Industrial

Relations
 Learning Objectives

• The nature of industrial relations and the need for peaceful

employer and employee relations

• The different approaches to industrial relations

• The stakes of each of the parties in industrial relations

• A proactive strategy to industrial relations

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 Nature of IR
• IR is concerned with the relationship between management
and workers and the role of regulatory mechanism in resolving
any industrial dispute

• Specifically, IR covers the following areas:

– Collective bargaining
– Role of management, unions, and government
– Machinery for resolution of industrial disputes
– Individual grievance and disciplinary policy and practice
– Labour legislation
– Industrial relations training

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 Importance of Peaceful IR
• IR is key for increased productivity in industrial establishments
• Jan., 2012 – Ceramic factory at Puducherry (Exe ad Union leader)
• July, 2012 - Avinash Dev – GR HR Maruti

• IR has moral dimensions: It is unethical on the part of any management to take

advantage of the helplessness of workers and exploit them

• IR assumes relevance in this context: One of its objectives is to protect workers’

interests and to improve their economic conditions

• IR seeks to protect the rights of managers: Managers expect workers to observe

codes of discipline

• Viewing every problem seriously and resorting to manipulative style of IR which

emphasize the need to keep labour in check

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 Pause and Ponder

IR as a subject was neglected in academic circles for a long

time. No university and no institute had a course on the
subject till recently. It was only after the Manesar plant
incident that XLRI introduced a course on IR in its MBA
programme. This attitude of reactive intervention should
change. Your comments.

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Parties To IR

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 Parties To IR (Contd.)
• Trade Unions - have broad objectives which are:

• To secure improved terms and conditions of employment for their

members and the maximum degree of security to enjoy these terms
and conditions

• To obtain improved status for the worker in his or her work

• To increase the extent to which unions can exercise democratic

control over decisions that affect their interests by power sharing at
the national, corporate and plant levels

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 Parties To IR (Contd.)
• Employers
– Employers too, are directly involved in any dispute between them and the
employees
– Management has certain rights i.e. hire/fire, close, merge, relocate, tech
change are the weapons…
– The management is known to adopt dubious means to forego a strike, call
off a strike, or tone down union demands
– Breaking a powerful union, sets one fraction against other

• Creating and maintaining employee motivation

• Obtaining commitment from the workforce
• Establishing mutually beneficial channels of communication throughout the
organisation
• Achieving high levels of efficiency
• Negotiating T&C of employment with employee representatives
• Sharing decision making with employees

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 Parties To IR (Contd.)
• Employers’ Associations (CII, Nasscom, Assocham, Ficci)
– The major objectives of employers’ associations include:

• Representing employers in collective bargaining.

• Developing machinery for the avoidance of disputes
• Representing members on national issues

– The specific objectives of Confederation of Indian Industries (CII) are:

• Strengthening industry role in the economic development of the country

• Working towards globalisation of Indian industry
• Providing up-to-date information and data to the government
• Creating awareness and support industry efforts on quality, environment
and consumer protection
• Identifying and addressing special needs of the small-scale sector

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•
Parties
Role of Government
To IR (Contd.)

Shifting Importance of Parties 10

 Parties To IR (Contd.)
Govt.:
•Intervention in IR is old as industry
•Till 19th century – laissez faire; left to management
•Towards the end of the century – attitude changed and intervened
•State now regulates the relationship
•Set up wage boards, labour courts, tribunals and enacted laws to lay down
norms
•

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 Parties To IR (Contd.)
• Judiciary and Employee Relations
– The powers of the judiciary are of a dual type:
• The authority of the courts to settle legal disputes
• Judicial review — the authority of the courts to rule on the constitutionality of
a legislation

– Judicial intervention: In resolving industrial disputes is significant

because:
• Judicial errors do occur
• Possibility of wrong assessment of penalty
• Conflicting judgements are pronounced
• Lot of confusion in terms

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 Parties To IR (Contd.)
• HR Function
– It is the HR professional who is accountable for industrial harmony
– It is a paradox that when things are going good, credit is not given to
the HR team but fingers are pointed out at them in times of crises
– As stated in the Ulrich Model of HRM, an HR professional needs to
play the role of a strategic partner, a change agent, an administration
expert and an employee champion
– HR team like its counterparts in finance, operations or marketing is
equally concerned about the performance of the organisation

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 Pause and Ponder

If HR leader is responsible for peaceful IR, why were

Avinash Kumar Dev, Roy George and Lalit Kumar Choudhry
killed? Did they fail to discharge their duties as HR
professionals? Find the reasons.

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• ILO and NLC
Parties To IR (Contd.)
– ILO’s (1919) – creating Int. stand for labour in the form of conventions and recommendations
which constitutes IL code. Covers wages, hours, holiday, medical examination, maternity
protection, industrial safety and health.
– Labour standards with regard to industrial relations include:
• Right of Association (Agriculture)(1921)

• Freedom of Association and Protection of the Right to Organise (1948)

• Right to Organise and Collective Bargaining (1949)

• Rural Workers’ Organisations (1975)

• Tripartite Consultations (1975)

• Collective Bargaining (1981)

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 Pause and Ponder

How do you align IR strategy with corporate strategy? Is it

necessary?

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 IR Strategy
• Necessary to have a clear cut strategy

• Although the management of IR is essentially a knee-jerk reaction, far

removed from the world of strategic thinking and planning

• Since employer-employee relations are usually presumed to be satisfactory

until they get out of hand, managers, rarely, feel the need to act before the
trouble breaks out

• But the reactive strategy cannot continue for long – growing competition,
diff economic environ., rising cost of manpower and low productivity
compel to think and plan proactively

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 IR Strategy (Contd.)
• Factors Affecting Employee Relations Strategy
– Internal factors:
• The attitudes of management to employees and unions
• The attitudes of employees to management
• The attitudes of employees to unions
• The inevitability of the differences of opinion between management and
unions
• The extent to which the management can or wants to exercise absolute
authority to enforce decisions affecting the interests of employees
• The present and likely future strength of the unions
• The extent to which there is one dominating union or the existence of
multiple unions leading to inter-union rivalry
• The extent to which effective procedures for resolving grievances or
handling disputes exist within the company
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 IR Strategy (Contd.)
• Factors Affecting Employee Relations Strategy
– Internal factors:
• The effectiveness of managers and supervisors in dealing with problems
and disputes related to IR
• and the extent to which technological changes are likely to affect
employment conditions and Opportunities
– External factors:
• The militancy of the unions—nationally or locally
• The effectiveness of the union and its officials
• The authority and effectiveness of the employers’ association.
• The extent to which bargaining is carried out
• The effectiveness of any national or local procedure agreements
• The employment and pay situation—nationally and locally
• The legal framework within which IR exists

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 IR Strategy (Contd.)
• IR Decisions
– A proactive IR strategy programme must cover the
following decisions:
• Communication
• Relationships
• Competence
• Discipline and Conflict

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 IR Strategy (Contd.)
Stakeholders have built a well-structured machinery for
settling conflicts between employers and employees. This
includes:
•Collective bargaining
•Code of discipline
•Grievance Procedure
•Arbitration
•Conciliation
•Adjudication

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 IR Strategy
1. Collective Bargaining: The most effective way of resolving ID.
Occurs when representatives of Unions and Mgmt. meet
•To determine employees’ wages & benefits,
•To create/revise work rules
•To resolve disputes or violations of the labor contract

Collective in a sense that chosen representative of the employees

act as bargaining agent in carry out negotiations

Also in a sense that paid professional managers represent the interests of

management in front of TUs.

Also, collective in situations where companies join together in an employer

association for bargaining with TUs

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 IR Strategy
2. Code of Discipline:
Defines duties and responsibilities of employers and employees.
The objectives are:
•To ensure that both parties recognize their rights
•To promote constructive co-operation
•To secure settlement of dispute and grievances by negotiation, conciliation
and arbitration
•To avoid work stoppages
•To maintain discipline in industry
if the code is adhered to strictly, there will be no conflicts

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 IR Strategy
3. Grievance Procedure:
All labor agreements contain some form of grievance procedure.
If the procedure is followed strictly, any dispute can be resolved.
Grievance – any dissatisfaction or feeling of personal injustice
Other conditions which may give rise to grievance are:
A violation of law / labor agreement
A violation of company rules
Change in working conditions / past practices
Violation of health and/or safety

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 IR Strategy
• Four stage sequential process
• Failure at one stage means the issue should go to the next
• Taken to the union if all the earlier stages fail to resolve the
dispute
Complain to section Head
Complain to Department Head
Complain to Divisional Head
Complain to Union

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 IR Strategy
4. Arbitration:
A neutral third party studies the situation, listens to both parties and
gather information and then makes recommendations that are binding
on both
Effective mean because
Est by the parties themselves and decision is acceptable
Relatively expeditious compared to courts
•Achieved success however, is not without weaknesses:
•Expensive – shared by both parties
•Mistake in selecting the arbitrator
•Too much arbitration is not a sign of healthy IR

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 IR Strategy
Arbitration:
•Labor union takes initiatives to go for
•Select an arbitrator
•Studying their previous decisions to detect biases
•After selected, agreed; time and place for hearing will be determined
•Issue is presented in a document
•Each side presents its case
•Conducts much like a court room proceeding
•Witness, cross-examination may be used
•After hearing, arb. studies written material, testimony
•And reaches a decisions in 30 to 60 days

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 IR Strategy
5. Conciliation :
•Process by which representatives of workers and employers are
brought before a third party / mediator
•With a view to arrive at an agreement by mutual discussion between
them
•The ID Act, 1947 provides for the appointment of conciliators.
•Section 4 of the Act states that appropriate Govt. shall appoint such
number of persons as it thinks fit as conciliation officer
Main duties are: to mediate and promote settlement
•To investigate the dispute
•Send a report to app Govt. (steps taken in case no settlement is
arrived at)

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 IR Strategy
6. Adjudication:
•Means a mandatory settlement of an ID by a labor court.
•Generally, the Govt. refers a dispute for adjudication depending on
the failure of conciliation
•Generally referred or on recom. of conciliation officer; however, the
govt. has discretionary powers to accept / reject recom.
•Section 10 of ID Act, 1947 provides for reference….
•Also lays down rules regarding the composition and powers of labor
courts
•The verdict of labor court is binding
•Most significant instrument in resolving but criticized due to delay
•

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