Unit 9

Labor relation and labour regulation in Nepal

Concept of Labor relation

Labor relation is also called the employee relation or industrial relation. It means the relationship
between the management and employee, unions and management, union and employees and between
the employees themselves.
“Industrial relation deals with either the relationship between the state and employer and owner’s
organization or the relation between the occupational organizations themselves”. International Labor
Organization.
Objectives of labor relation
1. Maintain the harmonious relation amongst the labor and the management
2. Enhance the economic growth and prosperity
3. Encourage the trade union
4. To control and minimize the industrial conflict
5. Improve the employee strength
6. Maximize the employee productivity

Actors of labor relations

1. Employers
2. Employee
3. Government
4. Pressure group
5. Trade unions
6. Employee’s association

Trade Union/ labor union

Meaning
It is the collection of the different worker or labour from the different organization or institution which
get unit to defend and fights for their rights. Trade unions are important stakeholder in labour relations.
In the trade union the worker or labor gets organized in trade union to work collectively to promote and
protect their interests. Management should use trade union constructively to settle any sort of
management or interpersonal dispute and maintain the industrial peace.
The features or characteristic of trade union are
1. Organization: A union is an organization. It has the objectives, working procedure, the structure
and people working in it. It is a human association where all kinds of people workers together
for mutual interest.
2. Permanency: a union is generally a permanent organization. its life depends with the life of the
organization where it is formed.
3. Collectivity: the members of the union work collectively in a unity as a group. Individual
interests are sacrificed for the shake of group interest. Unity is strength form unions.
4. Mutual interest: The member of the union seek to promote and protect their mutual interest,
such interest can be economic, cultural social and political.

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 5. Collective bargaining: a union operated through collective bargaining. Labour and management
come to the bargaining table negotiate and reach a settlement.

Functions of Trade Union

A trade union is an organization of the people which has their own special goals and objectives. They
performs various function which are as follows
1. Collective bargaining: Collective barging refers to the negotiation with the management by the
union member in the table. Union are able to get higher pay and benefits package for their
member. Union carries out collective bargaining related to wages, hours of working, condition of
employment and services. Employee joins union in the expectation of getting higher
compensation.
2. Job security: Employees working the organization may be fired at any time without any
ultimatum. Thus the unions establish security system for their member. The collective
bargaining contract guarantees, job, income, and fair treatment for the duration of the contract.
3. Better working condition: The worker wants to work in the between and safe working
environment and condition. Thus the union members protest for the unfair working condition.
They define and regulate grievance procedure. They help improve quality of work life of
employees.
4. Influence work rules: Union provide channels influence work rules and to protest for unfair
rules. They ensure administration of work rules.
5. Obtain political power: unions are lobbying groups. They tend to be aligned with a given
political party. This helps them gain political power.

Types of trade unions

Union can be of following types. They are
1. Closed shop: In the closed shop all the employees who are hire in the organization must be
union remember.
2. Union shop: In this type of union all the member must take the membership of union. If the
employees does not join the union they have to forfeit (loose) their jobs,
3. Agency shop: in this union type all the non union employees are required to pay the union as
sum of money equal to union fees and dues as a condition of continuing employment.
4. Open shop: Joining a union is voluntary. Those who do not join do not pay union dues or fees.
However those who join the union are compelled to remain in the union for the duration of
existing contract.

Reasons for Joining Union

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 There are various reasons by which the employees join the unions
1. Job security: Employees working the organization may be fired at any time without any
ultimatum. Thus the unions establish security system for their member. The collective
bargaining contract guarantees, job, income, and fair treatment for the duration of the contract.
They protect the dignity on the job.
2. Higher compensation: Unions are able to get higher pay and benefits packages for their
member. Union employs professional bargainer for bargaining related to wages, hours of work,
condition of employment, benefits, and services. Employee joins union in the expectation of
getting higher compensation.
3. Better working condition: Union compelled the administration to provide the safe and proper
working condition. They are channels for pretesting unfair condition. They define and regulate
grievance procedure. They helps to improve the quality of work life of employees
4. Influence work rules: Unions provide channels to influence work rules and to pretests for unfair
rules. They ensure fair administration of rule.
5. Obtain political power: unions are lobbying groups. They are aligned with political parities. They
help them gain political power.
6. Others
 Sense of belongingness
 Sense of participation
 Minimize discrimination
 Platform for self-expression

Collective Bargaining
Collective bargaining is a process of negotiation, drafting, administrating and interpretation of a written
agreement between an employee and a union leader for a specific period of time. The wages, working
hour condition, premonition etc are negotiated for period of usually two or three years at a time.
Collective bargaining is very important part of human resource management. As a major part of
industrial relation the objective of collective bargaining is to agree upon an acceptable contract to
management, union representatives and the union remember. Collective means that representatives
attempt to negotiate an agreement. The major participants are representatives of management, trade
union and government. Goods faith bargaining is the cornerstone of effective labour management
relation in which we see sincerer intention of both parities o to negotiate difference and reach a
mutually acceptable agreement. Bargaining items of collective bargaining may be

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1. Voluntary bargaining items: these are neither mandatory nor illegal i.e. they become a part of
negotiation mainly through the joint efforts of both management and union for example
continuance of past contract, scope of bargaining unit, pension benefits of retire employee etc.
2. Mandatory bargaining items: These are obligatory that may be the provision of act or decision of
court. For example wages, fares of employment, overtime pay, holidays, vacation, pension,
insurance benefits etc.
3. Illegal bargaining items: They are forbidden law. For example separation of employee based on
race, closed shop i.e the company can hire only union member (printing industry in USA closed shop
practice after forbidden by law) bargaining items and issues depends on legal framework
establishment, growth and practice of organization ,union and government.

Collective bargaining process:

The process of collective depends on the country specific legal provision and types of bargaining
issues. It consist of following process
1. Preparation of negotiation: After the certification of a union as the bargaining unit, the
management and union prepare for negotiation. Preparing for negotiation can consist of fact
gathering, goal setting, and strategies development. Information is received from internal
sources like accident record employee performances reports overtime figure turnover
absenteeism etc. and the external source includes due statistics on the current economy,
economic forecast etc.
2. Contract negotiation: Both parties stay in a bargaining able. At first union delivers to
management a list of demands. Both management and unions discuss on different issues and
real negotiation takes place behind the closed doors. Negotiation is form of compromise. An
oral agreement is eventually converted into a written contract. It is signed by both parities i.e
ratified.
3. Contract administration: Once a contract is agreed upon and ratified, it must be administered. it
consist of
i. Disseminating the agreement to all union member and manager
ii. Implementing the contract
iii. Interpreting the contract and grievance resolution
iv. Monitoring activities during the contract period

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Causes of labor disputes
1. Economic causes
Unfair distribution of the income, bonus or other benefits within the organization. Unhealthy
working condition or environmental, lack of drinking water, poor ventilation etc.
2. Managerial causes
Not giving the recognition to the union or trade union member by the managers. Defective
recruitment policies. The defective promotion, transfer and placement policies encourage
dissatisfaction among workers.
3. Political causes
Political shelter to the trade union members, political access, political instability etc.
4. Other causes
Sympathy strike, protest of police atrocities, corruption in industry and public life, easy money, work
load, contract demand, safety measures, etc.

Settlement of labor disputes/conflict

1. Negotiation (collective bargaining): It is the process in which two or more parties reach agreement
even though they have different perception. During negotiation, concerned parties sit together and
negotiate or participating through bilateral discussion tries to reach an agreement to settle dispute
or conflict.
2. Facilitation: It is also called conciliation. It is a process in which a third party provided assistance to
settle dispute or conflict to concerned parties. Conciliation / facilitation primarily is concerned with
meeting and discussing their problems. Its purpose is to get the parities meeting and talking again
to solve dispute of conflicts. The decision cannot be imposed by the third party i.e facilitator. The
term conciliation / facilitation are sometime used as synonyms. In conciliation, the third party
brings the parties dispute together, encourages them to discuss on their difference and assist them
to come to their own solution. In mediation the mediator or third party is more active and submits
his own proposal for settlement of disputes or conflict that is free to refuse or accept the
proposals. But in case of interest dispute the conciliation is sometimes voluntary and sometimes
compulsory within the firms.
3. Mediation: it is a process in which a neutral third party helps to dispute/conflict parities to reach an
agreement. Mediator should be creative and trusted by both parities in disputes or conflicts. As
comparing to conciliation / facilitation the mediator is more active but the conflict parities are free
to accept or reject proposal.

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 4. Arbitration: Arbitration is a process whereby a third party takes a final decision to solve dispute or
conflict. Arbitrator should be refereed by both conflicting groups and participants. The arbitrator
dictates the settle terms. The case of dispute or conflict after arbitration is not recovered by court.
His decision is final.
5. Legal action: This is the legalistic view of managing conflicts or disputes. It is a mandatory
settlement of industrial disputes or conflicts by ordinary courts, tribunals or a labor court. Legal
action is also called “litigation”. The verdict of or final decision of court binds both parties. Legal
action is also called adjudication.
6. Fact finding: A neutral third party studies the issues in a dispute and recommends a reasonable
settlement, which is also used to solve dispute or conflicts.

Features and provisions of labour Act.

The date of authentication of the labour act was on the 2 Jestha 2053 (May 15, 1996). The first
amendment was on the 15 Magh 2054 (Jan.28, 1989). The Parliament has made this Act on the twenty first
year of the reign of His Majesty King Birendra Bir Bikram Shah Dev. This consists of 11 chapter. Only the
special and main features has been described in brief. The features of the Labour act, 2048 are:
Chapter 1
This chapter presents the short title and commencement to the “Labour Act, 2048 (1992)". It also defines
the various terms like production process, enterprise, employee, worker, manager, proprietor, factory inspector,
minor, adult, energy" etc.
Chapter 2
The chapter 2 of the labour act deals with the classification of job, appointment of worker and
employee, clarification: prohibition of engaging non-Nepalese citizens at work, appointment in contract
service, security of service, keeping on reserve, retrenchment and reinstatement , seasonal enterprise, and the
compulsory retirement.
Chapter 3
Chapter three gives the information regarding the worker’s working hours, computation of
commencement of working hour, extra wages for overtime to be provided, and about the attendance register to
be kept.
Chapter 4
This chapter is all about the worker’s remuneration. It is related with minimum remuneration fixation
committee, annual increment in remuneration, payment of remuneration, allowances and facilities, prohibition
on deduction of remuneration. At the last of this chapter the provision of the appeal has been mentioned.
According to which if the party is dissatisfied then they may file an appeal to the Labour Court within thirty
five days of the receipt of information of such order.
Chapter 5
This chapter is related with the Health and Safety of the workers. this chapter has described the provisions
relating to health and safety, protection of eyes, protection from chemical substance, provision for safety
against fire, hazardous machines to be fence, in relation to lifting of heavy weight, disputes relating to
age, orders to provide for safety, notice to be provided, and the powers to determine the standards.
Chapter 6
Chapter six is about the welfare provision. It has included the various terms related with the welfare
provision. they are the welfare fund, compensation gratuity, provident fund and medical expenses, leave,
provision of quarters, provisions relating to children, relaxing room, and canteen.
Chapter 7
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 This chapter has the special provisions to be applicable to special type of enterprise.
a. For tea estate. The provision for the tea estate are related with the formation of committee,
provision of quarter, provisions of primary health care, safety devices, provisions of primary
school, daily consumer goods, provision for entertainment, and to get the works done on
contract.
b. For construction business. The special provisions are related with construction tools, special
arrangements at temporary construction sites, and accident insurance, safety arrangements.
c. For the transportation business: The provision are related with working hours, trip allowance,
fifty percent allowance to be received during breakage or waiting period, accident insurance, first
aid materials, prohibition of consumption of alcoholic drinks and the commission agent.
d. For the business of hotel, travel, trekking, adventure, rafting, jungle safari etc. the
provision describes about the with females engaged in work, safety of workers or employees
engaged in trekking or rafting, accident insurance, payment of field allowance etc., provisions for
first aid, and the applicability of other provisions.
Chapter 8
The topic for chapter eight is the conduct and punishments. It elaborate the type of punishment that the
employer may give to the worker, employee’s misconduct, the punishment, and procedures before imposing
punishments. This chapter also explain about the misconduct of the proprietor or manager and also the action
taken by the labour office. In this chapter the punishment for obstruction to government employee and other
types of penalties have been mentioned. At last of the chapter the fines, punishments awarded under this act is
realized in the manner as governmental dues under prevailing laws.
Chapter 9
Chapter nine describes the provision about the central labour advisory board, labour relation committee,
appointment of labour officer, powers of labour officer, appointment of factory inspector, powers of the
factory inspector and notices and posters.
Chapter 10
This chapter explain about the labour dispute, dispute Settlement and other provisions. It also elaborate
about the establishment of labour court, procedures relating to submission of claims of collective dispute,
prohibition to claim, notice of strike to be provided. This chapter also explain about the labour action like the
lock out and prohibition to strike if the negotiation or filing of complaint fails to resolve the dispute. it is
related with the legal validity of collective agreement, order may be issued to end the strike, termination of
lock-out period and the remuneration for the period of lock-out.
Chapter 11
The special powers of government of Nepal is explained in this chapter. Similarly, the special provisions
respect of the workers and employees engaged outside the enterprises, powers to remove obstacles, powers to
frame rules, by laws to be availed, provisions relating to enterprise owned by government of Nepal, delegation
of authority, prevalence of this act, and finally the repeal and saving has been incorporated in this section of
the chapter.
The major provisions of labour act are
1. Provision of advertisement of appointment
2. The probation period: 1 year
3. No provision for non Nepali
4. Employee transfer:
5. Provision of permanency of employee
6. Age of retirement: 55 years
7. Working hours: 8 hours or 48 hours per week
8. Provision of overtime
9. Provision of minimum remuneration:
10. Providing Safety measure
11. Welfare fund and additional facilities
12. Provision of punishment
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