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According to Michael jucius, “A grievance can be any discontent or

dissatisfaction, whether expressed or not, whether valid or not, and arising out of
anything connected with the company that an employee thinks,believes,or even feels as
unfair, unjust or inequitable.”

A grievance means any discontentment or dissatisfaction in an employee

arising out of anything related to the enterprise where he is working. It may not be
expressed and even may not be valid.

It arises when an employee feels that something has happened or is going to

happen which is unfair, unjust or inequitable. Thus a grievance represents a situation in
which an employee feels that something unfavourable to him happened or is going to

In an industrial enterprise, an employee may have grievance because of long

hours of work, non-fulfillment of terms of service by the management, unfair treatment in
promotion, poor working facilities etc.


Grievances are symptoms of conflicts in the enterprise just like smoke could mean fire,
similarly grievances could lead to serious problem if it is not addressed immediately so
they should be handled very promptly and efficiently.

While dealing with grievances of subordinates, it is necessary to keep in

mind the following points:

• A grievance may or may not be real.

• Grievance may arise out of not one cause but multifarious causes.

• Every individual does not give expression to his grievances.


A grievance may take any of the following forms


When an employee is dissatisfied with his job, for genuine or factual reasons like a
breach of terms of employment, he is said to have factual grievance. Thus factual
grievances arise when the legitimate needs are unfulfilled. The problem that he has is real
and not virtual.


When an employee grievance or dissatisfaction is not because of any factual or valid

reason but because of wrong perception, wrong attitude or wrong information he has such
a grievance is called imaginary grievance. Though it is not the fault of management, the
responsibility of dealing with it still rests with the management. So the problem is not
real. It is in the mind or just a feeling towards someone or something.


An employee may have dissatisfaction for reasons that are unknown to him. This may be
because of pressures and frustrations that an employee is feeling from other sources like
his personal life.


Exit interviews:

Employees usually quit organizations due to dissatisfaction or better

prospects elsewhere. Exit interviews, if conducted carefully, can provide important
information about employee grievances. This can help the management to gather
feedback and to genuinely incorporate feedback. The management should carefully act
upon the information drawn from such employees. It should be careful that the discontent
is reduced so that no more employees quit the organization because of similar reasons.

Gripe boxes:

These are boxes in which the employees can drop their anonymous
complaints. They are different from the suggestion boxes in which employees drop their
named suggestion with an intention to receive rewards.

It is normally said that if you want to progress in life, you should be close
to critics. These gripe boxes can perform the role of critics for the organization. The
management should carefully act upon the information thus gathered. The internal
customers of an organization should be satisfied if the external customers are to be kept

Opinion survey:

The management can be proactive by conducting group meetings,

periodical interviews with employees, collective bargaining sessions etc. through which
one get information about employees dissatisfaction before it turn into a grievance.

Open-door policy:
Some organizations extend a general invitation to their employees to
informally drop in the manager’s room any time and talk over their grievances. This can
be very effective because it can nip the evil in the bud. Management should remember
that employees need a patient hearing at tunes.


1. Grievance resulting from working conditions.

• Improper matching of the worker with the job.
• Changes in schedules or procedures.
• Non-availability of proper tools, machines and equipment for doing the job.
• Unreasonably high production standards.
• Poor working conditions.
• Bad employer-employee relationship etc.

2. Grievances resulting from management policy.

• Wage payment or job rates.
• Leave
• Overtime
• Seniority and promotional
• Transfer
• Disciplinary action
• Lack of employee development plan
• Lack of role clarity

3. Grievance resulting from personal adjustment.

• Over-ambition
• Excessive-self-esteem or what we better known as ego
• Impractical attitude to life etc


Frustration alienation demotivation slackness

Low productivity increase in wastage and costs
Absenteeism indiscipline labor unrest


A grievance should be dealt with in the first instance at the lowest level, that is, an
employee should raise his grievance with his immediate superior. It may be simple to
settle it on the spot and that will be the end of it. Even if it can’t be settled at that level,
the man’s superior will know what is happening. This is necessary not only to maintain
his authority, but also to prevent him from being aggrieved, as he will certainly be, if he
is by-passed and hears of the complaint from his own superior.

It must be made clear to the employee what line of appeal is available. If he can’t get
satisfaction from his immediate superior, he should know the next higher authority to
which he can go.

Since delay causes frustration and tempers may raise and rumors spread around the work,
it is essential that grievances should be dealt with speedily. As it is said that a stitch in
time saves nine, similarly the problems of the employees should be taken care of by the
management least it should become a major for the management.

The grievance procedure should be set-up with the participation of the employees and it
should be applicable to all in the organization. The policies and rules regarding
grievances should be laid down after taking inputs from the employees and it should be
uniformly applicable to all in the organization.

It should be agreed that there would be no recourse to the official

machinery of conciliation unless the procedure has been carried out and there is still
dissatisfaction and moreover, there must be no direct action on either side, which might
prejudice the case or raise tempers while grievance is being investigated.


A grievance procedure should incorporate the following features:

1. Conformity with existing legislation:

The procedure should be designed in conformity

with the existing statutory provision where practicable; the procedure can make use of
such machinery as the law might have already provided for.

2. Acceptability:

Everybody must accept the grievance procedure.inorder to be generally

acceptable, it must ensure the following.

• A sense of fairplay and justice to the worker.

• Reasonable exercise of authority to the manager and

• Adequate participation of the union.

3. Simplicity:

The following points should be noted in this regard

• The steps should be as few as possible.

• Channels for handling grievances should be carefully developed.

• Employees must know the authorities to be contacted at various levels.

• Information about the procedure should be thoroughly disseminated among all

employees through pictures, charts, diagrams etc.

4. Promptness:

Speedy settlement of a grievance is the corner stone of a sound personnel

policy. The procedure should aim at a rapid disposal of the grievance. This can be
achieved by incorporating the following features in the procedure.

• As far as possible, grievance should be settled at the lowest level.

• No matter should ordinarily be taken up at more than two levels, i.e.normally

there should be only one appeal.

• Different types of grievances may be referred to appropriate authorities.

• Time limit should be placed at each step and it should be conveyed to the
concerned parties.

5. Training:

In order to ensure effective working of the grievance procedure, it is necessary that

Supervision and the union representatives should be conveyed to the concerned parties.

6. Follow-up:

The personal department should review the working of the grievance procedure
periodically and necessary changes should be introduced to make it more effective. This
is generally ignored by the organization. A regular follow-up of the system increase the
fail of the people in the system. Therefore it is necessary that the grievance procedure
should be reviewed whenever it is required.


 Complaint should be given patient hearing. Management should be empathetic.

 Superior should try to get at the root of the problem.

 Management must show anxiety to remove the grievances of workers.

 If grievances are real and their causes are located, attempts should be made to
remove the causes.

 If grievances are imaginary an unfounded attempts should be made to convince

the workers.

 Grievance must be handled in the reasonable time.



Refer to essentially the same kind of third party intervention in

promoting voluntary settlement of disputes.

Conciliation is limited to encouraging the parties to discuss their differences and to

help them develop their own proposed solutions.

Mediation, on the other hand, implies a stronger form of intervention and a

mediator may be permitted to offer to the parties’ proposals for settlement.


Mediation is a process by which a third party brings together the opposing

groups not only to iron out the differences between them but also to find an answer to
problems or specified proposals and offer alternative suggestions.

The mediator has been described as a confidential advisor and an industrial diplomat. he
performs a messengers service for the parties and neither imposes his will nor his
judgment up on them.

Mediation contemplates affirmative and positive action by a third party to bring

about a settlement of disputes. It encourages the employees and the union to come to a
decision without any force or orders from the mediation.

Kinds of mediators:

There are three kinds of mediation, according to prof.pigou, namely:

 The eminent outsider

 The non-governmental board and

 The board connected with some part of the governmental system of the country.

Essentials of a successful mediation:

Mediation can be a made more effective and successful device if the following
measures are adopted.

 Mediation can work only in a climate of consent.

 Mediator must be an impartial and unpresodiced person, having influence on the

parties, and must infuse confidence in them.

 Mediation should take place in a proper setting. It should be available not as a

substitute for bargaining by the parties but as a supplement thereto when such
bargaining reaches an Impasse. It should strengthen collective bargaining.


Conciliation is the most important method for the prevention and settlement of industrial
disputes through third party intervention.
Conciliation may be described as “the practice by which the services of a neutral third
party are used in a dispute as a means of helping the disputing parties to reduce the extent
of their differences and to arrive at an amicable settlement or agreed solution. It is a
process of rational and orderly discussion of differences between the parties to a dispute
under the guidance of a conciliator.

It is a process by which representatives of workers and employers are brought together

before a third person or a group of persons with a view to persuading them to arrive at an
agreement by mutual discussion between them.

Qualities of a conciliator:

A conciliator must have some qualities if he is to win the trust and confidence of the

1. Independence and impartiality are the two attributes which every conciliator should
possess. He should be independent enough not to be swayed or influenced by others. He

should be able to resist undue pressures or persuasion from powerful employers or

2. A conciliator should be physically and psychologically fit for the rigours of his task.
He must have a strong and deeply held conviction of importance and usefulness of

3. Because of the nature of his work, a conciliator must have the ability to get along well
with people. He must be honest, polite, tactful, self-confident even tempered and patient
in trying to achieve results.

4. A conciliator should have a friendly personality, sense of humor and have a gift for
relieving tensions at joint discussion.

5. He must have the ability and versatility to form judgements.he should therefore acquire
knowledge from personal experience and observation, besides getting knowledge of
social sciences, psychology, social institutions, group behavior and cultural changes.

6. A conciliator should be well acquainted with the law and regulations concerning
industrial relations and the settlement of industrial disputes.

7. He should be well trained in different aspects of the management process. He should

have some knowledge of products or services, the production methods, practices etc.

Conciliation procedure and practices in India

Conciliation procedure in India comprises of conciliation machinery which consists of

conciliation officers and boards of conciliation.

Conciliation officer

According to the industrial disputes act 1947 the central and state
governments can appoint conciliation officer by a notification in the official gazette to
that effect.
The number of conciliation officers to be appointed is determined by
miscellaneous legislation of the appropriate government, taking into account the volume
of work and the number of industrial disputes that actually exist or may arise. his main
task is to go from one camp to another and find out the greatest common measure of

Conciliation proceedings
• Relating to public utility service

The conciliation officer has a special obligation where the dispute relates to a public
utility service. If an industrial dispute exists or is apprehended in such services the
conciliation officer must hold conciliation proceedings in the prescribed manner.

• In case of other industries, his power is discretionary i.e.; he may or may not
hold such proceedings. The act requires that ‘he may do all such things as he
thinks fit for the purpose of inducing the parties to come to a fair and amicable
settlement of disputes.

• The conciliation officer has wide process of investigation into an industrial

dispute, and all matters affecting the merits and right settlement thereof.

• If a settlement is arrived at in the course of conciliation proceedings, the

conciliation officer must send a report, together with a memorandum of
settlement signed by the parties to the dispute, to the appropriate government.

• A settlement brought about by the conciliation officer is an administrative act

and not a quasi-judicial act.

• If no settlement is reached, the conciliation officer is required to send

immediately a full report to the appropriate government settling forth the steps
taken by him and the probable reasons for failure.

• He must submit the report of the settlement or non-settlement of the dispute

within 14 days of the commencement of the conciliation proceedings, or
within such shorter period as may be fixed by the appropriate government.

• The conciliation officer can only send a report but has no authority to pass a
final order.

• A conciliation proceeding is not concluded and is deemed to be pending until

any of the following condition is fulfilled.

 Where a settlement is arrived at; a memorandum of the settlement is

signed by the parties to the dispute;

 Where no settlement is arrived at, the report of the conciliation officer

is received by the appropriate government.

 A reference is made to the court of enquiry, labour court, tribunal or

national tribunal during the pendency of the conciliation proceedings.

The time for the submission of the report may be extended by an agreement in
writing of all the partner to the dispute, subject to the approval of the conciliation

Board of conciliation

It is constituted as an adhoc body by an appropriate government. Its

purpose is “to mediate and to induce the parties to come to a fair and amicable settlement.

The board may be constituted by the appropriate government by a notification

to that effect in the official gazette. it consists of a chairman who shall be an ‘independent
person’ i.e;unconnected with the dispute or with any industry directly affected by such
dispute and two or four members, as the government thinks fit, who shall be appointed to
represent the parties.

If any party fails to recommend any name within the prescribed time, the
appropriate government shall appoint such persons as it thinks fit to represent that party.

Conciliation proceedings

The government concerned refers a dispute to a board with a view to promoting

settlement when any industrial dispute exists or is apprehended.

The board has the power of a civil court regarding the following matters:

1. It can enforce the attendance of any person and examine him on oath.

2. It can compel a party to produce relevant document and material objects.

3. It can issue a commission for the examination of witnesses.

Certain statutory restrictions have been placed on strikes in all industrial establishments
during the pendency of any conciliation proceedings before a conciliation officer or a
conciliation board and for 7 days after the conclusion of such proceedings.

Evaluation of the working of conciliation machinery:

A great many disputes for which bipartite solutions are not feasible, are referred for
conciliation and the conciliation offers succeed in bringing about a settlement in over 80
percent of the cases.

While evaluating the working of the conciliation machinery in India, the ncl
observes that the working of the machinery involves delay. Conciliation is not given any
importance by the parties, as both workers and management have no faith in its effective
To make conciliation more effective, the ncl recommended the conciliation
machinery to be made part of the industrial relations commission. This will serve the
purpose of making the conciliation free from external influence.

Measures of conflict resolution

Non-statutory Statutory
measure measures

Tripartite ID act State

Code of Workers Collectiv
machinery acts
discipline participation bargainin
in mngt g scheme
n machinery

Works Voluntary
Conciliation Adjudic
committee arbitration ation

Concili Nature
Conciliati Labour Industrial
ation tribunal
on board courts tribunals
officers s

Measures of conflict resolution

Effort to Union
remove manageme
sources of nt
conflict cooperation

Social groups
Social control
legislation labour

Grievanc Wage management

administratio Work
n &proper methods,
production working
standards conditions society

Industrial dispute handling

Preventive Settlement
measures measures

Welfare officer

Tripartite n officer
Board of
Works conciliation
Court of
Standing orders

Grievance arbitration


Code of conduct tribunal



Arbitration is one of the means of securing an award on a conflict issue by reference to a

third party.

“It is a process in which a dispute is submitted to an impartial outsider who makes

a decision which is usually binding on both the parties.”

The parties can select any person or persons as arbitrators including the presiding officer
of a labour court, tribunal or national tribunal.

Arbitration and conciliation

o Arbitration is to be distinguished from conciliation not only by the fact that its
decision is binding on the parties but also by its different approach and spirit.

o The arbitrator enforces his own point of view on the contending parties and the
opinion of the disputants is given any predominance.

o Arbitration is more judicial in character than conciliation.

Arbitration and mediation

 Arbitration is a judicial process, while mediation has a legislative tinge.

 Award of arbitrator rests on equity and justice i.e; there is no scope for
compromise is the essence of mediation.

 Arbitration award is binding while that of mediator is not.

 Arbitration often leads to termination of dispute but mediation may or may not
bring about this termination.

 Arbitration is best suited for the settlement of contractual rights where as

mediation is suited to the adjustment of disputes over interests.

Types of arbitration


1. Voluntary
2. Compulsory

1. Voluntary arbitration implies that the two contending partners, unable to compose
their differences by themselves or with the help of the mediator or conciliator
agree to submit the conflict/dispute to an impartial authority, whose decision they
are ready to accept.

 Under voluntary arbitration, the parties to the dispute can and do themselves refer
voluntarily any dispute to arbitration before it is referred to adjudication.

 This is known as “voluntary reference “for the parties themselves volunteer to

come to a settlement through arbitration machinery.

Essential elements of voluntary arbitration:

 Voluntary submission of dispute to an arbitrator.

 Subsequent attendance of witnesses and investigations.

 Acceptance of arbitration implies the acceptance of its award-be it favorable or


 Voluntary arbitration specially needed for disputes arising under agreements.

Compulsory arbitration

Compulsory arbitration is one where the parties are required to accept arbitration without
any willingness on their part.

When one of the parties to an industrial dispute feels aggrieved by an act of the
other, it may apply to the appropriate government to refer the dispute to adjudication
machinery. Such reference of a dispute is known as ‘compulsory’ or ‘voluntary’
reference, because reference in such circumstances does not depend on the sweet will of
both the contending parties and any party t the dispute.

Under compulsory arbitration, the parties are forced to arbitration by the state when:

1. The parties fail to arrive at a settlement by a voluntary method.

2. When there is a national emergency which requires production continuation.

3. The country is passing through economic crisis.

4. There is a grave public dissatisfaction with the existing industrial relations.

5. Industries of strategic importance are involved.

6. Parties are ill balanced i.e. where unions are weak, ill-organised and powerless.

7. Public interest and the working conditions have to be safeguarded and regulated by the

Compulsory arbitration leaves no scope for strikes and lockouts; it deprives both the
parties of their way very important and fundamental rights.

Qualifications of arbitrators

Arbitrator should have following qualifications.

1. An understanding of the complexities of the labour-management relationship.

2. A knowledge of collective bargaining and the operation of arbitration procedures.

3. They must be committed to the maintenance of harmonious labor-management


4. They must be acceptable to the parties.

Procedure for investigation:

 After the dispute has been referred to the arbitrator, he will hear both the parties.

 Fair hearing, which demands that an opportunity should be given to both the
parties to be heard and cross-examined.

 Principle of natural justice requires that a party should have due notice of
proceedings, and it must know what are the issues involved and what part it has to

 Arbitrator should not rely on any document which is not shown and explained to
the other party and to which a reply has not been received.

Submission of award

Arbitrator after investigating the dispute has to submit his award to the government.
While writing his award, the arbitrator has to ensure that;

1. The award is in line with the term of reference and that it does not go beyond its

2. It must be precise and definite, that its, must be clear, unambiguous and without any
vagueness, and that it is not in any way capable of being misunderstood or

3. It should be capable of being enforced or implemented.

4. The award should contain a date or specific period for its implementation.

5. The award should not violate any provision of any existing law or settlement legally
arrived at.

6. The award should contain sufficient justification or reasons for the settlement arrived
at by the arbitrator.


The ultimate legal remedy for the settlement of an unresolved dispute is its reference to
adjudication by the government.
“It is a process of dispute settlement where in the government submits the case to a
competent authority and enforces its award on the parties.”
The procedure of adjudication involves compulsory attendance of witnesses, compulsory,
powers of investigation, enforcement of awards with penalties for breaches of these
The id act-1947 provides three-tier system of adjudication.
The act provides the machinery of adjudication, namely the 1.labour courts
2. Industrial tribunals
3. National tribunals
Under the provisions of the 1947 act, either the state government or central government
can constitute labour courts and tribunals.

Arbitration Adjudication
1. It is voluntary method of resolving id. It 1. It is compulsory and is the ultimate
is resorted before the dispute is referred to remedy for resolving industrial disputes
A labour court, industrial tribunal or provided by the id cat 1947.
national tribunal.
2. The appropriate government can issue 2. No such provision when a dispute is
notification to the parties who are not referred to labour courts/industrial
bound by the arbitration agreement but are tribunals/national tribunals.
concerned in the dispute to present their
case before arbitrator.

3. The power to refer an id to an arbitrator 3. The power to adjudicate up on disputes

is derived from the written agreement made is statutory in the sense that it is derived
by the employees and workmen together from provisions of id act 1947.
and these parties agree to be referred to
arbitration in case or dispute.

4. arbitrator/s is specified in the written 4. The presiding officer of these

agreement. The number may be one or adjudicatory bodies is appointed by the
more than one. government.

5. No such provision for arbitration. 5. Labour courts/industrial

tribunals/national tribunals can appoint one
or two assessors.

6. All the three bodies shall be deemed to

be civil courts by the act.

1. It is voluntary method of resolving id. 1. It is compulsory and is the

remedy for resolving industrial disputes provided by the id cat 1947.
It is resorted before the dispute is referred to
A labour court, industrial tribunal or national tribunal.
Labour courts:

One or more labour courts may be constituted by the appropriate

government for adjudicating on industrial disputes relating to any matter specified in the


A labour court shall consist of one person only, who:

A.)Is or has been judge of a highcourt; or

B.)Has been, for a period of not less than 3 yrs a district judge or

C.)Held any judicial office in India for not less than 7yrs.

D.)No person should be allowed to continue in the office of the labour court if he is not
an independent person or has attained age of 65 yrs.

The duties of labour court are:

o To hold adjudication proceedings expeditiously.

o Submit its award to the appropriate government as soon as practicable on the

conclusion of the proceedings.


The jurisdiction of labour courts extends to the adjudication of following disputes

relating to matters specified in the second schedule:

o The proprietory or legality of an order passed by an employer.

o The application or an interpretation of standing orders.

o Discharge or dismissal of workers, including reinstatement of, or grant relief

to, workers wrongfully dismissed.

o With drawl of any customary concession/privilege.

o Illegality or otherwise of a strike or lockout.

o All matters other than those specified in the 3 schedule of Act.

Industrial Tribunals

The appropriate government may appoint one or more industrial tribunals for the
adjudication of industrial disputes relating to any matter whether specified in the
second or the third schedule. The industrial tribunal may be appointed for a
limited on an adhoc basis or permanently.


A tribunal shall consist of one or more persons such as

A.)Are or have been judge of a high court.

B.)Are or have been district judge for a period of not less than 3 yrs.

C.)Hold or have held the office of the chairman or any other member of the labour
appellate tribunal or any tribunal for a period of not less than 2 yrs.


The matters specified in the third schedule are:

1. Wages, including the period and mode of payment.

2. Compensatory and other allowances.

3. hours of work and rest intervals.

4. Leave with wages and holidays.

5. Bonus, profit sharing, provident fund and gratuity.

6. Shift working, otherwise than in accordance with standing orders.

7. Classification of grades.

8. Rules of discipline.

9. Rationalization.

10. Retrenchment of workers and closure of an establishment.

11. Any other matter that may be prescribed.

National Tribunals:

The central government, may by a notification in the official gazette, constitute

one or more national tribunals which, in the opinion of the central government,
involve questions of national importance or are of such nature that industrial
establishments situated in more than one state are likely to be interested in, or
affected by such disputes.


A national tribunal shall consist of one person only to be
appointed by the central government, who:

A.)Is or has been judge of a high court; or

B.)Has held the office of the chairman or any other member of the labour
appellate tribunal for a period of not less than 2 yrs.

Code of discipline:


Inspite of the fact that a large number of labour laws have been enacted
and the Indian labour scene is crowded with various complex judicial formalities
and legalities and the court has played a key role in rendering justice in industrial
relations, the industrial relations scene has not been peaceful.

The labor-management relations have been shattered and the expected

workers involvement has not been adequately achieved. The need for some
measures other than legislative was, therefore, felt both by management and the

Principles of the code:

The fifteenth labour conference held in July 1957discussed the question of

discipline in industry and laid down the following general principles:

• There should be no strike or lockout without notice.

• No unilateral action should be taken in connection with any industrial


• There should be no recourse to go-slows tactics.

• No deliberate damage should be caused to plant or property.

• Acts of violence, intimidation, coercion or mitigation should not be

resorted to.

• The existing machinery for the settlement of disputes should be utilized.

• Awards and agreements should be speedily implemented.

• Any agreement which disturbs cordial industrial relations should be

These principles were later considered by a sub-committee and after

certain modifications there in, the code of discipline evolved. it came into force
from june1, was accepted by the four central national labour organization
on behalf of the workers and the employers federation of India, the all India
organization of industrial employers and the all-India manufacturers organization
on behalf of employers.

Chief features of the code:

The code defines the duties and responsibilities of

employers, workers and even of the government.

• The code of discipline is a government induced self-imposed and mutually

agreed and voluntary principle of discipline and relations between
management and workers in industry.

• It aims at preventing disputes by providing for voluntary and mutual

settlement of disputes through negotiation, conciliation, voluntary
arbitration without the interference of any outside agency or through

• Both central and state government should rectify any shortcomings in the
machinery they constitute for the administration of labour laws.

• The code restrains parties from unilateral action, but it involves them to
make the best use of the existing machinery for the settlement of disputes
with the at most expedition.

• It enjoins upon the management to take prompt action for the settlement of
grievances and implementation of awards and agreements.

• Any action that stands in the way of cordial relations and is against the
spirit of the code on the part of both management and trade unions should
be avoided.

• It requires that constructure cooperation should be encouraged between

workers and management at all levels. There should be no recourse to
violence, demonatrations, intimidation, victimization, coercion, and
discrimination, interference with union activities or normal work either by
workers or by management.

Neither party should adopt such unfair labour practices as go-slows, stay-
in-strike, or sit-down strike tactics and litigation.

Objectives of the code of discipline:

The objectives as stated in the code are:

1. To ensure that employers and employees recognize each others rights and

2. To promote constructure co-operation between the parties concerned at all

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

4. To eliminate all forms of coercion, intimidation and violence in industrial


5. To avoid work stoppages.

6. To facilitate the free growth of trade unions and

7. To maintain discipline in industry.

The code is a comprehensive formulation providing for almost all the

function of an industrial relations system, as would be clear from the actual
wordings in code specified.

Industrial dispute

Disputes and conflicts waste valuable time, effort and money of the society. It is
of paramount importance that there should not be any conflict in the society.
Conflict is one of the central principles of organizational life. It is an expression
of disagreement.

Conflict occurs at various levels-within a person, between members of a

group and between groups. Whenever there are differences between the goals of
separate groups or even several individuals in a group conflict occurs.

At the organizational level, industrial conflict can occur due to the


1. within the work organization-between union leaders and managers.

2. within the union organization-between union leaders and workers.

3. between the work organization and union organization represented by
management and union leaders.

The ultimate manifestation of industrial conflict is a strike on the part of

the workers and lockout on the part of managers/employers.

Categories of disputes:

Industrial disputes- 1.interest disputes

2. Rights disputes
o Interest disputes relate to the establishment or modification of the existing terms
and conditions of employment, which includes rights and obligations of the
contracting parties, i.e; the worker and employer.

o Rights dispute relate to the application or interpretation of existing clauses in an

employment contract, collective bargaining agreement and so on.

Most of the rights disputes relate to termination of workers service by the


Causes of industrial disputes:

Numerous causes lead to industrial dispute falling into
the following broad categories:

Economic causes:
 Wages and allowances
 Bonus
 Conditions of work and employment
 Working hours
 Discharge, dismissal or retrenchment
 Leave, holiday with pay
 Work load
 Incentive, fringe benefits
 Delayed implementation of agreements, awards etc.

Non-economic causes:
 Causes unconnected with industry
 Fear of loss of job due to rationalization, in production of
new technology.
 Non-recognition of trade unions.
 Administrative causes
 Ego clashes

 Unsettled grievances

Political causes:
 Sympathetic strikes
 Bandhs for political reasons

Social causes:
 Low morale
 Deterioration of social values and norms

Psychological causes:
• Maladjustment
• Personality clashes
• Non-programmed intervention on disciplinary matters

Technological causes:
• Adoption of new technology/automation
• Computerization
• Rationalization

Market situation:
 Accumulation of goods
 Unhealthy competition
 Import of goods

Consequences of industrial disputes:

Many firms struggle to overcome disputes, and the costs of not doing so are surprisingly

The consequences of industrial disputes on selected set of people include:

Employer: immediate loss to employer is production. It results in idle capacity, loss of

profits, delaying of orders, delay in delivery schedules and goodwill. The market position
of goods gets affected.

Employees: employees suffer on all fronts payloss, mental agony, and bitterness in
society and so on.

Consumers: consumers get affected by the scarcity of goods and price like. After the
strike the burden of the cost is naturally passed on to the consumer by price rise.

Modes of pressure on management during industrial disputes or industrial actions:

 Go-slows: work is carried out a slower speed than normal.

 Overtime Bann: workers refuse to work overtime.

 Sit-ins: workers non-violently occupy buildings to publicize their protest.

 Picketing: workers standout side the firm/industry to protest.

 Work to rule: employees follow their job description.

 Strikes employees withdraw their labour.


employer workmen


Fails to get
Mutually settled



Failure to report to
appropriate govt

Does not refer Refer for

for adjudication adjudication

Labour Industrial Natural

courts tribunal tribunal

Award(binding for
atleast one year)

Social security:

In the post-independence period, provision of social security the working population has
been one of the Indian government.

Prior to independence, there was only one enactment in the area of social security,
namely, the workmen compensation act, 1923.after independence; several schemes for
the benefit of working population have been launched.


Weber and Cohen state that

“social security is a controversial and dynamic subject with various
statistical actuarial, medical and legal.”

Friedlander defines social security as “a programme of protection provided by

society against the contingencies of modern life sickness, unemployment, old age,
dependency, industrial accidents and invalidism against which the individual can’t be
expected to protect him and his family by his own ability or foresight.”

“The security that society furnishes through appropriate organization, against certain
risks to which its members are exposed.”

Need of social security:

1. Social security protects not just the subscribers but also his/her entire family by giving
benefit packages in financial security and health care.

2. Social security schemes are designed to guarantee at least long-term sustenance to

families when the earning member retires, dies or suffers a disability.

3. It acts as a facilitator-it helps people to plan their own future through insurance and

4. The success of social security schemes requires the active support and involvement of
employees and employers.

Major elements of social securities:

There are two major elements of social security ;

• Social assistance
• Social insurance

1. Social assistance:

A social assistance deal with the provision for the care of is closely associated
social work services in many countries.

The practice of zakat, which was instituted in Islamic societies in the

seventh century A.D in Europe, witnessed the development of social assistance.

Definitions of social assistance:

The international labour officer defines social assistance as “a service or

scheme which provides benefits to persons of small means as of right in amounts
sufficient to meet minimum standards of need and finances from taxation.”

The free dictionary by Farlex defines, social assistance as “benefits paid to

bring incomes up to minimum levels established by law.”


 S.A schemes are designed to help people who are in financial difficulties.

 The assessment of the claimant’s financial status is known as the “means test”.

 S.A represents the unilateral obligation of the community towards its dependent

 It is provided by the society or the government to the poor and needy individuals.

 S.A schemes are funded from general revenues rather than from individual
contribution, with statutory scales of benefit adjusted according to person’s

 The whole cost of the programme is met by the state and local units of

 Benefits are paid of legal right prescribed categories of need.

 In assessing need, persons other income sources are taken into account and certain
resources such as reasonable level of personal savings are disregarded.

 The benefit grant is designed to bring persons total income up to a community
determined maximum, taking into account other factors such as family size and
unavoidable fixed Obligations such as rent.

 Grants are not related to the applicant’s earnings or customary standards of living.

Social insurance:

Social security primarily refers to a social insurance programme providing social

protection, or protection against socially recognized conditions, including poverty, old
age, disability, unemployment and others. Hence social insurance is part and parcel of the
social security.

Beveridge defined social insurance as the “giving in return for contribution,
benefits up to subsistence level, as of right and without means tests, so that an individual
may build freely upon it.”

The free dictionary by farlex defines social insurance as “government provision for
unemployed, injured or aged people, financed by contributions from employers and
employees as well as by government revenue.”

Principles of social insurance:

1. Social insurance is financed by contributions which are normally shared between

employers and workers; with perhaps, state participation in the form of a supplementary
contribution or other subsidity from general revenue.

2. Participation is compulsory with few exceptions.

3. Contributions are accumulated in special funds out of which benefits are paid.

4. Surplus funds not needed to pay current benefits are invested to earn further income.

5. A person’s right to benefit is secured by his contribution record without any test of
need or means.

6. The contribution and benefit rates are often related to what the person is or has been

Social insurance schemes:

The two most important social insurance schemes at present in our country

1. The employees state insurance scheme.

2. The employee’s provident fund and miscellaneous provisions scheme.

Essential elements of social insurance:

The following are the essential elements of social insurance.

1. Compulsory participation:
Most people participating in social insurance programmes do
so as a result of a legal requirement.

2. Government sponsorship: governments create and supervise social insurance

programmes, but do not necessarily manage them.

3. Contributory finance: mostly, the resources needed to run the programme are raised
through explicit contributions collected from the employer, or from both the employer
and the employee. A workers contribution is usually a fixed percentage of his/her wage
or income.

4. Eligibility derived from contributions:

Eligibility for benefits under social insurance programmes rests, in part on
current or previous contributions by the individual or the individual’s employer.

5. Benefits prescribed in law:

Uniform sets of entitling events and schedules of benefits are developed, announced and
applied to all participants, administrators of the programme.

6. Benefits not directly related to contributions: social insurance programmes usually

redistribute towards lower-wage workers. The lower-wage workers, however, tends to get
back proportionately more than the higher-wage worker.

Social security schemes of the employees state insurance :( ESI)

The ESI provides certain benefits to employees incase of sickness, maternity and
employment injury, and to make provisions for certain other matters in relation there to.

The ESI Act, 1948 sec 46 envisages following six social security benefits:

1. Medical benefit.
2. Sickness benefit.
3. Maternity benefit.
4. Disablement benefit.

5. Dependents benefit.
6. Funeral expenses.

1. Medical benefit:

The scheme provides full range of medical care to insured person and his family,
through a network of ESI dispensaries and panel clinics, diagnostic centers and esi
hospitals etc.the package covers all aspects of health care from primary to super-
speciality facilities for the families, this benefit has been divided into the following

Full medical care:

This consists of hospitalization facilities and includes specialist

services, drugs, dressings and diets as required for inpatients.

Expanded medical care:

This consists of consultation with the specialists and supply of

special medicines and drugs as may be prescribed by them in addition to the outpatient
care. This also includes facilities for special laboratory tests and x-ray examination.

Immunization: the corporation has embarked upon a massive programme of

immunization of young children of insured persons under this programme, preventive
inoculation and vaccines are given against diseases like polio, tetanus, measles,
tuberculosis etc.

Family welfare services:

The ESI Corporation has been undertaking provision for family welfare services to the
beneficiaries of the scheme.

Supply of special aids: insured persons and members of their families are provided
artificial limbs, hearing aids, wheel chairs as a part of medical care under the scheme.

2. Sickness benefit and extended sickness benefit:

Sickness benefit: it represents periodical cash payments made to an insured person during
the period of certified sickness occurring in a benefit period when insured person requires
medical treatment and attendance with abstention from work on medical grounds.

Extended sickness benefit :( ESB)

Insured persons suffering from long-term diseases experience great hardship even after
the expiry of 91 days sickness benefit. An insured person suffering from certain long-

term diseases is entitled to ESB, only after exhausting sickness benefit to which he may
be eligible.
3. Maternity benefit:

Maternity benefit consists of periodical cash payments incase of

confinement or miscarriage or sickness arising out of pregnancy, premature birth of child
or miscarriage, to an insured woman as certified by a duly appointed medical officer.

o Confinement: payable for a period of 12 weeks on production of form 21 and 23.

o Miscarriage or medical termination of pregnancy: payable for a period not

exceeding one month on the basis of form 20 and 23.

o Sickness arising out of pregnancy, confinement, premature birth: payable for a

period not exceeding one month on the basis of forms 8,9 and10.

o Maternity benefit rate is double the standard benefit rate or roughly equal to the
average daily wage.

Disablement benefit:

Disablement benefit is admissible for disablement caused by employment

Injury. At the first instance, temporary disablement benefit is payable as long as
temporary disability lasts.

If employment injury results in partial or total disability, permanent

disablement benefit is payable till the death of the insured person.

Dependents benefit:

It consists of periodic payments to dependents of an insured person who dies as s result of

an employment injury sustained as an employee under the ESI act.

There are no contributing condition qualifying to this benefit.thus, if a person dies of

employment injury even on the first day of his employment, his dependents are entitled
the benefit.

Funeral expenses:

Funeral expenses are in the nature of a lump sum payment up to a maximum of Rs.2500
made to defray the expenditure on the funeral of deceased insured person.

The amount is payable to the eldest surviving member of the family, or in his
absence to the person who actually incurs the expenditure on the funeral.

Wage and salary administration:

There are so many motivators to a person at workplace. Among all motivation

techniques, “money” remains to be the most important motivator.

The wages and incentives paid on a rational basis are essential to achieve the goals of
higher productivity, through proper utilization of human resources

“wages means all remuneration (whether by way of salary,allowance,or

otherwise)expressed in terms of money, capable of being so expressed which should ,if
the term of employment express or implied were fulfilled, be payable to a person
employed in respect of his employment and includes;

o Any remuneration payable under any award or settlement between the parties or
order of a court.

o Any additional remuneration payable under the terms of employment such as

bonus and any sum which by reason of termination of employment of person
employed is payable under law or contract of service.”

Wage policy:

The term wage policy refers to the legislation or government action undertaken to
regulate the level or structure of wages or both for the purpose of achieving specific
objectives of social and economic policy.

According to ILO, wage policy means “legislation or government

action calculated to affect the level or structure of wages, or both for the purpose of
attaining specific objectives of social and economic policy.”

Objectives of wage policy:

1. Provision of minimum wages in sweated industries:

In a country like India, where laborers are exploited in sweated

industries, the basic objective of wage policy is to produce for “safety net” wages to
prevent their exploitation, the wage policy should, and therefore aim at a minimum
wage in sweated occupations as well as floor for entry to industrial employment.

2. Fixation of wage ceilings:

The ceilings on wages need to be fixed to save employees from the pinch of
inflationary tendencies that flow from uncontrolled price rise. The workers should get
a just share in the fruits of economic development and increased productivity.

3. Control over inflationary tendencies:
The controlling of inflationary pressures should be an essential element of wage
policy, for increasing prices workers real income, lower their standard of living and
ultimately cause industrial unrest. A wage policy should aim at stabilizing prices by
tying wage increases to productivity.

4. Acceleration of export promotion:

For the import of essential capital goods, technical know-how, trained

manpower of raw materials, foreign exchange has to be earned by promoting exports.

5. Improvement in existing wage structure:

A desirable or rational wage structure facilitates the acquisition of

productive skills, serves as an incentive to higher productivity. The wage and income
also encourages the allocation of labour to the expanding sectors of the economy in
which labour is in great demand.



Salary is the remuneration paid to the clerical and managerial personnel employed on
monthly/annual basis.

According to random house dictionary,

“salary is defined as a fixed compensation periodically paid to a person for
regular work or services especially work other than that of a manual, mechanical or
Mental kind.”

Wage salary
Compensation to the employees where measurement of quantum of
For services rendered to the service is Difficult them consolidated
Organization Payment given is salary

General reference is payment To labour. To clerical and managerial Staff.

There are several methods of wage salaries are paid uniformly generally on
payment Based on hours, no of units etc. monthly basis.

An incentive in general does not exist to Incentives are paid to salaried Employees
workers. along with salaries

Since 1948 several terms have acquired currency referring to wage levels, viz;

 Statutory minimum wages

 Basic or basic minimum wage
 The minimum wage
 The fair wage
 The living wage
 The need based minimum wage