Industrial Relation

Industrial Relation
Chapter 1
Concept and Meaning
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 have a broad as well as a narrow
outlook. Originally, industrial relations were broadly defined to include the relationships and
interactions between employers and employees. From this perspective, industrial relations cover
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 non-union employment relationships and the personnel practices and policies of
employers.
According to Johannes Schregle, “Labour relations denote the relationship between workers
and employers, between worker’s organizations and employers organizations and between
their respective organizations and public authorities.”
According to Dale Yoder, “industrial relations describe the relationship between management
and employees or among employees and their organizations that characterize or grow out of
employment.”
Therefore, Industrial relation is the relationship between the organization, management and
workers. An industrial relation involves industrial or trade union relations, dealing with people
collectively by the processes of involvement and participation, and handling grievances.
International Institute of Labour Studies has defined it as social relations in production.
It covers:
• Employer-employee relation in industry.
• Trade unions activities also came to be included under this term.
• The state- the activities of the state designed to modify, regulate, and control relations
between employers and employees also became a part of industrial relations.
• Employer and employees relationship under public service has also come to be covered
by the term.
• 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.
Prepared by: Nimmi Rai, MMC Dharan

• The themes of IR revolve around the three ‘actors’ of the IR system, viz. the employees,
the employers and the government.
• Industrial relations are basically the interactions between employers, employees and the
government, and the institutions and associations through which such interactions are
mediated.
Objectives
• To establish and maintain industrial peace and stability.
• To promote and maintain fair and just treatment of workers and employers.
• To promote and maintain collective bargaining as a means of determining wages, hours
and other terms and conditions of employment.
• To promote and develop harmonious and cooperative relationships between workers and
employers.
• To provide a forum for the resolution of disputes and grievances.
• To promote and maintain safe and healthy working conditions.
• To encourage and promote the participation of workers in the management of their
workplaces.
• To promote and maintain the rights of workers to form and join trade unions, and to
engage in collective bargaining
•
Scope of Industrial Relation
The scope of labor relations refers to the areas of study, research, and practice concerned with
the relationship between employers, employees, and their organizations. It covers the following
areas:
• Employee rights and benefits
• Trade unions and worker organizations
• Labor law and regulations
• Workplace safety and health
• Employee training and development
• Collective bargaining
• Labor market trends and analysis.
• Grievance procedures
Thus, the scope of industrial relations seems to be very wide. It also includes the establishment
and maintenance of good personnel relations in the industry, ensuring manpower development,
establishing a closer contact between persons connected with the industry and that between the
management and the workers, creating a sense of belonging in the minds of management,
creating a mutual affection, responsibility and regard for each other, stimulating production as
well as industrial and economic development, establishing a good industrial climate and peace
and ultimately maximising social welfare.
Forms of labour relations
1. Employer-Employee Relations: It refers to the working relations between workers and
employers in the workplace. This formal relationship between an employer and an employee is
called an employment relationship. It occurs when a person initiates employment or renders

services for remuneration under certain circumstances. It denotes all management employer
relations except the union- management relations.
2. Group Relations: It refers to the relations between various groups of workmen i.e., workmen,
supervisors, technical persons, etc. Group relations provide an opportunity to learn about groups,
organizations, and social dynamics.
3. Labor Relations: It refers to the relations between union- management (also known as labor
management relations).
Theories of Industrial Relations
The basic elements of industrial relations as well as the relationships among the parties are
influenced by a set of economic, sociological, political, psychological and cultural factors
operating in different countries at different intervals of time. The different perspectives of
industrial relations are:
A. Unitary Perspective
In Unitarism, the organization is perceived as an integrated and harmonious system, viewed as
one happy family. A core assumption of unitary approach is that management and staff, and all
members of the organization share the same objectives, interests and purposes. It views
employment relationships as cooperative and mutually beneficial, emphasizing the common
goals of both management and labor. Furthermore, unitarism has a paternalistic approach where
it demands loyalty of all employees. Trade unions are deemed as unnecessary and conflict is
perceived as disruptive.
From employees’ point of view, unitary approach means:
• Working practices should be flexible. Individuals should be business process
improvement oriented, multi-skilled and ready to tackle with efficiency whatever tasks
are required.
• If a union is recognized, its role is that of a further means of communication between
groups of staff and the company.
• The emphasis is on good relationships and sound terms and conditions of employment.
• Employee participation in workplace decisions is enabled. This helps in empowering
individuals in their roles and emphasizes team work, innovation, creativity, discretion in
problem-solving, quality and improvement groups etc.
• Employees should feel that the skills and expertise of managers supports their endeavors.
From employer point of view, unitary approach means that:
• Staffing policies should try to unify effort, inspire and motivate employees.
• The organization's wider objectives should be properly communicated and discussed with
staff.
• Reward systems should be so designed as to foster to secure loyalty and commitment.
• Line managers should take ownership of their team/staffing responsibilities.
• Staff-management conflicts - from the perspective of the unitary framework - are seen as
arising from lack of information, inadequate presentation of management's policies.

• The personal objectives of every individual employed in the business should be discussed
with them and integrated with the organization’s needs.
B. Pluralistic Perspective
The pluralistic approach totally departs from the unitary approach and assumes that the
organization is composed of individuals who form distinct groups with their own set of aims,
objectives, leadership styles, and value propositions. It views employment relationships as being
characterized by a balance of power between management and labor, with conflicting interests
being negotiated and resolved through compromise.
The organization is multi structured and there will be continued tension due to conflicts within
and between the various sectional groups. In contrast to the unitary approach, the pluralistic
approach considers conflict between management and employees as rational and inevitable. The
pluralistic approach considers conflict between management and employees as rational and
inevitable.
The implications of this approach include:
• The firm should have industrial relations and personnel specialists who advise managers
and provide specialist services in respect of staffing and matters relating to union
consultation and negotiation.
• Independent external arbitrators should be used to assist in the resolution of disputes.
• Union recognition should be encouraged and union representatives given scope to carry
out their representative duties
• Comprehensive collective agreements should be negotiated with unions.
C. Marxist Perspectives
Also known as the ‘Radical Perspective’, the Marxist approach is based on the proposition that
the economic activities of production, manufacturing, and distribution are majorly governed by
the objective of profit. Marxists, like the pluralists, regard conflict between employers and
employees as inevitable. It views employment relationships as being characterized by a
fundamental conflict of interests between management (representing capital) and labor
(representing the working class), with labor being exploited by management.
However, pluralists believe that the conflict is inevitable in all organizations. Marxists see it as a
product of the capitalist society. Adversarial relations in the workplace are simple one aspect of
class conflict. The Marxist approach, thus, focuses on the type of society in which an
organization functions. This view of industrial relations is a byproduct of a theory of capitalist
society and social change. This approach views pluralism as unreal and considers industrial
disputes and class conflicts as inevitable for the circular functioning of an industry.
Marx argued that:
• Weakness and contradiction inherent in the capitalist system would result in revolution
and the ascendancy of socialism over capitalism.
• Capitalism would foster monopolies.
• Wages (costs to the capitalist) would be minimized to a subsistence level.

• Capitalists and workers would compete/be in contention to win ground and establish their
constant win-lose struggles would be evident.
This perspective focuses on the fundamental division of interest between capital and labor, and
sees workplace relations against this background. It is concerned with the structure and nature of
society and assumes that the conflict in employment relationship is reflective of the structure of
the society. Conflict is therefore seen as inevitable and trade unions are a natural response of
workers to their exploitation by capital.
D. System theory
The system approach was developed by J. P. Dunlop of Harvard University in 1958. According
to this approach, individuals are part of an ongoing but independent social system. The behavior,
actions and role of the individuals are shaped by the cultures of the society. The three elements
of the system approach are input, process and output. Society provides the cue (signal) to the
individuals about how one should act in a situation. The institutions, the value system and other
characteristics of the society influence the process and determine the outcome or response of the
individuals. The basis of this theory is that group cohesiveness is provided by the common
ideology shaped by the societal factors. It views employment relationships as being part of a
larger system of economic, political, and social relationships, with employment relationships
being shaped by external factors such as the economy, technology, and government policies.
According to Dunlop, the industrial relations system comprises certain actors, certain contexts,
and an ideology, which binds them together and a body of rules created to govern the actors at
the workplace and work community.
E. Behavioral theory: It views employment relationships as being influenced by individual
attitudes, behaviors, and perceptions, with motivation, communication, and leadership being key
factors in shaping these relationships.
Industrial relation actors

The actors of industrial relations systems are (i) management and hierarchy of managers, (ii)
workers and the hierarchy of their organizations and (iii) Specialized governmental and mutually
agreed non-governmental agencies concerned with workers, enterprises and their relationships.
Employer and their Associations
Employers’ associations operate at local, industry and all national levels. The association of
employers work to protect the interests of its member. It is powerful body at the national level
which is doing an admirable job in protecting and promoting the legitimate interests of the owner
of industries and corporate sectors.
• Representing employers in collective bargaining
• Developing machinery for the avoidance of disputes
• Providing information on employee relations and to give advice
• Representing members on national issues.
• FNCCI, Chambers of commerce, CNI etc. are the Employers associations in Nepal.
Employers Roles
• Employers are directly involved in any dispute between the employers and employees .
Employers are endowed with certain undisputable rights vis-à-vis labour. The
management has the right to hire and fire any worker, notwithstanding union restrictions.

• It is not just firing a worker here or there, but the management’s ability to control the
economic destiny of the workers that matters.
• Creating and maintaining employee motivation
• Obtaining commitment from the work-force
• Establishing mutually beneficial channels of communication through out the
organization.
• Achieving high levels of efficiency
• Negotiating terms and conditions of employment with employee representatives.
• Sharing decision making with employees
• Engaging in a power structure with trade unions.
Workers and their associations.
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. In other words 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 is called employee.
Workers and their associations 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.
Workers/Employees - Roles
 Understanding their rights and responsibilities under labor laws and collective bargaining
agreements.
 Participating in collective bargaining and negotiations with management.
 Communicating effectively with co-workers and management to address workplace
issues.
 Joining or forming a union to advocate for their rights and interests.
 Reporting any violations of labor laws or collective bargaining agreements to the
appropriate authorities.
Overall, employees play a key role in shaping labor relations by exercising their rights and
advocating for their interests in the workplace.
Government
Government intervention in IR is also old as the industry itself. However, till the 19 th century,
governments everywhere followed the laissez faire policy. They left IR to the managers and
workers who were required to solve the problems themselves. Towards the end of the 19th
century, the attitude of the governments changed, and intervention become a reality. The state, as
of today regulates the relationship between the management and the labour and seeks to protect
the interests of both of groups. The government has set up wage boards, labour courts, tribunals
and enacted laws to lay down norms and to enforce their compliance.
Government Roles

 Regulating labor laws and protecting workers' rights.
 Enforcing collective bargaining agreements.
 Mediating disputes between labor and management.
 Investigating and prosecuting cases of unfair labor practices.
 Promoting safe and fair working conditions.
Overall, the government aims to balance the interests of workers and employers and ensure that
labor practices are in line with national labor policies and laws.
The system perspectives of industrial relation
The systems perspective of industrial relations is an approach that views the employment
relationship as a complex and dynamic system that involves multiple actors and influences. This
perspective emphasizes the interdependence and interrelatedness of various factors that affect the
employment relationship, including the economic, social, political, and technological contexts.
According to this perspective, the employment relationship is not just a transaction between
employers and employees, but rather a complex system that is influenced by a range of external
and internal factors. These factors include the legal and regulatory framework, the economic
conditions, the organizational culture and structure, the nature of work and technology, and the
social and political context.
The systems perspective also highlights the importance of considering the interests, needs, and
perspectives of all stakeholders involved in the employment relationship, including employers,
employees, unions, government, and society at large. It recognizes that the interests of these
stakeholders may sometimes conflict, but that they also have the potential to work together to
create more productive and sustainable employment relationships.
According to System Model
 An IRS is to be viewed as analytical subsystem of an industrial society on the same
logical plane as economic system.
 It is a separate and distinctive subsystem of the society, on the same plane as an
economic system.
 There are also relationship between a society and IRS
Overall, the systems perspective of industrial relations provides a holistic and integrated
approach to understanding the complexities of the employment relationship, and highlights the
need for a collaborative and inclusive approach to managing industrial relations issues.
 Industrialization strategy and labor relation
Industrialization strategy refers to the set of policies and practices implemented by a government
or business to promote and expand industrial production. It can include measures such as
investment in infrastructure, education and training, and tax incentives for businesses.
Industrialization strategy refers to a set of policies and practices aimed at promoting and
facilitating the growth of industries, typically in a developing country
A shift in industrialization strategy has an effect on an industrial relations system. A country's
industrialization strategy for economic development profoundly influences its industrial relations
(IR) and human resources (HR) policy goals. The way in which labor relations are managed can

vary widely depending on the industrialization strategy being pursued. For example, in some
cases, governments may prioritize the interests of businesses and seek to limit the power of labor
unions, while in other cases, they may prioritize the interests of workers and promote collective
bargaining and other forms of worker empowerment.
History shows that there are key moments of transition in industrial relations systems, after
which they get set and are hard to modify. There are several types of industrialization strategies,
each with its own goals and approaches. Some of the most common types of industrialization
strategies include:
Import Substitution Industrialization (ISI)
Import substitution industrialization (ISI) is an economic policy that favors developing domestic
industries and reducing reliance on manufactured foreign imports. It is a strategy that aimed at
reducing a country's dependence on imports by promoting domestic production through
protectionist policies such as tariffs, quotas, and subsidies. This strategy involves promoting
domestic industries by reducing reliance on imported goods. ISI aims to create self-sufficient
economies by producing goods that were previously imported, such as consumer goods, textiles,
and machinery. The impact of ISI on labour relations can be mixed.
Import Substitution Industrialization (ISI) had a significant impact on labor relations in the
countries that adopted this industrialization strategy. ISI aimed to reduce the reliance on
imported goods and create self-sufficient economies by producing goods that were previously
imported. This required the creation of new manufacturing industries that required a large
workforce, resulting in significant changes in labor relations.
One of the most significant impacts of ISI on labor relations was the creation of large-scale
manufacturing industries. These industries required a significant workforce, which often led to
the growth of labor unions and collective bargaining. Workers in these industries were able to
negotiate better wages, working conditions, and benefits, and the growth of unions led to an
increase in worker power.
SI also led to the growth of state-owned enterprises (SOEs), which played a significant role in
employment and labor relations. These SOEs often employed large numbers of workers, and the
government played an active role in managing labor relations. This led to a highly centralized
system of labor relations, with the government and unions negotiating wages and working
conditions.
However, ISI also had some negative impacts on labor relations. In some cases, the government
played an active role in suppressing labor unions, viewing them as a threat to economic stability.
This led to a highly politicized system of labor relations, with unions often being co-opted by the
government.
Overall, the impact of ISI on labor relations was complex and varied depending on the country
and the specific policies adopted. While ISI led to the growth of new industries and employment
opportunities, it also had some negative impacts on labor relations, including government
suppression of labor unions and highly centralized systems of labor relations.

Export-Oriented Industrialization
Export-oriented industrialization (EOI) is an economic strategy that focuses on boosting exports
as a means of driving economic growth and development. This strategy seeks to increase
competitiveness in international markets through a combination of factors such as investment in
technology, skills development, and favorable trade policies. This strategy aims to boost
economic growth by increasing exports of manufactured goods. EOI encourages businesses to
focus on producing goods that can be sold in foreign markets, typically by offering tax
incentives, subsidies, or other forms of support. The impact of EOI on labour relations can also
be mixed.
One of the most significant impacts of EOI on labor relations was the growth of export-oriented
industries. These industries often require a skilled workforce to produce high-quality goods that
can compete in the global market. As a result, there was a shift towards more skilled and
specialized work, with a focus on technological advancements and innovation.
EOI also led to a more flexible and decentralized system of labor relations. Export-oriented
industries often operate in free trade zones or special economic zones, which offer tax incentives
and other benefits to businesses. This led to a more competitive environment, with companies
competing for skilled workers by offering higher wages, better benefits, and improved working
conditions.
However, EOI also had some negative impacts on labor relations. In some cases, the growth of
export-oriented industries led to a decline in traditional industries, resulting in job losses and
wage stagnation. Additionally, the competitive environment of EOI often led to a race to the
bottom, with companies competing on labor costs, resulting in low wages and poor working
conditions for some workers.
Overall, the impact of EOI on labor relations was complex and varied depending on the country
and the specific policies adopted. While EOI led to the growth of new industries and
employment opportunities, it also had some negative impacts on labor relations, including job
losses, wage stagnation, and a race to the bottom on labor costs.
 Globalization and industrial relation
Globalization is the word used to describe the growing interdependence of the world’s
economies, cultures, and populations, brought about by cross-border trade in goods and services,
technology, and flows of investment, people, and information.
Globalization has had a significant impact on industrial relations, which refers to the relationship
between workers and employers within the workplace. The increased mobility of goods,
services, and capital has led to changes in the structure of the global economy, which has in turn
led to changes in industrial relations. Impact of globalization on industrial relation can be
explained below:
Changing labor force

One of the most significant impacts of globalization on labor relations has been the changing
labor force. Companies now operate across borders, sourcing inputs and components from
multiple countries, and assembling finished products in different locations. This has led to
increased competition and flexibility in the labor market, with companies seeking to hire workers
with the necessary skills at the lowest cost.
Government regulations on industrial relations
Globalization has had a significant impact on industrial relations and has led to changes in the
role of government in regulating labor relations. As countries have opened their economies to
global trade and investment, governments have had to adapt their labor regulations and policies
to remain competitive in the global market. There is an increased competition for jobs and
investment. Countries often compete with one another to attract foreign investment and jobs,
which can result in a race to the bottom on labor standards and regulations. This can make it
difficult for governments to maintain or improve labor standards without becoming
uncompetitive.
Growth of Multinational Corporation
One of the most significant impacts of globalization on industrial relations has been the growth
of multinational corporations (MNCs). MNCs often operate in multiple countries and have
significant bargaining power in labor relations. This has led to a shift in power away from
national governments and towards MNCs, which can sometimes have negative impacts on
workers' rights and working conditions.
Distribution of jobs and wages
Globalization has also led to changes in the distribution of jobs and wages around the world. The
increased competition for labor has led to the growth of low-wage industries in developing
countries, while higher-wage industries have often migrated to developed countries with more
skilled labor forces. This has led to wage stagnation and job losses in some industries, while
others have seen wage growth and increased demand for skilled labor.
Overall, the impact of globalization on labor relations has been complex and varied, with both
positive and negative impacts. While globalization has led to increased competition and
flexibility in the labor market, it has also led to wage stagnation, job losses, and a race to the
bottom on labor standards. The challenge for policymakers is to balance the benefits of
globalization with the need to protect workers' rights and ensure that globalization is inclusive
and sustainable.

Chapter 2
Trade Union
Concept of trade unions
A trade union is an organization formed by workers or employees in a particular industry or
profession to protect their rights and interests. The primary function of a trade union is to
negotiate with employers on behalf of its members to secure better wages, working conditions,
benefits, and job security. Trade unions may also provide legal and other support to their
members in case of workplace disputes or issues.
Trade unions typically operate on a democratic basis, with members electing leaders and
representatives to negotiate with employers and make decisions on behalf of the union. They
may also organize collective bargaining, strikes, and other forms of industrial action to press
their demands with employers.
According to Nepal Trade Union Act 2049 section 2(d) "Trade Union" means the enterprise level
Trade Union registered under this Act for the protection and promotion of the occupational rights
of the workers and this expression shall also includes Trade Union Association and Trade Union
Federation.
In Nepal, there are several trade unions that represent different industries and sectors. Here are
some examples:
Nepal Trade Union Congress (NTUC): NTUC is the largest trade union federation in Nepal,
representing workers across various sectors such as manufacturing, services, agriculture,
and transport. It was established in 2007 and has affiliations with the International Trade
Union Confederation.
General Federation of Nepalese Trade Unions (GEFONT): GEFONT is another major trade
union federation in Nepal, representing workers in industries such as construction,
textiles, and hospitality. It was founded in 1989 and has more than 500,000 members.
All Nepal Trade Union Federation (ANTUF): ANTUF is a trade union federation that represents
workers in industries such as agriculture, forestry, and mining. It was established in 2005
and has affiliations with the World Federation of Trade Unions.
Nepal Independent Hotel Workers Union (NIHWU): NIHWU is a trade union that represents
workers in the hospitality industry, including hotels and restaurants. It was founded in
1996 and has been involved in various campaigns to improve working conditions and
wages for hotel workers in Nepal.
Nepal Transport Independent Workers Union (NTIWU): NTIWU is a trade union that represents
workers in the transport industry, including drivers, conductors, and mechanics. It was
established in 2007 and has been involved in various campaigns to improve working
conditions and road safety for transport workers in Nepal.

Trade Unions: Characteristics
Association of Employees: A trade union is simply an organisation of workers who are
members of a specific class of job, profession, trade, or business.
Association made Voluntarily: A worker voluntarily joins a union. No one can be forced to join
a union.
Permanent: Trade unions are typically considered permanent bodies. Members may join and
leave, yet the union is still in place.
Shared Interest: Members of a trade union come together over issues such as job security,
better salary and conditions of employment, and other issues of common interest.
Group Action: When a single employee complains about a particular management decision, the
trade union will step in to help resolve the issue.
Importance of Trade Unions
Trade unions play an important role in protecting the rights and interests of workers and
promoting fair labor practices. Here are some of the key importances of trade unions:
1. Collective bargaining: Trade unions negotiate with employers on behalf of their members
to secure better wages, working conditions, benefits, and job security. Through collective
bargaining, trade unions can help to ensure that workers are treated fairly and that their
contributions to the organization are recognized.
2. Representation: Trade unions provide a voice for workers in the workplace, representing
their interests and concerns to employers and government bodies. This can help to ensure
that workers are not subjected to unfair or discriminatory treatment and that their rights
are protected.
3. Legal support: Trade unions may provide legal support and representation to members in
case of workplace disputes or issues. This can be particularly important for workers who
may not have the resources or knowledge to pursue legal action on their own.
4. Training and development: Trade unions may provide training and development
opportunities for their members, such as skills training, leadership development, and
education on workers' rights and labor laws.
5. Social and political activism: Trade unions may also engage in social and political
activism on behalf of their members and the wider community. This may include
campaigning for social justice, advocating for workers' rights and labor laws, and
supporting community initiatives.
Overall, trade unions play a crucial role in promoting fair and just labor practices and protecting
the rights and interests of workers. Through their collective bargaining, representation, legal
support, training and development, and social and political activism, trade unions help to ensure
that workers are treated with dignity and respect in the workplace.
EMERGENCE OF TRADE UNIONISM

Trade unionism emerged in response to the exploitation and poor working conditions faced by
workers during the Industrial Revolution in the late 18th and early 19th centuries. As
industrialization led to the growth of factories and mass production, workers were subjected to
long hours, low pay, dangerous working conditions, and limited job security.
The first trade unions emerged in Britain in the early 19th century, with workers organizing into
unions to press their demands for better wages, working conditions, and job security. These early
trade unions were often illegal and faced harsh repression from employers and the government.
However, they were able to organize strikes and other forms of industrial action to press their
demands.
Over time, trade unions grew in strength and became more organized and professional. They
developed structures and systems to represent workers in collective bargaining with employers
and established legal frameworks to protect workers' rights. In many countries, trade unions
became an important part of the labor movement and played a key role in securing better
working conditions, wages, and benefits for workers.
Trade unionism emerged in different parts of the world at different times, with workers
organizing to demand better working conditions, wages, and job security in response to the
exploitation and abuses they faced.
Here are some key examples of the emergence of trade unionism in different parts of the world:
Europe: Trade unionism emerged in Europe during the Industrial Revolution in the late 18th and
early 19th centuries, with workers organizing into unions to press their demands for
better wages and working conditions. The growth of trade unions was supported by the
rise of socialist and communist movements in Europe, which sought to challenge the
power of capitalists and promote workers' rights.
United States: Trade unionism emerged in the United States in the early 19th century, with
workers organizing into unions to demand better wages and working conditions. The
American Federation of Labor (AFL), founded in 1886, became the dominant trade union
organization in the US, representing workers across a wide range of industries.
Latin America: Trade unionism emerged in Latin America in the early 20th century, with
workers organizing into unions to demand better wages and working conditions in
industries such as mining and agriculture. The emergence of trade unions was often
linked to broader struggles for social and political rights, as workers sought to challenge
the power of authoritarian regimes and establish more democratic forms of government.
Africa: Trade unionism emerged in Africa in the mid-20th century, as workers organized to
demand better wages, working conditions, and political representation in the face of
colonialism and apartheid. Trade unions played a key role in the anti-colonial struggle
and continue to be important forces for social and economic justice in many African
countries.

Asia: Trade unionism emerged in Asia in the early 20th century, with workers organizing into
unions to demand better wages and working conditions in industries such as textiles,
mining, and agriculture. Trade unions played a key role in the struggle for independence
in many Asian countries and continue to be important forces for social and economic
justice in the region.
Today, trade unions continue to play a vital role in protecting workers' rights and interests in
many countries around the world. While the issues faced by workers have changed over time,
trade unions remain an important force for ensuring that workers are treated fairly and with
dignity and respect in the workplace.
Objectives of Trade union
1. Improvement of economic status of workers
2. Shorter working day
3. Improvement of working and living conditions
4. Income security of workers (pension, provident fund, compensation for work-injuries,
protection against layoff, reduction of expenditure and victimization)
5. Better health, safety, and welfare of standards
6. Respect and humane treatment from colleagues and supervisors.
7. Greater voice in industrial administration and management and
8. Improvement of political status.
9. Take collective action to enforce the terms of collective bargaining
10. Help settle their grievances.
Trade union activities
Economic activities
The economic activities of trade unions typically revolve around collective bargaining,
organizing strikes, and engaging in various forms of advocacy and lobbying.
Here are some of the specific economic activities that trade unions engage in:
1. Negotiating wages and benefits: Trade unions negotiate with employers on behalf of their
members to secure better wages, benefits, and working conditions.
2. Promoting workplace safety and health: Unions work to ensure that their members work
in safe and healthy environments, and they advocate for policies and regulations that
promote workplace safety.
3. Providing job training and education: Trade unions often provide training and education
programs to their members to help them improve their skills and advance in their careers.

4. Representing workers in grievances: Unions represent workers who have been wronged
by their employers, such as in cases of discrimination, wrongful termination, or wage
theft.
5. Advocating for worker-friendly policies: Unions engage in advocacy and lobbying efforts
to promote policies that benefit workers, such as minimum wage laws, family and
medical leave, and anti-discrimination laws.
6. Organizing strikes and other forms of direct action: In some cases, unions may engage in
strikes or other forms of direct action to pressure employers to improve working
conditions or meet other demands.
Political Activities
One of the primary objectives of trade unions is to protect the interests and rights of their
members in the workplace, which often involves engaging in political activities. Here are some
examples of political activities that trade unions may engage in:
 Political education of the workers.
 Establishing political parties and extending help to candidates of other political parties
who are sympathetic to cause of labor.
 Lobbing to influence the course of labor and other legislation.
 Participating in and representing the workers at advisory bodies.
 Developing aggressiveness and revolutionary urge amongst workers.
 Protesting against government measures unfavorable to the interest of workers.
Social Activities
Trade unions engage in a variety of social activities to support their members and promote their
interests. Some common social activities of trade unions include:
 Initiating and developing workers’ educations scheme.
 Organizing welfare activities such as mutual insurance, monetary and other help during
periods of strikes and economic distress.
 Running cooperatives.
 Providing housing facilities.
 Participating in community development and community protection activities.
 Engaging in cultural activities.
 Cooperating with governmental agencies in social welfare programs.
International Activities
Trade unions engage in a variety of international activities to promote workers' rights, improve
working conditions, and advance social justice across borders. Some of the most common
international activities of trade unions include:
 Participating in the activities of the International Labour Organization (ILO).
 Associating with the international federations of trade unions such as the World
Federation of Trade Unions (WFTU), the International Confederation of Free Trade
Unions (ICFTU) and the International Trade Union Secretariats.
 Sending monetary and other help to workers of other countries in their time of need.

 Trade unions often engage in campaigns of international solidarity to support workers'
struggles and human rights in other countries.
 Trade unions may engage in collective bargaining with multinational corporations to
negotiate better wages, benefits, and working conditions for workers in different
countries.
 Trade unions often provide education and training to their members to help them navigate
the complex world of international trade and labor relations.
Trade Unions in Service Sector
Trade unions are organizations that represent workers and advocate for their rights and interests
in the workplace. Although they traditionally served workers in manufacturing industries, labor
unions have attempted to respond to the rise of service industries in economies globally. The
service sector, which includes industries such as healthcare, hospitality, and finance, has seen a
significant increase in unionization in recent years.
The history of trade unions in the service sector dates back to the early 20th century, when the
sector began to grow rapidly in many industrialized countries. In the United States, for example,
service sector employment grew from around 10% of the workforce in 1900 to over 80% by the
end of the 20th century. The first service sector unions were often focused on public sector
workers, such as teachers, nurses, and government employees. In the early 20th century, these
workers faced difficult working conditions and low pay, and unions emerged to represent their
interests and advocate for better working conditions.
In the 1930s, the National Labor Relations Act was passed in the United States, which gave
workers the legal right to form unions and engage in collective bargaining. This helped to spur
the growth of unions in the service sector, particularly in industries such as healthcare and
education.
In recent years, service sector unions have continued to play an important role in advocating for
workers' rights and improving working conditions. For example, the Fight for $15 movement,
which began in 2012, has pushed for a $15 minimum wage and has been successful in securing
wage increases in several cities and states.
One reason for the rise in unionization in the service sector is the growing number of low-wage
jobs with poor working conditions. Many service sector workers are employed in jobs that offer
low wages, limited benefits, and few opportunities for advancement. Unions can help these
workers negotiate better wages, benefits, and working conditions. Another reason for the
increase in unionization in the service sector is the changing nature of work. Many service sector
jobs are part-time or contract positions, which can make it difficult for workers to organize and
advocate for their rights. However, unions can provide a collective voice for these workers and
help them negotiate better working conditions.
Additionally, the COVID-19 pandemic has highlighted the importance of unions in the service
sector. Many essential workers in industries such as healthcare, grocery stores, and transportation
have been on the frontlines of the pandemic, putting their health and safety at risk. Unions have

been instrumental in advocating for these workers and ensuring they have access to personal
protective equipment, hazard pay, and other resources.
One challenge facing trade unions in the service sector is the high level of part-time and
temporary work, which can make it difficult to organize and represent workers. Additionally,
many service sector workers are employed in small businesses, which can be harder to unionize
than larger companies.
The scenario of trade unions in the service sector varies depending on the country and region.
However, some general trends and challenges faced by trade unions in the service sector include:
 Decline in union membership: In many countries, the number of workers who are
members of trade unions has declined, particularly in the service sector. This has
weakened the bargaining power of unions and made it more difficult for them to
negotiate favorable conditions for workers.
 Growing competition: The service sector is growing and becoming increasingly
competitive, which can make it difficult for trade unions to negotiate favorable wages and
benefits for their members.
 Prevalence of part-time and casual work: Many service sector jobs are part-time or
casual, which can make it difficult for trade unions to organize and represent these
workers.
 Political and legal challenges: In some countries, trade unions face political and legal
challenges, such as restrictions on the right to strike or limitations on the activities of
trade unions
Despite these challenges, trade unions in the service sector continue to play an important role in
advocating for the rights and interests of workers. By building strong relationships with workers,
employers, and the wider community, trade unions can continue to be effective and relevant in
the service sector.
Structure of trade unions in Nepal
Trade unions in Nepal are structured in a hierarchical manner, with a national level organization
overseeing the activities of various local and sectoral level unions. The following is a brief
overview of the structure of trade unions in Nepal:
1. National Level: The national level trade union in Nepal is the Nepal Trade Union
Congress (NTUC). It is the largest and most influential trade union in the country. It has
several affiliated unions and represents workers across various sectors.
2. Regional Level: Regional trade unions are responsible for overseeing the activities of
local unions in a specific region. There are several regional trade unions in Nepal,
including the Nepal Trade Union Federation (NTUF), All Nepal Federation of Trade
Unions (ANTUF), and General Federation of Nepalese Trade Unions (GEFONT).
3. Local Level: Local trade unions are responsible for representing workers in a specific
workplace or industry. They negotiate with employers on behalf of workers and work to
ensure their rights and benefits are protected. There are numerous local trade unions in

Nepal, covering various industries such as agriculture, education, healthcare, and
transportation.
4. In addition to the above-mentioned levels, trade unions in Nepal are also structured based
on the sector they represent. For example, there are trade unions for government
employees, private sector employees, and workers in specific industries such as
construction and hospitality.
Overall, the structure of trade unions in Nepal is designed to provide representation and
protection to workers across various industries and regions. The national level organization
oversees the activities of various local and sectoral unions and provides a unified voice for
workers in negotiations with employers and the government.
Trade union movement in Nepal
The history of Nepalese trade unions goes back to 1947. The formation of ANTUCrecognized in
1950 was the first trade union federation in Nepal. During interim period few trade union centres
were organized openly but they did not got legal status during this period. The Panchayati rule
forcefully imposed NLO instead of trade unions in 1963. After 19 year of continuous repression,
in 1979 the historical mass movement gave rise to more than half dozen trade unions. But
because of lack of enough coordination and understanding among trade unions of different
sectors, the formation of national center could not make possible.
The General Federation of Nepalese Trade Unions (GEFONT) has formally been registered as
the first national trade union confederation in the country after the enactment of the Trade Union
Act, which was established in 1989 as a follower of ANTUC. With the reestablishment of
multiparty democracy in 1990 ban on trade unions was lifted. Consequently they start their
activities openly. Immediate after the restoration of multiparty democracy Nepal Trade Union
Congress (NTUC) came into existence as a follower of BWU.
The trade union movement of modern lines came to be organized only after the enactment of
Trade Union Act 1992 while ban on trade union was lifted and they were recognized legally.
Since the end of the 1997 the total number of registered trade union on federations reached three
with the registration of Democratic Confederation of Nepalese Trade Unions (DECONT)
separated from NTUC. Similarly large number of national federations and enterprise level unions
are registered in different Regional Labour Offices. Since last few years union registration in
informal sector and service sector is growing. As a result the number of enterprise level unions
increased rapidly after the introduction of Trade Union Act.
With the second amendment of the Trade Union Act in 1999 it has become possible to unionize
the informal sector workers too including agricultural workers and even self-employed. The
Trade Union Act 1992 clearly explained distinct three-tier system of trade unions in Nepal. They
are: Enterprise Level Trade Union, Trade Union Federation and Confederations. During the short
period of time Nepalese trade unions have been acquired a lot of improvements in various issues.
Among them increase in membership, militancy, collective bargaining capacity and the changing
attitude of the society towards trade union is considered as remarkable strengths. But Nepalese
trade unions are suffering from various weaknesses such as low membership, multiplicity of

unions on the one and on the other inter and intra union rivalry among unions, weak financial
position, weak leadership, low level of wages, remarkable unemployment and underemployment
situation in the country, etc.
As a result of various awareness raising programs training, workshop, education programs,
research and exposure programs directed to the human resource development programs
conducted by the trade unions within a short period, the general workers, members and activists
of trade unions from grass root to confederation level have been benefited. On the one the
current changing environment of occupational structure made the gap between workers and
management wider and wider on the other temporary, part time and seasonal workers has
increased remarkably. It is evident that the proportion of white-collar employment has increased
with the change in the occupational structure. Both of these situations are not favorable for union
development. After the restoration of multiparty democracy Nepalese trade unions are raising
voice in each and every aspect of labor welfare but preferably they focus on the issues of
minimum wage, job security, social security, working conditions, occupational safety and health,
unfair labor practices, fundamental trade union rights, etc. Significant proportion of trade union
leaders and general workers belongs to the young age group (20-39).
There is a diverse view regarding the beginning of the trade union movement of Nepal. Some
had opined the trade union movement was developed on the influence of the trade union
movement of India, where overwhelming majority viewed it was due to the internal necessity.
Trade union movement of Nepal has been grown fast during last one decade mainly due to lift
the ban on trade unions after the restoration of the multiparty democracy in 1990 and especially
with the enactment of Trade Union Act in 1992. Along with the development of trade unions the
socio-economic condition of the workers has increased though it is little. But still trade union
movement of Nepal is facing various problems for its smooth functioning to fulfill its goal. The
role of trade unions varies country to country. The variation depends upon the stage of economic
and social development of the country, the strength of trade unions, institutional set up of the
society in which they work social responsibility of the union and capacity to reconcile it to their
members. Nepalese trade unions have continually given emphasis to their common voices that
the provisions of the existing labor laws are still not sufficient to safeguard the interests of the
workers. On the other implementation and monitoring side of the existing labor laws is very
weak and it become a major demand of the trade unions of Nepal. Trade union is not only a
militant organization to fight for workers’ welfare but also a social organization and since last
few years working for the moral, educational and cultural upliftment of the member of the
society along with their economic welfare of the workers. They hope the workers will be
benefited through the social development being a member of the society. There is a great debate
on the issue whether trade union is a political organization or professional organization.
Generally it is used to be saying that a trade union could not be apolitical institution but on the
other it also could not be separate from politics. Thus trade union has to carry out various roles
related to politics. Trade union movement of Nepal reached in the present stage by passing
different stages during its more than 50 years’ history. The nature of trade union’s role may
differ in the past, present and future as the pace of change in the socio-economic and cultural
situation of the country that is accepted by all. Based on the present national and international

situation it is assumed that trade union could not survive in the future without changing their role
according to the changing situation of the country as well as abroad. Thus to sustain and
strengthen trade union movement Nepalese trade unions should have to be directed their
activities mainly to focus on policy issues addressing the negative effect of globalization on trade
union in the present context. The trade union movement in Nepal began in the 1950s, with the
formation of the Nepal Trade Union Congress (NTUC). The NTUC was closely associated with
the Nepali Congress Party and played a key role in the movement against the autocratic Rana
regime.
1. The Panchayat Era: During the Panchayat era (1960-1990), trade unions were not
allowed to operate independently. The government created its own trade union
organization, the National Trade Union Center (NTUC), which was closely monitored
and controlled by the state.
2. The Democratic Movement: The 1990 pro-democracy movement in Nepal saw the
emergence of independent trade unions. The Nepali Congress Party-led government
recognized the importance of trade unions and passed a new Labor Act in 1992, which
provided legal recognition to trade unions and guaranteed workers' rights to form and join
trade unions.
3. Post-Civil War Era: After the end of the decade-long civil war in 2006, trade unions
became more active and vocal in Nepal. They played a key role in pushing for labor law
reforms and better working conditions for workers. However, the trade union movement
in Nepal is still facing challenges such as weak legal protection, lack of resources, and
political interference.
Lastly, it can be conclude that Nepalese trade unions prefer to keep their individual identity but
join hands with each other in certain issues of the workers. As a temporary alliance they discuss
among themselves various issues of common concern but such discussions cannot be viewed as a
move towards merger of trade unions. The trade unions in Nepal do not confine their role merely
to workplace issues. They frequently raising national issues in different forum but they do not
have a common platform for voicing their opinion. In the present changing context both the
unions and employers should have to agree honestly on participative management to save the
establishment and employment of the working mass in the coming years.
Trade unions related issues in Nepalese organization
There are several issues related to trade unions in Nepalese organizations that have been a cause
of concern for workers and trade unionists. The following are some of the most common trade
union-related issues in Nepalese organizations:
 Mutual Hostility and suspicion : The psychological distance and barrier are pretty high
between management, employee and the government. The government at present is
literally squeezed between the employers and employees.
Government cannot find out its role between facilitator, regulator, promoter, arbitrator or
that of controller.
 Strikes and lockouts as ultimate resolution of dispute; Strikes and lockouts are
thought to be one and the ultimate weapons in the hands of trade unions and management
respectively. The rights, interests and obligations of the employees are to be determined
by the management.

 Politicization of labor issues and multiplicity of unions : The trade unions are used as
vote banks because of politicization of labor. Both government and management have
used divide and rule policy thereby weakening the position of labor union. On the other
hand the powerful unions have gone beyond their jurisdiction to dictate the management
on personnel issues like recruitment, promotion, transfer and departmental action.Trade
union act allows the provision for more than one union in the industrial unit, has also
helped to divide laborers. Collective security rather than furthering the class interests has
been the major underlining theme of trade union activities.
 Legalistic orientation of IR: The IR is too much preoccupied with legalistic orientation.
There is ambiguity in the Labor Act 1992 and Trade Union Act 1992. The labor
legislations are at early stage of development in the country. The management charges
that labor legislation has been drawn singularly with the interest of labor in mind while
trade unions accuse the law to be lack of practice. The process of learning by doing is the
popular mode of IR management.
 Labor Disputes: As per ILO three distinct features of labor dispute demand special
treatment for its solution. First; in labor disputes, the parties to the disputes have to stay
together. The disputes have a long term social consequences they involved not just the
workers and management but also the workers’ family, children and society at large. The
problem has a humane side, thus the solution must be humane. Second: The parties trying
to solve the dispute must have the consent of the parties to the dispute. Finally, the speed
by which the problem is solved is as much important as the outcome of the solution.
Labor disputes needlessly prolonged may bring totally unexpected consequences. Simply
having labor law may be a necessary but not a sufficient condition for the practice of
good industrial relations.
 Unacceptable labor practices; There are still unacceptable labor practices such as
bonded labor, child labor and labor discrimination in terms of caste, creed, gender and
nationality. There are still no. of workers that work in unorganized and informal sectors
like agriculture workers and self employed workers are yet to be covered by labor
legislation. Therefore unionization is still low in the economy. Even within the organized
sector only 36% of the work force is unionized.
Trade Union Act 2049 (1992). See pdf of Trade union act

Chapter 3
Collective Bargaining
Concept
Collective bargaining is made up of two words: Collective and bargaining. Collective implies
group action through its representatives and Bargaining suggests negotiations. Thus, collective
bargaining is “collective negotiation of a contract between the managements’ representatives on
one side and those of the workers on the other.” It is one of the techniques that has been adopted
by unions and management for compromising their conflicting interests. Broadly, collective
bargaining has three aspects. . They are:
 Subject matter of joint control, which might also be described as possible causes of
disputes;
 The question of procedures by which disputes can be resolved without resorting to
industrial actions; and
 There are the sanctions which can be applied if the negotiations breakdown or there is a
final failure to agree.
According to J. H. Richardson, “collective bargaining takes place when a number of work people
enter into a negotiation as a bargaining unit with an employer or group of employers with the
objects of reaching an agreement on the conditions of the employment of the work people.”
Archibald Cox says; “ The resolution of industrial problems between the representatives of the
employees acting collectively with a minimum of government dictation.”
The ILO considers collective bargaining as Negotiations about the working conditions and terms
of employment between an employer and a group of employees or one or more employees
organization with a view to reaching an agreement wherein the terms serve as a code of defining
the rights and obligations of each party in their employment relations with one another, fix a
large number of detailed conditions of employment and during its validity, none of the matters it
deals with can in normal circumstances be given as a ground for a dispute concerning as
industrial worker.
Collective bargaining refers to the negotiation process between employers and employees,
typically represented by a labor union, to reach an agreement on various employment-related
issues such as wages, benefits, working conditions, and job security. The aim of collective
bargaining is to arrive at a mutually acceptable agreement that satisfies the interests of both
parties. It is an important means for employees to have a say in the terms and conditions of their
employment and to work together to achieve their common goals. Collective bargaining is often
protected by law in many countries and is considered a crucial component of the labor relations
system. It is most commonly used in industries or occupations where workers are highly
organized and have a strong bargaining position.
Features /Nature of Collective Bargaining:

1. Collective bargaining is a process: It involves a series of discussions, negotiations, and
meetings between the employer and the employee representatives. It is not a one-time
event but a continuous process.
2. Collective bargaining is a voluntary process: It is voluntary in the sense that both parties
are free to participate or not to participate in the process. However, in many countries,
collective bargaining is mandatory in certain industries or sectors.
3. Collective bargaining is a mutual give-and-take process: Both parties must be willing to
compromise and make concessions to reach an agreement. Collective bargaining involves
mutual concessions and trade-offs.
4. Collective bargaining is a democratic process: It is a process that involves the democratic
representation of employees through their unions or other forms of representation.
5. Collective bargaining is a legally binding process: Once an agreement is reached, it
becomes legally binding on both parties.
6. Collective bargaining is a dynamic process: It is a process that evolves over time as new
issues and challenges emerge. It requires continuous adaptation to changing
circumstances.
7. Collective bargaining is a process that promotes industrial peace: By providing a
mechanism for resolving workplace disputes, collective bargaining promotes industrial
peace and stability.
8. It is a group action as opposed to individual action and is initiated through the
representatives of workers. In this group action management side would have their
representatives or delegates to deal with and on the workers side there is a trade union.
They talk face to face.
9. It is an art an advanced from human relations: for a successful collective bargaining one
needs a practical human relations approach. The parties involved must know the art of
handling people. They must have the capacity to explain their point of view logically
which is rather an art than sciences.
Objectives
1. To establish a system of communication and negotiation between employers and
employees: Collective bargaining provides a forum for employers and employees to
discuss and negotiate various employment-related issues.
2. To protect and promote the interests of employees: Collective bargaining helps
employees to achieve better wages, benefits, working conditions, and job security.
3. To establish and maintain industrial peace: Collective bargaining provides a mechanism
for resolving workplace disputes and promoting a peaceful and stable industrial
environment.
4. To establish a fair and equitable system of wages and benefits: Collective bargaining
helps to establish a system of wages and benefits that is fair and equitable to both
employees and employers.
5. To improve the efficiency and productivity of the organization: Collective bargaining can
help to improve the efficiency and productivity of the organization by addressing issues
related to work processes and working conditions.
6. To promote social justice and equality: Collective bargaining can help to promote social
justice and equality by addressing issues related to discrimination, harassment, and other
workplace injustices.

7. To promote employee participation and democracy: Collective bargaining provides
employees with an opportunity to participate in the decision-making processes that affect
their working lives and promotes democratic principles in the workplace.
Process of Collective Bargaining
• Preparation for Negotiation
• Identifying issues for Bargaining
• Negotiation
• Initial Negotiated Agreement
• Ratification of Agreement
• Implementation of Agreement
Preparation for Negotiation: Preparation for negotiation in Collective Bargaining is as
important as the negotiation process itself. Up to 83% of the outcomes are influenced by pre-
negotiation process. Such preparation is required for both management as well as the union
representatives. From the management’s point of view, pre-negotiation preparation is required
as:
 Management should decide when and how to open the negotiations/dialogue.
 Management must choose the representatives to negotiate at the negotiation table.
 Draft for likely decisions should be prepared in advance so that the final agreement draft
can be prepared as soon as the negotiation process is over.
 From the employees’ side also, preparation is required for the following reasons:
 The union should collect the information related to the financial position of the company
and their ability to pay the employees.
 The union must also be aware of the various practices followed by other companies in the
same region or industry.
 The union must assess the attitudes and expectations of the employees over concerned
issues so that the outcome of negotiations does not face any resistance from them.
Identifying issues for Bargaining: The second step in bargaining process is the determination
of issues which will be taken up for negotiations. The different types of issues are:
 Wage-related issues: Include wage or salary revision, allowance for meeting increased
cost of living like Dearness Allowance (D.A), financial perks, incentives etc.
 Supplementary economic benefits: These include pension plans, gratuity plans, accident
compensation, health insurance plans, paid holidays etc.
 Administrative issues: Include seniority, grievance procedures, employee health and
safety measures, job security and job changes.
 The wage and benefits issues are the ones which receive the greatest amount of attention
on the bargaining table.
Negotiation: When the first two steps are completed, both parties engage in actual negotiation
process at a time and place fixed for the purpose. There are two types of negotiations:

• Boulwarism: In this method, the management themselves takes the initiative to find out
through comprehensive research and surveys the needs of the employees. Under
Boulwarism, management takes a hard-line stance in labor negotiations, offering
employees a "take-it-or-leave-it" proposition, which is often the company's final offer.
The strategy involves a management approach that emphasizes unilateral decision-
making by management, with little or no input from labor unions or other employee
representatives.
• Continuous Bargaining: Involves parties to explore particular bargaining problems in
joint meetings over a long period of time, some throughout the life of each agreement.
The basic logic behind this method is that all persistent issues can be addressed through
continuous negotiation over a period of time. The success of negotiations depends on the
skills and abilities of the negotiators.
Initial negotiated agreement: When two parties arrive at a mutually acceptable agreement
either in the initial stage or through overcoming negotiation breakdown, the agreement is
recorded with a provision that the agreement will be formalized after the ratification by the
respective organizations.
Ratification of agreement: Ratification of negotiated agreement is required because the
representatives of both the parties may not have ultimate authority to decide various issues
referred to for collective bargaining. The ratification of agreement may be done by the
appropriate manager authorized for the purpose in the case of management, or trade executives
in the case of the employees. Ratification is also required by the Industrial Disputes Act. It is
important that the agreement must be clear and precise. Any ambiguity leads to future
complications or other such problems.
Implementation of agreement: Signing the agreement is not the end of collective bargaining,
rather it is the beginning of the process when the agreement is finalized, it becomes operational
from the date indicated in the agreement. The agreement must be implemented according to the
letter and spirit of the provisions made by the agreement agreed to by both parties. The HR
manager plays a crucial role in the day-to-day administration implementation of the agreement.
Collective bargaining as a method of wage fixation
Collective bargaining:
• A system which establishes revises and administers many of the rules which govern the
workers’ place of work;
• A procedure which determines the quantum of compensation which employees should
receive and which influence the distribution of economic ills;
• A method of settling disputes during the pendency of agreement and of determining, after
its expiry, whether a dispute should be reopened or whether a strike or a lock-out should
be resorted to or not.”
On the basis of structural arrangements, collective bargaining may be classified into two broad
categories:
(a) Single-Employer Bargaining: Single-employer bargaining take place between one company
and either one union, or more than one unions where there are several unions at different plants.

(b) Multi-Employer Bargaining: Multi-employer bargaining signifies collective bargaining
between the employers’ federation and the workers of an industry represented by the federation
of all the trade unions. This type of bargaining may take place at local, regional or industry level.
Strategy used by collective bargaining for wage fixation
There are several strategies that can be used during collective bargaining for wage fixation.
Some common strategies include:
1. Establishing bargaining goals: The union and management should identify and establish
their bargaining goals before starting the negotiations. The goals should be realistic, clear
and achievable.
2. Building a strong bargaining team: The union and management should select a strong and
competent team that can negotiate effectively on their behalf.
3. Conducting research and analysis: The union and management should conduct research
and analysis to identify the relevant labor market conditions, industry standards, and
economic factors that could affect the wage negotiations.
4. Using benchmarking: The union and management may use benchmarking to compare the
wages and benefits of similar jobs in other companies or industries. This can help both
sides to determine what is fair and reasonable.
5. Negotiating on non-wage issues: Sometimes, the union and management may agree to
negotiate on non-wage issues such as working conditions, job security, and benefits.
These negotiations can sometimes help to create value and find creative solutions that
benefit both parties.
6. Using effective communication: Effective communication is essential during collective
bargaining. Both sides should listen to each other's concerns, interests, and proposals, and
try to find common ground.
7. Maintaining a positive relationship: Maintaining a positive relationship between the
union and management is important during and after the bargaining process. A positive
relationship can help to build trust, promote cooperation, and reduce the likelihood of
future disputes.
Overall, successful collective bargaining for wage fixation requires both sides to be committed,
flexible, and willing to compromise in order to reach a mutually beneficial agreement.
Purpose of Minimum Wage Fixing
1. Minimum wage fixing should constitute one element in a policy designed to overcome
poverty and to ensure the satisfaction of the needs of all workers and their families.
2. The fundamental purpose of minimum wage fixing should be to give wage earners
necessary social protection as regards minimum permissible levels of wages.
 Criteria for Determining the Level of Minimum Wages: In determining the level of
minimum wages, account should be taken of the following criteria, amongst others:
(a) The needs of workers and their families;
(b) The general level of wages in the country;
(c) The cost of living and changes therein;
(d) Social security benefits;

(e) The relative living standards of other social groups;
(f) Economic factors, including the requirements of economic development, levels of
productivity and the desirability of attaining and maintaining a high level of employment.
Coverage of the Minimum Wage Fixing System
The number and groups of wage earners who are not covered in pursuance of Article 1 of the
Minimum Wage Fixing Convention, 1970, should be kept to a minimum.
1. The system of minimum wages may be applied to the wage earners covered in pursuance
of Article 1 of the Convention either by fixing a single minimum wage of general
application or by fixing a series of minimum wages applying to particular groups of
workers.
2. A system based on a single minimum wage
(a) Need not be incompatible with the fixing of different rates of minimum wages in different
regions or zones with a view to allowing for differences in costs of living;
(b) should not impair the effects of decisions, past or future, fixing minimum wages higher than
the general minimum for particular groups of workers.
Prerequisites for Collective Bargaining
Collective bargaining is a process that involves negotiations between workers (usually
represented by a union) and employers (or their representatives) to determine the terms and
conditions of employment. In order to engage in successful collective bargaining, there are
several prerequisites that should be met. These include:
1. Union recognition: The union representing the workers must be recognized by the
employer as the bargaining agent for the employees. This recognition can be achieved
through a certification process or by mutual agreement between the union and the
employer.
2. Availability of information: Both the union and employer should have access to relevant
information, such as financial data, production statistics, and market trends. This
information is necessary to make informed decisions during the bargaining process.
3. Good faith bargaining: Both the union and the employer should engage in bargaining in
good faith, meaning they should be sincere in their efforts to reach an agreement and not
engage in any unfair labor practices.
4. Legal compliance: Both parties should comply with all relevant laws, regulations, and
contractual obligations related to the bargaining process.
5. Mutual respect: Both parties should approach the bargaining process with mutual respect
and an understanding of each other's interests and concerns.
6. Clear bargaining objectives: Both parties should have clear bargaining objectives and be
prepared to make concessions in order to reach an agreement.
7. Equal bargaining power: Constructive consultation between trade union and management
is possible only when the bargaining power of two parties is relatively equal and is
exercised with responsibility and discrimination.
8. Free consultation: Two parties of collective bargaining accept the principle of ‘free
consultation’ and ‘free enterprise’ consistent with the advancement of public interest.

9. Representative union: The willing acceptance by management to recognize representative
union for this purpose.
10. Mutual confidence: Both the parties must have mutual confidence, good faith and a desire
to make collective bargaining machinery a success.
Negotiation
Negotiation is a process of communication and bargaining between two or more parties to reach
an agreement or settle a dispute. Negotiation can occur in various settings, including business,
politics, international relations, and personal relationships.
The concept of negotiation involves a series of interactions between the parties involved, with
each party expressing their interests, goals, and preferences. Negotiation involves a give-and-
take process in which both parties make proposals, counterproposals, and concessions, with the
aim of reaching a mutually acceptable agreement.
A negotiation is a strategic discussion that resolves an issue in a way that both parties find
acceptable. In a negotiation, each party tries to persuade the other to agree with his or her point
of view. By negotiating, all involved parties try to avoid arguing but agree to reach some form of
compromise. Negotiations involve some give and take, which means one party will always come
out on top of the negotiation. The other, though, must concede even if that concession is
nominal. Parties involved in negotiations can vary. They can include talks between buyers and
sellers, an employer and prospective employee, or between the governments of two or more
countries.
The negotiation process typically involves the following stages:
1. Preparation: Both parties prepare for the negotiation by gathering relevant information,
clarifying their goals and objectives, and assessing their strengths and weaknesses.
2. Opening: The negotiation begins with an opening statement, in which each party sets out
their position and interests.
3. Bargaining: The parties then engage in bargaining, exchanging proposals and
counterproposals and making concessions in order to reach an agreement.
4. Closure: The negotiation concludes with a closure stage, in which the parties reach a final
agreement or decide to terminate the negotiation.
Successful negotiation requires effective communication, mutual respect, and a willingness to
compromise. The negotiation process can be challenging, and may involve conflict and tension,
but with a collaborative and constructive approach, both parties can reach a satisfactory outcome.
The Negotiations: 3 Key Elements
In any negotiation, the following three elements are important and likely to affect the ultimate
outcome of the negotiation:
Attitudes: All negotiation is strongly influenced by underlying attitudes to the process itself, for
example attitudes to the issues and personalities involved in the particular case or attitudes linked
to personal needs for recognition.

Knowledge: The more knowledge you possess of the issues in question, the greater your
participation in the process of negotiation. In other words, good preparation is essential.
Interpersonal Skills: Interpersonal skills are the skills we use every day when we communicate
and interact with other people, both individually and in groups. They include a wide range of
skills, but particularly communication skills such as listening and effective speaking.
Interpersonal skills are sometimes referred to as social skills, people skills, soft skills, or life
skills.
Negotiating Techniques: Negotiation techniques are methods used to influence and persuade
the other party during a negotiation. Here are some common negotiation techniques:
1. Prepare, prepare, and prepare: Enter a negotiation without proper preparation and
you’ve already lost. Start with yourself. Make sure you are clear on what you really want
out of the arrangement. Research the other side to better understand their needs, as well
as their strengths and weaknesses. Enlist help from experts, such as an accountant,
attorney, human resource manager, arbitrator etc.
2. Pay attention to timing: Timing is important in any negotiation. Sure, you must know
what to ask for, but also be sensitive to when you ask for it. There are times to press
ahead, and times to wait. When you are looking your best is the time to press for what
you want. But beware of pushing too hard and poisoning any long-term relationship.
3. Leave behind your ego: The best negotiators either don’t care or don’t show they care
about who gets credit for a successful deal. Their talent is in making the other side feel
like the final agreement was all their idea.
4. Ramp up your listening skills: The best negotiators are often quiet listeners who
patiently let others have the floor while they make their case. They never interrupt.
Encourage the other side to talk first. That helps set up one of negotiation’s oldest
maxims: whoever mentions numbers first, loses. While that’s not always true, it’s
generally better to sit tight and let the other side go first. Even if they don’t mention
numbers, it gives you a chance to ask what they are thinking
5. If you don’t ask, you don’t get: Another tenet of negotiating is, “Go high, or go home.”
As part of your preparation, define your highest justifiable price. As long as you can
argue convincingly, don’t be afraid to aim high. But no ultimatums, please. Take-it-or-
leave-it offers are usually out of place.
6. Anticipate compromise: You should expect to make concessions and plan what they
might be. Of course, the other side is thinking the same, so never take their first offer.
Even if it’s better than you’d hoped for, practice your best look of disappointment and
politely decline. You never know what else you can get.
7. Offer and expect commitment: The glue that keeps deals from unraveling is an
unshakable commitment to deliver. You should offer this comfort level to others.
Likewise, avoid deals where the other side does not demonstrate commitment
8. Don’t absorb their problems: In most negotiations, you will hear all of the other side’s
problems and reasons they can’t give you what you want. They want their problems to
become yours, but don’t let them. Instead, deal with each as they come up and try to
solve them. If their “budget” is too low, for example, maybe there are other places that
money could come from.

9. Stick to your principles: As an individual and a business owner, you likely have a set of
guiding principles and values that you just won’t compromise. If you find negotiations
crossing those boundaries, it might be a deal you can live without.
10. Close with confirmation: At the close of any meeting (even if no final deal is struck)
recap the points covered and any areas of agreement. Make sure everyone confirms.
Follow-up with appropriate letters or emails. Do not leave behind loose ends.
Negotiating Skills
Good interpersonal skills are essential for effective negotiations, both in formal situations and in
less formal or one-to-one negotiations which are:
• Effective verbal communication
• Active Listening
• Reducing misunderstandings is a key part of effective negotiation
• Rapport Building
• Problem Solving
• Decision Making
• Assertiveness
• Dealing with Difficult Situations
• Mediation skills
• Conflict resolution and mediation skills
• Persuasion and Influencing Skills
• Communication skills
• Emotional intelligence
• Team working
• Problem solving and decision making
Types of Collective Bargaining
There are four types of Collective Bargaining classified on the basis of their nature and the
objectives, and can be practiced depending on the different situation requirements.

Definition: The Collective Bargaining is the process wherein the unions (representatives of
employees or workers), and the employer (or their representative) meet to discuss the issues
related to wage, the number of working hours, work environment and the other terms of the
employment.
There are four types of Collective Bargaining classified on the basis of their nature and the
objectives, and can be practiced depending on the different situation requirements.
1. Conjunctive or Distributive Bargaining: In this form of collective bargaining, both the

parties viz. The employee and the employer try to maximize their respective gains. It is based on
the principle, “my gain is your loss, and your gain is my loss” i.e. one party wins over the other.
The economic issues such as wages, bonus, other benefits are discussed, where the employee
wishes to have an increased wage or bonus for his work done, whereas the employer wishes to
increase the workload and reduce the wages.
2. Co-operative or Integrative Bargaining: Both the employee and the employer sit
together and try to resolve the problems of their common interest and reach to an amicable
solution. In the case of economic crisis, such as recession, which is beyond the control of either
party, may enter into a mutual agreement with respect to the working terms. For example, the
workers may agree for the low wages or the management may agree to adopt the modernized
methods, so as to have an increased production.
3. Productivity Bargaining: This type of bargaining is done by the management, where the
workers are given the incentives or the bonus for the increased productivity. The workers get
encouraged and work very hard to reach beyond the standard level of productivity to gain the
additional benefits.Through this form of collective bargaining, both the employer and the
employee enjoy the benefits in the form of increased production and the increased pay
respectively

4. Composite Bargaining: In this type of collective bargaining, along with the demand for
increased wages the workers also express their concern over the working conditions, recruitment
and training policies, environmental issues, mergers and amalgamations with other firms, pricing
policies, etc. with the intention to safeguard their interest and protect the dilution of their powers.
Thus, the purpose of the Collective Bargaining is to reach a mutual agreement between the
employee and the employer with respect to the employment terms and enjoy a long term
relationship with each other.
Collective bargaining issues in Nepalese organization

In Nepal, collective bargaining is a legally recognized right of workers and is governed by the
Labor Act 2017. However, there are several issues related to collective bargaining in Nepalese
organizations, including:
• Limited coverage: Collective bargaining in Nepal is limited to the formal sector, which
covers only a small fraction of the workforce. This leaves the majority of workers,
especially those in the informal sector, without any bargaining power or protection.
• Weak legal framework: The legal framework for collective bargaining in Nepal is weak
and outdated. The existing laws do not provide adequate protection to workers and their
representatives, and the procedures for negotiating and enforcing agreements are
cumbersome.
• Weak trade unions: The trade union movement in Nepal is weak, fragmented, and
politicized. Many unions are affiliated with political parties, which often use them for
their own interests. This undermines the ability of trade unions to effectively represent
workers and negotiate with employers.
• Employer resistance: Many employers in Nepal are resistant to collective bargaining and
often refuse to recognize trade unions or negotiate with them. This leaves workers with
little recourse and makes it difficult to improve their working conditions.
• Lack of trust: There is a general lack of trust between employers and workers in Nepal,
which makes it difficult to establish a constructive bargaining relationship. This is
compounded by the fact that many workers are employed in small and medium-sized
enterprises, where the employer-employee relationship is often informal and based on
personal relationships rather than formal contracts.
• Unequal Bargaining Power: Employers often have more bargaining power than workers,
particularly in the informal sector, where labor laws are often not enforced. This can
result in imbalanced negotiations and disadvantageous outcomes for workers.
• Inadequate Implementation: Even when collective agreements are reached, there is often
inadequate implementation and enforcement of the agreed-upon terms, particularly in the
informal sector
Overall, the issues related to collective bargaining in Nepal are complex and deeply rooted in the
country's social, economic, and political context. Addressing these issues will require a concerted
effort from all stakeholders, including the government, employers, workers, and their
representatives.
Provisions of collective bargaining in Nepal: Based on Labor Act 2017 (2074)

In Nepal, collective bargaining is a legally recognized right of workers and is governed by the
Labor Act 2017. However, there are several issues related to collective bargaining in Nepalese
organizations, including:
• Right to Collective Bargaining: The Labor Act 2017 (2074) provides workers with the
right to form and join trade unions and engage in collective bargaining with employers.
• Scope of Collective Bargaining: Collective bargaining can cover all issues related to
employment and work, including wages, benefits, working hours, working conditions,
and job security.
• Procedure for Collective Bargaining: The law requires that collective bargaining must be
conducted in good faith and in a timely manner. Employers and trade unions must meet
and negotiate in good faith, and if an agreement is reached, it must be put in writing and
signed by both parties.
• Mediation and Conciliation: If the parties cannot reach an agreement through collective
bargaining, they may seek mediation or conciliation services from the Labor Office or the
Labor Court.
• Strike and Lockout: The Labor Act 2017 (2074) also provides for the right to strike and
the right to lockout. However, these rights are subject to certain restrictions and
conditions, including the requirement for advance notice and the need to exhaust all other
options for dispute resolution before resorting to a strike or lockout.
• Prohibition of Discrimination: Employers are prohibited from discriminating against
workers based on their membership in a trade union or participation in collective
bargaining.
• Collective Bargaining Agreement: Once an agreement is reached, it must be in writing
and signed by both parties. The agreement should be registered with the Labor Office
within 30 days, and it will be valid for a period of up to two years.
Overall, the Labor Act 2017 (2074) of Nepal provides a framework for collective bargaining that
aims to promote harmonious industrial relations between employers and employees.
Also see The Labor Act 2017 (2074)pdf

Chapter 4
Employee Grievances, conflicts and disputes
Industrial Grievance
Grievance means any type of dissatisfaction or discontentment arising out of factors related to an
employee’s job which he thinks is unfair. A grievance arises when an employee feels that
something has happened or is happening to him who he thinks is unfair, unjust or inequitable.
Industrial grievances refer to complaints or disputes arising between employers and employees
or among employees in the workplace. These grievances can arise from a variety of issues, such
as working conditions, wages and benefits, job assignments, promotions, and disciplinary
actions.
In the workplace, grievances can be categorized as individual or collective grievances. Individual
grievances are complaints raised by individual employees against their employer regarding a
specific issue that affects them personally. On the other hand, collective grievances are
complaints raised by a group of employees or a union on behalf of its members regarding a
broader issue that affects the group as a whole.
Effective management of industrial grievances is important for maintaining a healthy work
environment and ensuring the well-being and satisfaction of employees. A well-designed
grievance handling mechanism can help to resolve disputes in a timely and effective manner, and
prevent escalation into larger conflicts or legal disputes.
In many organizations, a grievance handling procedure is established to provide a framework for
addressing grievances. The procedure typically involves several steps, such as filing a written
complaint, investigation, mediation, and arbitration or legal action if necessary. The procedure
should be fair, impartial, and transparent, and should provide opportunities for both parties to
present their case and reach a resolution.
Overall, effective management of industrial grievances is an important aspect of human resource
management, and can contribute to a positive work environment and increased employee
satisfaction and productivity. In an organization, a grievance may arise due to several factors
such as:
• Violation of management’s responsibility such as poor working conditions
• Violation of company’s rules and regulations
• Violation of labor laws
• Violation of natural rules of justice such as unfair treatment in promotion, etc.
Various sources of grievance may be categorized under three heads:
1. management policies,
2. working conditions, and
3. personal factors

The grievance procedure is one of the more important means available for employees to express
their dissatisfaction. It is also a means available to management to keep a check on relevant
diagnostic data on the state of the organization's health. There are other means also for this, such
as decline in production/output (other things being equal) change in an individual’s work habits
and approach to the job itself.
Nature of employee grievances
Employee grievances can take many forms and arise from various workplace situations. Here are
some examples of the nature of employee grievances:
1. Discrimination: An employee may file a complaint if they believe they have been
discriminated against on the basis of their age, race, gender, religion, or other protected
characteristics.
2. Harassment: An employee may file a complaint if they have experienced harassment or
bullying from a colleague or supervisor.
3. Working conditions: An employee may file a complaint if they believe the working
conditions are unsafe, unhealthy, or unpleasant.
4. Compensation: An employee may file a complaint if they believe they are not being paid
fairly or if they are not receiving the benefits they are entitled to.
5. Workload: An employee may file a complaint if they feel overworked or overwhelmed
with responsibilities.
6. Management: An employee may file a complaint if they believe their supervisor or
manager is treating them unfairly or not providing appropriate support.
7. Career development: An employee may file a complaint if they believe they are not
receiving opportunities for career growth or advancement.
It is important for organizations to have a mechanism in place for employees to raise grievances,
and for management to address these grievances in a timely and respectful manner.
Causes of grievances
Grievances may occur due to a number of reasons:
1. Economic: Employees may demand for individual wage adjustments. They may feel that they
are paid less when compared to others. For example, late bonus, payments, adjustments to
overtime pay, perceived inequalities in treatment, claims for equal pay, and appeals against
performance related pay awards.
2. Work environment: It may be undesirable or unsatisfactory conditions of work. For example,
light, space, heat, or poor physical conditions of workplace, defective tools and equipment, poor
quality of material, unfair rules, and lack of recognition.
3. Supervision: It may be objections to the general methods of supervision related to the attitudes
of the supervisor towards the employee such as perceived notions of bias, favouritism, nepotism,
caste affiliations and regional feelings.
4. Organizational change: Any change in the organizational policies can result in grievances. For
example, the implementation of revised company policies or new working practices.

5. Employee relations: Employees are unable to adjust with their colleagues, suffer from feelings
of neglect and victimization and become an object of ridicule and humiliation, or other inter-
employee disputes.
6. Unfair treatment: Employees may feel that they are being treated unfairly or unequally
compared to their colleagues. This can include issues related to promotions, salary, benefits, or
working conditions.
7. Discrimination and harassment: Discrimination and harassment based on protected
characteristics such as race, gender, age, or religion can create a hostile work environment and
cause employees to file grievances.
8. Workload and stress: Employees may feel overworked or stressed due to unreasonable
workload or deadlines, which can lead to burnout and grievances.
9. Poor management: Poor management practices, such as favoritism, lack of recognition, or lack
of leadership, can create a negative work environment and lead to grievances.
Processing of Grievance
The details of a grievance procedure/machinery may vary from organisation to organisation.
Here, a four phase model is suggested. The first and the last stages have universal relevance,
irrespective of the differences in the procedures at the intermediate stages.
The four stages of the machinery are briefly discussed here: The level at which grievance occurs:
The best opportunity to redress a grievance is to resolve it at the level at which it occurs. A
worker’s grievance should be resolved by his immediate boss, the first line supervisor. The
higher the document rises through the hierarchy, the more difficult it is to resolve.
Bypassing the supervisor would erode his authority. When the process moves to a higher stage,
the aggrieved employee and the supervisor concerned may shift their focus to save face by
proving the other wrong.
The substantive aspect of any of the grievances may thus be relegated and dysfunctional aspects
come to the fore thus making it more difficult to settle the issue. In a unionized concern, the first
stage of the procedure usually involves three people: the aggrieved employee, his immediate
boss and the union representative in the shop/ department.
It is possible to involve the union in laying down the framework of the grievance procedure and
thereafter restrain union involvement in the actual process, at least in the first two stages. The
choice depends on the top management attitude and orientation towards the dynamics of union
management relations.
Supervisory role needs to be strengthened, with appropriate training in problem solving skills,
grievance handling and counselling so that he can do much in reducing the number of grievances
that get passed to higher stages in the machinery. Unrealistic policies and expectations and lack
of commitment for equity and fair play can cause problems in handling grievances at the lower

level. Inadequate delegation of authority may also inhabit a supervisor’s effectiveness in
handling grievances at this level.
i. Intermediate Stage: If the dispute is not redressed at the supervisor’s level, it will usually be
referred to the head of the concerned department. It is important that line management assume
prime responsibility for the settlement of a grievance. Any direct involvement by personnel
department may upset balance in line-staff relations. At the intermediate level, grievance can be
settled with or without union involvement. Excessive reliance on supervisor at this stage can
jeopardizes the interests of the employee and affect the credibility of the procedure.
ii. Organization Level: If a grievance is not settled at the intermediate level also, it will be
referred to the top management. Usually, a person of a level not less than General Manager
designated for the purpose will directly handle the issue. By now, the grievance may acquire
some political importance and the top leadership of the union may also step in formally, if the
procedure provides for it and informally, if the procedure prohibits it. At this level it is very
difficult to reconcile the divergent interests.
iii. Third Party Mediation: If the grievance has not been settled bi-laterally within the
organization, it goes to a third party for mediation. It could be conciliation, arbitration or
adjudication or the matter may even be referred to a labor court. At this stage, the parties
concerned lose control over the way the grievance is settled. In case of mediation (conciliation or
arbitration) the mediator has no authority to decide, but in case of labor court or an adjudicator,
the decision will be binding on the parties, subject to statutory provisions for appeal to higher
courts.
Industrial conflicts
Industrial conflict refers to disputes and disagreements that arise between workers and employers
or between labor unions and management. Such conflicts can occur due to a variety of reasons,
including wages and benefits, working conditions, job security, management decisions, and
changes in company policies.
There are several types of industrial conflicts, including strikes, lockouts, picketing, and work
slowdowns. Strikes are one of the most common forms of industrial conflicts, where workers
stop working and refuse to return until their demands are met. A lockout occurs when the
employer prevents employees from working by closing the workplace or denying access to the
premises. Picketing involves workers protesting outside the workplace, while a work slowdown
is when employees reduce their work output to protest against a situation.
Industrial conflicts can have significant consequences for both workers and employers. They can
lead to lost wages, decreased productivity, damaged relationships between labor and
management, and can result in costly legal battles. However, industrial conflicts can also be an
essential tool for workers to assert their rights and negotiate better working conditions and
benefits. It is, therefore, important for both labor and management to approach industrial
conflicts with a spirit of cooperation and compromise to find mutually beneficial solutions.
Nature of Industrial Conflicts

The nature of industrial conflicts can vary depending on the underlying issues and the
parties involved. However, some common characteristics of industrial conflicts include.
 Economic Issues: Conflicts often arise over economic issues such as wages, benefits, and
working conditions. These issues can be related to concerns about job security, unfair
treatment, or a lack of respect.
 Power Struggle: Conflicts can also arise due to power struggles between labor unions and
management. Both sides may seek to gain control or influence over the workplace, which
can lead to tensions and conflicts.
 Communication Breakdown: Communication breakdowns between management and
workers or between labor unions and employers can also contribute to industrial
conflicts. Poor communication can lead to misunderstandings, mistrust, and a lack of
cooperation, which can escalate into conflict.
 Ideological Differences: Conflicts can also arise due to ideological differences between
workers and management or between labor unions and employers. These differences may
be related to political or social issues, such as worker rights, social justice, or
environmental concerns.
 Historical Issues: Industrial conflicts can also be influenced by historical issues, such as
past conflicts or grievances that have not been adequately addressed. These issues can
create a sense of mistrust and resentment that can fuel future conflicts.
Manifestations of Conflict
 Verbal Aggression: Verbal aggression can be a common sign of conflict, and it may
include shouting, name-calling, sarcasm, or other forms of verbal abuse.
 Non-Verbal Cues: Non-verbal cues such as facial expressions, body language, and tone
of voice can also be signs of conflict. For example, clenched fists or a tense posture may
indicate anger or frustration.
 Avoidance: When people avoid each other or certain topics, it can be a sign of conflict.
For example, a coworker who stops participating in team meetings or a couple who stops
discussing certain issues may be avoiding conflict.
 Lack of Communication: When communication between people breaks down or
becomes strained, it can be a sign of conflict. This may include withholding information,
ignoring messages, or using ambiguous language.
 Physical Aggression: In some cases, conflict can escalate to physical aggression, such as
pushing, hitting, or other forms of violence.
 Negative Performance: Conflict can also impact performance, and people may
experience a decrease in productivity, creativity, or motivation. They may also have
difficulty focusing or completing tasks.
 Emotional Distress: Conflict can cause emotional distress, such as anxiety, depression,
or stress. It can also impact physical health, leading to headaches, sleep disturbances, or
other physical symptoms.
Conflict Resolution Methods

NEGOTIATION
Definition: Negotiation is the most basic means of settling differences. It is back-and-forth
communication between the parties of the conflict with the goal of trying to find a solution.
The Process: You may negotiate directly with the other person. You may hire an attorney to
negotiate directly with the other side on your behalf. There are no specific procedures to follow –
you can determine your own – but it works best if all parties agree to remain calm and not talk at
the same time. Depending on your situation, you can negotiate in the board room of a big
company, in an office or even in your own living room.
This involves direct communication between the parties involved to reach an agreement or
compromise. Negotiation can be formal or informal, and may involve a mediator or facilitator to
help the parties work towards a resolution. Negotiation allows you to participate directly in
decisions that affect you. In the most successful negotiations, the needs of both parties are
considered. A negotiated agreement can become a contract and be enforceable.
Characteristics of Negotiation:
 Voluntary
 Private and confidential
 Quick and inexpensive
 Informal and unstructured
 Parties control the process, make their own decisions and reach their own agreements
(there is no third-party decision maker)
 Negotiated agreements can be enforceable in court
 Can result in a win-win solution
MEDIATION
Definition: Mediation is also a voluntary process in which an impartial person (the mediator)
helps with communication between the parties and promotes reconciliation, which will allow
them to reach a mutually acceptable agreement. Mediation is often the next step if negotiation
proves unsuccessful. A mediator is a neutral third party who helps the parties involved in a
conflict to work towards a mutually acceptable resolution. The mediator does not make decisions
for the parties but instead helps them to communicate effectively and find common ground.
The Process: The mediator manages the process and helps facilitate negotiation between the
parties. A mediator does not make a decision nor force the parties to reach an agreement. The
parties directly participate and negotiate their own settlement or agreement.
At the beginning of the mediation session, the mediator will describe the process and ground
rules. The parties, or their attorneys, have an opportunity to explain their view of the dispute.

Mediation helps each side better understand the other’s point of view. Sometimes the mediator
will meet separately with each side. Separate “caucusing” can help address emotional and factual
issues as well as allow time for receiving legal advice from your attorney. Mediations are
generally held in the office of the mediator or another agreed neutral location.
Characteristics of Mediation:
 Promotes communication and cooperation
 Provides a basis for you to resolve disputes on your own
 Voluntary, informal and flexible
 Private and confidential, avoiding public disclosure of personal or business problems
 Can reduce hostility and preserve ongoing relationships
 Allows you to avoid the uncertainty, time, cost and stress of going to trial
 Allows you to make mutually acceptable agreements tailored to meet your needs
 Can result in a win-win solution
ARBITRATION
Definition: Arbitration is the submission of a disputed matter to an impartial person
(the arbitrator) for decision. This is a more formal process that involves a neutral third party
who listens to both sides of the dispute and makes a binding decision. The decision of the
arbitrator is usually final and cannot be appealed.
The Process: Arbitration is typically an out-of-court method for resolving a dispute. The
arbitrator controls the process, listens to both sides and makes a decision. Like a trial, only one
side will prevail. Unlike a trial, appeal rights are limited.
In a more formal setting, the arbitrator will conduct a hearing where all parties present evidence
through documents, exhibits and testimony. The parties may agree to, in some instances,
establish their own procedure, or an administrating organization may provide procedures. There
can be either one arbitrator or a panel of three arbitrators. An arbitration hearing is usually held
in offices or other meeting rooms.
The result can be binding if all parties have previously agreed to be bound by the decision. In
that case, the right to appeal the arbitrator’s decision is very limited. An arbitrator’s award can be
reduced to judgment in a court and thus be enforceable. In nonbinding arbitration, a decision
may become final if all parties agree to accept it, or it may serve to help you evaluate the case
and be a starting point for settlement talks.
Characteristics of Arbitration:
 Can be used voluntarily
 Private (unless the limited court appeal is made)

 May be less formal and structured than going to court, depending on applicable
arbitration rules
 Usually quicker and less expensive than going to court, depending on applicable
arbitration rules
 Each party will have the opportunity to present evidence and make arguments
 May have a right to choose an arbitrator with specialized expertise
 A decision will be made by the arbitrator that may resolve the dispute and be final
 Arbitrator’s award can be enforced in a court
 If nonbinding, you still have the right to a trial
 Arbitration is not typically permitted for family law matters
Industrial Dispute
An industrial dispute is a conflict between employers and employees, or between different
groups of employees, regarding employment conditions, wages, benefits, or other aspects of the
employment relationship. Industrial disputes can take many forms, from mild disagreements or
work stoppages to more serious strikes or lockouts.
Industrial disputes can arise for a variety of reasons, including disagreements over pay, working
conditions, job security, or management decisions. The parties involved may try to resolve the
dispute through negotiation, mediation, or other methods of conflict resolution. In some cases,
the dispute may escalate to more serious forms of industrial action, such as strikes, boycotts, or
picketing.
Industrial disputes can have significant impacts on both employers and employees, as well as on
the wider community. They can result in lost wages, reduced productivity, and damage to
business reputation. At the same time, industrial disputes can be an important tool for employees
to negotiate for better working conditions and wages, and for employers to make decisions that
benefit the organization as a whole.
Nature of industrial disputes
 Collective action: Industrial disputes often involve groups of employees who come
together to negotiate with their employer or take action to address their grievances.
Collective action can take the form of strikes, work stoppages, or protests.
 Conflict over employment conditions: Industrial disputes typically involve conflict
over employment conditions, such as wages, benefits, hours of work, or working
conditions. Disputes can also arise over issues such as job security, disciplinary action, or
discrimination.
 Power imbalance: In many cases, there is a power imbalance between the employer and
the employees involved in an industrial dispute. Employers may have more resources,

such as financial or legal resources, which can make it more difficult for employees to
achieve their goals.
 Legal and institutional frameworks: Industrial disputes are often governed by legal and
institutional frameworks, such as labor laws, collective bargaining agreements, or dispute
resolution mechanisms. These frameworks can impact the nature and outcomes of
industrial disputes.
 Impact on stakeholders: Industrial disputes can have significant impacts on a wide
range of stakeholders, including employees, employers, customers, suppliers, and the
broader community. For example, a strike may result in lost wages for employees, lost
profits for employers, and disruptions to the supply chain for customers and suppliers.
Legal provision on dispute settlement process in Nepalese Organizations
The Labor Act, 2017 of Nepal provides for the settlement of disputes between employers and
employees through a grievance redressal mechanism established by the organization, internal
inquiry, or through the Labor Court.
 Settlement of Individual Disputes
Submission of individual claims :
1. If any labour has an individual claim/ dispute on any matter related to the Regulation,
prevailing laws or collective agreement, such a labour may make an application in
writing to the employer.
2. After receiving the application from the labour, employer shall receive the application
and give its receipt to the labour.
3. The employer shall settle the dispute relating to such a claim within fifteen days upon
holding discussion with the concerned labour.
 Application may be made to the Office
The concerned party may, make an application to the Office for the settlement of the claim by
mediation on the following circumstances.
1. If the employer does not give a notice for discussion within seven days from the date on
which the application was made.
2. Fail to agree upon discussion after fifteen days from the date on which the original
application was made to the employer.
3. The Office shall give the concerned employer and the labour a notice specifying the date
and time for discussion.
4. The Office shall settle the dispute relating to the claim within twenty-one days from the
date of receipt of the application.
5. If an agreement is reached between the concerned employer and the labour upon the
negotiations, such a dispute shall be regarded to have been settled.
 Decision to be made by the Office: Where the problem could not be solved by
discussion between labor and employer, the Office shall, on the basis of the available
evidence, make a decision within fifteen days.
Settlement of Collective Disputes

 Collective claim may be submitted if any enterprise employing ten or more than ten
labors shall have a collective bargaining committee.

 Employer and collective bargaining committee hold negotiations on collective claims
where employer shall give a notice stating the venue and time for negotiation.
 The concerned party may make an application to the Office for the settlement of
collective claims, demands through mediation if employer fails to give a notice to the
collective bargaining committee for negotiations.
 Where mediation does not succeed, the dispute relating to the collective claims shall be
settled through arbitration.
 The collective bargaining committee may, organize a strike for the settlement of any
collective dispute if the arbitrator fails to perform the arbitral functions,
 The collective dispute could not be settled through the procedure, the management may,
by giving justifiable grounds, lock out the enterprise by obtaining approval of the
Department.
 The trade union or collective bargaining committee or employer shall, make an
agreement, in good faith.
Strikes
Strikes typically refer to a labor action taken by workers in which they collectively refuse to
work as a way to protest against their employer or to demand better working conditions, wages,
benefits, or other grievances. Strikes are often organized and carried out by labor unions or other
worker organizations, and they can vary in duration and intensity.
During a strike, workers may picket outside their workplace or engage in other forms of peaceful
protest, such as sit-ins or rallies. The goal of a strike is to put pressure on the employer to meet
the demands of the workers, either through negotiations or other means.
Strikes can have a significant impact on the economy and society, as they can disrupt the
production and distribution of goods and services. They can also result in financial losses for
both the employer and the workers, as well as for consumers and other businesses that depend on
the affected industry.
In many countries, strikes are legal and protected under labor laws, but there are often
restrictions on their timing, duration, and other aspects. Some employers may also seek legal
remedies, such as court injunctions, to limit or prevent strikes from occurring.
Strike is a very powerful weapon used by trade unions and other labour associations to get their
demands accepted. It generally involves quitting of work by a group of workers for the purpose
of bringing the pressure on their employer so that their demands get accepted. When workers
collectively cease to work in a particular industry, they are said to be on strike.
Causes of strikes:

 Strikes can occur because of the following reasons:
 Dissatisfaction with company policy
 Salary and incentive problems
 Increment not up to the mark
 Wrongful discharge or dismissal of workmen
 Withdrawal of any concession or privilege
 Hours of work and rest intervals
 Leaves with wages and holidays
 Bonus, profit sharing, Provident fund and gratuity
 Retrenchment of workmen and closure of establishment
 Dispute connected with minimum wages
Lockouts and its causes
Lockout means temporary shutdown of the factory by the employer, but not winding up
(permanent) of the factory. Lockout of the factory maybe happened due to the failure in the
management affected by internal disturbances or maybe by external disturbances. Internal
disturbances maybe caused when the factory management goes in to financial crisis or got
succumbed into financial debts, disputes between workers and workers, disputes between
workers and management or may be caused by ill-treatment of workers by the management.
THE REASONS BEHIND THE LOCKOUTS
 Disputes or clashes in between workers and the management.
 Unrest disputes or clashes in between workers and workers.
 Illegal strikes, regular strikes or continuous strikes by workers may lead to lockout of
factory or industry.
 External environmental disturbance due to unstable governments, may lead to lockouts of
factories or industries.
 Continuous or accumulated financial losses of factory or industry, may lead to opt
lockout by the management.
 Maybe lockout, if any company involves in any fraudulent or illegal activities.
 Failure in maintaining proper industrial relations, industrial peace and harmony.
Lockout of the factory is regarded as major issue which affects both management of the factory
and their employees. Management should always monitor employees behavior and relationship
between employees and relationship in between management and employees To avoid disputes
which leads to lockouts

UNIT 5:
WORKER PARTICIPATION IN MANAGEMENT
Concept
Workers’ participation in management is an essential ingredient of Industrial democracy. The
concept of workers’ participation in management is based on Human Relations approach to
Management which brought about a new set of values to labor and management.
Traditionally the concept of Workers’ Participation in Management (WPM) refers to
participation of non-managerial employees in the decision-making process of the organization.
Workers’ participation is also known as ‘labor participation’ or ‘employee participation’ in
management. In Germany it is known as co-determination while in Yugoslavia it is known as
self-management. The International Labor Organization has been encouraging member nations
to promote the scheme of Workers’ Participation in Management.
Workers’ participation in management implies mental and emotional involvement of workers in
the management of Enterprise. It is considered as a mechanism where workers have a say in the
decision-making.
According to Keith Davis, Participation refers to the mental and emotional involvement of a
person in a group situation which encourages him to contribute to group goals and share the
responsibility of achievement.
According to Walpole, Participation in Management gives the worker a sense of importance,
pride and accomplishment; it gives him the freedom of opportunity for self-expression; a feeling
of belongingness with the place of work and a sense of workmanship and creativity.
The concept of workers’ participation in management encompasses the following:
 It provides scope for employees in decision-making of the organization.
 The participation may be at the shop level, departmental level or at the top level.
 The participation includes the willingness to share the responsibility of the organization
by the workers
A process by which subordinate employees, either individually or collectively, become involved
in one or more aspects of organizational decision making within the enterprises in which they
work.
Workers’ participation in management is an essential ingredient of Industrial democracy. The
concept of workers’ participation in management is based on Human Relations approach to
Management which brought about a new set of values to labour and management. Traditionally
the concept of Workers’ Participation in Management (WPM) refers to participation of non-
managerial employees in the decision-making process of the organization. Workers’
participation is also known as ‘labour participation’ or ‘employee participation’ in management.

In Germany it is known as co-determination while in Yugoslavia it is known as self-
management. The International Labour Organization has been encouraging member nations to
promote the scheme of Workers’ Participation in Management.
Workers’ participation in management implies mental and emotional involvement of workers in
the management of Enterprise. It is considered as a mechanism where workers have a say in the
decision. The philosophy underlying workers’ participation stresses:
 Democratic participation in decision-making;
 Maximum employer-employee collaboration;
 Minimum state intervention;
 Realization of a greater measure of social justice;
 Greater industrial efficiency; and
 Higher level of organizational health and effectiveness.
It has been varyingly understood and practiced as a system of joint consultation in industry; as a
form of labour management cooperation; as recognition of the principle of co-partnership, and as
an instrument of industrial democracy. Consequently, participation has assumed different forms,
varying from mere voluntary sharing of information by management with the workers to formal
participation by the latter in actual decision-making process of management.
Levels of Participation:
Workers’ participation is possible at all levels of management; the only difference is that of
degree and nature of application. For instance, it may be vigorous at lower level and faint at top
level. Broadly speaking there is following five levels of participation:
1. Information participation: It ensures that employees are able to receive information and
express their views pertaining to the matters of general economic importance.
2. Consultative participation: Here works are consulted on the matters of employee welfare
such as work, safety and health. However, final decision always rests at the option of
management and employees’ views are only of advisory nature.
3. Associative participation: It is extension of consultative participation as management here is
under moral obligation to accept and implement the unanimous decisions of employees.
4. Administrative participation: It ensure greater share of works in discharge of managerial
functions. Here, decision already taken by the management come to employees, preferably with
alternatives for administration and employees have to select the best from those for
implementation.
5. Decisive participation: Highest level of participation where decisions are jointly taken on the
matters related to production, welfare etc. is called decisive participation.
Determinants of workers’ participation in management

It is felt that the success of WPM is determined by two types of factors:
(i) Situational and (ii) Human. The former refers to the peculiar characteristics of each enterprise
which determine its participation potential, such as its autonomy, its size and organization
structure as well as technological factors. Other factor determining worker’s participation in
management are:
 Employers’ willingness to introduce worker participation - organizational size, industry
origin, business strategy and union presence.
 Particular structural conditions of organization.
 Unilateral management control, are more likely to have participation schemes acceptable
to unions than plants where unions are weaker.
 Management style and strategies.
 Intention to improve labor relation.
 Union presence may also influence managers’ willingness to introduce participative
structures and employee involvement programmes.
 industrial or economic force
 intellectual and theoretical force
 Public interest
Determinants of workers’ participation in management: Walker Model
By human factors is meant a worker’s propensity to participate and the manager’s acceptance of
the participation schemes. This has three aspects, i.e., (i) workers’ attitudes to participation, i.e.,
whether he has a desire to participate or not; (ii) secondly, the worker’s perceived power to
participate; if he sees and believes that he has the power, then he makes efforts to participate;
(iii) thirdly, his capacity to participate, i.e., his ability to understand the managerial functions and
the issues involved in participation and the ability to express himself clearly.
Human factors also relate to a manager’s attitude, which is dependent upon the kind of approach
he adopts for running an enterprise. This can be either: (i) authoritarian; (ii) paternalistic; (iii)
constitutional; or (iv) democratic. These determine not only his acceptance of workers’
participation schemes but also the form that they may take.
Workers Participation in Management: Characteristics
Characteristics of workers’ participation in management:
 Participation implies mental and emotional involvement rather than muscular activity.
 It motivates the employees to contribute their maximum and provides an opportunity to
workers to direct their initiative and creativity towards the objectives of the group.

 It encourages people to accept responsibility for an activity as they feel self involved in
the group.
Thus, we can conclude that participation provides an opportunity to every member of the
organization to contribute his brain and ingenuity as well as his physical efforts for the
improvement of organizational effectiveness and at the same time enhancing his own economic
welfare. It also develops in them a sense of organizational loyalty and involvement.
Workers Participation in Management: Objectives
 To raise productivity, production and efficiency of workers.
 To improve morale of workers.
 To satisfy the desire of workers for self- expression.
 To promote industrial peace in the concern.
 To have better industrial relations and establish harmonious relations between the
workers and management.
 To evoke the fullest collaboration of the employees.
 To encourage social education which promotes solidarity in the working class?
 To establish Industrial Democracy.
 To build the most dynamic Human Resources.
 To satisfy the workers’ social and esteem needs.
 To promote increased productivity for the advantage of the organization, workers and the
society at large.
 Its psychological objective is to secure full recognition of the workers.
 To democratize the management.
Workers Participation in Management: Significance
 It encourage to acceptance new change.
 It improves the level of morale & team spirit.
 It ensures the responsibility of workers.
 It restores human dignity under industrial sectors.
 It provides ample scope for self expression and self advancement.
 It help to make better decision
 It makes atmosphere to use creativity of workers.
 It establishes the industrial democracy.
 It helps to faster growth of industrial sectors.

Workers’ empowerment techniques: Quality circle and its application
Quality circle is a methodology to involve employees for more in decision making and shift the
organisation towards a more participative culture. It is a risk-free way to begin and can be
considered as a living tool that suits for any organisation to develop solutions in work base
problems.
The concept of quality circle encourages employee participation as well as it promotes teamwork
and motivates people to contribute towards organisational effectiveness through group
involvement. Not only it gives amazing outcomes but it also helps to facilitate designing of better
systems in an organizations.
Quality circle is a people building philosophy based on the premise that an employee doing a
particular job is biggest expert of that field and thus is in a better position to identify, analyse and
resolve the work related problems through their innovative and unique ideas.
In fact, it is a practical application of McGregor’s Theory ‘Y’ that if given the right environment
and decision making power, people will enjoy and take pride in their work thus leading to
enrichment of their work life.
Quality circle is a small group of employees in the same work area or doing similar type of work
who voluntarily meets regularly for about an hour every week to identify, analyze and resolve
work related problems. The objective is to improve quality, productivity and the total
performance of the organisation and also to enrich the quality of work life of employees.
It is a voluntary group of employees, who are doing the same or similar type of job, meet
together on a regular’ basis to identify, analyze and solve their work related problems leading to
improvement in their work, performance and- enrichment of their work life. The number of
circle members could vary from 5 to 15 but the ideal size of a circle is 7 or 8 members.
The size should not be so high that every member cannot have sufficient time and opportunity to
participate and contribute. The quality circle members must be from the same work area so that
the problems they identify will be familiar to all the members for effective participation.
It is a small group of employees in the same work area or doing similar type of work who
voluntarily meet regularly for about an hour every week to identify, analyze and resolve work-
related problems not only to improve quality, productivity and the total performance of the
organisation, but also to enrich the quality of work life of employees.
Workers’ empowerment techniques: Quality circle and its application: Key Feature
 People Building Philosophy – A quality circle is a homogeneous group. The number of
employees in a quality circle is between six to ten and they generally come from a
particular area.
 Voluntary Group – No coercion or pressure is brought on any member to join or not to
join. Nor can any member be barred from joining quality circles.

 Participative Program – Quality circles represent collective effort. Every one working in
the organisation must get a chance to say what is in his mind.
 Supportive Management – Quality circles need the encouragement to grow and mature.
Management must be willing to give support, advice and also some commitment in the
beginning.
 To Improve the Performance – Collective and participative efforts must result in the
improvement of quality, productivity and performance.
 Enrichment of Worklife – Apart from team culture and attitudinal changes, the quality
circles must result in improved working environment, happier relations and greater job
satisfaction.
 To Identify and Resolve Work Related Problems – Members of quality circles identify
their problems through brainstorming sessions.
Workers’ empowerment techniques: Quality circle and its application: Objectives

 To develop, enhance and utilize human resources effectively;
 To improve quality of products/services, productivity and reduce cost of production per
unit of output;
 To satisfy the workers’ psychological needs for self-urge, participation, recognition etc.,
with a view to motivating them. Accomplishment of this objective will ensure
enhancement of employee morale and commitment;
 To improve various supervisory skills like leadership, problem solving, inter-personal
and conflict resolution; and
 To utilize individual imaginative, creative and innovative skills through participation,
creating and developing work interest, including problem solving techniques etc.
Achievement of these objectives effectively requires the use of certain techniques.
 To make use of the knowledge and skills of the workers.
 To develop good relations between workers and managers and create cordial industrial
relations.
Key benefits: Quality circle and its application

The chief benefit of this approach is the good ideas that result in savings. The approach also
improves communication, particularly upward, and raises the consciousness of employees
concerning issues of quality and productivity. Employees are benefited from influencing change,

improving their work lives, and from contributing to quality improvements.
On the other hand, their daily work lives and job content increases, which fosters pride of
workmanship. But for the continuation of their commitment, organisations must see ways and
means of employee motivation. Apart from the mechanism for financial benefits to share cost
benefit with members, non-financial benefits such as respect for their achievement, pride of
workmanship and learning for enhancing their knowledge will contribute more towards
committed culture.
Finally, participative culture can move towards trust culture where continuous improvement is
instinctively created throughout the organisation. All employees participate in decision making;
their contribution help to develop the organisation and the organisation contributes to their
development in return. This culture built on trust continuously moves towards success.
Some of te benefits can also be listed below:

1.Self-Development
2. Job Satisfaction
3. Reduction of Waste
4. Improvement of Quality
5. Improvement of Communication
6. Improve Participation
7. Improvement in Productivity
8. Problem Solving Opportunities
9. Team Spirit
10. Reducing Absenteeism and Grievances:
Workers’ empowerment techniques: Kaizen and its benefits

The Kaizen strategy is explained by the two words: ‘KAI’ meaning change and ‘ZEN’ meaning
to become goods. Kaizen is focused on people. Kaizen is a Japanese word that means
“improvement”. It originated from the Japanese business philosophy of continuous improvement.
This business philosophy made Japanese manufacturing companies more efficient than their
counterparts. Kaizen strategies are now becoming much more prevalent among Japanese
organization, irrespective of size and ownership.
Kaizen is a Japanese term meaning "change for the better" or "continuous improvement." It is a
Japanese business philosophy regarding the processes that continuously improve operations and
involve all employees. Kaizen sees improvement in productivity as a gradual and methodical
process. The concept of kaizen encompasses a wide range of ideas. It involves making the work
environment more efficient and effective by creating a team atmosphere, improving everyday
procedures, ensuring employee satisfaction, and making a job more fulfilling, less tiring, and
safer.
Kaizen is an approach to creating continuous improvement based on the idea that small, ongoing
positive changes can reap major improvements. Typically, it is based on cooperation and
commitment and stands in contrast to approaches that use radical changes or top-down edicts to
achieve transformation

Today KAIZEN is recognized worldwide as an important pillar of an organization’s long-term
competitive strategy. Since introducing this term as a systematic approach for business
improvement, companies that implement KAIZEN have continually yielded superior results.
There are 5 Fundamental KAIZEN principles that are embedded in every KAIZEN tool. The 5
principles are: Know your Customer, Let it Flow, Go to Gemba (lean manufacturing), Empower
People and Be Transparent. The implementation of those 5 principles in any organization is
fundamentally important for a successful Continuous Improvement culture and to mark a turning
point in the progression of quality, productivity, and labor-management relations.
Every employee, in every area, actively looks for things that can be improved. Over time, the
small changes lead to major benefits in efficiency, safety, as well as employee and customer
satisfaction. The Kaizen methodology can provide these benefits to nearly any industry, from
manufacturing to healthcare. Improvements don’t stop once a solution is realized. Instead, each
process is fine-tuned as employees continue to look for areas that can improve. These benefits
span throughout the entire business. The benefits/advantage of Kaizen are:
 Reducing Waste
 Simplifying Work Processes
 Improving Better safety
 Improving Employee and Customer Satisfaction
 Worthy targets
 Improved teamwork
 Kaizen builds leadership skills

 Improved efficiency
 Improved Standard Work Document
 Improved employee satisfaction
Disadvantage of Kaizen:
 Change is difficult
 Could cause frictions
 Training requirement
 Enthusiasm could wane easily
 Few bad eggs could ruin the whole batch
One major kaizen disadvantage is that it distorts the entire management system. Kaizen could be
difficult for businesses to go back to previous systems. Also, employees might be unwilling to
change the system that they have been used to. Furthermore, training staff to adapt to new
changes could be expensive and very demanding. If employees do not play their part in adopting
these changes, the amount of time and resources spent will go to waste. In the end, the purpose
of implementing kaizen is defeated.
Workers’ empowerment techniques: Quality of work life and work behavior

Quality of work life (QWL) was conceptualized in terms of need satisfaction stemming from an
interaction of workers' needs (survival, social, ego, and self-actualization needs) and those
organizational resources relevant for meeting them.
It was hypothesized that need satisfaction (or QWL) is positively related to organizational
identification, job satisfaction, job involvement, job effort, job performance; and negatively
related to personal alienation.
Quality of work life (QWL) refers to the favorableness or unfavourableness of a job environment
for the people working in an organization. The period of scientific management which focused
solely on specialization and efficiency, has undergone a revolutionary change.
The traditional management (like scientific management) gave inadequate attention to human
values. In the present scenario, needs and aspirations of the employees are changing. Employers
are now redesigning jobs for better QWL.
The QWL as strategy of Human Resource Management has assumed increasing interest and
importance. Many other terms have come to be used interchangeably with QWL such as
‘humanizations of work’ ‘quality of working life, ‘industrial democracy’ and ‘participative
work’.
The overriding purpose of QWL is to change the climate at work so that the human-
technological-organizational interface leads to a better quality of work life.
QWL is based on a general approach and an organisation approach. The general approach
includes all those factors affecting the physical, social, economic, psychological and cultural
well-being of workers, while the organisational approach refers to the redesign and operation of
organisations in accordance with the value of democratic society.
QWL is concerned with taking care of the higher-order needs of employees in addition to their
basic needs. The overall climate of work place is adjusted in such a way that it produces more
humanized jobs.

QWL is viewed as that umbrella under which employees feel fully satisfied with the working
environment and extend their wholehearted cooperation and support to the management to
improve productivity and work environment.
Profitability of a company is linked to satisfaction of its work force. A company that does not
measure and improve employee satisfaction may face increasing turnover, declining productivity
and limited ability to attract and retain qualified replacements.
Employee satisfaction and quality of work life directly affect company’s ability to serve its
customers. Efforts towards QWL measurement help in efficient and effective allocation of
resources to enhance productivity and stability of the workforce.
It leads to:
 Positive employee attitudes toward their work and the company.
 Increased productivity and intrinsic motivation.
 Enhanced organizational effectiveness and competitive advantage.
Work-Life Quality — defined, as the balance between an employee’s work demands and outside
interests or pressures — is a long-standing but ever-evolving area of corporate social
responsibility. Some organizations view QWL as important, but do not formally link it to their
strategic or business plans.
Quality of work life: Importance

1. Enhance stakeholder relations and credibility
2. Increase productivity
3. Attraction and retention
4. Reduces absenteeism
5. Improve the quality of working lives
6. Matches people who would not otherwise work with jobs
7. Benefiting families and communities
8. Job involvement
9. Job satisfaction
10. Company reputation
Quality of work life: Techniques and Significance

Techniques for improving the quality of work life
 Job Enrichment: Job enrichment is a management technique that involves increasing the
depth and scope of an employee's responsibilities in order to provide them with a greater
sense of satisfaction and accomplishment in their work. This can be achieved by adding
new tasks, increasing autonomy, and providing opportunities for growth and
development. Job enrichment typically involves a focus on tasks that are higher-level and
more complex than those traditionally assigned to an employee's role. This can include
tasks such as decision-making, problem-solving, and creative thinking. Employees are
also given greater autonomy in their work, which allows them to take ownership of their
tasks and feel more invested in their work
 Job Rotation: Job rotation is a management technique that involves moving employees
between different roles or departments within an organization for a set period of time.
The goal of job rotation is to provide employees with a wider range of experiences and
skills, as well as to help them gain a better understanding of how different parts of the

organization work together. For example, employees may rotate through different
departments within a single location, or they may be sent to different offices or facilities
in different locations. he benefits of job rotation can be significant for both employees
and the organization. For employees, job rotation can provide a valuable opportunity to
learn new skills, gain exposure to different parts of the organization, and develop a
broader perspective on the company's operations. This can help to keep employees
engaged and motivated, and can also help to prepare them for future leadership roles
within the organization.
 Quality Circles; Quality circles are a management technique that involves a group of
employees who come together voluntarily to identify, analyze and solve work-related
problems, and to improve the quality of their work and productivity. Quality circles are
typically composed of employees who work together in the same department or on the
same project. The basic goal of quality circles is to improve the overall quality of work,
reduce waste, and increase productivity, by encouraging employee participation and
involvement in the problem-solving process. This is achieved through regular meetings of
the quality circle group, in which members discuss and analyze work-related issues, and
work together to find solutions. Quality circles typically follow a structured problem-
solving process, which includes steps such as defining the problem, analyzing the root
cause, developing and implementing solutions, and evaluating the results. The group may
also use tools and techniques such as brainstorming, Pareto charts, and cause-and-effect
diagrams to help them identify and solve problems
Significance of Quality of Work Life
1. Decrease absenteeism and turnover,
2. Less number of accidents,
3. Improved labor relations,
4. Employee personification,
5. Positive employee attitudes toward their work and the company,
6. Increased productivity and intrinsic motivation,
7. Enhanced organizational effectiveness and competitive advantage, and
8. Employees gain a high sense of control over their work
JOINT MANAGEMENT COUNCILS

Joint Councils are the bodies comprising of the representatives of employers & employees. The
councils discuss various matters concerning the working of the company. The council generally
discusses matters relating to working conditions, prevention of accidents, indiscipline, and
training. These councils provide a platform to employers & employees to solve their problems &
grievances. They function as the advisory consultants to the Management but may not
necessarily be effective in the role of decision making.
Participative management acts as a force to motivate employees to meet specific organizational
goals. This approach focuses on making optimum utilization of intellectual and emotional human
resources. Motivated employees are the biggest assets of an organization. An idea to form the
Joint Management Councils was developed in a labor management co-operation that was held in
New Delhi in 1958. The functions have been divided into four categories that include general
functions, functions with the workers rights, functions that are linked with the right to receive the
latest information and functions linked to rights for exercising administrative powers.
The important attributes of Joint Management Councils are:

 It can be consulted by management on certain specified matters.
 In certain matters management is expected to share information with members of council.
 The council has administrative responsibilities.
 Subjects under collective bargaining, such as wages, bonus and allowances have been
excluded from the scope of JMC.
 It has wider scope than work committee.
 JMC have administrative responsibility for safety, vocational training and welfare of
workers.
Objectives of JMC:
 Promote cordial and healthy relations between management and workers.
 Augmenting productivity substantially,
 Securing better welfare and other facilities for workers
 Training them to understand and share the responsibilities of management.
 Build trust and understanding between management and workers.
 Improve worker efficiency.
 Provide welfare facilities to the workers.
 Educate workers about the scheme for their increased participation.
However, the working of these Joint Management Councils that were formed in both the public
and private sectors have not been satisfactory owing to hostility of employers and workers and
also due to lack of proper understanding of purposes and benefits
Joint work committees
In terms of employee representation at workplace level , alongside the employee committee,

whose function is predominantly one of protecting employees' rights.
This committee, which is chaired by the head of the enterprise or a delegated representative, is
composed of equal numbers of employer and employee representatives. The latter are elected by
the employee committee(s) on a proportional representation basis from the manual worker and
white-collar worker members of the workforce.
The joint works committee has a threefold function: 1) it possesses co-determination rights over
company policy on recruitment, promotion, transfer and dismissal, employee appraisal, works
rules, health and safety matters, and the use of equipment to monitor employee performance; 2)
it has information and consultation rights as regards management decisions on technical
changes, working methods and the work environment, current and forecast labour requirements,
vocational training and re-training, and the enterprise's economic and financial position,
including an obligation on the employer to provide it with information, at least once a year, on
levels of pay; and 3) it has the right to monitor and keep a check on company welfare facilities
such as company housing.
In areas of co-determination, every decision of the committee which is backed by an absolute
majority on both sides is adopted. In the event of failure to reach agreement the side that
introduced the issue concerned may initiate the conciliation procedure and, where necessary,
arbitration by the National Conciliation Service . For matters covered by consultation rights,
joint opinions backed by an absolute majority are submitted to the head of the enterprise and are
normally adopted; where the two sides disagree both opinions must be communicated to the
company board.

Meetings of the committee are held during working hours, with guaranteed maintenance of pay
for its members. The company must provide it with a suitable room and secretarial assistance.
Advisers may be invited to participate in a consultative capacity. Committee members enjoy
special protection against dismissal (see protection against dismissal of joint works committee
members) and their (renewable) term of office is five years.
Despite the legal rights of the joint works committee, the employer's control of the agenda and
access to technical expertise may contribute to a situation where employee influence is in
practice not great. The consequent lack of confidence in the institution and the tendency of the
Labour and Mines Inspectorate not always rigorously to enforce the committee's rights mean that
the institution may be far less powerful and widespread than the legislation might suggest.
Managing good industrial relations: Problem

 Lack of Privacy
 It's an "Us Against Them" Mentality
 Inflexibility of Employer
 Gender Wage Disparity
 Narrow Focus of Employees
 Achieving Competitiveness
 Employer Flexibility
 Role of Government and Unions
 Ethical concern
 Technological development
 Managing the Common Issues in Human Resource Management and Industrial Relations
 The Problems in Staffing
 Handling of the Grievances
 The Bargaining Unit
Managing good industrial relations: Prospects

• 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. Good industrial relations reduce the
industrial disputes. 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).
• Thus industrial relation measures followed should be given prime emphasis which may
lead to an effective relationship between management and employees.
• An effective industrial relation results in the increase of the productivity of the
organization.
• Better relationship between the employee and employer is very essential for successful
running of any organization.
• Favorable relationship can avoid many adverse situations.

• Welfare schemes like medical allowance; death relief fund, insurance, housing and
transportation facilities, recreation club etc. can be provided by the company to the
employees to maintain the industrial relation better one.
• Also proper safety measures can be adopted in the organization. All matters relating to
safety, health and welfare of employees are properly implemented.
• Structured Communication as an important vehicle for carrying the employees and
management together can be adopted to facilitate the flow of information, ensure
employees commitment and involvement in all critical aspects of the operation.
• Of course there are many scopes for improvement. Both management and recognized
union should come forward to restore the relationship of trust.
• The joint for a need to be more effective. The management also needs to be more
committed to implement the plans more properly.
Future of industrial relations

Good and harmonious industrial relations create a sense of belongingness and group-
cohesiveness among workers and also a congenial environment resulting in less industrial unrest,
grievances and disputes. This will ensure optimum use of resources, both human and materials,
eliminating all types of wastage. Good industrial relations, built-in mutual cooperation and
common agreed approach motivate one to contribute one’s best, result in higher productivity and
hence income, give more job satisfaction and help improve the morale of the workers. The
following measures can be adopted for improving industrial relations in future:
• Sound personnel policies
• Participative management
• Responsible unions
• Employee welfare
• Grievance procedure
• Constructive attitude
• Creating a proper communication channel
• Strong and Stable Union
• Mutual trust
• Sincere implementation of agreements
• Governments’ role
Workers Participation in Management: Scenario of worker's participation in management in

Nepal
The thought that participation of workers in management is inevitable in the process of decision
making for the smooth functioning of industrial democracy has gained much strength because of
the realization that labour is not only the factor of production but also a sensitive human element.
In Nepalese context, we feel that the demand for participation in management should be raised in
order to bring about transparency in managerial activities, and to strengthen the psychology of
labourers as labour-investors of an equal status. Participation will produce positive results in
connection with productivity and distribution of bonus. To sum up, the issue of workers'
participation in management has to be raised in resemblance to the promotion of industrial
democracy.
Before 1990’s popular movement, there was party less panchayat system in Nepal. In Panchayat
system there was not democratic practices. There were not trade union rights. Through, in this

period, Nepal was beings the member of ILO, the Nepal Government had constituted the Nepal
Labor Organization under the Class Organization Act. Beside, Nepal labor organization there
were few underground trade unions lack of the democratic practice in panchayat system there
were not effective exercise of Worker’s Participation in Management.
Two aspects of an enterprise are ownership and control. Control refers to management.
Ownership and control used to be inseparable in early days. Today, they have come into two
distinct areas. Shareholders of a company these days are just the owners and do not exercise or
have no control over the processes of management or decisions of the company. A distinct class
has evolved which controls and manages, although the managers concentrate themselves on the
interest of the ownership. In these circumstances, the question is whether the labourers can
become owners or not, whether they should participate in management and control or decision
making processes.
There is a concept of the 'employee stock ownership plan' propounded by Louis Kelso who is of
the opinion that workers are natural shareholders, not natural managers. This plan of collective
ownership of workers' trust by purchasing the shares of the enterprise through loans from banks
and financial institutions has gained popularity in USA. Under this ESOP, workers do not have
any role in management or in the system of control. On the contrary successful workers'
cooperatives in many countries have also proved that workers can play active role in
management as well as ownership.
Workers Participation in Management: An Overview of Industrial Relations in Nepal

Industrial Relation refers to the relationship between worker’s and employers, workers’
organizations and employers’ organizations, and between those organizations and the
government. It is generally concerned with negotiations, collective bargaining, labour disputes,
conciliation and arbitration, consultation, wages, workers’ participation in management
decisions, the role of government, trade unions, employers and their welfare.
Industrial relation in Nepal should studied in the context of the country’s very low level of
economic development, its predominantly agrarian economic, very small manufacturing sector,
short history of industrial development and equality short and limited exposure to industrial
relations. As well as the effects of the recent political changes which promise well for the
observance of freedom of association, the promotion of collective bargaining and the
development of sound stable industrial relations.
There is no separate Industrial Relations Act in Nepal. The industrial relations mechanism is
embodied in the Labor Act of 1992 further amended at 2074 BS. The main features of the
structure of relationship between management, workers and their trade unions have been spelt
out in the Act. In Nepal, the government has been very active in regulating industrial relations.
The provisions of Labor Act are implemented and executed by the Department of Labor. The
major responsibility of the Labour Department includes:
• Administration of labor legislation to ensure that satisfactory standards of employment
are maintained and measure for the protection of workers are properly taken.
• Regular inspection of places of employment such as factories, workers’ etc.
• Settlement of disputes between employers and workers.
• Promotion of joint consultation machinery and collective bargaining.
In Nepal, the factory inspectors and labor officers are the major instruments in shaping the
structure of industrial relations at the enterprise level. Being responsible in implementing and

regulating labor legislations, mutual consultation between workers’ management and labour
officers help in reinforcing peaceful industrial relations at enterprise level .
The probable areas of improvement in industrial relations can be outlined as follows:
• Improvement in the legal framework for collective bargaining and resolution disputes by
conciliation and arbitration.
• Formation and promotion of joint consultative committees;
• Promotion of national productivity.
• Promotion of small group activities.
Legal provisions
• The Trade Union Act, 1992
• Trade Union Rule, 1993
• Labour Regulation, 1993
• The Bonus Act
• The Labour Act 2074
Present status
1. Minimum Remuneration Fixation Committee.
2. Labour Advisory Board and Labour Relations Committee.
3. Labour Advisory Committee
4. Minimum Remuneration Fixation Committee
5. Labour Relation Committee
6. Collective Bargaining
7. Tripartite Committees
Problems in Regarding to Worker Participation in Mgmt in Nepal

1. Ignorance of existing laws.
2. Priority not given to industrial relation.
3. Trade union guided by their political ideology.
4. Managers are hand-picked rather than professional
5. The role of government has not impartial
6. Lack of democratic culture.
7. Negative attitude toward workers
8. Not aware about importance of industrial relation.
9. Basic conflict of interests between the workers and the owners of business enterprises.
10. Multiplicity of trade unions and factionalisms has been a serious obstacle in the way of
workers’ participation in management in the country.
11. Both managements and trade unions have often complained of a overabundance of joint
bodies in the Nepalese industries, for example, works committees, joint management
councils, shop councils, unit councils, plant councils, establishment councils, canteen
committees, production committees, safety committees, welfare committees, grievance
committees and so on. Very often, there is confusion and duplication of functions.
12. Lack of specific arrangements for sharing the gains of participation.

13. Not appear to be the result of an inner urge on the part of the employers and workers.
There is a greater realization in the government circles of the utility of workers’
participation in management than among employers and workers.
14. Lack of education and training with regard to the content, process, utility and other
relevant aspects of participation have also proved an impediment to the growth of
workers’ participation in the country

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Industrial Relation

Prepared by: Nimmi Rai, MMC Dharan

Prepared by: Nimmi Rai, MMC Dharan

Prepared by: Nimmi Rai, MMC Dharan

Prepared by: Nimmi Rai, MMC Dharan

Prepared by: Nimmi Rai, MMC Dharan

Prepared by: Nimmi Rai, MMC Dharan

Prepared by: Nimmi Rai, MMC Dharan

Prepared by: Nimmi Rai, MMC Dharan

Prepared by: Nimmi Rai, MMC Dharan

Prepared by: Nimmi Rai, MMC Dharan

Prepared by: Nimmi Rai, MMC Dharan

Prepared by: Nimmi Rai, MMC Dharan

Prepared by: Nimmi Rai, MMC Dharan

Prepared by: Nimmi Rai, MMC Dharan

Prepared by: Nimmi Rai, MMC Dharan

Prepared by: Nimmi Rai, MMC Dharan

Prepared by: Nimmi Rai, MMC Dharan

Prepared by: Nimmi Rai, MMC Dharan

Prepared by: Nimmi Rai, MMC Dharan

Prepared by: Nimmi Rai, MMC Dharan

Prepared by: Nimmi Rai, MMC Dharan

Prepared by: Nimmi Rai, MMC Dharan

Prepared by: Nimmi Rai, MMC Dharan

Prepared by: Nimmi Rai, MMC Dharan

Prepared by: Nimmi Rai, MMC Dharan

Prepared by: Nimmi Rai, MMC Dharan

Prepared by: Nimmi Rai, MMC Dharan

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Prepared by: Nimmi Rai, MMC Dharan

Types of Collective Bargaining

Prepared by: Nimmi Rai, MMC Dharan

1. Conjunctive or Distributive Bargaining: In this form of collective bargaining, both the

Prepared by: Nimmi Rai, MMC Dharan

Collective bargaining issues in Nepalese organization

Prepared by: Nimmi Rai, MMC Dharan

Prepared by: Nimmi Rai, MMC Dharan

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Settlement of Collective Disputes

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Workers’ empowerment techniques: Quality circle and its application: Objectives

Key benefits: Quality circle and its application

Prepared by: Nimmi Rai, MMC Dharan

Some of te benefits can also be listed below: