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EVOLUTION IN INDUSTRIAL RELATIONS AND

RECENT TRENDS
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• The History of Labour Laws in India dates back to Pre-Independence British Era as these Labour and
Industrial Laws were enacted by British Administration to protect interests of British Employers and
Industrialists.
• The industrial development took place in the middle of the nineteenth century. After industrial
development, the first organization that came into being was that of the industrialists. The owners of the
industries formed an organization.
• The Industrial Revolution, a historical phenomenon, completely transformed society from rural and
agricultural to industrial and consumerist.
• Early labour laws were enacted to protect employers’ interests. It was governed by the laissez-faire
doctrine, which entails a policy of minimal government intervention in the economic affairs of individuals
and society. On the other hand, contemporary labour law aims to safeguard employees from employer
exploitation.
• Also the fast changing technological development, industrial production techniques, and ideological values
have brought forth in the industrial world a unique type of employer-employee relationship. For a proper
understanding of industrial relations, it seems essential to have a historical review of industrial relations
in India.

STAGES OF LABOUR MOVEMENT IN INDIA

STAGE I : STAGE II STAGE III STAGE IV STAGE V

PRIOR TO BETWEEN THE DURING AND POST AT PRESENT
THE WORLD TWO WORLD AFTER THE INDEPENDENCE
WAR I WARS WORLD WAR (1947-2000S)
Pre-1918 Early trade II (1939- 45)
Phase union period
(1918- 1938)

STAGE I :
PRIOR TO THE WORLD WAR I
Pre-1918 Phase

• The setting up of textiles and jute mills and laying of the railways since 1850 payed the way for that
emergence of industrial activity and, in turn, labour movement in India. Beginning with the Apprentice Act
of 1850, which allowed orphaned children to find work when they reached the age of 18, several labour
laws covering all aspects of industrial employment have been enacted. Some researchers have traced the
origin of labour movement in India dated back to 1860. However, most of the writers on the subject trace
the history of labour movement in India since 1875.
• The first labour agitation, under the guidance and leadership of Mr. S. S. Bengalee, a social reformist and
philanthropist, started in Bombay in 1875 to protect against the appalling conditions of workers in
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factories, especially those of women and children and appealed to the authorities to introduce legislation
for the amelioration of their working conditions.
• As a result, the first Factory Commission was appointed in Bombay in the year 1875 and the first Factories
Act was passed in 1881.
• In 1881, Mr Narayan-Meghji Lokhande made renewed efforts for reform in the conditions of Indian
labour. Mr Lokhande a workman summoned a summit conference of workers engaged in mills in Bombay
Presidency. In this conference, the essential demands of labour were considered and a number of
resolutions were passed.

• Mr. N. M. Lokhande may be said to be the founder of organised labour movement in India who founded
the first trade union in the country, namely, the Bombay Mill Hands Association (1890).
• The major demand of this conference was that the workers should be granted a weekly holiday and given
half-an-hour rest every day. Besides, it was also insisted that workers suffering from accidental injuries
should be adequately compensated. The efforts of this conference bore some healthy fruits. Some
industrialists accepted some of the above demands.
• As a consequence of success achieved by the conference, Mr Lokhande felt encouraged and he established
a trade union in Mumbai.
• He christened this organization Bombay Mill Hands Association 1890.
• He also helped in the publication of a labour magazine- “Deenbandhu”.

• Thus, Mr Lokhande stood by the working class and did a great deal to improve their lot. But after the death
of Mr Lokhande, the momentum of the, work being done by him was lost. Afterwards railway employees
organized themselves into a union.
• This was followed by a series of associations such as the Amalgamated Society of Railway Servants in India
(1897), The Printers’ Union of Calcutta (1905), The Madras and Calcutta Postal Union (1907), and the
Kamgar Hitwardhak Sabha (1910). All these unions aimed at promoting welfare facilities for workers and
spreading literacy among them.

The broad features of the labour movement during the pre-1918 phase may be subsumed as:

(i) The movement was led mostly by the social reformers and philanthropists and not by the workers.

(ii) There was, in fact, no trade union in existence in the true sense.

(iii) The labour movement was for the workers rather than by the workers.

(iv) The movement was confined to the revolt against the conditions of child labour and women workers
working in various industries under appalling conditions.

STAGE II
BETWEEN THE TWO WORLD WARS
Early trade union period (1918- 1938)

1918-1924 Phase:

The phase 1918-1924 is considered as the era of formation of modem trade unionism in the country. The trade
union movement got momentum just after the close of the World War I. The postwar economic and political
conditions contributed to the new awakening of class consciousness among the workers. This led to the
formation of trade unions in the truly modem sense of the term.
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As a result, Ahmedabad Textile Labour Association (1917), led by Shrimati Ansuyaben Sarabhai; the Madras
Labour Union (1918), led by B. P. Wadia; Indian Seamen’s Union, Calcutta Clerk’s Union; and All India Postal
and RMS Association were formed.

The various factors that influenced the growth of trade union movement in India during this phase may be
briefly catalogued as follows:

1. The wretched conditions of workers on account of spiralling prices of essential commodities during the
post-World-War I led workers to form trade unions to improve their bargaining power and, in turn, living
conditions.
2. The political scenario characterized by the home-rule movement and the martial law in Punjab made the
politicians to recognize the workers movement as an asset to their cause. At the same time, workers also
needed able guidance and leadership from the politicians to settle their grievances with the employers.
3. The Russian Revolution also swayed the labour movement in India showing a new social order to the
common man in the country.
4. The setting up of the International Labour Organisation (ILO) in 1919 also gave a big fillip to the labour
movement in India. India becoming a founder-member of the ILO required deputing delegates to the ILO.
Mr. N. M. Joshi for the first time was deputed as the representative from India to International Labour
Conferences and Sessions. It ignited workers’ anxiety to organize. As a result, the All India Trade Union
Congress (AITUC) was formed in 1920. By 1924, the trade union movement in India proliferated to the
extent of 167 trade unions with a quarter million members.

This period in the history of trade union movement has been described as the Early Trade Union Period.

1925-1934 Phase:

• With increasing hardships of workers, the signs of militant tendencies and revolutionary approach in trade
unionism got expression into violent strikes since 1924. The communists gained influence in L trade union
movement during this period. They split the Trade Union Congress twice with their widening differences
with the left-wing unionists.
• The moderate section under the leadership of Mr. N. M. Joshi and Mr. V. V. Giri seceded from the Congress
and set up a separate organization named the National Trade Unions Federation (NTUF).
• Another split in AITUC took place in 1931 at its Calcutta session when the extreme left wing under the
leadership of Messrs S. V. Deshpande and B T Randive broke away and formed a separate organization,
namely, the All India Red Trade Union Congress Two Years later, the National Federation of Labour was
formed to facilitate unity among all the left-wing organizations of labour. As a result, the AITUF and NFL
merged to form the National Trade Union Federation (NTUF).
• Another important feature of this period was the passing of two Acts, namely, the Trade Unions Act 1926
and the Trade Disputes Act, 1929 which also gave a fillip to the growth of trade unionism in India. The
former Act provided for voluntary registration and conferred certain rights and privileges upon registered
unions in return for obligations. The later Act provided for the settlement of trade unions. This phase of
the Indian labour movement may be described as The Period of Left Wing Trade Unionism.

1935-1938 Phase:

• The Indian National Congress was in power in seven provinces in 1937. This injected unity in trade unions.
As a result, the All India Red Trade Union Congress itself with the AITUC in 1935. After three years in 1938,
the National Trade Union Congress (NTUC) also affiliated with the AITUC. Other factors that contributed
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to the revival of trade unions were increasing awakening among the workers to their rights and change in
the managerial attitude towards trade unions.
• In 1938, one of the most developments took place was the enactment of the Bombay Industrial Disputes
Act, 1938. An important provision of the Act, inter alia, to accord compulsory recognition of unions by the
employers gave a big fillip to the growth of trade unionism in India.

1939-1946 Phase:

• Like World War I, the World War II also brought chaos in industrial front of the country. Mass retrenchment
witnessed during the post-World War II led to the problem of unemployment .This compelled workers to
join unions to secure their jobs. This resulted in big spurt in the membership of registered trade unions
from 667 in 1939-40 to 1087 in 1945-46.
• Rift between the Communists and the Congress- Rift between the Communists and the Congress- Indian
Trade Union Labour Federation” came into existence led by M.N. Roy.
• The year 1946 was also marked by two important enactments, namely, the Industrial Employment
(Standing Orders) Act, 1946 and the Bombay Industrial Relations Act, 1946. Both the Acts, through their
provisions, contributed to strengthen the trade unionism in the country.

STAGE III: DURING AND AFTER THE WORLD WAR II

• The Second World War lowered standard of living for the workers further and this led to the strengthening
of the movement. The question of war effort created a rift between the Communists and the Congress.
This, coupled with other issues, led to further split in the movement.

• As a result of this rift, “Indian Trade Union Labour Federation” came into existence led by M.N. Roy.

• However, the movement as a whole got stronger due to the compounding issues. This included mass
entrenchment post-war and the massive price rise that accompanied it.
• Legislations like Industrial Employment Act, 1946 and Bombay Industrial Relations Act, 1946
contributed to strengthening the trade union movement. In general, the movements got more vocal and
involved in the national movement.
• The two parallel labour unions continued to function. The dissensions and conflicts among communists and
Congressmen persisted and ultimately due to the efforts of Gulzarilal Nanda and Sardar Patel, Indian
National Trade Union Congress (INTUC) was established 1947.
• As the INTUC has the largest membership in the country it was declared the representative union of Indian
labour. Subsequently, Hind Mazdoor Sabha (HMS) was formed in 1948 under the banner of Praja Socialist
Party. Later on, it came under the influence of Socialists. This trade union of Communists though did not
escape the scourge of rifts and dissensions it split up into two groups in 1949. As a result of this split, a
new trade union came into being and this was named United Trade Union Congress. Professor K.T. Shah
headed this trade union.
• Bhartiya Mazdoor Sangh: In 1955, Jan Sangh also established a labor organization. The trade union under
the aegis of Rashtriya Swayamsevak Sangh (RSS) was known as “Bhartiya Mazdoor Sangh”. Its
headquarters was in Bhopal.
• Among them INTUC and HMS were affiliated to the "Industrial Confederation of the Trade Union" (ICFTU)
which is one of the international labour organizations. AITUC was affiliated to the World Federation of
Trade Unions.

Stage IV- After Independence

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• Independence and partition of the country smashed the hope of the workers for getting higher wages and
better working conditions from the national Government. With a view to retaining the amenities which
they have earned earlier, a series of strikes swept the country.

• The number of strikes and man days lost were the highest ever recorded in the country. Various political
parties formed and kept control over various trade unions. In 1948, Praja Socialist party started another
trade union known as Hind Mazdoor Panchayat. Indian Federation of Labour and Hind Mazdoor Panchayat
were amalgamated and formed Hind Mazdoor Sabha (H.M.S) in 1948.

Factories Act, 1948

• In India , the Government appointed the Rege 'Committee to investigate into the working conditions of
labour in a number of industries. The recommendations of this committee formed the basis for the
Factories Act of 1948.
• The new Act which came into operation on April 1st, 1949 is in essence a product of history. It bears traces
of all the previous factories Acts in our country and of the convention laid down by the I.L.O, Conferences
year by year. It also bears the imprint of the pattern of factory legislation evolved in Great Britain.
• Planned economic development and emphasis on Trade union
• The Planning Commission drafted its first five year plan, setting therein necessary targets of production -
industrial as well as agricultural - to be achieved during the next five years. For having industrial
advancement industrial Policy Resolution in 1948, was also prepared.

• As the economic progress is bound up with the Industrial peace so for the successful implementation of
the plans, particularly in the economy organised for planned production and distribution and aiming at the
realisation of social justice and the welfare of the masses, the co-operation from Trade Unions was
considered absolutely essential at different stages of the execution of the plans.

• Accordingly, it was realised that the question of maintenance of smooth industrial relations was not a
matter between employers and employees alone. But it was a vital concern of the community. Therefore
their relationship has to be of a partnership in this constructive endeavour. this was the reason why it was
provided in the first five year plan that the dignity of labour must be recognised so that the workers who
on account of hardships of illiteracy and ignorance and lack of opportunities have not been able to play as
effective a role in the working of industry as they should, could understand and carry out their
responsibility and could take an increasing share in the industry.
• Accordingly the workers "right of association, organisation and collective bargaining was accepted" and it
was laid down in this plan that they (Trade unions) should be welcomed and helped to function as part
and parcel of the industrial system.

• Code of Discipline of Industries of 1958

• The code was approved by all central organisations of workers and employers in 16th Indian Labour
Conference at the initiative of the then Labour Minister, Shri G.L. Nanda.
• The code reflects the policy of the government to build up an industrial democracy on voluntary basis and
is the sheet anchor of Mahatma Gandhi’s philosophy of industrial relations. It aims at preserving industrial
peace with the help of employers and employees. It represents a voluntary moral commitment and is not
a legal document.
• The issue of discipline in industry was discussed in the Indian Labour Conference and the code of discipline
was framed and introduced by that tripartite body in 1958. Discipline in the relationship between workers
and employers can better be enforced if both the parties accept their responsibilities and show a
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willingness to discharge them. In the absence of any statutory provision at the all-India level for the
recognition of trade union, the provision in this regard has been incorporated in the Code of Discipline.

The main elements of the code are:

i) The two parties agree to utilise the existing machinery for the settlement of industrial disputes.
ii) The parties shall not resort to strikes and lock-outs without first exploring all avenues of settlement
iii) The parties accept that the disputes not settled mutually shall be referred to voluntary arbitration.
iv) The code specifies the criteria for the recognition of trade union and creates an obligation on employers to
recognise the majority union in an establishment or industry.
v) The two parties shall not resort to the unfair labour practices detailed out in the code.
vi) Managements and trade unions agree to establish grievance procedure on a
mutually agreed basis.

First National Commission on Labour

• First National Commission on Labour in 1966- was set up on 24 December 1966 under the Chairmanship
of Justice P.B. Gajendragadkar. The Commission submitted its report in August, 1969 after detailed
examination of all aspects of labour problems, both in the organised and unorganised sectors. The first
National Commission on Labour recommended that works committee be set up in any unit which has a
recognised union. It also recommends growth of collective bargaining recognition of union, prohibition
and regulation of strikes & lockouts.

Stage V: Present
Second National Commission on Labour
Second National Commission on Labour was set up on 15 October 1999 under the chairmanship of Ravindra
Verma which submitted its report to the then Prime Minister Atal Bihari Vajpayee on 29 June 2002.
Need for Second National Commission on Labour
• During the period of three decades since setting up of the First National Commission on Labour, there
has been an increase in number of labour force etc. because of the pace of industrialisation and
urbanisation.
• After the implementation of new economic policy in 1991, changes have taken place in the economic
environment of the country which have in turn brought about radical changes in the domestic
industrial climate and labour market.
• Changes have occurred at the work places, changes in the industry and character of employment,
changes in hours of work and overall change in the scenario of industrial relations. These changes have
resulted in certain uncertainties in the labour market requiring a new look to the labour laws.
Labour Codes 2023: Decoding the New Labour Reforms
• The Central Government of India has finally passed the four new labour codes in an effort to bring about
reforms to the existing labour laws, and to establish rules and regulations which will govern employee-
employer relations.
• A total of 29 labour laws which have remained unchanged since Independence will now be codified into
the four new labour codes, namely Industrial Relations Code, Code on Wages, Occupational Safety, Health
and Working Conditions Code, and Social Security Code.

What Prompted the Introduction and Passing of the Four New Labour Codes?

• The empowerment of workers, for a prosperous, empowered and self-reliant India; that’s the true motive,
according to the current government in power.
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• The 4 labour codes aren’t exactly “new”. They were first introduced in the parliament on September 29,
2020. It’s only now that they’re seeing the light of day. India, and her 50 crore workers in the organised
and unorganised sectors still don’t have access to the various social security schemes, even after 74 years
of Independence.
• The Minimum Wages Code — Workers Earn What They Deserve Of the 29 existing codes, 4 have been
clubbed under the Minimum Wages Code to give workers the right to minimum wages for the first time.

Key Highlights of Minimum Wages Code

• Minimum wages to be reviewed every 5 years

• Timely payment of wages guaranteed for all workers
• Equal wages for both male and female workers
• Provision of floor wage eliminates regional disparity in minimum wages
• Minimum wages to be decided based on skill level and geographical area
• Payment of Wages Act (in effect since 28 September, 2017) has increased the wage ceiling from
₹18,000 to ₹24,000
• Social, health, and wage security to over 50 crore workers in the organised and unorganised sectors

The OSH Code — Enhanced Worker Well-Being and Women Empowerment

The Occupational, Safety, Health and Working Conditions Code, 2020 aims to provide a safe working
environment for workers. It amalgamates 13 labour laws and ensures occupational health and safety at the
workplace.

Key Highlights of the OSH Code

• Inter-state migrant workers can register themselves on the national portal to create legal identities which
will help them avail social security schemes and benefits
• Employer-sponsored annual travelling allowance for inter-state migrant workers
• Mandatory and free annual health checkup sponsored by the employer
• Building and construction workers migrating between states to receive a direct benefit from the Building
and other Construction Workers’ Cess fund
• Migrant worker in one state and their dependants in another to get ration facilities under the ‘One Nation-
One Ration Card’ scheme
• Dedicated helpline for addressing migrant workers’ grievances
• Creation of a national inter-state migrant worker database
• One-day leave for every 20 days of work done — number of mandatory work days slashed from 240 to 180
• Women workers can work at any establishment
• Women workers can work at night with their consent and employers have to make necessary
arrangements for their safety and provide necessary facilities
• Paid maternity leave for women workers, increased from 12 to 26 weeks
• Establishments with 50 or more women workers to set up creche facility

The IR Code, 2020 — An Undisputable Reform To End All Disputes

The Industrial Relations Code (IR Code, 2020) subsumes 3 labour codes and safeguards trade unions and
workers’ interests. It also ensures that no disputes between workers and industrial units arise in the future.
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Key Highlights of the IR Code

• Workers who lose their jobs to get an allowance under the Atal Bimit Vyakti Kalyan Yojna
• Workers from organised sectors who have lost jobs to get unemployment allowance under the the Atal
Bimit Vyakti Kalyan Yojna
• Retrenched workers to get 15 days’ wages credited to their bank accounts for re-skilling
• Speedy justice and settlement of workers’ disputes (within a year) by a tribunal
• Two-member industrial tribunal for quick disposal of disputes and cases
• Trade union with 51% votes to be the negotiating party for workers
• A council of trade unions to be set up to negotiate with employers if no single trade union gets 51% votes

The Social Security Code — Security for Disadvantaged Workers

9 pre-existing labour codes have been combined to constitute the Social Security Code, 2020. This code will
provide access to various security schemes like pension, maternity benefit, gratuity, insurance and so on.

Key Highlights of the Social Security Code

• Free treatment at ESIC-run dispensaries and hospitals through a small contribution

• Workers from unorganised sectors and all sectors get access to ESIC hospitals
• ESIC dispensaries, hospitals and branches for all 740 districts in India
• ESIC benefit for workers engaged in hazardous work
• Platform and gig workers in tech to get ESIC access
• Establishments engaged in hazardous work to compulsorily register with ESIC
• Plantation workers to get ESIC benefit
• EPFO (PF) scheme extended to self-employed individuals and workers in both organised and unorganised
sectors
• Minimum service clause removed for payment of gratuity to fixed-term (contractual) employees
Same social security benefits for fixed-term and full-time employees
• Creation of national database of workers in the unorganised sector through registration on the e-shram
portal
• Employers with 20+ workers to report vacancies online
• Unorganised sector workers to get Aadhaar-based UAN for ESIC and PF scheme benefits
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Recent Trends in Industrial Relations System

1. Labour Reforms:
The State Intervention policy of the government has mostly worked in favour of the labour to give them
protection and collective bargaining. The industrial policies were designed to regulate the actions of the labour
and capital and providing judicial solutions to industrial disputes. Now with the product market and capital
market reforms, which has increased the beginning power of the capital vis-a-vis labour, capital has become
more mobile and less regulated.
While the product market and capital market reforms may go unnoticed by majority of the people, the labour
reforms come under the political and economic consideration of the nation. Labour reforms exert more
political pressures as the government has to ensure the welfare of the millions of workers employed in the
organized sector. The economic pressures do restrain certain welfare schemes of the industrial enterprises.
The government of India has resorted to ‘soft’ labour reforms in the form of:
i. Disinvesting instead of privatization.
ii. Liberalizing labour inspection systems.
iii. Amending trade union laws.
iv. Reducing interest rates on provident fund.

2. Judicial Trends:
Judiciary has realized that our labour and trade unions have been over protected. They have started taking
more realistic stand on the issues relating to industries, keeping in view the existing social norms and
international practices.
For example- closure and shifting of factories in Agra to prevent pollution to Taj and closure of polluting
industries and prohibition of moving activities in forest areas have been strongly opposed by the workers and
trade unions. The courts have upheld the privatization of public sectors (BALCO case), despite the protests by
public sector workers.
Examples of Judgments which Make Employers Happy:
i. Strike is not a fundamental right.
ii. Ruling that a strike has not only to be legal, but also justified; application of the norm of no work on pay
in the case of strikes and for those who do union work as against company work.
iii. Imposition of fine on trade union leaders for indulging in arson, loss of company property etc.
iv. Restrictions on protest demonstration, political bandhs, etc.
v. Decision that in the case of accidents by a bus or lorry, the compensation payable to the victims should
be recovered from the earning of drivers.
Examples of Judgments which Make Workers Happy:
i. Striking off of the contents of service conditions and standing orders in matters like treating unauthorized
absence for over a week as abandonment of employment.
ii. Requirement of a notice of change when the Voluntary Retirement Scheme is introduced because work
done by more people will now be required to be done by fewer people.
iii. Regularisation of casual/contract labour. Absorption organisation labour as regular when the system of
contract labour is abolished.
iv. Ruling of the Supreme Court that the service of employees in an organisation cannot be terminated
arbitrarily and abruptly by giving notice of one or three months or pay in lieu of notice.
v. Abolition of child labour in hazardous industries.

3. Trade Unions Nexus:

When the rights of consumers and community are affected, the rights of workers and trade unions and even
managers/employers get a back seat. This is evidenced by ban on bandh and restriction on protests and
dharnas. Now-a-days, trade unions can see their future by aligning themselves with the interests of the wider
society.
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In government and public sectors, workforce is shrinking due to non-filling of regular posts and introduction
of Voluntary Retirement Scheme (VRS). New employment opportunities are declining in organized public
sector industries. In the private sector, particularly in service and software sector, the new, young and female
workers do not generally align to any trade unions.
Further, trade unions have become quite defensive from the fact that there is radical shift from strikes to law
suits.

4. Labour-Management Conflicts:
The globalization has brought significant changes in the labour market and the industrial relations system.
Both the actors (management and workers) have exerted respective pressures on the government to
introduce concrete actions favouring their interests. The government has responded to protect the dominant
political interests while announcing labour reforms.
Few more emerging trends in this issue are:
i. There have been less strikes, lockouts and less man days lost due to strikes.
ii. Workers are more educated and do not believe in violent activities.
iii. Workers have shown responsibilities in cut-throat competition and are aware of their rights, thus
leading to decline in strikes.
iv. Employees also avoid lockouts because decline in production even for hours lead to heavy losses to
them.

5. Managerial Strategies:
The employers devised various managerial strategies to achieve labour flexibility, weaken labour power, more
control over production process, reduction in regular workers, transfers, multi-tasking, freeze in employment,
increased use of contract labour, subcontracting etc., on both public as well as private enterprises.