Industrial Relations

Unit 7

Industrial Relations Industrial relation means the relationship between employers and employees in course of employment in industrial organisations. organisations. However, the concept of Industrial Relations has a broader meaning. In a broad sense, the term Industrial Relations includes the relationship between the various unions, between the state and the unions as well as those between the various employers and the government. Relations of all those associated in an industry may be called Industrial Relations. Relations. According to International Labour Organisation, Organisation, Industrial relations comprise relationships relationships between the state on one hand and the employer’s and employee’s organisation organisation on the other, and the relationship among the occupational organisations themselves.

Definition: According to J.T. Dunlop, Dunlop, “Industrial relations are the complex interrelations interrelations among managers, workers and agencies of the government”

Features of Industrial Relations: 1. Industrial relations are outcomes outcomes of employment relationships relationships in an industrial industrial enterprise. These relations cannot exist without the two parties namely employers and employees. 2. Industrial relations system creates rules and regulations regulations to maintain maintain harmonious relations. 3. The government government intervenes intervenes to shape the industrial industrial relations through laws, rules, agreements, terms, charters etc. 4. Several parties parties are involved in the Industrial Industrial relations relations system. system. The main parties are employers and their associations, associations, employees and their unions and the government. These three parties interact within economic and social environment to shape the Industrial relations structure. structure. 5. Industrial relations are a dynamic and and developing developing concept, concept, not a static one. They undergo changes with changing structure and scenario of the industry as and when change occurs. 1

Unit-7 PYDAH BBM II Year

Industrial Relations

6. Industrial relations include both individual relations and collective collective relationships.

Objectives of Industrial Relations: 1. To maintain maintain industrial industrial democracy democracy based based on participation participation of labour in the management and gains of industry. 2. To raise produc productivit tivity y by reducing reducing tendency tendency of high labour labour turnover turnover and absenteeism. 3. To ensure ensure workers’ workers’ participation participation in management of the company by giving them a fair say in decision-making and framing policies. 4. To establis establish h a proper proper channel channel of commun communicat ication. ion. 5. To increas increase e the morale morale and disci disciplin pline e of the employee employees. s. 6. To safeguard safeguard the interests of the labour as as well as management management by securing the highest level of mutual understanding and goodwill between all sections in an industry. 7. To avoid all all forms of industrial industrial conflicts conflicts so as to ensure industrial peace by providing better living and working standards for the workers. 8. To bring about government government control control over such industrial industrial units which which are running at a loss for protecting the livelihood of the employees.

Importance of Industrial Relations: 1. Uninterrupted Production: The most important benefit of industrial industrial benefits is that it ensures continuity of production. This means continuous employment for all involved right from managers to workers. There is uninterrupted flow of income for all. Smooth running of industries is important for manufacturers, manufacturers, if their products are perishable goods and to consumers if the goods are for mass consumption (essential commodities, food grains etc.). Good industrial relations bring industrial industrial peace which in turn tends to increase production. 2. Reduction in Industrial disputes: Good Industrial relations reduce Industrial disputes. Strikes, grievances and lockouts are some of the reflections of Industrial unrest. Industrial peace helps in promoting cooperation and increasing production. Thus good Industrial relations help in 2



establishing Industrial Industrial democracy, discipline and a conducive workplace environment. 3. High morale: Good Industrial relations improve the morale of the employees and motivate the worker workers to work more and better. 4. Reduced wastage: Good Industrial relations are maintained on the basis of co-operation and recognition of each other. It helps to reduce wastage of material, manpower and costs. 5. Contribut Contributes es to econom economic ic growth growth and develop development. ment.

Causes of poor Industrial Relations: 1. Economic causes: Often poor wages and poor working conditions are the main causes for unhealthy relations between management and labour. Unauthorised deductions deductions from wages, lack of fringe benefits, absence of promotion opportunities, opportunities, faulty incentive schemes are other economic causes. Other causes for Industrial conflicts are inadequate infrastructure, infrastructure, worn-out plant and machinery, poor layout, unsatisfactory unsatisfactory maintenance etc. 2. Organisational causes: Faulty communications system, unfair practices, non-recognition non-recognition of trade unions and labour laws are also some other causes of poor relations in industry. 3. Social causes: Uninteresting nature nature of work is the main social cause of poor Industrial relations. Dissatisfaction Dissatisfaction with job and personal life culminates into Industrial conflicts. 4. Psychological causes: Lack of job security, non-recognition of merit and performance, performance, poor interpersonal interpersonal relations are the psychological reasons for unsatisfactory unsatisfactory employer-employee employer-employee relations. 5. Political causes: Multiple unions, inter-union rivalry weaken the trade unions. Defective trade unions system prevailing in the country has been one of the most responsible causes for Industrial disputes in the country.

Suggestions to improve Industrial Relations: 1. Sound personnel policies: Policies and procedures concerning the compensation, compensation, transfer and promotion, etc. of employees should be fair and transparent. transparent. All policies and rules relating to Industrial relations should be fair and transparent to everybody in the enterprise and to the union leaders. 3



management: Employees should associate workers and 2. Participative management: unions in the formulation and implementation of HR policies and practices. 3. Responsible unions: A strong trade union is an asset to the employer. Trade unions should adopt a responsible responsible rather than political approach to industrial relations. 4. Employee welfare: Employers should recognise recognise the need for the welfare of workers. They must ensure reasonable wages, satisfactory satisfactory working conditions, and other necessary facilities for labour. Management should have a genuine concern for the welfare and betterment of the working class. 5. Grievance procedure: A well-established and properly administered system committed to the timely and satisfactory redressal of employee’s grievances can be very helpful in improving Industrial relations. A suggestion scheme will help to satisfy the creative urge of the workers. 6. Constructive attitude: Both management and trade unions should adopt positive attitude towards each other. Management must recognise unions as the spokesmen of the workers’ grievances and as custodians of their interests. The employer should accept workers as equal partners in a joint endeavour for good Industrial relations. 7. Creating a proper communication channel to avoid grievances and misunderstandings among employees 8. Education and training imparted to the employees

End of unit -7 part-I

4



Industrial Disputes Industrial disputes are organised protests against existing terms of employment or conditions of work. According to the Industrial Dispute Act, 1947, an Industrial dispute means “Any dispute or difference between employer and employer or between employer and workmen or between workmen and workmen, which is connected with the employment or non-employment non-employment or terms of employment or with the conditions of labour of any person” In practice, Industrial dispute mainly refers to the strife between employers and their employees. An Industrial dispute is not a personal dispute of any one person. It generally affects a large number of workers’ community having common interests.

Prevention of Industrial Disputes: The consequences of an Industrial dispute will be harmful to the owners of industries, industries, workers, economy and the nation as a whole, which results in loss of productivity, profits, profits, market share and even closure of the plant. Hence, Industrial disputes need to be averted by all means.

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Prevention of Industrial disputes is a pro-active approach in which an organisation undertakes various actions through which the occurrence of Industrial disputes is prevented. Like the old saying goes, “prevention is better then cure”. Method s for preventi on

of

Industri al

Disput es

Labour Model Standi ng

Orders

Code of Discipl ine

Works Comm ittee

Welfar e Officer s

Collect ive Bargai ning

Joint Manag ement Counci ls

Sugge Tripart stion ite Schem Bodies es

Joint Counci ls

1. Model Standing Orders: Standing orders define and regulate terms and conditions of employment and bring about uniformity in them. They also specify the duties and responsibilities responsibilities of both employers and employees thereby regulating standards of their behaviour. Therefore, standing orders 6



can be a good basis for maintaining harmonious relations between employees and employers. Under Industrial Dispute Act, 1947, every factory employing 100 workers or more is required to frame standing orders in consultation with the workers. These orders must be certified and displayed properly by the employer for the information of the workers.

discipline: The code of Industrial discipline 2. Code of Industrial discipline: discipline defines duties and responsibilities of employers and workers. The objectives of the code are: 

To secure settlement of disputes by negotiation, conciliation and voluntary arbitration.

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To eliminate all forms of coercion, intimidation and violence.

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To maintain discipline in the industry.

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To avoid work stoppage.

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To promote constructive co-operation between the parties concerned at all levels.

3. Works Committee: The Industrial Dispute Act, 1947 has provided for the establishment of works committees. In case of any industrial industrial establishment in which 100 or more workers are employed, a works committee consisting consisting of employees and workers is to be constituted; it shall be the duty of the Works Committee to promote measures for securing and preserving amity and good relations among the employees and workers.

4. Joint Managem Management ent Councils Councils:: 5. Sugge Suggesti stion on Schem Schemes es:: 6. Join Jointt Counc Council ils: s: 7. Collective Bargaining: Collective Bargaining is a process in which the representatives of the employer and of the employees meet and attempt to negotiate a contract governing the employer-employee-union employer-employee-union relationships. Collective Bargaining involves discussion and negotiation between two groups as to the terms and conditions of employment. 8. Labour welfare officer: The factories Act, 1948 provides for the appointment of a labour welfare officer in every factory employing 500 or more workers. The officer looks after all facilities in the factory provided for 7



the health, safety and welfare of workers. He maintains liaison with both the employer and the workers, thereby serving as a communication communication link and contributing towards healthy industrial relations through proper administration administration of standing orders, grievance procedure etc. 9. Tripartite bodies: Several tripartite bodies have been constituted at central, national and state levels. The India labour conference, standing labour committees, Wage Boards and Industries Committees operate at the central level. At the state level, State Labour Advisory Boards have been set up. All these bodies play an important role in reaching agreements on various labour-related issues. The recommendations recommendations given by these bodies are however advisory in nature and not statutory.

Machinery for settlement of Industrial Disputes: 1. Conciliation: Conciliation refers to the process by which representatives of employees and employers are brought together before a third party with a view to discuss, reconcile their differences and arrive at an agreement through mutual consent. The third party acts as a facilitator in this process. Conciliation is a type of state intervention in settling the Industrial Disputes. The Industrial Disputes Act empowers the Central & State governments to appoint conciliation officers and a Board of Conciliation as and when the situation demands. Conciliation Officer: The appropriate government may, by notification in the official gazette, appoint such number of persons as it thinks fit to be the conciliation officer. The duties of a conciliation officer are: a) To hold conciliation proceedings with a view to arrive at at amicable settlement between the parties concerned. b) To investigate investigate the dispute dispute in order order to bring bring about the the settlement between the parties concerned. c) To send a report report and memor memorandu andum m of settlement settlement to the the appropria appropriate te government. d) To send a report to the government government stating forth the steps taken by him in case no settlement has been reached at. The conciliation officer however has no power to force a settlement. He can only persuade and assist the parties to reach an 8



agreement. The Industrial Disputes Act prohibits strikes and lockouts during that time when the conciliation proceedings are in progress. 2. Arbitration: A process in which a neutral third party listens to the disputing parties, gathers information information about the dispute, and then takes a decision which is binding on both the parties. The conciliator simply assists assists the parties to come to a settlement, whereas the arbitrator listens to both the parties and then gives his judgement.

Advantages of Arbitration: 

 

It is established by the parties themselves and therefore both parties have good faith in the arbitration process. The process in informal and flexible in nature. It is based on mutual consent of the parties and therefore helps in building healthy Industrial Relations.

Disadvantages: 

Delay often occurs in settlement of disputes.

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Arbitration is an expensive procedure and the expenses are to be shared by the labour and the management.

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Judgement can become arbitrary when the arbitrator is incompetent or biased.

There are two types of arbitration: a) Voluntary Arbitration: In voluntary arbitration the arbitrator is appointed by both the parties through mutual consent and the arbitrator acts only when the dispute is referred to him. b) Compulsory Arbitration: Implies that the parties are required to refer the dispute to the arbitrator whether they like him or not. Usually, when the parties fail to arrive at a settlement voluntarily, or when there is some other strong reason, the appropriate government can force the parties to refer the dispute to an arbitrator. 3. Adjudication: Adjudication is the ultimate legal remedy for settlement of Industrial Dispute. Adjudication Adjudication means intervention of a legal authority appointed by the government to make a settlement which is binding on both the parties. In other words adjudication means a mandatory settlement of an 9



Industrial dispute by a labour court or a tribunal. For the purpose of adjudication, adjudication, the Industrial Industrial Disputes Act provides a 3-tier machinery:

a) Labo Labour ur cour courtt b) Indus Industri trial al Tribuna Tribunall c) Natio National nal Tribun Tribunal al a) Labour Court: The appropriate government may, by notification in the official gazette constitute one or more labour courts for adjudication of Industrial disputes relating to any matters specified in the second schedule of Industrial Disputes Act. They are: 

Dismissal or discharge or grant of relief to workmen wrongfully dismissed.

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Illegality or otherwise of a strike or lockout.

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Withdrawal of any customary concession or privileges.

Where an Industrial dispute has been referred to a labour court for adjudication, adjudication, it shall hold its proceedings expeditiously and shall, within the period specified in the order referring such a dispute, submit its report to the appropriate government. b) Industrial Tribunal: The appropriate government may, by notification in the official gazette, constitute one or more Industrial Tribunals for the adjudication adjudication of Industrial disputes relating to the following matters:

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Wages

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Compensatory Compensatory and other allowances

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Hours of work and rest intervals

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Leave with wages and holidays

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Bonus, profit-sharing, profit-sharing, PF etc.

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Rules of discipline

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Retrenchment of workmen

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Working shifts other than in accordance with standing orders



It is the duty of the Industrial Tribunal to hold its proceedings expeditiously and to submit its report to the appropriate government within the specified time. c) National Tribunal: The central government may, by notification in the official gazette, constitute one or more National Tribunals for the adjudication adjudication of Industrial Disputes in 

Matters of National importance

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Matters which are of a nature such that industries in more than one state are likely to be interested in, or are affected by the outcome of the dispute.

It is the duty of the National Tribunal to hold its proceedings expeditiously and to submit its report to the central government within the stipulated time.

End of unit -7 part-II

11



Workers’ Participation in Management Workers’ participation in management is an essential ingredient of Industrial democracy. The concept of workers’ participation in management is based on Human Relations approach approach to Management which brought about a new set of values to labour and management. Traditionally the concept of Workers’ Participation Participation in Management (WPM) refers to participation of non-managerial employees in the decision-making decision-making process of the organization. organization. Workers’ participation is also known as ‘labour participation’ or ‘employee participation’ participation’ in management. In Germany it is known as codetermination determination while in Yugoslavia it is known as self-management. 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-making.

Definition: According to Keith Davis, Participation refers to the mental and emotional involvement of a person in a group situation which encourages encourages him to contribute to group goals and share the responsibility of achievement. According to Walpole, Participation Participation in Management gives the worker a sense of importance, importance, pride and accomplishment; it gives him the freedom of opportunity for self-expression; self-expression; a feeling of belongingness with the place of work and a sense of workmanship workmanship and creativity. The concept of workers’ participation in management encompasses the following: 12



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It provides scope for employees in decision-making of the organization. organization.

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The participation may be at the shop level, departmental level or at the top level.

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The participation includes the willingness to share the responsibility of the organization by the workers.

Features of WPM: 1. Participation means mental and emotional emotional involvement rather than mere mere physical presence. 2. Workers participate participate in management management not not as individuals individuals but collectively collectively as a group through their representatives. representatives. 3. Workers’ participation participation in management management may may be formal or or informal. informal. In both the cases it is a system of communication communication and consultation whereby employees express their opinions and contribute to managerial decisions. decisions. 4. There can be 5 levels of Management Participation or WPM: a. Information participation: It ensures that employees are able to receive information and express their views pertaining to the matter of general economic importance. importance. b. Consultative importance: Here workers are consulted on the matters of employee welfare such as work, safety and health. However, final decision always rests with the top-level management, as employees’ views are only advisory in nature.

participation: It is an extension of consultative c. Associative participation: participation participation as management here is under the moral obligation to accept and implement the unanimous decisions of the employees. Under this method the managers and workers jointly take decisions. participation: It ensures greater share of workers’ d. Administrative participation: participation participation in discharge of managerial functions. Here, decisions already taken by the management come to employees, preferably with alternatives for administration administration and employees have to select the best from those for implementation. implementation. e. Decisive participation: Highest level of participation participation where decisions are jointly taken on the matters relating to production, welfare etc.

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Objectives of WPM: 1. To estab establish lish Industri Industrial al Democ Democracy racy.. 2. To build build the the most most dynamic dynamic Human Human Resourc Resources. es. 3. To satisfy satisfy the workers workers’’ social social and esteem esteem needs. needs. 4. To strengthen strengthen labourlabour-mana manageme gement nt co-operati co-operation on and thus maintain maintain Industrial peace and harmony. 5. To promote promote increased increased productivity for the advantage of the organization, organization, workers and the society at large. 6. Its psychological psychological objective objective is to secure secure full recognition of the workers.

Strategies / Methods / Schemes / Forms of WPM: 1. Suggestion schemes: Participation of workers can take place through suggestion scheme. Under this method workers are invited and encouraged to offer suggestions for improving the working of the enterprise. A suggestion box is installed installed and any worker can can write his suggestions and drop them in the box. Periodically all the suggestions are scrutinized by the suggestion committee or suggestion screening screening committee. The committee is constituted by equal representation from the management and the workers. The committee screens various suggestions received from the workers. Good suggestions suggestions are accepted for implementation and suitable awards are given to the concerned workers. Suggestion schemes encourage workers’ interest in the functioning of an enterprise. 2. Works committee: Under the Industrial Disputes Act, 1947, every establishment establishment employing 100 or more workers is required to constitute a works committee. Such a committee consists of equal number of representatives from the employer and the employees. The main purpose of this committee is to provide measures for securing and preserving preserving amity and good relations between the employer and the employees.

Functions:

Works committee deals with matters of day-to-day functioning at the shop floor level. Works committees are concerned with:

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

Conditions of work such as ventilation, lighting and sanitation.

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Amenities such as drinking water, canteens, dining rooms, medical and health services.

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Educational Educational and recreational activities.

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Safety measures, accident prevention mechanisms mechanisms etc.

Works committees function actively in some organizations organizations like Tata Steel, HLL, etc but the progress of Works Committees in many organizations has not been very satisfactory due to the following reasons: 

Lack of competence and interest on the part of workers’ representatives.

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Employees consider it below their dignity and status to sit alongside blue-collar workers.

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Lack of feedback on performance of Works Committee.

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Undue delay and problems in implementation implementation due to advisory nature of recommendations.

3. Joint Management Councils: Under this system Joint Management Councils are constituted at the plant level. These councils were setup as early as 1958. These councils consist of equal number of representatives representatives of the employers and employees, not exceeding 12 at the plant level. The plant should employ at least 500 workers. The council discusses discusses various matters relating to the working of the industry. This council is entrusted with the responsibility of administering welfare measures, supervision of safety and health schemes, scheduling scheduling of working hours, rewards for suggestions etc. Wages, bonus, personal problems of the workers are outside the scope of Joint management councils. The council is to take up issues related to accident prevention, management of canteens, water, meals, revision of work rules, absenteeism, indiscipline indiscipline etc. the performance performance of Joint Management Councils have not been satisfactory due to the following reasons: •

15

Workers’ representatives feel dissatisfied as the council’s functions are concerned with only the welfare activities.



•

Trade unions fear that these councils will weaken their strength as workers come under the direct influence of these councils.

4. Work directors: Under this method, one or two representatives of workers are nominated or elected to the Board of Directors. This is the full-fledged and highest form of workers’ participation in management. The basic idea behind this method is that the representation of workers at the top-level would usher Industrial Democracy, Democracy, congenial employeeemployer relations and safeguard the workers’ interests. The Government of India introduced this scheme in several public sector enterprises such as Hindustan Antibiotics, Hindustan Organic Chemicals Ltd etc. However the scheme of appointment of such a director from among the employees failed miserably and the scheme was subsequently dropped. 5. Co-partnership: Co-partnership Co-partnership involves employees’ participation in the share capital of a company in which they are employed. By virtue of their being shareholders, shareholders, they have the right to participate in the management of the company. Shares of the company can be acquired by workers making cash payment or by way of stock options scheme. The basic objective of stock options is not to pass on control in the hands of employees but providing better financial incentives for industrial productivity. But in developed countries, WPM through co-partnership co-partnership is limited. 6. Joint Councils: The joint councils are constituted for the whole unit, in every Industrial Unit employing 500 or more workers, there should be a Joint Council for the whole unit. Only such persons who are actually engaged in the unit shall be the members of Joint Council. A joint council shall meet at least once in a quarter. The chief executive of the unit shall be the chairperson of the joint council. The vice-chairman vice-chairman of the joint council will be nominated by the worker members of the council. The decisions of the Joint Council shall be based on the consensus and not on the basis of voting. In 1977 the above scheme was extended to the PSUs like commercial commercial and service sector organizations employing 100 or more persons. The organizations include hotels, hospitals, railway and road transport, transport, post and telegraph offices, state electricity boards. 7. Shop councils: Government of India on the 30 th of October 1975 announced a new scheme in WPM. In every Industrial establishment establishment employing 500 or more workmen, the employer shall constitute a shop council. Shop council represents each department or a shop in a unit. Each shop council consists of an equal number of representatives from 16



both employer and employees. The employers’ representatives representatives will be nominated by the management and must consist of persons within the establishment. establishment. The workers’ representatives will be from among the workers of the department or shop concerned. The total number of employees may not exceed 12.

Functions of Shop Councils: 1. Assi Assist st management management in achieving achieving monthly monthly product production ion targets. targets. 2. Improve production and efficiency, efficiency, including elimination of wastage wastage of man power. 3. Study absente absenteeism eism in the shop shop or department department and recommen recommend d steps to reduce it. 4. Suggest Suggest health, health, safety safety and welfare welfare measures measures to be adopted adopted for smooth smooth functioning of staff. 5. Look after physical conditions of working working such as lighting, lighting, ventilation, ventilation, noise and dust. 6. Ensure Ensure proper proper flow of adequa adequate te two way communi communicati cation on between between management and workers.

Workers’ Participation in Management in India

Workers’ participation in Management in India was given importance only after Independence. Industrial Industrial Disputes Act, 1947 was the first step in this direction, which recommended for the setting up of works committees. The joint management councils were established in 1950 which increased the labour participation in management. Since July 1975 the two-tier participation called shop councils at shop level and Joint councils were introduced. Workers’ participation in Management Bill, 1990 was introduced in Parliament which provided scope for upliftment of workers.

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Reasons for failure of Workers participation Movement in India: 1. Employers resist the the participation participation of workers in decision-making. decision-making. This is because they feel that workers are not competent enough to take decisions. 2. Workers’ representatives representatives who participate in management management have to perform the dual roles of workers’ spokesman spokesman and a co-manager. Very few representatives are competent enough to assume the two incompatible roles. 3. Generally Trade Unions’ Unions’ leaders who represent represent workers workers are also also active active members of various political parties. While participating in management they tend to give priority to political interests rather than the workers’ cause. 4. Schemes of workers’ workers’ participation participation have have been initiated initiated and and sponsored sponsored by the Government. However, there has been a lack of interest and initiative on the part of both the trade unions and employers. 5. In India, labour laws laws regulate regulate virtually virtually all terms and and conditions conditions of employment at the workplace. Workers do not feel the urge to participate in management, having an innate feeling that they are born to serve and not to rule. 6. The focus has always always been on participation participation at the higher levels, levels, lower levels have never been allowed to participate much in the decision-making in the organizations. 7. The unwillingness unwillingness of the employer to share powers powers with with the workers’ representatives, representatives, the disinterest of the workers and the perfunctory attitude of the government towards participation in management act as stumbling blocks in the way of promotion of participative management.

Measures for making Participation effective: 1. Employer should adopt a progressive outlook. They They should consider the industry as a joint endeavour in which workers have an equal say. Workers should be provided and enlightened about the benefits of their participation in the management. 2. Employers and workers workers should should agree on the objectives of the industry. They should recognize and respect the rights of each other. 18 Unit-7 Industrial Relations

PYDAH BBM II Year

3. Workers and and their representatives representatives should should be provided provided education education and and training training in the philosophy and process of participative management. Workers should be made aware of the benefits of participative management. 4. There should should be effective effective communication communication between workers and management management and effective consultation of workers by the management in decisions that have an impact on them. 5. Participation should be a continuous continuous process. To begin with, participation participation should start at the operating level of management. 6. A mutual mutual co-operation co-operation and commitment commitment to participation participation must be be developed by both management and labour. Modern scholars are of the mind that the old adage “a worker is a worker, a manager is a manager; never the twain shall meet” should be replaced by “managers and workers are partners in the progress of business”

End of unit -7 part-III

Collective Bargaining Good relations between the employer and employees are essential for the success of industry. In order to maintain good relations, it is necessary that industrial disputes are settled quickly and amicably. One of the efficient methods of resolving industrial disputes and deciding the employment conditions is Collective Bargaining. Industrial disputes essentially refer to differences or conflicts between employers and employees. 19



Collective Bargaining is a process in which the management and employee representatives meet and negotiate the terms and conditions of employment for mutual benefit. Collective bargaining involves discussion and negotiation between two groups as to the terms and conditions of employment. employment. It is termed Collective because both the employer’s negotiators and the employees act as a group rather than individuals. It is known as Bargaining because the method of reaching an agreement involves proposals and counter-proposals, offers and counter offers. There should be no outsiders involved in the process of collective bargaining. According to Walton and McKersie the process of Collective Bargaining consists of four types of activities: 1) Distributive Bargaining: It involves haggling over the distribution of surplus. Various activities involved in this activity are wages, salaries, bonus and other financial issues. In this activity, both the parties face a win/lose situation. 2) Integrative Bargaining: Also known as Interest-Based Bargaining, Bargaining, issues which are not damaging to either party are discussed. It is a negotiation strategy in which both the parties collaborate to find a win-win solution to their problems. This strategy focuses on developing mutually beneficial agreements based on the interests of the disputants. disputants. Issues brought up may be better job evaluation procedures, better performance appraisal methods or training programmes etc. 3) Attitudinal structuring: Attitudinal structuring structuring refers to efforts by negotiators to shape their opponents' perceptions about the nature of the issues to be negotiated. By cultivating an atmosphere atmosphere of friendliness, friendliness, mutual respect, trust, and cooperation, negotiators can encourage their opponents to view issues largely in integrative terms and participate in joint problem solving. This activity involves shaping and reshaping some perceptions like trust/distrust, trust/distrust, friendliness/hostility, friendliness/hostility, co-operative/non-cooperative between the labour and management. When there is a backlog of bitterness between both the parties, attitudinal structuring is required to maintain smooth and harmonious industrial relations.

Intra-Organisational Bargaining: It is a type of manoeuvring to achieve 4) Intra-Organisational consensus among the workers and management. management. Even within the union there may be differences between different groups as may be the case with the management. Intra-organisational consensus is required for the smooth acceptance of the outcome of Collective Bargaining.

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Objectives of Collective Bargaining: 1. To maintain maintain cordial cordial relation relations s between between the employer employer and employees employees.. 2. To protect protect the interests interests of of the workers workers through through collective collective action action and by preventing unilateral actions from being taken by the employer. 3. To ensure ensure the particip participatio ation n of trade unions unions in industr industry. y. 4. To avoid the need for government government intervention intervention as collective collective bargaining bargaining is a voluntary collective process. 5. To promote promote Industr Industrial ial democrac democracy. y.

Characteristics of Collective Bargaining: 1. It is a group group or collective collective action action as opposed opposed to individual individual action. action. It is initiated through the representatives of the employees. 2. It is a flexible flexible and dynamic process process where-in where-in no party party adopts a rigid attitude. attitude. 3. It is a continuous process, which provides provides a mechanism for continuous continuous negotiations and discussions between management and the trade unions. 4. It is a voluntary process process without any any third-party third-party intervention. intervention. Both workers and management voluntarily participate in the negotiations, negotiations, discuss and arrive at a solution. That is why it is known as a bipartite process where workers’ representatives and management get an opportunity for clear, faceto-face communication. communication. 5. It ensures industrial democracy democracy at the workplace; it is a self-run self-run government government in action. 6. It is a two-way two-way proces process. s. It is a mutual mutual give give and take take rather rather than a take home all method of arriving at a solution to a dispute.

Process of Collective Bargaining Preparation for 21



Negotiation

Identifying issues for Bargaining

Negotiati on

Negotiated Agreement Ratification of Agreement

Implementation of Agreement

Negotiation: Preparation for negotiation in Collective 1. Preparation for Negotiation: Bargaining is as important as the negotiation process itself. Upto 83% of the outcomes are influenced by pre-negotiation pre-negotiation process. Such preparation is required for both management as well as the union representatives. 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.

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Management must choose the representatives to negotiate at the negotiation table.

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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: 22



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The union should collect the information related to the financial position of the company and their ability to pay the employees.

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The union must also be aware of the various practices followed by other companies in the same region or industry.

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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.

2. 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.

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Supplementary Supplementary economic benefits: These include pension plans, gratuity plans, accident compensation, health insurance plans, paid holidays etc.

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Administrative 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. 3. 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 a re two types of negotiations: negotiations:

Boulwarism: In this method, the management themselves takes the initiative to find out through comprehensive research and surveys the needs of the employees. Based on the analysis of the findings, the company designs its own package based on the issues to be bargained. Thereafter, a change is incorporated incorporated only when new facts are presented by the employees or their unions. Continuous Bargaining: Involves parties to explore particular bargaining 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 23



period of time. The success of negotiations depends depends on the skills and abilities of the negotiators. negotiators.

agreement: When two parties arrive at a mutually 4. Initial negotiated agreement: 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. 5. 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 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 complications or other such problems. 6. 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 implementation of the agreement.

End of unit -7

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Industrial Relations

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