Industrial/labour relations

INDUSTRIAL RELATIONS▫Definition

The practice or the study of relationship within and between workers, working groups and their organisations and managers, employers and their organisations.

Definition (cont..)

•The European Commission states: “Industrial, labour or employment relations regulate the link between the company and the employers and indirectly between society as whole and its citizen (European Commission, 2002). .

Definition (cont..)•Industrial relations is the study of

bargaining relationship between employees and employers (Laffer, 1974)

•The continuous relationship between a defined group of employees and management (John Ivancevich 2004)

•The field of industrial relations looks at the relationship between management and workers, particularly groups of workers represented by a union

•The relationship being referred to here include the negotiation of a written contract concerning pay hours of work and others terms and conditions of employment as well as the interpretation and administration of this contract over its period.

What it involves•Employment and employment regulations•Trade unionism•Grievance and grievance handling

procedures•Discipline and disciplinary action•The laws governing all above

Industrial relations: the actors•

The industrial relations can be seen as a system which contains three actors.▫ The trade Unions▫The employers associations▫The government

Trade unions•Participation of the trade unions in the

industrial relation can take different forms, from collective bargaining to strikes. Trade Unions find their legitimate and strength to take part in these negotiations from their members

The employers’ organisations

•Unlike trade unions which are composed of individual persons, employer organisations are composed out of enterprises - FKE

The government

•Prime mission - to preserve social peace (the regulation of general conflict, which can be disturbed by a strike, etc.

•Their wish for prosperous economy, which can only be achieved by limiting unemployment and encouraging economic growth.

•Direct interest in industrial relations as an employer.

Intervention possibilities by the govt. •Categories:

▫To creation of general binding rules (example; unemployment benefits)

▫Creating the rules of the game in industrial relations matters

▫The provision f collective goods next to the other parties (actors)

Intervention possibilities by the govt. ( cont..)

•The government can intervene in a direct manner as the employer of the civil servants and employees in subsided sub sectors

Industrial relations charter

•Is a tripartite pact among government, employers and a trade-union umbrella organisation, which is voluntary.

•It provides a framework for Kenyan industrial relations.

•It is an agreement among the government, employers and workers through umbrella bodies for the management of labour and industrial relations in Kenya.

Industrial relations charter ( cont…)•spelt out the agreed responsibilities of

management and unions and their respective obligations in the field of industrial relations

•Defines a model recognition agreement as a guide to parties involved

•It set up a joint Dispute Commission.

Industrial relations charter ( cont…)•The charter was first signed prior to

independence in 1962. •Based on the need for consultations and

co-operation among these parties for efficiency and improvement of workers’ terms and conditions of service are its pillars.

Industrial relations charter ( cont…)•The employer and the employee need to be in

good terms and operate within their prescribed obligations for a smooth flow of work.

•The government, through the Ministry of Labour, is meant to be the arbitrator should a dispute arise between the worker and employer.

• It is for these reasons that the three actors are referred to as “social partners”.

•Occasionally, conflict arises because of the partners’ divergent interests.

Legislation pertaining to labour and labour relations in Kenya• Relevant laws and acts include

▫The Employment Act; ▫Labour Relations act▫Occupation, Safety and Health Act (OSHA)▫Labour institutions Act▫Work injuries and Benefits Act

Trade Unions _ definition

•the predominant historical view is that a trade union "is a continuous association of wage earners for the purpose of maintaining or improving the conditions of their employment."

•It is an organisation of employees that use collective action to advance its members interest in regard to wages and working conditions

•A trade union is "an organization consisting predominantly of employees, the principal activities of which include the negotiation of rates of pay and conditions of employment for its members

•“An association of employees whose principal purpose is to regulate relations between employees and employers, including any employer’s organisation

Objectives and activities of trade unions• The immediate objectives and activities

of trade unions vary, but may include:

•Provision of benefits to members: Early trade unions often provided a range of benefits to insure members against unemployment, ill health, old age and funeral expenses.

•

Objectives and activities of trade unions (cont..)•Collective bargaining: Where trade

unions are able to operate openly and are recognised by employers, they may negotiate with employers over wages and working conditions.

•Industrial action: Trade unions may organize strikes or resistance to lockouts in furtherance of particular goals.

Objectives and activities of trade unions (cont..)•Political activity: Trade unions may

promote legislation favourable to the interests of their members or workers as a whole. To this end they may pursue campaigns, undertake lobbying, or financially support individual candidates or parties (such as the Labour Party in Britain) for public office.

Why do workers join unions?

• Dissatisfaction with the work environment, including working conditions, compensation, and supervisors (note: Not the work itself)

• A desire to have more influence in affecting change in the work environment ( therefore the greater the extent to which management has mechanism for voicing employees concern, the less tendency on the part of the workers to favour unionization)

• Employees beliefs regarding the potential benefit of a union

Why workers join unions Cont..

•Job security

•Socialization and group membership

•Safe and healthy working conditions

•Communicating link with management

•Fair compensation

•Type of Union •Description / Example •Craft of skills union •To represent skilled workers e.g. Musicians Union (MU) • Industrial unions •To represent the members of one particular industry e.g.

Fire Brigades Union (FBU) •General unions •Unions which recruit workers from all types of industries and

with any level or range of skills e.g. Amicus – the Manufacturing Science and Finance Union (MSF)

•White-collar unions •Represent office workers e.g. National Union of Teachers

(NUT)

Types of trade unions

Type of Union DescriptionCraft of skills union

To represent skilled workers e.g. Musicians Union (MU)

Industrial unions To represent the members of one particular industry e.g. Fire Brigades Union (FBU)

General unions Unions which recruit workers from all types of industries and with any level or range of skills e.g. Amicus – the Manufacturing Science and Finance Union (MSF)

White-collar unions

Represent office workers e.g. National Union of Teachers (NUT)

Types of union security models

Models:

1. A closed shop employs only people who are already union members. The compulsory hiring hall is the most extreme example of a closed shop—in this case the employer must recruit directly from the union.

2. A union shop employs non-union workers as well, but sets a time limit within which new employees must join a union.

Five types of union security are possible (cont..)• 3. An agency shop:• Employees who do not belong to the

union still must pay union dues on the assumption that the unions effort benefit all workers

• requires non-union workers to pay a fee to the union for its services in negotiating their contract.

Five types of union security are possible (cont..)•4. An open shop:•It is up to the employees whether or

not they want to join the union – those who do not, do not pay dues

•Does not discriminate based on union membership in employing or keeping workers.

• Where a union is active, the open shop allows workers to be employed who benefit from, but do not contribute to, a union or the collective bargaining process.

Five types of union security are possible (cont..)•5. Maintenance by membership

arrangement. Employees do not have to belong to the union. ▫However, union members employed by the

firm must maintain membership in the union for the contract period

Who is excluded from union representation? • In the Industrial Relations Charter, the parties

agreed that the following will be excluded from union representation: ▫ Persons who are formulating, administering, -

coordinating, and/or controlling any aspects of the organization’s policy: Executive Chairman Managing Director, General Manager (and his deputy) and functional

Heads – that is, departmental Heads (and their deputies),

Branch Manager (and his deputy), Persons in-charge of operation in an area (and their

deputies).

▫ Persons having authority in their organisations to hire, transfer, appraise, suspend, promote, reward, discipline and handle grievances

▫ Persons training for the above positions (including Under-studies).

▫ Personal Secretaries to persons under 1 above.▫ ▫ Persons whose functional responsibilities are of a

confidential nature as shall be agreed upon between the parties.

▫ Any other category of staff who may, in the case of any particular undertaking, be excluded from union representation by mutual agreement.

Recognition and Registration of Unions - who may not be registered

•The registrar to refuse registration of an application if there already exists a registered trade union whom he or she deems “sufficiently representative of the whole or of a substantial proportion of the interest in respect of which the applicants seek registration.”

•An application for registration may be refused by the Registrar if persons seeking registration for an organization are engaged or work in different trades or calling and if its constitution does not contain suitable provision for protection and promotion of their respective sectional industrial interests.

Other grounds for refusal•Other restrictions imposed by law are that, an

organization may also be refused registration:▫ If the objects of its constitution are unlawful▫ Its principal purpose is not in accord with what is

set out in the Act▫ If the secretary or treasurer are deemed not

sufficiently literate in English and Swahili language and are unable to carry out their duties adequately.

• Additional grounds for refusal and cancellations are:▫Unlawful application of trade union funds▫ Improper keeping of funds of the organization ▫ If the trade union is being used for unlawful

purpose..

Consequences of cancellation•The consequences of cancellation of

registration of a trade union are that it:▫ceases to enjoy any rights and privileges; ▫does not take part in any trade dispute or

promote, organize or finance any strike or lock out or provide pay or benefits for its members;

▫shall be dissolved and its funds disposed of in accordance with the rules of the union;

▫no person shall take part in its management or organization, or act on behalf of the union as an officer.

Unfair labour practices - employerIt is an unfair labour practice: • To interfere with, restrain, or coercing employees in exercising

their legally sanctions rights of self organisation.

• For company representatives to dominate or interfere with either the formation or the administration of labour unions.

The above two can be through bribing employees, using company spy system, moving business to avoid unionization, and black listing union sympathizers.

• Discriminating employees for their legal union activities

• Discharging or discriminating against employees simply because the latter file unfair practices against the company

• Employers refusing to bargain collectively with their employees’ duly chosen representatives

Unfair labour practices - unions•Restraining or coercing employees from

exercising their guaranteed bargaining rights – e.g.. Staging an anti union employee will lose his or her job once the union gain recognition

•Cause an employer to discriminate an any way against an employee in order to encourage or discourage his or her membership in an union ( except in closed or union shop)

Unfair labour practices - unions• Refuse to bargain in good faith with the

employer about wages, hours and other employment conditions.

• Certain strikes and boycotts are also unfair practices

• Engage in “featherbedding” (requiring an employer to pay an employee for services not performed

• Charging excessive or discriminatory membership fees

Unfair labour practices - unions• Inducing, encouraging, threatening or coercing

any individual to engage in strikes, refusal to work, or boycott where the objective is to:▫Force or require an employer or self employed

persons to recognize or join any labour organisations

▫Force or require an employer to cease using products or doing business with another person

▫Force an employer to apply pressure to another employer to recognize a union which is not in your industry

The rights of an employee

•To belong or not to belong to a union ( except for union shops)

•Employees can present grievances directly to an employer

•Employees authority to make any subtraction of union dues form his/her pay cheque

The rights of an employee (cont..)•Nominate candidates for union office

•Vote in union elections

•Attend union meetings

•Examine the union accounts and records

Collective bargaining - Definition• It is a process by which the representative of the

organisation meet and attempt to work out a contract with the employees representatives – the union

• Occurs when representatives of a labour union meet with management representatives to:▫Determine employees wages and benefits▫To create or revise works rules▫To resolved disputes or violations of labour

contracts

Definition (cont..)

•It is the primary process for determining wages, benefits, and working conditions

•Bargaining means the process of cajoling, debating, discussing, and threatening in order to bring about a favourable agreement for those concerned

Variables influencing the collective bargaining process•The success of collective bargaining

process and the final agreement reached are influenced by:▫The management representatives▫The union representatives▫The state of the economy▫Goals of the bargaining parties▫The labour laws▫Issues being discussed▫Public sentiments▫Precedents in bargaining

Labour contract

•This is the result of collective bargaining

•A labour contract is a formal agreement between a union and management that specifies the conditions of employment and the union-management relationship over a mutually agreed period of time (2 – 3 years)

Labour contract (cont..)

•Its specifies what the two parties have agreed upon regarding issues such as wages, benefits, and working conditions.

•The labour contract and bargaining process is bound by certain ‘good faith’ guidelines that must be upheld by both parties

Collective bargaining - What is good faith•Both parties communicate and negotiate,

that they match proposals with counterproposal, and that both make every reasonable effort to arrive at an agreement.

•It does not mean that one party compels another to agree to a proposal

•Nor does it require that either party make any specific concessions

Good faith guidelines•Meetings for purposes of negotiating the

contract are scheduled and conducted with the union at reasonable times and places

•Realistic proposal are submitted

•Reasonable counterproposals are offered •each party signs the agreement once it has

been complemented Does not mean that either party is required to agreed to a

final proposal or make concessions

When is bargaining not in good faith• Surface bargaining: Going through the motions

of bargaining without any real intention of completing a formal agreement

• Inadequate concessions: Unwillingness to compromise, even though no one is require to make a concession

• Inadequate proposal and demands: The advancement of the proposal should be a positive factor in determining the overall good faith

When is bargaining not in good faith (cont..)•Dilatory tactics: the law requires that the

parties meet and “confer at reasonable times and intervals’ obviously, refusal to meet with the union does not satisfy the positive duty imposed on the employer

• Imposing conditions: Attempts to impose conditions that are so burdensome or unreasonable as to indicate bad faith

When is bargaining not in good faith (cont..)•Making unilateral changes in conditions:

A strong indication that the employer is not bargaining with the required intent of reaching an agreement

•Bypassing the representative: The duty of the management to bargain in good faith involves , at minimum, recognition that the union representative is the one with whom the employer must deal with in conducting negotiations

When is bargaining not in good faith (cont..)•Committing unfair labour practices during

negotiations: Such practices reflect poorly upon the good faith of the guilty party

•Withholding information: An employer must supply the union with information, upon request, to enable it to understand and intelligently discuss the issues raised during bargaining

When is bargaining not in good faith (cont..)• Ignoring bargaining items: Refusal to

bargain on a mandatory item (one must bargain over these) or insistence on a permissive item (one may bargain over these)

NB Negotiating in good faith does not mean that negotiations cannot grind to a halt

Bargaining items• The labour law sets out categories of items that

are subject to bargaining:

• These are mandatory, voluntary and illegal items• • Mandatory - Recognized by law as items that

can be bargained on e.g.. Rates of pay, hours of employment, wages, overtime, severance pay, holidays, vacations, pensions, profit sharing, employee security etc

Voluntary ( or permissible bargaining items) •Items are neither mandatory nor illegal

•The become a part of negotiations only through the joint agreement of both union and management

•Neither party can compel the other t negotiate over voluntary item

•You cannot hold up a signing of a contract because the other party refuses to bargain on voluntary items

•Examples of voluntary bargaining items are: management rights as to union affairs, pension benefits of retired employees, scope of bargaining unit, prices in cafeterias

•Illegal bargaining items are forbidden by law. E.g. closed shops, separation of employees based on race, discriminatory treatment

Failure to reach an agreement – Leads to an impasse Bargaining impasse occurs when:1. Union and management are unable to

reach a settlement on a mandatory bargaining issues (wages, hours, or other terms and conditions of employment).

2. When membership refuses to ratify a tentative agreement. This occurs because:

▫The union membership may feel that its leadership did not bargain in good faith

Possible outcomes of a labour impasse•Workers power - Stoppage of work by the

union ( strike, picketing, boycotts)

•Employers power - Stoppage of work by management (lockouts), closing the plant

•Seeking the help of a neutral third party to reach agreement

Types of strikes•Economic strikes – based on the demand

for higher wages or better benefits than the employer wants to provide. Results from a failure to agree on the terms of contract

•Jurisdictional strikes –exist when two unions argue over who has the right to represent workers, and workers differ as to which union should represent them

•Wildcat strikes – unapproved strike that occurs suddenly because one union subgroup has not been satisfied by a grievance decision or by some managerial action. The union leaders do not sanction this type of strike

•Sit down – employees strike but remain in the plan. Such strike are sometimes said to be illegal because it could be seen as invasion of private property

•Sympathy strikes – occurs when one union strikes in support of the strike of another union

Picketing•Picketing is used by employees on strike

to advertise their dispute with management and to discourage other from entering or leaving the premises

•It involves placing members at plant entrance advertise the dispute

•This practice is designed to shut the company down during the strike resulting to losses hence willingness to negotiate

•Picket is legal as long as its peaceful.

•It becomes illegal if it leads to violence – can occur if the employer gets replacements for striking employees or some employees do not support the action and try to close the “picket line”

Boycotts• This involves refusing to buy or use company's

products or services

• As an incentives to employees to honor the boycott, heavy fines may be levied against union members if they are caught buying, or using products subjected to boycott.

• The union hopes the general public will join the boycott to put additional pressure on the employer

Types of boycotts

•Generally there are two types of boycotts:

•The primary boycott – involves refusal of the union to allow members to patronize (buy or use products) a business where there is a labour dispute. These type of boycotts are legal

•Secondary boycott – refers to the union trying to induce third parties, such as suppliers or customers, to refrain from any business dealings with an employer with whom it has a dispute. This type is illegal

Employers’ power•The employer can:

▫Lockout▫Replacement of striking workers▫Close the company or the plant▫Close certain operations of the company▫Transfer operations to another location▫Subcontract certain jobs

•All these decisions must be made in accordance with the law and the actions are not interpreted as attempts to avoid bargaining with the union

Lockouts•Lockouts is an effort to force the union to

stop harassing the employer or to accept the conditions set by management

•Lockouts are also used to prevent union work slowdowns, damage to property, or violence related to labour disputes

•In practice, lockouts are more of a threat than a weapon actually used by management

Permanent replacement

•Although the labour laws protect the rights of workers to organise, engage in collective bargaining, and strike, it does not forbid companies to hire replacement workers, nor is there a prohibition against making these replacements permanent

What the employer should consider when faced with a strike• Generally the employer should consider the

costs associated with the enduring strike against the cost of agreeing to the union demands.

• There are a number of considerations the employer must take into account:

1. How the employers union will affect future negotiations with the union

2. How long the firm and the union can endure the strike3. Whether business can continue during the strike

Grievance - definition•A grievance is a complaint, whether valid

or not, about an organisation policy, procedure, or management practice that creates dissatisfaction or discomfort

• It is a formal complaint regarding the event, action, or practice that violated the contract

•The complaint may be by the management or the union.

Grievance and grievance procedures• Grievance procedure – steps/process to be

followed in handling grievances Grievance procedures are usually followed in unionized companies, but they are also important channels of communication in nonunionized organisation.

• In unionised companies, the contract contains a clause covering steps to be followed and how the grievance will be handled

• The number of steps vary from contract to contract

Purpose of Grievance procedures•To determine whether the labour contract

has been violated

•Helps clarify what was not clear in the contract e.g. defining lawful and unlawful conduct, defining what is “just cause” or “unjust cause”

•To settle alleged contract violations in a friendly and orderly manner, before they become a major issue.

•To prevent future grievances form arising

•To improve cooperation between management and union workers

•Help to obtain better climate of labour relations

Benefits of a grievance procedure •Stabilization of daily employee relations;•Democracy in the workplace;• Open discussion of issues, and improved

communication between the employer and employee;

•Allows for interpretation of the Collective agreement;

•Provides the option to submit the problem to a neutral third party.

step grievance procedure• 1. Informal Discussion: discuss this issue with

his or her supervisor. may be resolved at this step via the supervisor listening to the issue(s) raised by the employee, investigating the concerns thoroughly and providing a thoughtful response

• If a dispute is not settled at the Informal Discussion, then a grievance is filed stating clearly the articles

• allegedly violated.

Formal Step 1

•2. Formal step 1: If a grievance is filed, the employee, in conjunction with his or her union representative will complete grievance form provided by the union, outlining the facts of the grievance, the article(s) of the collective agreement allegedly violated, and the remedy sought and submit this to the supervisor or designate.

•Upon receipt of the grievance, the supervisor or designate must arrange to meet with the employee and the union representative within prescribed timelines to discuss the problem.

•In addition to the supervisor, the employee and the union representative, an employer representative will also be in attendance..

3. Formal step 2: If the grievance is not settled at step 1, there is a conference between middle management and union officials (union committee)

4. Formal step 3: If not settled then the grievance is referred to senior management and senior union officials ( for example chairperson, or secretary general), attempt to solve the grievance.

▫ Sometimes a mediator may be brought in at this point to help resolved the grievance.

▫ The mediators role is to get the two parties to communicate and to offer compromise.

▫ The mediators role is not to establish which side is right or wrong

▫ His or her recommendation can be accepted or rejected by either party

5. Formal step 5: Both parties (union and management) turn the grievance over to an arbitrator who makes a decision .

Why discipline rules and procedures •Discipline rules and procures help to

promote orderly employment relations as well as fairness and consistence in treatments of individuals

•Disciplinary procedures are also legal requirements in certain circumstances

Why discipline rules and procedures (cont…)•Disciplinary rules tell employees what

behavior is expected from them. If an employee breaks a specific rule, this is regarded as misconduct

•Employers use disciplinary procedures and action to deal with situations where employees allegedly break discipline rules

•Disciplinary procures may also be used where employees don’t meet their employers expectation in the way they do their job – (unsatisfactory performance)

Why discipline rules and procedures (cont…)•When dealing with disciplinary cases,

employers need to be aware of both the aware of the law on unfair dismissal and the statutory minimum procures contained in the employment act

•The law requires employers to act reasonably when dealing with disciplinary issues

Why discipline rules and procedures (cont…)•What is classified as reasonable behavior

will depend on the circumstances of each case, and is ultimately a mater of employment tribunal to decide.

•However there are core principles of reasonable behavior which will help employers deal with disciplinary issues in a fair and consistent manner

Dealing with discipline issues in the work place – what to do?When a potential disciplinary matter arises:• The employer should make necessary

investigations to establish the facts promptly before memories of the event fade

• It is important to keep a written record for later reference

• Having established the facts, the employer should decide to: ▫ Drop the matter, ▫ Deal with it informally - recommend counselling for the

employee▫ Or arrange for it to be handled formally

What to do??

•When an investigatory meeting is held solely to establish the facts of a case, it should be make clear to the employee involved that it is not a disciplinary meeting

What to do - gross misconduct(cont…)• In cases of gross misconduct:

▫ relationship have broken down (cannot work together anymore)

▫ there is a risk to an employers property ( theft, fighting etc) ▫ Risk of being held responsibilities to other parties ( corruption,

unethical behaviour to customers etc) ,• consideration should be given to a brief period of

suspensions with full pay whilst investigation is conducted

• Such suspension should only be imposed after careful consideration and should be reviewed to ensure it is not unnecessarily protracted.

• And it should be made clear that suspension is not a disciplinary action

What to do (cont…)Informal action: •Cases of minor misconduct or unsatisfactory

performance are best dealt with informally

•A quiet word is all that is required to improve an employee's conduct or performance

• If informal action does not bring about improvement, or the misconduct or unsatisfactory performance is considered to be too serious, employer should go for formal actions

Formal action - steps

•Inform the employee of the problem•Hold meeting to discuss the problem•Discuss on outcome and action•Verbal warning •First formal action •Second and final written warning•Dismissal or other penalty