Class notes- Industrial Relations and Labour Laws

Lecture- 9
Prevention of Industrial Disputes and
Workers’ participation in Management
In the production process there are various points where a conflict of interest between
labour and management arises. The conflict later develops into a dispute and the production process
itself gets disturbed. The causes of strikes in India are partly psychological, partly political but
predominantly economic, low wages or wage cuts, irrespective of rising prices, intolerable
conditions of work etc., have provoked several strikes in this country. Besides undeserved
punishments, mass discharges assaults, abuses and misbehaviours have also led to several strikes.
Other important causes of strikes are the absence of adequate machinery for collective bargaining,
the absence of close contact and understanding between employers and workers and in some cases,
the utter disregard of the human factor by employees.

The consequences of an Industrial dispute will be harmful to the owners of industries,

workers, economy, and the nation, which results in loss of productivity, profits, market share and
even closure of the plant. Hence, Industrial disputes need to be averted. 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.

Workers’ participation in Management

Workers’ participation in Management in India was given importance only after
Independence. 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.
 B. National and
A. At the Undertaking/ Industry level
C. State Level
1. Works Committee
Labour Advisory
2. Joint management Board
committee (JMC)
Indian Labour
3. Joint Councils Conference

4. Shop councils Standing Labour

Committee
5. Labour welfare officer

6. Work directors

7. Co-partnership

D. Model Standing Orders

E. Code of Industrial discipline

F. Collective Bargaining

A. At the Undertaking/ Industry level

1. Works Committee
Section 3 (I) (ii) of the Industrial Disputes Act, 1947 provides for the setting up of the Works
Committees consisting of equal representatives of management and employees in every undertaking
employing 100 or more workers, to “promote measures for securing and preserving amity and good
relations between the employers and the workmen and to that end, to comment upon matters of
their interests or concern and endeavour to compose any material differences of opinion in respect
of such matters.”

The main topics discussed in the meetings of Works Committees are generally -

1. Conditions of work, such as ventilation, lighting, temperature and sanitation, including

latrines and urinals.
2. Amenities such as drinking water, canteens, dining rooms, creches, rest-rooms, medical and
health services.
3. Safety and accident prevention, prevention of occupational diseases and protective
equipment.
4. Adjustment of festival and national holidays.
5. Administration of welfare and fine funds.
 6. Educational and Recreational facilities, such as libraries, reading rooms, cinema shows,
sports and games, picnic parties, community welfare and celebrations.
7. Promotion of thrift and savings.
8. Implementation and review of decisions arrived at meeting of Works Committees.

2. Joint management committee (JMC)

Second in the line of joint consultation is the joint management committees. The origin of
joint management committee is from the Industrial Policy Resolution (April 1956), which stated that
“In a socialist democracy, labour is a partner in the common task of development and should
participate in it with enthusiasm”. It consists of equal numbers of workers and employers (minimum
6 & maximum 12) decisions of the JMC should be unanimous and should be implemented without
any delay. JMC members should be given proper training. Representation of workers to the JMCs
should be based on the nomination by the representation.

The Joint Management Committees endeavour to -

1. Improve the working and living conditions of the employees,

2. Improve productivity,

3. Encourage suggestions from employees,

4. Assist in administration of laws and agreements,

5. To serve employees as an authentic channel of communication between the management and the

employees and

6. Create a live sense of participation in the employees.

3. 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 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 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 based on voting.

Functions

• Optimum use of raw materials and quality of finished products

• Optimum production, efficiency, and function of productivity norms of man and machine.
• Preparation of schedules of working hours and of holidays.
• Adequate facilitates for training.
• Rewards for valuable and creative suggestions received from workers.
4. Shop councils
Government of India on the 30th of October 1975 announced a new scheme in Workers’
participation in management. In every Industrial 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 both employer and
employees.
• The employers’ representatives will be nominated by the management and must consist of
persons within the 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:

• Assist management in achieving monthly production targets.

• Improve production and efficiency, including elimination of wastage of man power.
• Study absenteeism in the shop or department and recommend steps to reduce it.
• Suggest health, safety and welfare measures to be adopted for smooth functioning of staff.
• Look after physical conditions of working such as lighting, ventilation, noise and dust.
• Ensure proper flow of adequate two way communication between management and
workers.

5. 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 the health, safety, and welfare of workers. He maintains liaison with both the
employer and the workers, thereby serving as a communication link and contributing towards
healthy industrial relations through proper administration of standing orders, grievance
procedure etc.

Other similar bodies

(i) Unit council
Encouraged by the success of the Joint Councils scheme in manufacturing and mining units, a new
scheme of workers’ participation in management in commercial and service organisations in the
public sector, having large-scale public dealings, was announced on 5th January 1977. The scheme
envisaged the setting-up of unit councils in units employing at least 100 persons.

(ii) Plant Council

The plant council is formed in pursuance of the recommendations of the second meeting of the
Group on Labour at New Delhi on 23rd September 1985. The scheme is applicable to all Central
public sector undertakings, except those which are given specific exemption from the operation of
the scheme by the government.
 (iii) Production committee
It is a bi-partite body which has been established in accordance with Industrial Truce Resolution of
1962. This committee helps in boosting up production by suggesting better methods and assessing
fair workload for the workers.

(iv) Canteen Committee

This committee helps in management of canteen amenities such as drinking water, dining rooms etc.

(v) 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 and any worker can write his suggestions and drop them in the box.
Periodically all the suggestions are scrutinized by the suggestion committee or suggestion 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
are accepted for implementation and suitable awards are given to the concerned workers.
Suggestion schemes encourage workers’ interest in the functioning of an enterprise.

Of late, a number of prosperous companies having global businesses have also adopted certain
new forms of participative management such as Quality Circles and Total Quality Management

(vi) Quality Circle (QC)

A Quality Circle (QC) consists of 7 to 10 people drawn from the same work area, who meet regularly
to define, analyse and solve quality and related problems in their area. Membership is voluntary and
meetings are held once a week for an hour. During the meetings, members are trained in problem-
solving. This concept originated from Japan. In India, the experience of quality circle is a mixed one.

(vii) Total Quality Management (TQM)

TQM denotes deep commitment of an organization to quality. The quality of product/service is
the sole focus of an organization. It intends to infuse quality in each and every process of production
and delivery of service to the end consumer. Conventional belief that quality is the preserve of
quality control department, quality can be improved through inspection, quality costs high and
defects cannot be eliminated totally, have been thrown overboard.

6. Work directors
On the recommendations of the Administrative Reforms Commission made in its report on
public sector undertakings, the Government of India accepted, in principle that representatives of
workers should be taken on the Board of Directors of public sector enterprises.

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, congenial employee-employer relations and safeguard the
workers’ interests. The Government of India introduced this scheme in several public sector
enterprises, however the scheme of appointment of such a director from among the employees
failed miserably and the scheme was subsequently dropped.
7. 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, 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.

Employee Stock Option Plan (ESOP) is an employee benefit scheme under which the company
encourages its employees to acquire ownership in the form of shares. These shares are allotted to
the employees at a rate considerably lesser than the prevailing market rate. Apart from the
employee-benefit motive, ESOPs are also meant to align the interests of the employees with that of
the shareholders. It is believed that the employees, who are also the shareholders, will focus better
on company performance and growth so that the value of their shares appreciates.

B. At State Level
Labour Advisory Board
At the State level, the labour advisory board provides a forum for the representative of
government, employers, and employees to discuss problems to maintain and promote harmonious
industrial relations and to increase production. They advise the State on all matters relating to
labour, particularly in the fields of industrial relations and labour welfare.

C. At National Level
Indian Labour Conference and Standing Labour Committee
These two bodies also become a part of the State preventive machinery because these
issues sometime placed before the Indian Labour Conference and the Standing Labour Committee
for advise. The ILC and SLC are tripartite in character consisting of representatives of the Central and
State Governments, employers, and workers. These two bodies have exercised a significant
influence on the evolution of the government’s policy and the cause of industrial relations.

The Indian Labour Conference (ILC) is the apex level tripartite consultative committee in the
Ministry of Labour & Employment to advise the Government on the issues concerning working class
of the country. All the 12 Central Trade Union Organisations, Central Organisations of employers, all
State Governments and Union Territories and Central Ministries/Departments concerned with the
agenda items, are the members of the ILC.

The first meeting of the Indian Labour Conference (then called Tripartite National Labour
Conference) was held in 1942 and so far a total of 47 Sessions have been held. The 47th Session of
Indian Labour Conference held on 26th & 27th Feb 2018.

The Standing Labour Committee (SLC), a tripartite body is a pre-cursor to the Indian Labour
Conference. The 48th Session of SLC was held on 11th May, 2017 at New Delhi. The Standing Labour
Committee after detailed deliberations finalized following four agenda items for discussion in the
47th Session of Indian Labour Conference to be held on 26th & 27th Feb 2018:

(i) Social Security for all;

(ii) Labour Law amendment, reforms and codification.

 (iii) Employment Generation with special focus on women.

(iv) Transition to formal employment.

They have facilitated the enactment of central labour legislation on various subjects and
promotion of uniformity in labour legislation in the country. Tripartite deliberations have helped
reaching a consensus regarding minimum wage fixation (1948), introduction of health insurance
scheme (1948) and provident fund scheme (1952) and enactment of many new labour laws and
modification of the existing ones.

The main objectives underlying their establishment were, “promoting uniformity in labour
legislation, laying down of a procedure for the settlement of industrial disputes; and discussing all
matters of national importance as between employers and employees.” To that effect, the ILC
advises the Central Government on matters brought to it by the Central Government.

In the earlier phases, the SLC made deliberations on its own or on matters sent to it for
consideration by the ILC, which in turn, made the final recommendations. In the course of time both
became deliberative bodies, the difference remained only in the degree of representation. The
scope of the deliberations of both the bodies is confined mainly to labour matters in the country The
ILC and SLC have also contributed much to the formulation of the procedures for the settlement of
industrial disputes. The procedure of setting industrial disputes as envisaged in the Industrial
Disputes Act, 1947, is a direct outcome of the deliberations of these bodies. The code of discipline
and the code of conduct evolved at the ILC have also played an important role in influencing the
pattern of industrial relations.

D. 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 of both employers and
employees thereby regulating standards of their behaviour. Therefore, standing orders can be a
good basis for maintaining harmonious relations between employees and employers.

The Industrial Employment (Standing Orders) Act 1946, it is applicable to all undertakings
where 100 or more workers are working. The purpose of this Act has been “to regulate the
conditions of work thereby minimising industrial conflicts and to secure settlement of industrial
grievances.”

The Industrial Employment (Standing Orders) Act, 1946 requires every employer of an
industrial establishment to submit draft Standing Orders. Generally, the draft Standing Orders of the
various units contain the following matters given below -

• Classifications of workmen, whether permanent, temporary, apprentice, probationers or

casual or badli etc.
• Manner of intimating to workmen, periods and hours of work, holiday, pay-days and wage
rates
• Shift working
• Attendance and late coming
• Conditions of procedures, in applying for and the authority which may grant leave and
holidays
• Requirement to enter premises by certain gates and liability to search
 • Closing and reopening of sections of the industrial establishments and temporary stoppage
of work and the rights and liabilities of employers and workmen arising therefrom
• Closing and reopening of the entire industrial establishment or departments thereof and the
rights and liabilities of the employer and the employees arising therefrom
• Closure due to fire, breakdown of machinery, failure of power and other causes beyond the
control of management
• Suspension and dismissal for misconduct and acts or omissions which constitute misconduct
• Penalties for misconduct
• Procedure for imposition off-lines and censure notices
• Means of redress for workmen against unfair treatment or wrongful exactions by the
employer or his agents or servants
• Deductions for damages due to loss of goods
• Procedure for recruitment of badlies
• Conditions for abolition of posts and
• Conditions for promotion of workmen whether on temporary or permanent basis

E. Code of Industrial discipline

The discipline to observe the “rules of the game” is an attitude of mind and requires, apart
from legislative sanctions, persuasion on a morale plane. Majority of the employees follows rules
and regulations as expected by the management. However, some employees do not and thus they
require disciplinary action of some sort.

Voluntary machinery for settlement of industrial disputes is based on Code of Discipline

announced in 1958. The code was approved by all central organisations of workers and employers in
16th Indian Labour Conference at the initiative of the then Labour Minister, Shri G.L. Nanda.The
main elements of the code are -

• The two parties agree to utilise the existing machinery for the settlement of industrial
disputes.
• The parties shall not resort to strikes and lockouts without first exploring all avenues of
settlement.
• The parties accept that the disputes not settled mutually shall be referred to voluntary
arbitration.
• The code specifies the criteria for the recognition of a trade union and creates an obligation
on the part of the employers to recognise the majority union in an establishment or an
• industry.
• The two parties shall not resort to unfair labour practices detailed out in the code, such as
go-slow tactics, deliberate damage to the plant or property and acts of violence,
intimidation, coersion and instigation.
• Under the code, the management and the union(s) agree to establish a grievance procedure
on a mutually agreed basis.
• The awards and agreements should be implemented speedily.

In brief the code aims at “promoting constructive cooperation between the management and
labour at all levels and avoiding work stoppages -and litigations and securing settlement of disputes
and grievances through mutual consultations.”
 F. Collective Bargaining
Collective bargaining involves discussions and negotiations between two groups as to the terms and
conditions of employment. It is called ‘collective’ because both the employer and the employee act
as a group rather than as individuals. It is known as ‘bargaining’ because the method of reaching an
agreement involves proposals and counter proposals, offers and counter offers and other
negotiations.

It is not equivalent to collective agreements as collective bargaining refers to the process or

means, and collective agreements to the possible result, of bargaining. Collective bargaining may not
always lead to a collective agreement.

Features of Collective bargaining:

• Collective process in which representatives of both the management and employees

participate.
• Continuous process which aims at establishing stable relationships between the parties
involved.
• Not only involves the bargaining agreement, but also involves the implementation of such
an agreement.
• Attempts in achieving discipline in the industry
• Flexible approach, as the parties involved must adopt a flexible attitude towards
negotiations
• It is based on give and take approach and not in take or leave approach.
• It is a bipartite process.

Factors contributing to the failure of preventive mechanism

1. Ideological Differences between Employees and Employers Regarding the Degree of

Participation

There is a fundamental difference between employees and employers regarding the level of
participation by workers. The employers are of the opinion that workers’ participation at the Board
level should be introduced gradually in stages, while the employees feel that the scheme should be
simultaneously introduced at all levels. The result is that the various schemes have been accepted
half-heartedly.

2. Failure to Imbibe the Spirit of Participation by the Parties

One of the major factors responsible for its failure is the inability of the parties to imbibe the
spirit of participation. The employer looks upon bipartite bodies (the shop council, plant council and
JMCs) as substitutes for trade unions, while employees regard it as their rival. This attitude has
generated hostility, apathy, and at times even jealousy, among them, with the result that the spirit
of participation has suffered death ab initio.

3. Multiplicity of Participative Forms

The existence of a number of joint bodies the works committee, joint-management council, shop
council, unit council, plant councils, canteen committee, safety committee, suggestion committee
etc., each with an ill-defined role and functions has often created confusion, duplication of efforts
and resulted in a waste of time and energy. The resultant effect has been the improper functioning
of the scheme.

4. Lack of Strong Trade Unionism

In comparison to strong trade unionism in such developed countries as the USA, UK, Germany,
Japan, etc., the trade union movement in our country is fragmented, poorly organised, raven by
intense inter- union rivalry, and coloured and by various political philosophies. In such a situation, it
is futile to think of effective workers’ participation in management through their own elected
representatives.

5. Unhappy Industrial Relations

At no point of time in the economic history of the country the industrial climate has been free
from labour unrest. It is a pity that the government has imposed participative schemes on industries
in such a climate where, for its anticipated result has been its total failure. In fact, the scheme has
turned out be a fiasco from its very inception.

6. Illiteracy of Workers

The workers’ representatives on various participative bodies are, by and large, illiterate. In the
absence of adequate knowledge on their part of the concept, rationale and benefit of the
participative schemes, they are unable to actively participate meaningfully in their working.

The result is that either they fail to arrive at any decision or bank on outsiders for guidance who
invariably persuade them not to expect that forum to solve their problems. This fact is reflected in
workers’ inability to accept the scheme.

7. Non-Co-Operative Attitude of the Working Class:

The litigation-minded workers’ representatives on the various participative forums quite often
raise those issues which are beyond the scope of those forums or bodies. This attitude tempts
employers not to use the schemes while dealing with workers’ problems. This fact, therefore, has
had a dampening effect on the working of the scheme.

8. Delays in the Implementation of the Decisions of Participative Bodies

One of the major handicaps in the effective working of the participative scheme is that there are
inordinate delays in the implementation of the decisions arrived at by the various participative
forums. This often generates apathy or dissatisfaction and frustration among the workers a fact
which invariably leads to their waning interest in the participative scheme.