INDUSTRIAL RELATIONS

Industrial relations has become one of the most delicate and complex problems of modern industrial society. Industrial progress is
impossible without cooperation of labors and harmonious relationships. Therefore, it is in the interest of all to create and maintain
good relations between employees (labor) and employers (management).

Concept of Industrial Relations:

The term ‘Industrial Relations’ comprises of two terms: ‘Industry’ and ‘Relations’. “Industry” refers to “any productive activity in which an
individual (or a group of individuals) is (are) engaged”. By “relations” we mean “the relationships that exist within the industry between
the employer and his workmen.” The term industrial relations explains the relationship between employees and management which stem
directly or indirectly from union-employer relationship.

Industrial relations are the relationships between employees and employers within the organizational settings. The field of industrial
relations looks at the relationship between management and workers, particularly groups of workers represented by a union. Industrial
relations are basically the interactions between employers, employees and the government, and the institutions and associations through
which such interactions are mediated.

The term industrial relations has a broad as well as a narrow outlook. Originally, industrial relations was broadly defined to include the
relationships and interactions between employers and employees. From this perspective, industrial relations covers all aspects of the
employment relationship, including human resource management, employee relations, and union-management (or labor) relations. Now
its meaning has become more specific and restricted. Accordingly, industrial relations pertains to the study and practice of collective
bargaining, TRADE unionism, and labor-management relations, while human resource management is a separate, largely distinct field
that deals with nonunion employment relationships and the personnel practices and policies of employers.

The relationships which arise at and out of the workplace generally include the relationships between individual workers, the relationships
between workers and their employer, the relationships between employers, the relationships employers and workers have with the
organizations formed to promote their respective interests, and the relations between those organizations, at all levels. industrial relations
also includes the processes through which these relationships are expressed (such as, collective bargaining, workers’ participation in
decision-making, and grievance and dispute settlement), and the management of conflict between employers, workers and TRADE
unions, when it arises.

For better understanding of industrial relations,

various terms need to be defined here:

Industry:
Industrial Disputes Act 1947 defines an industry as
any systematic activity carried on by co-operation
between an employer and his workmen for the
production, supply or distribution of goods or
services with a view to satisfy human

wants or wishes whether or not any capital has been INVESTED for the purpose of carrying on such activity; or such activity is carried
on with a motive to make any gain or profit. Thus, an industry is a whole gamut of activities that are carried on by an employer with the
help of his employees and labors for production and distribution of goods to earn profits.

Employer:

An employer can be defined from different perspectives as:-

● a person or business that pays a wage or fixed payment to other person(s) in exchange for the services of such
persons.
● a person who directly engages a worker/employee in employment.
● any person who employs, whether directly or through another person or agency, one or more employees in any
scheduled employment in respect of which minimum rates of wages have been fixed.
As per Industrial Disputes Act 1947 an employer means:-
● in relation to an industry carried on by or under the authority of any department of [the Central Government or a State
Government], the authority prescribed in this behalf, or where no authority is prescribed, the head of the department;
● in relation to an industry carried on by or on behalf of a local authority, the chief executive officer of that authority;

Employee: -

● Employee is a person who is hired by another person or business for a wage or fixed payment in exchange for personal
services and who does not provide the services as part of an independent business.
● An employee is any individual employed by an employer.
● A person who works for a public or private employer and receives remuneration in wages or salary by his employer while
working on a commission basis, piece-rates or time rate.
● Employee, as per Employee State Insurance Act 1948, is any person employed for wages in or in connection with work of a
factory or establishment to which the act applies.

In order to qualify to be an employee, under ESI Act, a person should belong to any of the categories:
● those who are directly employed for wages by the principal employer within the premises or outside in connection
with work of the factory or establishment.
● those employed for wages by or through an immediate employer in the premises of the factory or establishment
in connection with the work thereof

● those employed for wages by or through an immediate employer in connection with the factory or establishment outside the
premises of such factory or establishment under the supervision and control of the principal employer or his agent.
● employees whose services are temporarily lent or let on hire to the principal employer by an immediate employer under a
contract of service (employees of security contractors, labor contractors, house keeping contractors etc. come under this
category).
Employment: The state of being employed or having a job.

Labor Market:

The MARKET in which workers compete for jobs and employers compete for workers. It acts as the external source from which
organizations attract employees. These markets occur because different conditions characterize different geographical areas, industries,
occupations, and professions at any given time.

An industrial relations system consists of the whole gamut of relationships between employees and employees and employers
which are managed by the means of conflict and cooperation.

A sound industrial relations system is one in which relationships between management and employees (and their
representatives) on the one hand, and between them and the State on the other, are more harmonious and cooperative than
conflictual and creates an environment conducive to economic efficiency and the motivation, productivity and development of
the employee and generates employee loyalty and mutual trust.

Actors in the IR system:

Three main parties are directly involved in industrial relations:

Employers: Employers possess certain rights vis-à-vis labors. They have the right to hire and fire them. Management can also
affect workers’ interests by exercising their right to relocate, close or merge the factory or to introduce technological changes.

Employees: Workers seek to improve the terms and conditions of their employment. They exchange views with management and
voice their grievances. They also want to share decision making powers of management. Workers generally unite to form unions
against the management and get support from these unions.

Government: The central and state government influences and regulates industrial relations through laws, rules, agreements,
awards of court ad the like. It also includes third parties and labor and tribunal courts.
SCOPE:

The concept of industrial relations has a very wide meaning and connotation. In the narrow sense, it means that the employer,
employee relationship confines itself to the relationship that emerges out of the day to day association of the management and the
labor. In its wider sense, industrial relations include the relationship between an employee and an employer in the course of the
running of an industry and may project it to spheres, which may transgress to the areas of quality control, MARKETING, price
fixation and disposition of profits among others.

The scope or industrial relations is quite vast. The main issues involved here include the following:
1. Collective bargaining
2. Machinery for settlement of industrial disputes
3. Standing orders
4. Workers participation in management
5. Unfair labor practiceS

Importance Of Industrial Relations

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

● Reduction in Industrial Disputes – Good industrial relations reduce the industrial disputes. Disputes are reflections of
the failure of basic human urges or motivations to secure adequate satisfaction or expression which are fully cured by
good industrial relations. Strikes, lockouts, go-slow tactics, gherao and grievances are some of the reflections of
industrial unrest which do not spring up in an atmosphere of industrial peace. It helps promoting co-operation and
increasing production.
● High morale – Good industrial relations improve the morale of the employees. Employees work with great zeal with
the feeling in mind that the interest of employer and employees is one and the same, i.e. to increase production. Every
worker feels that he is a co-owner of the gains of industry. The employer in his turn must realize that the gains of
industry are not for him along but they should be shared equally and generously with his workers. In other words,
complete unity of thought and action is the main achievement of industrial peace. It increases the place of workers in
the society and their ego is satisfied. It naturally affects production because mighty co-operative efforts alone can
produce great results.
● Mental Revolution – The main object of industrial relation is a complete mental revolution of workers and employees.
The industrial peace lies ultimately in a transformed outlook on the part of both. It is the business of leadership in the
ranks of workers, employees and Government to work out a new relationship in consonance with a spirit of true
democracy. Both should think themselves as partners of the industry and the role of workers in such a partnership
should be recognized. On the other hand, workers must recognize employer’s authority. It will naturally have impact
on production because they recognize the interest of each other.
● Reduced Wastage – Good industrial relations are maintained on the basis of cooperation and recognition of each
other. It will help increase production. Wastages of man, material and machines are reduced to the minimum and thus
national interest is protected.
Thus, it is evident that good industrial relations is the basis of higher production with minimum cost and higher profits. It also
 results in increased efficiency of workers. New and new projects may be introduced for the welfare of the workers and to promote
the morale of the people at work. An economy organized for planned production and distribution, aiming at the realization of
social justice and welfare of the massage can function effectively only in an atmosphere of industrial peace. If the twin objectives
of rapid national development and increased social justice are to be achieved, there must be harmonious relationship between
management and labor.

The main objectives of industrial relations system are:-

● To safeguard the interest of labor and management by securing the highest level of mutual understanding and
good-will among all those sections in the industry which participate in the process of production.
● To avoid industrial conflict or strife and develop harmonious relations, which are an essential factor in the
productivity of workers and the industrial progress of a country.
● To raise productivity to a higher level in an era of full employment by lessening the tendency to high turnover and
frequency absenteeism.

● To establish and promote the growth of an industrial democracy based on labor partnership in the sharing of profits
and of managerial decisions, so that ban individuals personality may grow its full stature for the benefit of the industry
and of the country as well.
● To eliminate or minimize the number of strikes, lockouts and gheraos by providing reasonable wages, improved living
and working conditions, said fringe benefits.
● To improve the economic conditions of workers in the existing state of industrial managements and political
government.
● Socialization of industries by making the state itself a major employer
● Vesting of a proprietary interest of the workers in the industries in which they are employed.

Trade Union

A trade union is an organisation made up of members (a membership-based organisation) and

its membership must be made up mainly of workers.

One of a trade union's main aims is to protect and advance the interests of its members in the
workplace.

Most trade unions are independent of any employer. However, trade unions try to develop close
working relationships with employers. This can sometimes take the form of a partnership
agreement between the employer and the trade union which identifies their common interests
and objectives.

Trade unions:
negotiate agreements with employers on pay and conditions
discuss major changes to the workplace such as large scale redundancy
discuss members' concerns with employers
accompany members in disciplinary and grievance meetings
provide members with legal and financial advice
provide education facilities and certain consumer benefits such as discounted insurance
Trade union recognition
Employers which recognise a union will negotiate with it over members' pay and conditions.

Many recognition agreements are reached voluntarily, sometimes with the help of the Labour
Relations Agency.

If agreement can't be reached and the organisation employs more than 20 people, a union may
apply for statutory recognition. To do so, it must first request recognition from the employer in
writing. If this is unsuccessful, the union can apply to the Industrial Court(external link opens in a
new window / tab) for a decision.

In considering the union's application, the Court must assess many factors including the level of
union membership and the presence of any other unions. Often, the Court will organise a ballot
among the affected workforce to decide whether recognition should be awarded. Throughout
the process, the emphasis is on reaching voluntary agreement.

Industrial Disputes and Their Resolutions

Industrialization in a country has always contributed to employment, contribution to national

income, per capita income, exports and economic development on one side and industrial
disputes on the other. It has always been the case of mixed blessing. The conflict of interest
between management and labour is what leads to industrial disputes. The management has a
goal of profit maximization and on the other hand the workers expect rise in income, security of
job, protection of their skills, improvement in their status and in the working conditions. Those
who control the factors of production require strict administration, closer supervision, and
maintenance of strict discipline and implementation of rules, code of conduct and code of
discipline. Whereas the workers demand a share in capital, voice in management, freedom of
expression, participation in management and dignity of employees. So the people that control
the factors of production and people that produce always have different or conflicting interest
which gives birth to industrial disputes. According to the Industrial Dispute Act, 1947. Section 2
(K) “Industrial Disputes mean 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 non - employment or terms of employment or with the conditions of labour of
any person”. Industrial disputes can be classified into four major types, known as interest
disputes, grievance disputes, unfair labour practices disputes and recognition disputes.

CAUSES OF INDUSTRIAL DISPUTES

Industrial disputes are a common feature of all industrialized economies, whether it is a
capitalist economy or socialist economy or mixed economy. Industry and industrial dispute
always go hand in hand infact they are the two sides of the same coin. The employees who give
their services and time to the industry are interested in higher wages, good working conditions
and want to have a voice in management. The employers on the other hand are more interested
in profits, productivity, quality and control of cost. With both these forces acting in opposite
direction there is a maximum possibility of disputes and so industrial disputes has become a
major feature of industrialization. Industrial disputes may arise out of economic, political, social
or from socio - economic background. At the same time the attitude of the employers and
employees is also responsible to a great extent. The factors leading to industrial disputes may
be industry related, management related, government related or union related. The most
common causes of industrial disputes can be listed as:
1. Wages and Allowances
2. Personnel Policies
3. Retrenchment
4. Lay off
5. Leave and hours of work
6. Bonus
7. Indiscipline
8. Violence
9. Inter Union rivalry
10. Non-implementation of awards or agreements
11. Non-fulfillment of demand
12. Workload
13. Work standards
14. Surplus labour
15. Working conditions
16. Change of manufacturing process
17. Violation of rules or codes
18. Shift working
19. Political motives
20. Closure or lockouts
21. Inability to communicate effectively
22. Reftisal to recognize unions
23. Authoritarian or autocratic attitude of management
24. Non-implementation of labour law.

MACHINERY FOR SETTLEMENT OF INDUSTRIAL DISPUTES

The Industrial Disputes Act, 1947 provides an elaborate and efficient machinery for the peaceful
and amicable settlement of the industrial disputes. They include:
1. Works Committees (Sec 3)
2. Conciliation Officers (Sec 4)
3. Board of Conciliation (Sec5)
4. Courts of Enquiry (Sec6)
5. Labour Courts (Sec 7)
6. Tribunals (Sec 7A)
7. National Tribunals (Sec 7B)

METHODS OF RESOLVING INDUSTRIAL DISPUTES

There are various methods of resolving industrial disputes like negotiations, conciliation,
mediation and arbitration. Every organisation or management or the trade union has the right
and freedom to choose anyone method to resolve the industrial disputes. What is important
here is that Industrial disputes must be solved as early as possible, it must be settled at the
level which it has occurred. Both the management and the union should change their attitude
and keep their ego aside and resolve the disputes as early as possible. When disputes are not
settled relations further become strained and complicated. There should be a WIN - WIN
situation, if both management and unions are to be happy. If one wins and one looses relations
do not and can never improve. Pending awards can lead to less productivity and losses for both
employer and employees. Both the parties as far as possible should resort to negotiations
instead of tribunals or conciliation.

NEGOTIATION For resolving industrial disputes one of the best methods in negotiation. It is in
negotiation the two parties that is the employer or management and workers or their unions
depend upon themselves for the settlement of disputes. Both the parties have faith and
confidence in each other and do not feel the need of a third party. This method of resolving
disputes gives importance to dialogue or bipartite dialogue without the government intervention.
This method of resolving disputes shows a higher level of maturity in the relationship between
management and unions. This is possible when both the parties are well organized, having faith
in each other, ready to recognize each other, ready to recognize each others position and
dignity. Things become more easy for negotiations when both the parties are ready to adjust
and accommodate each others point of view. To resolve disputes both the parties reach to a
written agreement through dialogues backed by moral sanctions. The written agreement
between management and the workers union gets more acceptance from both the sides,
disputes are resolved and at the same time relations are intact. In the process of negotiations if
the negotiation machinery breaks down the issues between the parties remain unresolved. In
such situations both the parties come to a point of deadlock and then direct confrontation
between the two parties begin, definitely resulting into conflict and disharmony. Such conflict
and disharmony results into loss of time, money, energy poor industrial relations, loss to the
organisation and a subject of greater concern for the society and the state.

CONCILIATION
 In this method of resolving disputes both the employer and the employees union take the help
form outside such as the government agency. The government agency tries to bring the two
parties the management and unions together for discussion and help them in their negotiations.
The main objective of conciliation is to reunite the two conflicting groups in the industry to avoid
further problems of production, disinterest and strained industrial relations. This method of
resolving industrial disputes is adopted when the parties cannot reconcile their differences on
their own and still want to avoid the problems of open conflict. Conciliation is a practice by which
the services of a neutral third party are used in the dispute, to make the disputing parties come
to an amicable settlement. Conciliation process takes place under the guidance of a conciliator.
Conciliation machinery consists of a conciliation officer and board of conciliation. Under section
12(2) of the Industrial Dispute Act of 1947 the conciliation officer shall be involved for the
purpose of bringing about a settlement of the dispute. The conciliation officer plays the role of
an innovator, protector, discussion guide, leader, advisor and communication link between the
two parties. If the conciliation does not get results in the course of conciliation proceedings then
the conciliation officer sends a report to the appropriate government a failure report informing
that a settlement cannot be arrived at. To make conciliation more effective the National
Commission on Labour has recommended that “Conciliation machinery should be a part of the
Industrial Relations Commission, which will make it free from other influences. The independent
character of the machinery will alone develope greater confidence and will be able to evoke
more co operations from the parties.

MEDIATION
Many times when the two parties to the dispute start making negotiations cannot come to a
consensus or when they are unable to find the right solution mediation becomes an important
tool. Mediation is a method of settling industrial disputes with the help of an outsider. The
mediator is very positive in its approach and also pays a positive role by collecting information
from both the parties the management and the union, makes a proper assessment of their views
and interest and on the basis of this offers suggestions for arriving at a solution or for making a
proper compromise. Both in mediation and conciliation there is a role for an outsider and in both
the cases a lot depends upon understanding between the parties involved in the dispute. In both
the case conciliation and mediation a lot depends upon adjustments for common gains. Both
mediation and conciliation are advisory and not judicial in nature. The mediator plays a role of a
guide and shows the parties to the dispute new areas of agreement which otherwise they
themselves could not have discovered.

ARBITRATION
The word arbitration means settlement of industrial disputes between two or more parties by
means of a decision of an impartial body when efforts in the process of conciliation and
mediation have failed. Arbitration is judicial in nature whereas conciliation is advisory in nature.
Arbitration is voluntary if the parties to the dispute have failed to settle their differences by
negotiation and conciliation, agree to submit them to arbitration as prescribed under Section lOA
of the Industrial Disputes Act, 1947. Compulsory arbitration or adjudication, the government
requires the parties to the dispute to submit their differences to an arbitration tribunal which after
considering the facts and arguments submitted to it, makes an award. In case of voluntary
arbitration it does not necessarily follow the procedure adopted by the courts. The essentials of
voluntary arbitration is that there should be voluntary submission of dispute to an arbitrator and
the enforcement of an award may not be necessary and binding because there is no
compulsion. Compulsory arbitration is used when the parties fail to arrive at a settlement
through the voluntary methods. Compulsory arbitration may be at times and under certain
circumstances, necessary and desirable. The objective of state intervention in the field of
industrial relations should be to do social justice and make the weaker party equally strong to
enable it to settle its differences through negotiations and collective bargaining. In compulsory
arbitration the parties are forced to arbitration by the state when the parties to the dispute have
failed to arrive at a settlement by voluntary method or when there is a situation of national
emergency or when the country is passing through economic crisis or when the parties to the
dispute are not well balanced or when the unions are weak and ill-organized or when the
employers are very well-organized and more powerful or when industries of strategic
importance are involved or when there is a general public dissatisfaction with the existing
industrial relations. In India where industrial disputes are concerned. The Industrial Disputes
Act, 1947 is a very important one. The principle objectives of the Act are: To promote measures
for securing good relations between employers and employees. To minimize the difference
between the employer and employee and get the disputes settled through adjudicatory
authorities. To provide suitable machinery for investigation and settlement of industrial disputes.
To prevent illegal strikes and lockouts. To provide relief to workmen in matters of lay-offs,
retrenchment, wrongful dismissals and victimization. To give the employees the right of
collective bargaining and promote conciliation.
The Industrial Disputes Act, 1947 provides three - tier system of adjudication.
1. Labour Courts
2. Industrial Tribunals
3. National Tribunal

One or more labour courts may be constituted by the appropriate Government for adjudicating
industrial disputes specified in the second schedule of the Act, and for performing any other
ftinction assigned to them. The duties of the labour court are to hold the adjudication
proceedings and submit the awards to the appropriate Government after the conclusion of the
proceedings. The labour court usually deals with matters arising in day to day working. In the
three-tier system of adjudication provided by the Industrial Dispute Act of 1947 after Labour
Court is the Industrial Tribunal. The appropriate Government may appoint one or more Industrial
Tribunal for adjudication of industrial disputes relating to any matter whether specified in the
Second Schedule or the Third Schedule. Industrial Tribunal may be for a limited period or
permanent. The Industrial Tribunal has all the necessary attributes of a court of justice. It may
create new obligations or modify contracts in the interest of industrial peace, to protect the rights
of the trade union, prevent unfair practices and victimization. Industrial Tribunals have a wider
jurisdiction than a Labour Court. The third in the three tier system of adjudication of the
Industrial Dispute Act of 1947 is the National Tribunal. The Central Government may be
notification in the official Gazetter constitute one or more National Tribunals for the adjudication
of industrial disputes which in the opinion of the Central Government involves question of
national importance or any matter which will afTect the industrial establishment in more than
one state. When a National Tribunal has been referred to, no of labour Court or Industrial
Tribunal shall have any jurisdiction to adjudicate upon such a matter.

CODE OF DISCIPLINE AND CODE OF CONDUCT

Code of Discipline forms the Gandhian philosophy to industrial relations to bring employees and
trade union to a moral agreement for promoting peace and harmony. Shri Guljarilal Nanda the
then Union Labour Minister, a true Gandhian took efforts to bring out a Code of Discipline in
1957 and 1958. It was at his instance that the code was formulated. The code was formally
adopted in the 16'’’ session of 1958 Indian Labour Conference. National representatives of both
employers and trade unions were parties to it. This code was a special one formulated to
voluntarily regulate Labour Management relations. The Code of Conduct was discussed to
regulate the inter-union relations and a Code of Discipline was discussed at the Indian Labour
Conference to regulate Labour Management relations. After a great deal of persuasion by Shri
Guljarilal Nanda the inter union “Code of Conduct” was of voluntarily adopted on 21^ May 1958.
The four central organizations of labour who were representing the Indian Labour Conference
that is Indian National Trade Union Congress. All India Trade Union Congress., Hind Mazdoor
Sabha and United Council of Trade Unions agreed to comply with the code. The adoption of the
“Code of Discipline” was announced in June 1958. The code of discipline is highly
comprehensive and ethical in its approach to the industrial relations system. The “Code of
Discipline” ensures that the employers and workers should utilize the existing machinery for the
settlement of disputes and avoid direct action. It also explains that both labour and management
should recognize the rights and responsibilities of each other. It also explains the obligations of
employers and workers. The code does not support any unfair practices but support prompt
action for settlement of grievances and implementation of settlements and awards. The National
Commission on Labour thinks that the code has only a limited success and thus it is not a
solution to problems of industrial relations.