adjudication.
d) Restriction on the rights of employers and employees to lockout and
strike respectively.
e) Unfavourable political and economic climate as the Government,
favourable to Collective Bargaining, is not prepared to allow endless
trial of strength for fear of planned economy being disrupted.
f) Absence of suitable legislative provisions for recognition of unions as
bargaining agents, and for requiring employers and employees to
bargain in food faith.
g) Lack of mutual trust and goodwill and spirit of give and take among
the employees and employers.
h) Reduced areas of Collective Bargaining due to the encouragement of
other institutions like wage boards, statutory fixation of minimum
wages and payment of bonus, regulation of fines and deductions , hours

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 of working, overtime payment, holidays, leave and other working and
employment conditions including social security measures.

₪ RECOMMENDATIONS OF NATIONAL COMMISION ON LABOUR

Aspects relating to the factors inhibiting the progress of collective

bargaining were examined by the National Commission on labour in 1969. It
recommended the following steps for promoting collective bargaining.

(i) Government intervention in industrial relations particularly in the

settlement of industrial disputes should be reduced gradually to the
minimum possible. Compulsory adjudication of disputes should be
used only as a last resort.
(ii) Trade unions should be strengthened both organizationally and
financially by amending the Trade Unions Act of 1926 to make
registration of unions compulsory , enhance the union membership
fee, reduce percentage of outsiders in the union executive and
among the office-bearers and increase the minimum number of
members of union applying for registration.
(iii) Legal provision may be made either by a separate legislation or by
amending an existing enactment for :

a) Compulsory recognition of trade unions and certification of

unions as bargaining agents
b) Prohibition and penalization of unfair labor practices
c) Bargaining in good faith by both employers and unions
d) Conferring legal validity and legitimacy on collective
agreements.

There are such provisions in the Maharashtra Recognition of

Trade Unions and prevention of Unfair Labor Practices Act of
1972, but as this Act is applicable only to Maharashtra, there is
need for making such legislation applicable to the whole country.

(iv) Intensification of workers education for building up internal union

leadership and making workers more knowledgeable and conscious
about their rights and obligations. This may help to depoliticise
unions and also reduce union rivalry.
(v) The idea of one union for one plant or one industry should be
popularized and made a reality.

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 (vi) The Government should declare its policy to allow and encourage
the parties to settle their conflicts and disputes by bipartite
consultation and negotiation consistent with public safety and
interest of the society in general.

All the above recommendations of the commission are under active

considerations of the Government. In fact, the recommendations regarding
prohibitation and penalization of unfair labor practices has already been
implemented by amending the Industrial Disputes Act (of 1947) in 1982 and
the amendment has been given effect to. The Government has already amended
the Trade Unions Act, 1926, in the Parliament. This has implemented some
more recommendations of the commission for improving the working of trade
unions and this may help further promotion of collective bargaining in the
country.

  

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 Chapter-10

WORKERS’ PARTICIPATION IN MANAGEMENT

Introduction:
The workers’ participation in management is an essential element of industrial
democracy & socialism . However this concept has always been a complex & debatable
issue in the field of industrial relations. Not only has it been interpreted in a variety of
different ways , its implementation too has taken different forms for the purpose of
harmonizing the industrial relations.

According to International Institute of Labour Studies: WPM is the participation

resulting from the practices which increase the scope for employees’ share of influence in
decision-making at different tiers of organizational hierarchy with concomitant
assumption of responsibility.

According to ILO: Workers’ participation, broadly covers all forms of association of

workers and their representatives with the decision-making process, ranging from
exchange of information, consultations, decisions and negotiations, to more
institutionalized forms such as the presence of workers’ member on management or
supervisory boards or even management by workers themselves as practiced in
Yugoslavia.

Dr. Mhetras defines this concept as “sharing of decision –making power by rank and file
of an industrial organisation , through proper representatives at all levels of management
in the entire range of managerial actions” Thus Participation basically means sharing the
decision-making power with the lower ranks of the organization in an appropriate
manner.

Three groups of managerial decisions affect the workers of any industrial establishment
and hence the workers must have a say in it.

o Economic decisions – methods of manufacturing, automation, shutdown, lay-offs,

mergers.
o Personnel decisions – recruitment and selection, promotions, demotions, transfers,
grievance settlement, work distribution.
o Social decisions – hours of work, welfare measures, questions affecting work rules and
conduct of individual worker’s safety, health, sanitation and noise control.

The concept of WPM is a broad and complex one. Depending on the socio-political

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environment and cultural conditions, the scope and contents of participation change.

Objectives:
According to Gosep, workers’ participation may be viewed as:
o An instrument for increasing the efficiency of enterprises and establishing harmonious
relations;
o A device for developing social education for promoting solidarity among workers and
for tapping human talents;
o A means for achieving industrial peace and harmony which leads to higher productivity
and increased production;
o A humanitarian act, elevating the status of a worker in the society;
o An ideological way of developing self-management and promoting industrial
democracy.
WPM also have following objectives
o To improve the quality of working life (QWL) by allowing the workers greater
influence and involvement in work and satisfaction obtained from work; and
o To secure the mutual co-operation of employees and employers in achieving industrial
peace; greater efficiency and productivity in the interest of the enterprise, the workers,
the consumers and the nation.

Importance:
 Unique motivational power and a great psychological value.
 Peace and harmony between workers and management.
 Workers get to see how their actions would contribute to the overall growth of the
company.
 They tend to view the decisions as `their own’ and are more enthusiastic in their
implementation.
 Participation makes them more responsible.
 Workers have ideas which can be useful;
Workers may work more intelligently if they are informed about the reasons for and the
intention of decisions that are taken in a participative atmosphere.
They become more willing to take initiative and come out with cost-saving suggestions
and growth-oriented ideas.

Scope and ways of participation:

One view is that workers or the trade unions should, as equal partners, sit with the
management and make joint managerial decisions. The other view is that workers should
only be given an opportunity, through their representatives, to influence managerial
decisions at various levels.
In practice, the participation of workers can take place by one or all the methods listed
below:
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o Board level participation
o Ownership participation
o Complete control
o Staff or work councils
o Joint councils and committees
o Job enlargement and enrichment
o Suggestion schemes
o Quality circles
o Empowered teams
o TQM
o Financial participation

Participation at the Board level:

 This would be the highest form of industrial democracy.
 The workers’ representative on the Board can play a useful role in safeguarding the
interests of workers.
He or she can guide the Board members on matters of investment in employee benefit
schemes like housing, and so forth.

In 1976, during emergency,the Government of India took the initiative and appointed
workers’ representatives on the Board of Hindustan Antibiotics (Pune), HMT
(Bangalore), and even on the Board of nationalized banks..The Tatas, DCM, and few
others corporates also have tried this initiative. However this initiative failed for
following reasons

Problems associated with this method:

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

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Participation through ownership:

This involves making the workers’ shareholders of the company by inducing them to buy
equity shares. In many cases, advances and financial assistance in the form of easy
repayment options are extended to enable employees to buy equity shares. L & T &
INFOSYS used this method.
Advantage:
o Makes the workers committed to the job and to the organization.
Limitations
o Effect on participation is limited because ownership and management are two different
things.

Participation through complete control:

 Workers acquire complete control of the management through elected boards.
 The system of self-management in Yugoslavia is based on this concept.
 Self-management gives complete control to workers to manage directly all aspects of
industries through their representatives.
Advantages:
o Ensures identification of the workers with their organization.
o Industrial disputes disappear when workers develop loyalty to the organization.
o Trade unions welcome this type of participation.
However, complete control by workers is not an answer to the problem of participation
because the workers do not evince interest in management decisions.

Participation through Staff and Works Councils:

 Staff councils or works councils are bodies on which the representation is entirely of
the employees.
 There may be one council for the entire organization or a hierarchy of councils.
 The employees of the respective sections elect the members of the councils.
 Such councils play a varied role. Their role ranges from seeking information on the
management’s intentions to a full share in decision-making.
 Such councils have not enjoyed too much of success because trade union leaders fear
the erosion of their power and prestige if such workers’ bodies were to prevail.

Participation through Joint Councils and Committees:

Joint councils are bodies comprising representatives of employers and employees.In this
method the participation is in the form of consultation..
Industrial Disputes Act, provides statutory support to such committees. Accordingly all
industrial establishment employing 100 or more workers.must have Works Committee o

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

Participation through Job Enlargement and Job Enrichment:

Excessive job specialization is seen as a by-product of mass production in industries,

which leads to boredom and associated problems in employees.

Two methods of job designing – job enlargement and job enrichment– are seen as
methods of addressing these problems.

o Job enlargement means expanding the job content – adding task elements horizontally.
o Job enrichment means adding `motivators’ to the job to make it more rewarding.

This offers freedom and scope to the workers to use their judgment. However this form of
participation is very basic as it provides only limited freedom to a worker concerning the
method of performing his/her job.Besides this, the worker has no say in other vital issues
of concern to him – issues such as job and income security, welfare schemes and other
policy decisions.

Participation through Suggestion Schemes:

Many organisations have Suggestion Schemes as a means of participation Employees’

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

Participation through Quality Circles:

This concept was originated in Japan in the early 1960s and has now spread all over the
world. A QC consists of seven to ten people from the same work area who meet regularly
to define, analyze, and solve quality and related problems in their area. Training in
problem-solving techniques is provided to the members. QCs are said to provide quick,
concrete, and impressive results when correctly implemented.
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Advantages:
o Employees become involved in decision-making, acquire communication and analytical
skills and improve efficiency of the work place.
o Organization gets to enjoy higher savings-to-cost ratios.
o Chances of QC members to get promotions are enhanced.
o QCs can be an excellent bridge between participative and non-participative approaches.

Limitations:

These circles require lot of time and commitment on the part of members for regular
meetings, analysis, brainstorming, etc. Most QCs have a definite life cycle – one to three
years. Few circles survive beyond this limit either because they loose steam or they face
simple problems.For QCs to succeed in the long run, the management needs to show its
commitment by implementing some of the suggestions of the groups and providing
feedback on the disposition of all suggestions.

Quality Circles – Indian Experience

In India Quality Circles were tried by BHEL, Mahindra and Mahindra, Godrej and Boyce
among others.in their manufacturing units. However they experienced mixed results:
M&M (jeep division) with 76 QCs has experienced favourable results. Many Technical
problems got solved. Industrial relations were improved . Many other initiatives like
MOST could be introduced. Workers could get out of their daily routine and do
something challenging.
In some organisations they were not successful as Trade Unions perceived them as a way
of overburdening workers, and an attempt to undermine their role.

Empowered Teams:
Team is an excellent form of participation many organisations have introduced in their
day to day work.& have derived significant results. Empowerment occurs when authority
and responsibility are passed on to the employees who then experience a sense of
ownership and control over their jobs. Employees may feel more responsible, may take
initiative in their work, may get more work done, and may enjoy the work more. For
empowerment to occur, the following approach needs to be follow a different approach
as compared to the traditional approach:

Features of empowered or self-directed teams:

o Empowered to share various management and leadership functions.

o Plan, control and improve their work.
o Often create their schedules and review their performance as a group.
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o Prepare their own budgets and co-ordinate their work with other departments.
o Usually order materials, keep inventories and deal with suppliers.
o Frequently responsible for acquiring any new training they might need.
o May hire their own replacement to assume responsibility for the quality of their
products or services.

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

Financial Participation:

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

Some schemes of financial participation:

o Profit-linked pay
o Profit sharing and Employees’ Stock Option schemes.
o Pension-fund participation.

Pre-requisites for successful participation:

 Management and operatives/employees should not work at cross-purposes i.e. they

must have clearly defined and complementary objectives.
 Free flow of communication and information.
 Participation of outside trade union leaders to be avoided.
 Workers’ education and training. Trade unions and government needs to work in this
area.
 Trust between both the parties.
 Workers should be associated at all levels of decision-making.
 Employees cannot spend all their time in participation to the exclusion of all other
work.

Limitations of participation:
 Technology and organizations today are so complex that specialized work-roles are
required. This means employees will not be able to participate effectively in matters
beyond their particular environment.
 The role of trade unions in promoting participative management has been far from
satisfactory.
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 Employers are unwilling to share power with the workers’ representatives.
 Managers consider participative management an encroachment on their authority.

Evolution of participative management in India:

The beginning towards WPM was made with the Industrial Disputes Act, 1947, which
made Works Committees mandatory in industrial establishments employing 100 or more
workers. The Industrial Policy Resolution adopted by the government in 1956 stated that
there should be some joint consultation to ensure industrial peace, and improve
employer-employee relations. The functions of both these joint bodies were to be
consultative and were not binding on the management. The response to these schemes
was encouraging to begin with, but gradually waned.

In 1962, a study team was appointed to report on the working of joint councils and
committees. The said team identified some reasons for their failure. However no
concrete steps were taken to remove the difficulties, or change the pattern of participative
management. During the emergency period of 1975-77, the interest in these schemes was
revived by the then Prime Minister by including Workers’ Participation in industry in the
government’s 20-point Economic programme. The government started persuading large
enterprises to set up joint consultative committees and councils at different levels.The
Janata Government who came to power in 1977 carried on this initiative. It was once
again emphasized by the Congress government who returned to power in 1980.However
the response was not positive.Through Article 43-A to our Constitution of India the Govt.
showed its commitment , which reads “The State shall take steps, by suitable legislation,
or in any other way, to secure the participation of workers in the management of
undertakings, establishments or other organizations engaged in any industry”.On May
30,1990; the government introduced the Participation of Workers in Management Bill in
the Rajya Sabha.The bill requires every industrial enterprise to constitute one or more
`Shop-Floor Councils’ at the shop floor level, and`Establishment Council’ at the
establishment level.These councils will have equal representation of employers and
employees. Shop-Floor councils enjoy powers over a wide range of functions from
production, wastage control to safety hazards. The Establishment Council enjoys similar
powers. The bill provides for the constitution of a Board of Management of every
corporate body owning an industrial establishment. The bill also provides for penalties on
individuals who contravene any provision of the bill.In spite of all these efforts, only the
government and the academicians have been interested in participative management.
However now the Corporates are showing positive approach towards this concept
because of the competitive environment. Through TQM, BPR & with many other
initiatives participative management is staging a comeback.
  

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 Chapter-11

TOTAL QUALITY MANAGEMENT

Human resource is a fundamental component of every successful & developing

organization.Take away the people and the organization is nothing. Take away the
people's motivation, commitment and ability to work together in well-organised teams,
and again, the organization is nothing. Conversely, inspire the people to work well,
creatively, productively, and the organization can fly. Logically therefore, the
development and proper utilization of people are vital to the success of all quality
management initiatives

Total Quality Management (TQM)

Total Quality Management (TQM) is an approach that seeks to improve quality and
performance which will meet or exceed customer expectations. In other words ,TQM is a
set of management practices throughout the organization, geared to ensure that the
organization consistently meets or exceeds customer requirements. TQM places strong
focus on process measurement and controls as means of continuous improvement.

TQM looks at the overall quality measures used by a company including managing
quality design and development, quality control and maintenance, quality improvement,
and quality assurance. TQM takes into account all quality measures taken at all levels and
involving all company employees.

Origins Of TQM

Total quality management has evolved from the quality assurance methods that were first
developed around the time of the First World War. The war effort led to large scale
manufacturing efforts that often produced poor quality. To help correct this, quality
inspectors were introduced on the production line to ensure that the level of failures due
to quality was minimized.

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After the First World War, quality inspection became more common place in
manufacturing environments and this led to the introduction of Statistical Quality Control
(SQC), a theory developed by Dr. W. Edwards Deming. This quality method provided a
statistical method of quality based on sampling. Where it was not possible to inspect
every item, a sample was tested for quality. The theory of SQC was based on the notion
that a variation in the production process leads to variation in the end product. If the
variation in the process could be removed this would lead to a higher level of quality in
the end product.

After World War Two, the industrial manufacturers in Japan produced poor quality items.
In a response to this, the Japanese Union of Scientists and Engineers invited Dr. Deming
to train engineers in quality processes. By the 1950’s quality control was an integral part
of Japanese manufacturing and was adopted by all levels of workers within an
organization.

By the 1970’s the notion of total quality was being discussed. This was seen as company-
wide quality control that involves all employees from top management to the workers, in
quality control. In the next decade more non-Japanese companies were introducing
quality management procedures that based on the results seen in Japan. The new wave of
quality control became known as Total Quality Management, which was used to describe
the many quality-focused strategies and techniques that became the center of focus for
the quality movement.

Seven Important Principles of Total Quality Management

Total Quality Management (TQM) is an approach that organizations use to improve their
internal processes and increase customer satisfaction. When it is properly implemented,
this style of management can lead to decreased costs related to corrective or preventative
maintenance, better overall performance, and an increased number of happy and loyal
customers.

However, TQM is not something that happens overnight. There are some underlying
philosophies that the company must integrate throughout every department of the
company and at every level of management. Whatever other resources you use, you
should adopt these seven important principles of Total Quality Management as a
foundation for all your activities.

1. Quality can and must be managed

Many companies have wallowed in a repetitive cycle of chaos and customer complaints.
They believe that their operations are simply too large to effectively manage the level of
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quality. The first step in the TQM process, then, is to realize there is a problem and that it
can be controlled.

2. Processes, not people, are the problem

If your process is causing problems, it won’t matter how many times you hire new
employees or how many training sessions you put them through. Correct the process and
then train your people on these new procedures.

3. Don’t treat symptoms, look for the cure

If you just patch over the underlying problems in the process, you will never be able to
fully reach your potential. If, for example, your shipping department is falling behind,
you may find that it is because of holdups in manufacturing. Go for the source to correct
the problem.

4. Every employee is responsible for quality

Everyone in the company, from the workers on the line to the upper management, must
realize that they have an important part to play in ensuring high levels of quality in their
products and services. Everyone has a customer to delight, and they must all step up and
take responsibility for them.

5. Quality must be measurable

A quality management system is only effective when you can quantify the results. You
need to see how the process is implemented and if it is having the desired effect. This will
help you set your goals for the future and ensure that every department is working toward
the same result.

6. Quality improvements must be continuous

Total Quality Management is not something that can be done once and then forgotten.
It’s not a management “phase” that will end after a problem has been corrected. Real
improvements must occur frequently and continually in order to increase customer
satisfaction and loyalty.

7. Quality is a long-term investment

Quality management is not a quick fix. You can purchase QMS software that will help
you get things started, but you should understand that real results won’t occur
immediately. TQM is a long-term investment, and it is designed to help you find long-
term success.
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Pre-requisites of TQM

TQM is the management of initiatives and procedures that are aimed at achieving the
delivery of quality products and services. However its successful implementation is based
on number of factors. They are as follows:

Support of the Top Management – Top management should act as the main driver for
TQM and create an environment that ensures its success.

Training – Employees should receive regular training on the methods and concepts of
quality.

Customer Focus – Improvements in quality should improve customer satisfaction.

Decision Making – Quality decisions should be made based on measurements.

Methodology and Tools – Use of appropriate methodology and tools ensures that non-
conformances are identified, measured and responded to consistently.

Continuous Improvement – Companies should continuously work towards improving

manufacturing and quality procedures.

Company Culture – The culture of the company should aim at developing employees
ability to work

QUALITY MANAGEMENT SYSTEMS

There are two important quality management systems where involvement of people is
important.

KAIZEN

Kaizen is a very significant concept within quality management and deserves specific
explanation:
Kaizen (usually pronounced 'kyzan' or 'kyzen' in the western world) is a Japanese word,
commonly translated to mean 'continuous improvement'.
Kaizen is a core principle of quality management generally, and specifically within the
methods of Total Quality Management and 'Lean Manufacturing'.

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Originally developed and applied by Japanese industry and manufacturing in the 1950s
and 60s, Kaizen continues to be a successful philosophical and practical aspect of some
of the best known Japanese corporations, and has for many years since been interpreted
and adopted by 'western' organizations all over the world.
Kaizen is a way of thinking, working and behaving, embedded in the philosophy and
values of the organization. Kaizen should be 'lived' rather than imposed or tolerated, at all
levels.
The aims of a Kaizen organization are typically defined as:
 To be profitable, stable, sustainable and innovative.
 To eliminate waste of time, money, materials,
resources and effort and increase productivity.
 To make incremental improvements to systems,
processes and activities before problems arise rather
than correcting them after the event.
 To create a harmonious and dynamic organization
where every employee participates and is valued.

Key concepts of Kaizen:

 Every is a key word in Kaizen: improving everything
that everyone does in every aspect of the organization
in every department, every minute of every day.
 Evolution rather than revolution: continually making
small, 1% improvements to 100 things is more
effective, less disruptive and more sustainable than
improving one thing by 100% when the need
becomes unavoidable.
 Everyone involved in a process or activity, however
apparently insignificant, has valuable knowledge and
participates in a working team or Kaizen group (see
also Quality Circles below).
 Everyone is expected to participate, analysing,
providing feedback and suggesting improvements to
their area of work.

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  Every employee is empowered to participate fully in
the improvement process: taking responsibility,
checking and co-ordinating their own activities.
Management practice enables and facilitates this.
 Every employee is involved in the running of the
company, and is trained and informed about the
company. This encourages commitment and interest,
leading to fulfillment and job satisfaction.

Kaizen teams use analytical tools and techniques to review systems and look for ways to
improve (see Quality Tools below).
At its best, Kaizen is a carefully nurtured philosophy that works smoothly and steadily,
and which helps to align 'hard' organizational inputs and aims (especially in process-
driven environments), with 'soft' management issues such as motivation and
empowerment.
Like any methodology however, poor interpretation and implementation can limit the
usefulness of Kaizen practices, or worse cause them to be counter-productive.
Kaizen works best when it is 'owned' by people, who see the concept as both empowering
of individuals and teams, and a truly practical way to improve quality and performance,
and thereby job satisfaction and reward. As ever, such initiatives depend heavily on
commitment from above, critically:
 to encourage and support Kaizen, and
 to ensure improvements produce not only better
productivity and profit for the organization, but also
better recognition and reward and other positive
benefits for employees, whose involvement drives the
change and improvement in the first place.

Interestingly, the spirit of Kaizen, which is distinctly Japanese in origin - notably its
significant emphasis upon individual and worker empowerment in organizations - is
reflected in many 'western' concepts of management and motivation, for example the Y-
Theory principles described by Douglas McGregor; Herzberg's Motivational Theory,
Maslow's Needs Hierarchy and related thinking; Adams' Equity Theory; and Charles
Handy's motivational theories.

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QUALITY CIRCLES

Quality circles, similar to Kaizen teams, are key part of any continuous improvement
programme.
In this context the word 'circle' refers to a team of people.
Teams or small groups (the circles) meet to analyse, and review working practices with
a view to making suggestions for improvement in their work and the systems.
As with many Quality Tools, the specific use of Quality Circles is chiefly concentrated
among manufacturing and engineering organizations or in technical departments of this
sort.
The term Quality Circles may be found in more general use outside of these traditional
areas, in which case the name tends to imply or symbolise that teams are working in an
empowered, cooperative way, especially focused on problem-solving and mprovements,
rather than a strict adherence to technical Total Quality Management or related
processes.

TQM Tools

'Quality Tools' refers to tools and techniques used in support of Kaizen and other
quality improvement or quality management programmes and philosophies.
Based mainly on statistical and manufacturing process tools, Quality Tools are used at
all levels of an organization - typically in 'quality circles' or Kaizen work teams to
analyse and review activities and uncover inefficiencies. The main quality tools are :

 Pareto Principle
 Scatter Plots
 Control Charts
 Flow Charts
 Cause and Effect , Fishbone, Ishikawa Diagram
 Histogram or Bar Graph
 Check Lists
 Check Sheets

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Pareto Principle

The Pareto principle suggests that most effects come from relatively few causes. In
quantitative terms: 80% of the problems come from 20% of the causes (machines, raw
materials, operators etc.); 80% of the wealth is owned by 20% of the people etc.
Therefore effort aimed at the right 20% can solve 80% of the problems. Double (back to
back) Pareto charts can be used to compare 'before and after' situations. General use, to
decide where to apply initial effort for maximum effect.

Scatter Plots

A scatter plot is effectively a line graph with no line - i.e. the point intersections
between the two data sets are plotted but no attempt is made to physically draw a line.
The Y axis is conventionally used for the characteristic whose behaviour we would like
to predict. Use, to define the area of relationship between two variables.

Warning: There may appear to be a relationship on the plot when in reality there is
none, or both variables actually relate independently to a third variable.

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Control Charts

Control charts are a method of Statistical Process Control, SPC. (Control system for
production processes). They enable the control of distribution of variation rather than
attempting to control each individual variation. Upper and lower control and tolerance
limits are calculated for a process and sampled measures are regularly plotted about a
central line between the two sets of limits. The plotted line corresponds to the
stability/trend of the process. Action can be taken based on trend rather than on
individual variation. This prevents over-correction/compensation for random variation,
which would lead to many rejects.

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Flow Charts

Pictures, symbols or text coupled with lines, arrows on lines show direction of flow.
Enables modelling of processes; problems/opportunities and decision points etc.
Develops a common understanding of a process by those involved. No particular
standardisation of symbology, so communication to a different audience may require
considerable time and explanation.

Cause and Effect , Fishbone, Ishikawa Diagram

The cause-and-effect diagram is a method for analysing process dispersion. The

diagram's purpose is to relate causes and effects. Three basic types: Dispersion analysis,
Process classification and cause enumeration. Effect = problem to be resolved,
opportunity to be grasped, result to be achieved. Excellent for capturing team
brainstorming output and for filling in from the 'wide picture'. Helps organise and relate
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factors, providing a sequential view. Deals with time direction but not quantity. Can
become very complex. Can be difficult to identify or demonstrate interrelationships.

Histogram or Bar Graph

A Histogram is a graphic summary of variation in a set of data. It enables us to see

patterns that are difficult to see in a simple table of numbers. Can be analysed to draw
conclusions about the data set.

A histogram is a graph in which the continuous variable is clustered into categories and
the value of each cluster is plotted to give a series of bars as above. The above example
reveals the skewed distribution of a set of product measurements that remain
nevertheless within specified limits. Without using some form of graphic this kind of
problem can be difficult to analyse, recognise or identify.

Check Sheets

A Check Sheet is a data recording form that has been designed to readily interpret
results from the form itself. It needs to be designed for the specific data it is to gather.
Used for the collection of quantitative or qualitative repetitive data. Adaptable to
different data gathering situations. Minimal interpretation of results required. Easy and
quick to use. No control for various forms of bias - exclusion, interaction, perception,
operational, non-response, estimation.

Check Lists

A Checklist contains items that are important or relevant to a specific issue or situation.
Checklists are used under operational conditions to ensure that all important steps or
actions have been taken. Their primary purpose is for guiding operations, not for
collecting data. Generally used to check that all aspects of a situation have been taken

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into account before action or decision making. Simple, effective.

Conclusion :
Quality Guru Mr.Joseph Juran, a seminal figure in the history of quality management
died on 28th February 2008,at the age of 103. Juran did more than teach the Japanese
about quality management. He was also arguably the first quality expert to emphasize
that no quality management system works unless people are empowered and committed
to take responsibility for quality - as an ongoing process - effectively for quality to
become part of people's behaviour and attitudes

  

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 Chapter-12

MANAGING FOR HARMONIOUS INDUSTRIAL RELATIONS

The establishment of good industrial relations depends on the constructive

attitude on the part of both management and the union. The constructive attitude
in its turn depends on all the basic policies and procedures laid down in any
organization for the promotion of healthy industrial relations. It depends on the
ability of the employers and trade union to deal with their mutual problems
freely , independently with responsibility. They should have faith in collective
bargaining rather than in collective action. For better industrial relations it is
also necessary that fair labour standards are laid down. There is a feeling of
equality with which the management should enter into collective bargaining
with the labour and there should be realization on the part of management to
promote workers welfare. The existence of strong independent, responsible ,
democratic trade unions ,the promotion of collective bargaining - a fair and
independent machinery for the peaceful settlement of industrial disputes - the
existence of good human relations , lack of any kind of discrimination are the
essentials for a healthy industrial relations.

Here are ten golden rules for good industrial relations :

1. Management should have harmony as a goal. The foregoing analysis of the

official statistics on industrial disputes in the manufacturing sector for the
period 1974-83 reveals that during the 10 year period, on an average, 50 per
cent of the strikes in India were either fully or partially successful from the
union point of view. This raises the question as whether the management is
genuinely interested in harmony. We often hear employees and trade union
leaders accusing management of engineering strikes , be they in the private or
the public sector, to survive recessionary market situation or a weak sales
position .

2. Having defined harmony as the goal, management should take the initiative to
pursue it vigorously. Harmony in industrial relations may be difficult, but not
impossible. In industry, the relationship between employee and employer is
contractual. So there are mutual expectations and obligations. Employees’
rights are employers’ obligations and vice versa. Hence ,conflict may be
inherent. It is the responsibility of the management to take the initiative in all
facets of industrial relations to mitigate conflict. Employees lose freedom
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 when they join an organization. The need for freedom would be dormant so
long as they get a just treatment. If they think that they are given a ‘raw deal’,
real or imaginary the conflict surfaces ; it may even escalate if it is not
promptly dealt with. If employees’ perceptions about ‘raw deal’ or ‘lack of
fair play’ are true , management must change its ways. If employees
perceptions are imaginary management must take the initiative not only to be
fair but also appear to be fair and seek to change the perceptions.

3. Full acceptance by management of its accountability is necessary in industrial

relations the same way as accountability is accepted for the quality of product
or marketing strategy.

4. A distinction, based on the concept of accountability, between the functions of

union and functions of management is necessary

5. Setting up norms and following them up with exemplary standards and

transparent honesty is imperative. If organizations are to have order and to
function in harmony with a sense of purpose and an achievement orientation
there is need for norms that are just and humane and these norms will gain
acceptance and respect if they emerge from a consensus among the concerned
rather than being imposed from above.

6. Uniform applicability of the policy and procedures after considering the

varying local conditions in a multi plan situation is mandatory. Every
organization and manager is faced with problems resulting from past
practices. Operational experiences result in a set of ‘past’ practices, which
when accumulated become part of the culture of the organization. These
unwritten but real policies exist apart from contracts and policy manuals and
owe their origin to the countless informal decisions and actions taken by
management. Hurried or causal response to seemingly unimportant situations
and employee requests set precedents that make a dent on the policy. Granting
a request to one employee and denying it to another will lead to charge of
favouritism , nepotism etc.

7. There is need for bargaining in good faith with the majority union of the
employees on matter concerning compensation and working conditions and
institutionalise joint consultation on all other matters affecting the employees.
Union shopping practices would be costly in the long run though it may
appear that there is a short term payoff because weak unions create more
problems than strong ones. The management should neither seek to exploit the
weaknesses of the union movement in the organization nor submit meekly to
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 the coercive tactics of the union. Bargaining outcomes should be viewed in a
sprit of partnership and give and take than in an adversarial win lose mood. As
for the need to institutionalize joint consultation we may recall what Field
Marshall Montgomery said “Even a man regimented in every sense of the
term would carry out his duties with more vigour and better spirit if treated as
someone who really mattered and who understood the overall importance of
the project in which he was involved”.

8. Maintain direct two way flow of communication between management and

employees. The relationship between employees and organization is primary
and that of employees and the union in which they may become members at a
latter stage is secondary. If employees are alienated from the organization and
begin to demonstrate their allegiance to the union the management should
share the blame. The secondary relationships become important and valued
when the primary relationships turn sour. In such an event whether real or
imaginary management should show concern, not apathy. One of the main
reasons for the alienation is the breakdown in communications .Managements
should establish rapport with the rank and file rather than merely with the
union leadership.

9. There is need to maintain a systematic data base on all aspects concerning

human resource management to ensure objectivity and transparency in
management actions that help bridge the gap between employees and
management in terms of credibility and confidence through better
communication of information and promotion on knowledge about the
organization.

10. Respect for and acceptance of the industrial relations function in an enterprise
depends on the quality and competence of the industrial relations
professionals and their involvement in strategic planning with commensurate
responsibility , authority and accountability. If there is lack of respect it may
be due to lack of expertise. If there is lack of acceptance, it may be because
they assume the union to be their adversary and adopt one-upmanship. If there
is lack of involvement in strategic planning it may be because they have failed
to convince the top management about their intrinsic worth in a proactive role.
If union appears to be doing its job better than managers in managing in an
organization one may conclude that leaders’ commitment to the cause of the
union is greater than managers’ commitment to the cause of management.

 END  
132
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