10.

Personnel Management

03-Oct-20
10.1 Management principles: Administration and
organization principles
• Management may be defined as “a process by which responsible
person in an organization get things done through the effort of other
people in group activities.”
• Management Principle Administrative:
• Henri Fayol a French mining engineer developed 14 principles of
management based on his management experiences. These
principles provide modern-day managers with general guidelines on
how a supervisor should organize her department & manage her
staff. These principles are:
1. Division of Work: Division of work and specialization produces
more & better work with same effort.
2. Authority & responsibility: Authority is the right to give orders &
power to exact obedience. Authority creates responsibility.

03-Oct-20
 Management Principle Administrative:

3. Discipline : obedience and respect within an organisation

are absolutely essential. Good discipline requires
managers to apply sanctions whenever violations becomes
apparent.
4. Unity of command: an employee should receive orders
from only one supervisor.
5. Centralization: The objective of centralization is best
utilization of personnel. The degree of centralization varies
according to the dynamics of each organization.
6. Unity of direction: Organisation activities must have one
central authority & one plan of action.
7. Scalar chain: A chain of authority exists from the highest
ranks to the lower ranks.

03-Oct-20
 Management Principle Administrative:

8. Stability of Tenure Personnel: To attain maximum

productivity of personnel, a stable workforce is
needed.
9. Remuneration: Workers must be paid fair wages for
their services.
10. order : the right material & right employee are
necessary for each organisational function and
activity.
11. Initiative : thinking out a plan & ensuring its success is
an extremely strong motivator. Zeal, energy&
initiative are desired at all levels of the organisational
ladder.

03-Oct-20
 Management Principle Administrative:

12. Subordination of individual interest to general

interest: the interest of one employee or group of
employee are subordinate to the interest and goal of
organization.
13. Equity: in organizations, equity is combination of
kindliness and justice. Both equity and equality of
treatment should be considered when dealing with
employees.
14. Espirt de corps : team work is fundamentally
important to an organization. Work teams and
extensive face to face verbal communication
encourages team work.

03-Oct-20
 Management Principle organizational:

1. Span of management: It refers to the number of

subordinates who can be managed efficiently by
a supervisor.
2. Line ,staff and auxiliaries:
Line agencies directly work for organizational
purpose;
staff agencies advise and assist line agencies in
their activities;
auxiliary agencies provide common house –
keeping services to the line agencies

03-Oct-20
 Management Principle organizational:

03-Oct-20
 Management Principle organizational:

3. Unity of command: Each employee should know

clearly to whom he is answerable & who are
answerable to him.
4. Hierarchy: A clear hierarchy of authority makes
direction ,supervision & coordination easier and
more effective.
5. Delegation of authority: delegation makes the
decision effort decentralized which motives the
subordinates on their work & make them more
responsible & accountable
03-Oct-20
 Management Principle organizational:

03-Oct-20 Hierarchy
 Management Principle organizational:

6. Decentralization & Centralization: Some

decisions are to be reserved at high level
authority whereas some to be decentralized
into lower level of management.
7. Co-ordination: A strong bonding of co-
ordination & co-operation between employees
and managers should be established for
common objective.

03-Oct-20
 Management Principle organizational:

8. Communication : line of communication should

be shortest in order to avoid the barriers of
communication.
9. Job Definition : job should be defined for each
workers based on their experience & ability to
do that work.
10.Increasing organizational leadership : Equal
opportunities of leadership for sake of
organizational objective must be provided.
11.Contact : organization should allow complete
coordination of each branch of work.
03-Oct-20
 10.3 Centralization and decentralization

An important structural feature affecting an organization's

efficiency is the degree to which it is centralized or
decentralized. This can be measured by:
• The extent to which managers delegate authority and decisions
from the top to the lower levels in the business.
• The extent to which the administrative functions of the firm
are carried out at head office, rather than being spread
through the organization.
For instance, some contractors have a central buying
department for all material purchases. Others allow managers
in different areas or divisions to organize their own
purchasing.
03-Oct-20
 10.3 Centralization and decentralization
Decentralization can be based on area or product. If a
contractor is working over a wide area, regional
decentralization may be vital to cope with local
conditions.
• If a company builds hospitals and factories and also
undertakes speculative housing work, product
decentralization may improve organizational
efficiency. In speculative housing, policies and
procedures for accounting, estimating, buying and so
on, will differ from those suited to contract work.
• However, no organisation is likely to be totally
centralised or decentralised.
03-Oct-20
 10.3 Centralization and decentralization

Most firms strike a balance between the two. What this balance
should be depends on several factors:
The size of the organisation.
• This is important because the larger it gets, the harder it
becomes to control everything from the top . when the
problems of large-scale organisation were becoming clearer,
managers have become keen on decentralisation because it
permits more realistic control and greater flexibility.

03-Oct-20
 10.3 Centralization and decentralization

The type of work the firm undertakes.

This is important for two reasons - diversity and pace of change.
If its operations are diverse, it is difficult for the top managers to
keep track of everything. If conditions are changing fast, it is
better to leave more of the judgements and decisions to people on
the spot. Indeed, some technical decisions have to be delegated
because the junior staff are more technically up-to-date.
Staff capabilities and motivation.
A decentralised organisation is often more satisfying for people
to work in, but staff must be competent and willing to make the
necessary decisions. This means that the organisation must have
good calibre employees in key positions in its decentralised units.
03-Oct-20
 10.3 Centralization and decentralization

• Centralisation and decentralisation each have

their strengths and weaknesses.
• The advantages of decentralisation are the
drawbacks of centralisation, and vice versa, so
it is only necessary to consider one of them.
• Following table 3.1 summarises the points for
and against decentralisation.

03-Oct-20
 10.3 Centralization and decentralization

03-Oct-20
10.3 Supervisory and Leadership Styles
• Leadership is a process by which an executive can
direct, guide and influence the behavior and work of
others towards accomplishment of specific goal.

• “Leadership is the ability to persuade others to seek

defined objectives enthusiastically. It is the human
factor which binds group together & motives it
towards goals.” – Kein Davis

03-Oct-20
10.3 Supervisory and Leadership Styles
All the leaders do not get things done in same manner. Some leaders follow carrot
approach & some other adopt stick approach. Their style varies. A perfect/standard
leadership style is one which assists a leader in getting the best out of people who
follow him.
The following are common leadership style:
1. Autocratic leadership style:
• Manager makes all the decision.
• S/he has complete command & hold over his employee/team.
Advantages:
• It leads to speedy decision.
• Greater productivity under leader’s supervision.
Drawbacks :
• Leads to employee absenteeism & turnover.
Suitable:
• For unskilled & routine nature of works, short-term and risky projects.

03-Oct-20
 10.3 Supervisory and Leadership Styles
2. Participative/Democratic leadership style:
• The manager involves the subordinates in decision
making by consulting team members (while still
maintaining control ) which encourages employee
ownership for the decisions.
Advantages:
• Leads to satisfied and motivated employees
• Leads to optimistic work environment
• Encourages creativity
Disadvantages:
• Time consuming

03-Oct-20
 10.3 Supervisory and Leadership Styles

3. Laissez-faire/ free-rein leadership style:

• The leader encourages team members to function
independently & work out their problems by
themselves, although s/he is available for advice &
assistance.
• Appropriate when team is highly motivated & skilled,
& has a history of producing excellent work.

03-Oct-20
 10.3 Supervisory and Leadership Styles

4. Bureaucratic Leadership:
• Leaders strictly adhere to organizational rules and
procedures.
• Suitable when safe work conditions & quality are
required.
• This style discourages creativity & does not make
employee self contented.

03-Oct-20
 10.4 Importance of communication

• Communication is the activity of communicating; the

activity of conveying information.

03-Oct-20 Fig: communication model

 10.4 Importance of communication

Communication are important in construction management.

The list below summarizes the importance of communication.
• Communication is a source of Information:
Information is being exchanged all the time. A manager
explains a company policy to an engineer; a joiner tells an
apprentice how to prepare a joint; a senior estimator tells a
junior how to build up a unit rate. But information passes both
ways. The engineer will tell the manager about a problem with
a sub-contractor. The joiner's apprentice will talk about a
grievance over bonus.

03-Oct-20
 10.4 Importance of communication

• Communication acts as Instrumental function:

Communication is used to get things done. Good communication is
vital in organisations, where groups undertake discrete tasks and
depend on one another to achieve mutual goals. People need to
know what they are expected to do, how quickly and how well. In
construction, most of the targets are available in drawings,
programmes and specifications, but the manager needs skill to
communicate them clearly and make sure that they have been
understood. Managers constantly use communication to get action.
For instance, they may ask a sub-contractor to increase its labour
strength to finish the job earlier. Similarly, others communicate with
the manager to get some management action. A supervisor will ask
for some equipment or for a meeting about production targets.

03-Oct-20
 10.4 Importance of communication

• Communication helps to keep Social relationships

Much of the communication which circulates round an
organisation is aimed at maintaining relationships between
individuals and groups, so that they continue to work as a
team. The larger the organisation, the more important this
social contact becomes. The contact itself is not directly
productive, but it facilitates the kind of communication that is
the life-blood of the business. On site, where communication
channels have to be created from scratch, social contact helps
to create co-operation between members of the team.

03-Oct-20
 10.4 Importance of communication

Communication helps to express feelings :

Communication enables people to express their feelings. This
may happen spontaneously, as in an argument during a site
meeting. But it may be carefully planned, for instance, to
create a favourable impression at an interview. A grievance
procedure is an example of this function operating at a formal
level.

03-Oct-20
 10.4 Importance of communication

Communication helps to change Attitude

Simply giving orders is not always enough. Managers may
need to change employees' attitudes to get the best work from
them. This would apply if, for instance, employees felt that the
firm was treating them unfairly. But this can be difficult. Some
kinds of attitude are resistant to change. Others are easier to
influence and personal discussion is often the best way. The
manager may use group discussion to achieve certain kinds of
attitude change, especially where several people are affected.

03-Oct-20
 10.4 Importance of communication

Communication acts as Role-related or ritual function:

Sometimes people communicate because they are expected to.
An operative who talks little may be labelled unsociable. The
manager is often expected to give a speech or have a few
words with a retiring employee.

03-Oct-20
 10.5 Information system for decisions
• Most managers, including construction managers, regard
decision-making as a key aspect of their work.
• Studies have shown that managers do not always spend a lot
of time on decisions, but making a good decision is often the
result of :
1. much careful information gathering and analysis,
2. involving discussions with a range of people,
3. scrutiny of recorded information and,
4. For some decisions, manipulation of data using computer
programs.

03-Oct-20
 10.5 Information system for decisions
• So a decision reached in minutes may be preceded
by many hours of collating and analyzing
information.

• Even a key business decision may be reached quickly,

but only after prolonged consideration of
information, a process which may have been spread
over weeks or months and involved other staff.

03-Oct-20
 10.5 Information system for decisions
• A decision almost always involves choosing between
several courses of action.

• If the choices are well-defined, the problem can be

described as routine. There may already be
procedures for dealing with it.

03-Oct-20
 10.5 Information system for decisions
• If the choices are unclear, the problem is non-routine and the
manager may spend a lot of time looking at the options
before reaching a decision.
• The decision will be more difficult if the number of choices is
large or the outcomes are hard to compare.
• If the manager lacks information about the problem or about
the options available, the decision can become very difficult
indeed.
• Most decisions are routine. They may not take up a lot of the
manager's time, but they interrupt other work.

03-Oct-20
 10.6 Motivating & Directing
• Motivation is derived from latin word movere
meaning to move.
• In present context motivation represents ‘those
psychological process that cause the arousal,
direction & persistence of voluntary actions that
are goal oriented’.
• Theories of motivation:
A. Content theory of motivation
they explain dynamic of human needs. By
understanding an employees’ need, we can
discover that condition that motivate person.
03-Oct-20
 10.6 Motivating & Directing
A.1. Maslow’s need hierarchy theory
psychologist Abraham Maslow in 1943 published his now-famous need
hierarchy theory of motivation based on his clinical observation of a few
neurotic individuals, it has subsequently been used to explain the entire
spectrum of human behavior.
• Physiological needs : most basic needs. Entails having enough food, air &
water.
• Security/ safety needs: consists need to be safe from physical &
psychological harm like: job security, provision for old age
• Belongingness/ social needs : contains the need of affection & belonging
like social interaction, love, interpersonal relationship.
• Esteem needs : need for reputation, prestige & recognition from others .
Also contains need for self- confidence & strength. E.g promotion.
• Self- actualization : Desire for self – fulfillment, to become the best one is
capable of becoming.
03-Oct-20
03-Oct-20 Maslow’s hierarchy of needs
 10.6 Motivating & Directing
A.2. Herzberg’s two factor theory:
This theory identifies two sets of factors that impact
motivation in workplace.
a) Hygiene factors: Although these factors don’t motivate
the employees, they cause dissatisfaction if they are
missing. They are : company policy & administration,
relationship with supervisors, relation with peers,
relationship with subordinates, work conditions, salary,
personal life, status and security
b) Motivators : it includes factors that are key to job
satisfaction & motivation. It includes: achievement,
recognition, work itself, responsibility, advancement,
growth.

03-Oct-20
 Herzberg’s two factor theory
03-Oct-20
 10.6 Motivating & Directing
A.3. Alderfer’s ERG theory:
It is built upon maslow’s hierarchy of needs theory. To begin
this theory, he collapsed Maslow’s five level of needs into
three categories.
1. Existence needs are desires for physiological & material
well being. (in terms of maslow’s model, existence needs
contains physiological & safety needs.)
2. Relatedness needs are desire for satisfying interpersonal
relationships. (in terms of maslow’s model, Relatedness
correspondence to social needs.)
3. Growth needs are desires for continued psychological
growth & development (in terms of maslow’s model,
growth needs include esteem & self realization needs).

03-Oct-20
 10.6 Motivating & Directing
A.4. Mcclelland’s acquired need theory
Everyone prioritizes needs differently. Individuals are
not born with these needs but are actually learnt
through life experiences. He identifies three specific
needs:
Need for achievement is the drive to excel
Need for power is the desire to cause others to behave
in a way that they would not have behaved otherwise.
Need for affiliation is the desire for friendly, close in
interpersonal relationship & conflict avoidance.

03-Oct-20
 10.6 Motivating & Directing
B. Process theory of motivation
It explains how workers select behavior actions to
meet their needs & determine their choices.
B.1. Equity theory:
it states that if an individual identifies an inequity
themselves & peers, they adjust the work they do
to make the situation fair in their in their eyes.
Equity occurs when,

03-Oct-20
 10.6 Motivating & Directing
B.2.Expectancty theory:
This theory examines the relation of expectancy with
performance, performance with reward & reward with
valance (value). Three components of this theory are:
1. Expectancy (E->P): the belief of a person that his/her
effort (E) will result in attainment of desired
performance (P) goals.
2. Instrumentality (P->R) : the belief of a person that
s/he will receive reward (R) if the performance (P)
expectation is met.
3. Valance : The value of reward according to person.
03-Oct-20
 10.6 Motivating & Directing
B.3. Reinforcement Theory:
It focuses on modifying an employee’s on-the-job behavior through the
appropriate use of one of the following four techniques:
1. positive reinforcement: they are rewards desirable behavior.
Positive reinforcement such as pay rise or promotion is provided as
a reward for positive behavior with intention of increasing the
probability that the desire behavior will be repeated.
2. Avoidance: it is an attempt to show an employee what
consequence of improper behavior will be.
3. Extinction: it is basically ignoring the behavior of subordinate &
not providing either positive or negative reinforcement.
4. Punishment : it is an attempt to decrease the likelihood of a
behavior recurring by applying negative consequences. (like
threats, suspension).
03-Oct-20
 10.7. Personnel selection, Testing & Training

Before an organization can fill a job vacancy, it must

find people who not only are qualified for the position
but also want the job. The organizational activities that
influence the number & types of applicants who apply
for a job & whether the applicant accept jobs that are
offered is called Recruitment.
Selection is a process by which an organization chooses
a list of applicants the person or persons who best
meet the selection criteria for the position available,
considering current environmental conditions.

03-Oct-20
 10.7. Personnel selection, Testing & Training

Major activities in selection are:

• Establishing selection policies
• identifying & choosing selection criteria
• gathering information about potential
employees
• Evaluating decisions to select or reject &
• Communicating decision selected or rejected

03-Oct-20
 10.7. Personnel selection, Testing & Training

Various kinds of tests can be used for selecting employees. It

depends on number of factors including budgetary constraints of
organization, complexity & difficulty of job, the knowledge, skills,
abilities & other characteristics required by job.
Types of selection tests:
1. Achievement tests: also called proficiency test. These measure
skill or knowledge acquired through training program & on job
experience.
2. Aptitude or potential ability test: it focuses particular type of talent
such as learning, reasoning etc.
3. Personality & temperament test : it discovers individual’s value
system, his emotional reactions, maturity & characteristics mood.
4. Interest test : it identifies person’s area of interest & work that
satisfies him.

03-Oct-20
 10.7. Personnel selection, Testing & Training

5.Psychomotor test: this includes choice reaction time,

speed of limb movement, and finger dexterity. These
tests are used for positions with high manual
requirements such as assembling radio or TV
components & watches.
6. Graphology Test : conducted to analyze the
handwriting of an applicant.
7. Polygraph test & honesty test : polygraph is an
instrument that records changes in breathing, blood
pressure, pulse & skin response associated with
sweating of palms. This test is designed to ensure
accuracy of information from the applicant.

03-Oct-20
 10.7. Personnel selection, Testing & Training

Training:
Training is a process that attempt to provide an
employee with information, skills & an
understanding of an organization & its goal. It is
desired to help a person continue to make positive
contributions in form of good performance.

03-Oct-20
 10.7. Personnel selection, Testing & Training

Method of Training:
1. On the job training (OJT): the employee is placed into real
workstation & shown the job & the tricks of the trade by
an experienced employee or the supervisor.
1.1. job instruction training : trainer first train the supervisors,
who in turn train the employees.
1.2. Apprenticeship: combination of on the job & classroom
training where in the workers get knowledge about the
job in classroom & then are required to perform the same
in the workshops for welders, mechanics etc.
1.3. internship : it is conducted where advanced theoretical
knowledge is to be backed up by practical experience of
job.

03-Oct-20
 10.7. Personnel selection, Testing & Training
2. off- the job training: these training are most effective for specific
objectives.
2.1. lectures : trainer gives lecture & involve trainee in a discussion of the
material to be learned.
2.2. conference : meeting of several people to discuss a particular topic
2.3. case studies : it uses written description of a real decision-making
situation in organization or situation that occurred in another organization.
Managers are asked to study the case to identify the problems, analyze the
problems for significance & propose solutions, choose best solution &
implement it.
2.4. Role play : each person is assigned a role in a situation (such as a case ) &
asked to play the role & to act other player’s role playing. It helps a
manager to become aware of & more sensitive to the feelings of others.
2.5. programmed instructions: it is a method of self instruction that enlists
machines or specially prepared books to teach the situation.
2.6. Computer Assisted Instructions : use of computer in education
2.7. Audio-visual Method:
03-Oct-20
 10.8 Trade unions& relations with
Managers
Trade union (Labor Union) is an organization of
employees that uses collective action to advance its
member’s interests in regards to wages & working
conditions. The philosophy behind the union is :
strength can be found in joining together.
Employees generally join unions to satisfy needs that
are important to them. Some more prevalent needs
includes:
job security
safe & healthy working conditions
communication link to management
fair compensation
03-Oct-20
 10.8 Trade unions& relations with
Managers

• Since the beginning civilization, the relationship

between those who direct the work and those
who accomplish it has been fraught with conflict
and resentment.
• Labor-management relations are the interacting
relations between labor (employees) and
management (employers).
• In most industries, wages and conditions are
determined by free collective bargaining between
employers and trade unions.
03-Oct-20
 10.8 Trade unions& relations with
Managers
• Overall, labor unions seem to think the reason
why labor-management partnership is difficult is
in the management side, while management side
tends to seek the reason in the labor union side.
• There is no doubt that labor-management
partnerships are very critical in achieving the goal
of productive government at all levels.
• the management and the labor force should be
the part of each like the labor is the part of
management and the management should be
the part of the labor.
03-Oct-20
 10.8 Trade unions& relations with
Managers
Collective Bargaining:
• It is a process by which the representative of the
organization meet & attempt to work out a contract with
employee’s representative- the union.
• Collective means that together representative attempt to
negotiate an agreement.
• Bargaining is a process of cajoling, debating, discussing &
threatening in order to bring about a favorable agreement
for those represented.
• It has two aspects:
1. It defines employer- employee relations on job through a
collective agreement
2. It interprets & administers the collective agreement
03-Oct-20
 10.8 Trade unions& relations with
Managers
Provisions in collective agreements relate to:
• Wages rate
• Conditions of employments
• Benefits
• Union security
Importance:
• It helps amicable settlements of disputes when arises.
• It promotes & protects interest of both parties.
• It helps to establish uniform terms & conditions of
employment to prevent disputes.
• It provides guidelines & norms in working conditions.
03-Oct-20
 Provision regarding Settlement of
Collective Disputes in labor act 2074
117. Collective claim may be submitted:
• Any enterprise employing ten or more than ten labours shall
have a collective bargaining committee.

• To hold negotiations on collective claims, demands : employer

shall, not later than seven days of the date of submission of
such claims or demands, give a notice in writing to the
collective bargaining committee, stating inter alia the venue
and time for negotiation.

03-Oct-20
 Provision regarding Settlement of
Collective Disputes in labor act 2074
118.Settlement through mediation:
1. The concerned party may, in the following
circumstance, make an application to the labor
Office for the settlement of collective claims,
demands through mediation:
(a) Where the employer fails to give a notice to the
collective bargaining committee for negotiations
(b) Where an agreement could not be reached
upon negotiation not later than twenty-one days
from the date of submission of claims, demands.
03-Oct-20
 Provision regarding Settlement of
Collective Disputes in labor act 2074
(2) The mediation proceeding shall be completed not later than
thirty days from the date of receipt by the Office of the
application.

(3) The dispute relating to the collective claims, demands shall

be settled if an agreement is reached between both the
parties upon the negotiation held in presence of the Office .

(4) The agreement made ,shall be binding for the concerned

parties.

03-Oct-20
 Provision regarding Settlement of
Collective Disputes in labor act 2074
119. Settlement of dispute through arbitration:
(1) Where mediation does not succeed , demands shall, in the
following circumstance, be settled through arbitration:
(a) If the collective bargaining committee and the employer
agree to settle the dispute relating to collective claims,
demands through arbitration,
(b) If a collective dispute arises in an enterprise providing
essential services,
(c) If a collective dispute arises in an enterprise within the special
economic zone, or
(d) If the strike is prohibited by imposition of a state of
emergency in accordance with the Constitution.
03-Oct-20
 Provision regarding Settlement of
Collective Disputes in labor act 2074
(2) Where the Ministry has a ground to believe that a financial
crisis may arise in the country as a result of ongoing or
possible strike or lockout or that the dispute needs to be
settled by arbitration, the Ministry may give an order for the
settlement of any collective dispute through arbitration
irrespective of the stage of such a dispute.
(3) the Ministry may form an arbitration panel comprising
representations from the labour, employer and Government
of Nepal.
(4) Expenses of the arbitration panel to be formed shall be borne
by the Government of Nepal as prescribed.

03-Oct-20
 Provision regarding Settlement of
Collective Disputes in labor act 2074
5) Any party wishing to have the dispute settled through
arbitration shall submit claims in writing to the arbitrator as
prescribed.
(6) On receipt of the claims referred to the arbitrator shall send
a copy of such claims to the other party and provide an
opportunity to such party to submit counter-claims in that
respect.
(7) In conducting the proceeding referred to in this Section, the
arbitrator may consult or discuss with any expert.
(8) Hearing shall be conducted at such date, time and place
specified by the arbitrator, and the arbitration proceeding
shall not sojourn for the sole reason that any party has
remained absent or counter-claim has not been submitted.
03-Oct-20
 Provision regarding Settlement of
Collective Disputes in labor act 2074
(9) The arbitrator shall make award not later than thirty days
from the date of completion of the hearing pursuant to sub-
section (8).
(10) The arbitrator may exercise such powers as the court has
under the prevailing laws in relation to the matters including
examining the evidence, taking depositions of witnesses,
making on-site inspections, in connection with the
proceeding.
(11) Except as otherwise provided for in the agreement by the
parties, other provisions relating to the arbitral proceeding
shall be as determined by the arbitrator

03-Oct-20
 Provision regarding Settlement of
Collective Disputes in labor act 2074
120. Power to form labour arbitration tribunal:
(1) The Government of Nepal may form an independent labour
arbitration tribunal for having mediation and arbitration with
regard to the collective dispute.
(2) Where a labour arbitration tribunal is formed pursuant to
subsection (1), the labour arbitration tribunal shall conduct
the mediation and arbitration proceedings referred to in this
Chapter.
(3) Other provisions relating to the labour arbitration tribunal
shall be as prescribed.

03-Oct-20
 Provision regarding Settlement of
Collective Disputes in labor act 2074
121. Right to strike for settlement of collective disputes:
(1) The collective bargaining committee may, if any of the following
circumstances exists, organize a strike for the settlement of any collective
dispute:
(a) If there exists no circumstance requiring compulsory arbitration pursuant
to sub-section (1) of Section 119,
(b) If the arbitrator fails to perform the arbitral functions,
(c) If an arbitration panel could not be formed within twenty-one days from
the date of application to the Ministry or decision is not made requiring
arbitration,
(d) If award is not given by the arbitrator within the prescribed time,
(e) If the employer refuses to enforce the arbitral award or challenges such an
award on legal grounds,
(f) If, except where compulsory arbitration is to be made, any party disagrees
with the arbitral award pursuant to sub-section (2) of Section 122.
03-Oct-20
 Provision regarding Settlement of
Collective Disputes in labor act 2074
(2) In order to make a strike pursuant to sub-section (1), a written notice along
with the claims, demands, and also specifying the date from which the
strike is to commence shall be submitted to the employer in advance of
thirty days, and information thereof shall also be given to the local
administration and the concerned Labour Office.
(3) Notwithstanding anything contained elsewhere in this Act, if the Ministry
gives an order for the settlement of the dispute through arbitration
pursuant to sub-section (2) of Section 119 after the notice on strike is
given or the strike is commenced pursuant to sub-section (2), they shall
postpone such a strike and participate in the arbitral process.
(4) Notwithstanding anything contained elsewhere in this Act, the labours
deputed as sentries and guards for the security of the enterprise shall
not be allowed to participate in the strike and do any act referred to in
Section 125 during the time when they are assigned on duty.

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122. Arbitral award and collective agreement to be binding:
(1) If any collective dispute is settled through compulsory
arbitration pursuant to sub-section (1) of Section 119, the
arbitral award shall be binding on the concerned parties.
(2) If any party to any dispute referred to arbitration in
pursuance of the order by the Ministry pursuant to sub-
section (2) of Section 119 who is not satisfied with the
arbitral award on the dispute fails to node down
disagreement in writing to the arbitrator not later than five
working days from the date of the award, such an award
shall also ipso facto be binding on the concerned party after
the expiration of that period.
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(3) The collective agreement and arbitral award need to be
registered in the Office for record and enforcement thereof.
(4) The collective agreement shall remain valid for two years
from the date of its entry into force, if any, specified in the
agreement itself and, failing the specification of such a date,
from the date of signing of the agreement and from the date
of the arbitral award, if any, made, and shall be valid as of
law.
(5) Notwithstanding anything contained in sub-section (4), the
provisions in the collective agreement or arbitral award shall
continue to apply unless and until it is amended or repealed
by another collective agreement or arbitral award.
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124. Right to lock-outs:
(1) Where a strike is organized or continued without giving a
notice pursuant to this Act or the collective dispute could not
be settled through the procedure referred to in this Act, the
management may, by giving justifiable grounds, lock out the
enterprise by obtaining approval of the Department.
(2) Before making a lock-out pursuant to sub-section (1), the
manager shall issue a notice in advance of at least seven
days, also specifying the date of lock-out, for information to
the labours that if the strike is not ended the lock-out will be
made.

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(3) Notwithstanding anything contained in sub-sections (1) and (2), where
there is a possibility of causing loss to the enterprise because of gherao,
riot, physical unrest etc. by the labours during the period of strike, the
management may lock out the enterprise. If the lock-out is so made,
information along with the justification for making such lock-out shall be
given to the Office or Department and the local administration not later
than three days.
(4) On receipt of the notice pursuant to sub-section (3), the local
administration shall immediately make necessary security arrangement
in such a workplace.
(5) The Department may at any time declare the lock-out of any enterprise
illegal in case it appears to be unjustifiable or it is likely to disturb the
peace and security of the country or it is contrary to the economic
interest of the country.

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(6) Notwithstanding anything contained elsewhere in this Section, no lock-out
may be made in an enterprise that operates any essential service.
125. Picketing or assembly may be made:
(1) With the objective of exerting pressure to have fulfilled the demands
when the strike or lock-out is continuing, the labours may picket or
assemble at the main entrance of the workplace or enterprise peacefully.
(2) In any circumstance other than the circumstance where strike or lockout,
they may picket or assemble before or after the working hours or during
the rest time without disturbing the work of the workplace or enterprise.
(3) Even in cases where picketing or assembly is made pursuant to subsection
(1), the labours may not do any act and action such as prohibiting others
from entering or leaving the workplace or enterprise or causing any loss
or damage to the workplace

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 Provision regarding Settlement of
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126. Employment contract not to be violated:
labor act 2074
No labour shall be deemed to have violated the employment contract by the
reason that he or she has made a strike, lock-out or picketing or made a
complaint in accordance with the law, and during that period, the
employment contract shall be deemed to continue to be effective.
127. Remuneration for strike or lock-out period:
(1) Any labour who makes a strike in a manner to be contrary to the
prevailing law shall not be entitled to any remuneration for the period of
such a strike.
(2) Labours shall be entitled to full remuneration for the period of lockout if
such lock-out is made by the employer in a manner to be contrary to the
prevailing law.
(3) If the collective agreement contains any agreement in relation to the
remuneration, the matter shall be governed accordingly; and failing such
agreement to that effect, the labour shall get half the remuneration for
the period of strike or lock-out made in fulfilment of the procedure of
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 Provision regarding Settlement of
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(4) If there arises any dispute as to whether any strike or lockout made in an
enterprise is contrary to law or not, the Department shall conduct
necessary inquiry and make decision not later than thirty-five days.
128. Prohibition on filing of case against loss:
(1) Where any financial loss is caused to the employer or labour because of a
strike, picketing or lock-out made in fulfilment of the procedures referred
to in this Act, no case may be filed in any court against any labour,
collective bargaining committee, trade union or employer involved in
such a strike, picketing or lock-out in relation to such a loss.
(2) Notwithstanding anything contained in sub-section (1), if any person or
group makes destruction or arson in the workplace or destruction of any
property in any other manner or causes physical damage, the amount
equivalent to the loss, damage may be recovered from such a person or
group.

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129. Collective bargaining or agreement to be made in good
faith:

(1) The trade union or collective bargaining committee or

employer shall, in making a collective bargaining or collective
agreement, do so in good faith.

(2) Other provisions relating to the collective bargaining or

agreement shall be as prescribed.

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 Thank You

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