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Industrial Relations

MODULE-10

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DEFINITION

Industrial Relation is a relation between employerand employees, employees and employees and

employees and trade unions.

- Industrial dispute Act 1947

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MEANING

PROCESS BY WHICH PEOPLE AND THEIRORGANISATION INTERACT AT THE WORK

PLACE TO ESTABLISH THE TERMS AND

CONDITIONS OF EMPLOYMENT.

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OBJECTIVES

1. To develop healthy labour -management relationship+ Well organized and responsible trade unions and employers

+ Spirit of collective Bargaining

+ welfare work should be done by state , trade union and employers

2. Maintenance or Industrial Peace

+ Proper machinery should be setup for the prevention andsettlement of Industrial dispute

+ Government should have the power to refer the dispute for

Adjudication in case situation gets out of hand.+ The provision of the bipartite and tripartite forums helps in

settlement of disputes.

3. Development of Industrial democracy

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IMPORTANCE

Uninterrupted production Reduction in Industrial Disputes

High morale

Mental Revolution: The industrial peace lies ultimately

in a transformed outlook on the part of both.

Reduced Wastage

Spirit of true democracy

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Evolution of IR

Agrarian Economy Stage : master-slave relationshipHandicraft stage : People had their own factors ofproduction, family members were involved, nomiddlemen

Cotton or Putting-out stage: crafts men sold theirproducts to the financers who supplied them withnecessary finances

Factory or the Industrial Capitalism Stage:

Trader decided to install his own machinery forproduction instead of depending on small cottageworkers.

Workers were brought under one roof. This lead toIndustrial Revolution

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Evolution of IR in India

Vedas focused on good mutual relations During British Rule, majority of workers were in

agriculture and worked under subversive conditions

and long working hours

Passing of Factories Act in 1881 awakened theworking class towards a concentrated approach.

In 1890, the first Labour association was formed

Viz., Bombay Mililhands Association

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The period of The World War I(1914-1918) created a

period of boom for employers as prices of commodities

increased. But the wages of worker didnt increase.

This economic distress brought workers together andan organised working class movement began in the

country.

Unrest took place at Ahemdabad ( led by Mahatma

Gandhi) and the other at Madras ( led by B. P. Wadia )in 1921.

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After Independence it was realised that strikes/lockout should be prevented to boost economy

The Minimun Wages Act, the Factories Act, and the

Employees State Insurance Act were enacted in

1948. First five year plan 1951 laid great importance to

maintenance of industrial peace

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Second five year plan evolved+ minimum wages guidelines,

+ code of discipline,

+ code of conduct,

+ scheme of workers participation inmanagement,

+ list of items on which work committees couldconduct their business

+ model grievance procedure+ Evaluation and Implementation machinery

+ voluntary arbitration

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Third five year plan

+ The bonus act, 1956 was passed

Till 1991 a lot of emphasis was laid on maintenance of

peaceful Industrial relations.

HOWEVER SINCE LIBERATION POLICY

SINCE 1991 COUNTRYS INDUSTRIAL RELATIONS

ARE IN DOLDRUMS BECAUSE OF VARIOUSCHANGES IN THE INDUSTRIAL SCENE.

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THEORIES TO IR

Unitary Perspective Pluralistic-Perspective

Marxist Perspective

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Unitary Perspective

Organization is harmonious system and is viewedas one happy family.

Management and staff, and all members of the

organization share the same objectives, interests

and purposes; thus working together, hand-in-hand,towards the shared mutual goals.

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Pluralistic-Perspective

Conflict is therefore seen as inevitable and tradeunions are a natural response of workers to their

exploitation by capital.

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Marxist Perspective

This approach sees conflicts of interest anddisagreements between managers and workers over

the distribution of profits as normal and inescapable.

Conflict is dealt by collective bargaining and isviewed not necessarily as a bad thing and if

managed could in fact be channeled towards

evolution and positive change.

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THREE ACTORS OF IR

OR

COMPONENTS /PARTIES OF IR

Employer

EmployeeGovernment

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CAUSES OF POOR IR

Inadequate fixation ofwage or wage structure;

Unhealthy working conditions;

Indiscipline

Lack of human relations skill on the part of supervisors

and other managers; Desire on the part of the workers for higher bonus or DA

and the corresponding desire of the employers to give as

little as possible;

Inappropriate introduction ofautomation without providingthe right climate;

Unduly heavy workloads

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CAUSES OF POOR IR

Inadequate welfare facilities;

Dispute on sharing the gains of productivity;

Unfair labour practices, like victimization and undue dismissal;

Retrenchment, dismissals and lock-outs on the part of

management and strikes on the part of the workers;

Inter-union rivalries; and General economic and political environment, such as rising

prices, strikes by others, and general indiscipline having their

effect on the employees attitudes.

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DEVELOPING SOUND IR

A sound industrial relations system is one in whichrelationships between management and employees(and their representatives) on the one hand, andbetween them and the State on the other, are moreharmonious and cooperative than conflictual

It creates an environment- conducive to economicefficiency

And the motivation, productivity and developmentof the employee

And generates employee loyalty and mutual trust.

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PRE-REQUISITE FOR SOUND IR

Top management approach

Developing sound HRM and IR policies and practices

Provision of adequate supervisory training

Follow-up results

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State Act

Direct interest in preserving industrial peace in the

country

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Contd.

The three list are

the centre

the state list

the concurrent

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National commission on labour and

Industrial Relations policy

The recommendations of the commission are;

1. Collective bargaining

2. Recognition of trade union ( A trade union seeking recognition should have a membership ofatleast 30% of workers in the establishment. The minimum membership should be 25% if the recognition issought for an industry in a local area.)

3. Strikes/lockouts and gheraos

4. Conciliation arbitration5. Unfair labor practices

6. Work committees and joint management councils

7. Settlement of industrial disputes

8. Griveance procedure

9. Discipline procedure

10. Industrial harmony

11. Industrial relations commission

12. Labour courts

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Industrial Dispute Act 1947

Important parts of the act are as following:

1. Objects of the Act

2. Definitions

3. Authorities under this Act

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Objectives of the Act:

1. To settle dispute arising between capital and labour by peaceful methodsand through the machinery of conciliation, arbitration and if necessary byapproaching the tribunals constituted under the act.

2. To promote collective bargaining

3. To prevent illegal strikes and lock-outs

4. To ensure social justice to both employers and employees

5. To promote measures for securing and preserving amity and goodrelations.

6. To provide compensation to workmen in cases of layoff, retrenchment andclosure.

7. To protect workmen against victimisation by the employer and to ensuretermination of industrial disputes in a peaceful manner.

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Definition

Industrial dispute means any dispute of difference

between employers and employers, employers and

workmen, workmen and workmen and connected

with employment or terms of employment orconditions of labour, or any other person

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Authorities under this act1. Work committee

2. Conciliation officer

3. Board of conciliation

4. Courts of enquiry

5. Labour court

6. Industrial tribunals

7. National tribunals

d i l i 7

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Work committee

Is formed in an establishment which 100 or more workers

are employed. Work committee ha representatives of

workers and employers both.

I d i l Di A 1947

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Conciliation officer

Appointed by the Government by notifying in the Official Gazettee.

Usually at the State level, Commissioners of Labour, Additional andDeputy Commissioners of Labour act as Conciliation Officer for

disputes arising in any undertaking employing less than twentyworkers.

In the conciliation process the officer tries to bring the disputingparties together towards a settlement of the dispute and hence worksas a mediator.

The intervention of conciliation officer may be mandatory ordiscretionary.

But in the disputes related to public utilities in respect of whichproper notice is served to him, his intervention becomes mandatory

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Board of Conciliation

It is a higher forum

It consists of equal number of representatives ofemployers and employees under the chairmanship of anindependent person, appointed by the government.

The Board has to submit its report to the governmentregarding the dispute within two months from the datedispute was referred to it. However, depending on thecase, the period can be extended.

I d t i l Di t A t 1947

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Court of Enquiry

The Industrial Dispute Act, 1947 empowers theappropriate government to constitute a Court of Enquiry.

This body basically is a fact-finding agency, constitutedjust to reveal the causes of the disputes and does notcare much for the settlement thereof.

The Court of Enquiry is required to submit its report tothe government ordinarily within six months from the

commencement of enquiry. The report of the court shall be published by the

government within 30 days of its receipt.


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Labour court

Labour court consists of one person only with

necessary judicial qualification.

The duty of the court is to enquire into the

matters reffered to it and report there on to the

appropriate government within six months from

the commencement of the inquiry.


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Industrial tribunals

Is constituted for the adjudication of industrial

disputes relating to any matter.


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National tribunals

Are constituted by central govt.

It handles industrial disputes which involve

questions of international importance.

Standing orders

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Standing orders

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Lay-off

Removal of surplus employees

The act of suspending or dismissing an employee,

as for lack of work or because of corporate

reorganization.

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Retrenchment

When a company or government goes through

retrenchment, it reduces outgoing money or

expenditures or redirects focus in an attempt to

become more financially solvent.

Retrenchment is also a reduction of expendituresin order to become financially stable.

Retrenchment is a pullback or a withdrawal from

offering some current products or serving some

markets.

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COLLECTIVE BARGAINING

Definition

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Definition

CB is a process of negotiation and other relatedpressure tactics ( like threats) adopted by the

employers and the organised workers represented

by their union in order to determine the terms and

conditions of employment.

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Importance

Increase the economic strength of unions and management.

Establish uniform conditions of employment with a view to avoiding

industrial disputes and maintaining stable peace in the industry.

Secure a prompt and fair settlement of grievances.

Avoids interruptions in work which follow strikes, go-slow tactics and

similar coercive activities; Lay down fair rates of wages and norms of working conditions;

Achieve an efficient operation of the plant;

Promote the stability and prosperity of the industry;

Provides a method or the regulation of the conditions of employment

of those who are directly concerned about them;

Prerequ s tes o co ect ve

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Prerequ s tes o co ect vebargaining

There should be a shift in the attitude of employersand employees. They should realise that it does notimply litigation as under adjudication.

Collective bargaining is best conducted at plant

level The parties should enter into negotiations with a

view of reaching an agreement.

Parties should rely on facts and figure for

successful negotiations. To ensure that collective bargaining functions

properly no unfair labor practices should befollowed.

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Prerequisites of collective bargaining

The terms of contract should be put down in

writing and embodied in document.

When no agreement is reached parties should

resort to conciliation, mediation, adjudication.

Once an agreement is reached it should behonoured and fairly implemented.

A provision of arbitration should be incorporated

in the agreement, which should become

operative when there is any disagreement on the

interpretation of its term and conditions.

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Union bargaining process

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Following are the steps;

1. Prepare: This phase involves composition of a

negotiation team. The negotiation team should

consist of representatives of both the parties with

adequate knowledge and skills for negotiation.2. Discuss: Here, the parties decide the ground rules

that will guide the negotiations.

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Propose: This phase involves the initial opening

statements and the possible options that exist to resolvethem. In a word, this phase could be described as

brainstorming. The exchange of messages takes place

and opinion of both the parties is sought.

Bargain: negotiations are easy if a problem solving

attitude is adopted. This stage comprises the time when

what ifs and supposals are set forth and the drafting of

agreements take place.

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Settlement: Once the parties are through with the

bargaining process, a consensual agreement is

reached upon wherein both the parties agree to a

common decision regarding the problem or the

issue. This stage is described as consisting of

effective joint implementation of the agreement

through shared visions, strategic planning and

negotiated change.

Collective bargaining in India

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Collective bargaining in India.

First started in the First Five year plan

Initially states made efforts to encourage mutual

settlement, collective bargaining and voluntary

arbitration and thereby reducing the number of

occasions it had to intervene.

Because of the show of power by the two parties state

gradually armed itself with legal powers. i.e., it couldrefer the dispute to adjudication or arbitration

many labour leaders opposed compulsory arbitration

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Despite this Collective Bargaining was introduced in India

in 1952

Gradually it became significant

Data released by Labour Bureau shows that CollectiveBargaining spread to major segments

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Collective Bargaining in India

ecen ren s n o ec ve

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Bargaining

With entry of MNCs in country the Indiancounterparts have also started paying betterpackages.

Following are some of the items which havebecome an impotant part of agenda of CollectiveBargaining

House Rent Allowances

Leave Travel Concession

Educational Allowance

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Collective Bargaining at different levels

At plant level

At industrial level

At the National level

PRODUCTIVITY BARGAINING

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Productivity bargaining has been described as "an agreement

in which advantages of one kind or another, such as higher

wages or increased leisure, are given to workers in return for

agreement on their part to accept changes in working practices

or in methods or in organization of work which will lead to moreefficient working.

The changes in the interests of efficiency are seen as an

integral part of the bargaining and as necessary contribution to

meeting the cost of advantages conceded to the workers."

.

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The prime purpose of productivity bargaining is to raise labour

productivity and lower unit labour costs, and this is achieved by theexchange of alternations in working practices for increased leisure,higher remuneration for labour, more comprehensive fringe benefits,and general increase in the status of manual employees.

Productivity bargaining is a complex process. It involves lengthy,detailed negotiations about the implementation of a variety ofmanagement techniques such as work study and job evaluation. Thecontent of negotiations is more or less comprehensive in the sensethat it includes not only bargaining over earnings but bargaining overother related matters such as reductions in hours, introduction orextension of shift working, manning of machines, demarcation lines,the introduction of new payment system, and re-allocation of jobcontrol.

In addition, the coverage of productivity bargaining is more or lesscomprehensive in that generally speaking it will aply to all employeesin an enterprise. Productivity bargaining generally occurs at the levelof the enterprise or company


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Grievance

any dissatisfaction or feeling of injustice in connection with

ones employment situation that is brought to the notice of

management

Dale s. Beach

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Need for Grievance procedure

Helps in preventing grievances by encouraging

management to probe underlying problems andto correct them. The management catches andsolves a problem before it becomes grievance.

It provides employees a formalised means ofemotional release for their dissatisfaction.

It brings human problems in open so thatmanagement can learn about them and trycorrective action.

It helps in establishing and maintaining a workculture or way of life.

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Sources of grievances

A. Grievances resulting from management policies:

1. wage rate

2. overtime

3. leave

4. transfer

5. seniority, promotion and discharges

6. lack of career planing and employee developmentplan

7. lack of role clarity

8. lack of regard for collective bargaining9. hostility towards a labour union

10. autocratic leadership style of supervisor

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Sources of grievancescontd

B. Grievances resulting from working conditions:

1. unrealistic

2. Non availability of tools and equipments

3. tight production standard

4. Bad physical conditions of the workplace

5. poor relationship with the supervisor

6. negative approach to the discipline

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GRIEVANCE PROCEDURE

1. OPEN DOOR POLICY

2. STEP LADDER PROCESS

Open oor po cy

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Employees are free to meet the top executives of the

organisation and get their grievances released.

Step- ladder process

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STEP-1

Filling of Written

grievance

STEP- 2

Supervisor or

foreman

STEP-3

Head of departmentSTEP-4

Joint Grievance

committee

STEP-5

Chief Executive

STEP-6

Voluntary

arbitration

settlement

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Disciplinary

Discipline may be defined as a force that prompts

individuals or groups to observe rules, regulations

and procedure which are deemed to be necessary

for effective functioning of an organisation

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Need for Discipline procedure

To give and seek direction and responsibility To increase the working efficiency and morale of the

employees so that their productivity can be increased

To impart an element of certainty of despite several

differences in informal behavioral patterns and other

related changes in the organisation.

To obtain a willing acceptance of the rules, regulations

and procedures of an organisation so thatorganizations goals are met

Discipline procedure

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Discipline procedure

Step 1: issuing a letter of charge to the employee

calling upon him for explanation

Step 2: consideration of explanation

Step 3: show cause noticeStep 4: holding of a full fledged inquiry

Step 5: considering the enquiry proceedings and

findings and making final order of

punishmentStep 6: follow-up

Types of punishment

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Types of punishment

Forms of disciplinary actions1. Oral warning

2. Written warning

3. Demotion in rank

4. Disciplinary lay off and suspension

5. Fines

6. Adverse remark in service book

7. Withholding of increments

8. Dismissal and discharge

INDISCIPLINE

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SC

Various socio-economic and cultural factors play a role in creating

indiscipline in an organisation.Causes Of Indiscipline:

1. Unfair Management Practices: Management sometimes indulges in

unfair practices like:

Wage discrimination

Non-compliance with promotional policies and transfer policies

Discrimination in allotment of work

Defective handling of grievances

Payment of low wages

Delay in payment of wages Creating low quality work life etc.

These unfair management practices gradually result in indiscipline.

Causes Of Indiscipline:CONTD

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CONTD

2. Absence of Effective Leadership:Absence of effective leadership results in

poor management in the areas of direction, guidance, instructions etc. This in

turn, results in indiscipline. I am sure you remember the importance of

leadership as studied in the last semester. If you do (which I suppose you

do), you can relate the importance of effective leadership with handling

indiscipline.

3. Communication Barriers: Communication barriers and absence of

humane approach on the part of superiors result in frustration and

indiscipline among the workers. The management should clearly formulate

the policies regarding discipline. These policies should be communicated and

the policies should be consistently followed in the organisations. Themanagement should also be empathetic towards the employees.

Causes Of Indiscipline:

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CONTD

4. Varying Disciplinary Measures: Consistent disciplinary actions

must be there in the organisation to provide equal justice to allconcerned. At different times and for everyone, the same

standard of disciplinary measures should be taken otherwise it

may give rise to growing indiscipline in the industry in future i.e.,

the judicious function on the past of management must be free form

may bias, privilege or favouritism.

5. Defective Supervision: Supervisor is the immediate boss of the

workers and many disciplinary problems have their in faulty

supervision. The attitude and behavior of the supervisor may create

many problems. As the maintenance of the discipline is the disciplineis the core f supervisory responsibilities, indiscipline may spring from

the want of the right type of supervision.


CONTD

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CONTD

6. Inadequate attention to personnel Problems: Delay in

solving personnel problems develops frustration amongindividual workers. The management should be proactive so

that there is no discontent among the workers. It should adopt a

parental attitude towards its employees.

However it should be noted that no relationship can continue for

long if it is one sided. What I am implying here is that the

workers should also live up to their commitments. They should

be reasonable in their demands.

7. Victimisation: Victimisation of subordinate also results inindiscipline. The management should not exploit the workers. It

is also in the long-term interest of the management to take care

of its internal customers


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p

CONTD

8. Absence of Code of Conduct: This creates confusion and also provideschance for discrimination while taking disciplinary action. We will be

discussing Code of Discipline in details etc.

A code of conduct is a set of rules outlining the responsibilities of or proper

practices for an individual, party or organization. Related concepts include

ethical codes and honor codes.

8. Divide and Rule Policy: Many mangers in the business obtain secret

information about other employees through their trusted assistants. The

spying on employees is only productive of a vicious atmosphere and of

undesirable in the organization. Henry Fayol has rightly pointed out thatdividing enemy forces to weaken them is clever, but dividing one's own team

is grave sin against the business. No amount of management skill is

necessary for dividing personnel, but integrating personnel into a team is the

challenging task of sound management.


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CONTD

Deferring settlement of Employee Grievances: The employee

grievances cannot be put off by deferring or neglecting their solutions. The

grievances should properly be inquired into and settled by the managers in

a reasonable period. Neglect of grievances often results in reduced

performance, low morale and indiscipline among the employees. Strikes

and work stoppages stem in many cases form the utter neglect of

employee grievances.

10. Mis-judgment in Promotion and Placements: Mis-judgment in

personnel matters like promotion and placements contribute to the growth

of indiscipline in an enterprise. Cases of mis-judgment are carefully noted,

widely circulated, and hotly debated by the employees. Expectingdiscipline from misruled people is not possible. Sometimes, undesired

persons are placed on the jobs which makes the employees discontented,

then giving rise to the problem of indiscipline.

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Questions??

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