MODULE 1

INDUSTRIAL RELATION
INDUSTRIAL RELATION
The relationship between Employer and employee or trade unions is called Industrial Relation.

Harmonious relationship is necessary for both employers and employees to safeguard the interests of the
both the parties of the production. In order to maintain good relationship with the employees, the main
functions of every organization should avoid any dispute with them or settle it as early as possible so as to
ensure industrial peace and higher productivity

Definition:-

 Industrial Relation is that part of management which is concerned with the manpower of the
enterprise – whether machine operator, skilled worker or manager-(Bethel, Smith & Group)

 Industrial Relation is a relation between employer and employees, employees and employees and
employees and trade unions. – (Industrial dispute Act 1947)

Distinction between Personnel Management and Industrial Relations

Personnel Management Industrial Relations

 Under Personnel Management, there are  In Industrial Relations, there are four
basically two parties--Employees and their important parties i.e. Employees, Employers,
Employers. Trade Unions and the Government.

 These are concerned with formulation of
objectives, policies, procedures , and
programmes for human resource and its
proper implementation.
 To review and revise the personnel policies
from time to time based on the outcome of
the industrial disputes
 To have an effective communication system
for establishing a direct contact between the
employees and their bosses.
 To provide an effective grievance and
disciplinary procedure to the employees
 It aims to improve the industrial relations by
providing all those facilities and benefits for
which employees are legally entitled.
 To ensure industrial peace and reduction of
industrial disputes to the possible extend
 To carry the employees' approach to the top
management through open door polices
 To ensure an effective collective bargaining
and industrial democracy setup
The two important aspects of industrial relations in a modern industrial society i.e.

co-operation and conflict.

1. Co-operation.
The co-operation between the labour and capital is one of the basic requirement for the smooth
functioning and the growth of industrialisation. The basis of co-operation is the mutual interest of
the labour and the owners of capital.

2. Conflict.
Conflict is the second aspect of the industrial relations system. Conflict is inherent in any industrial
relations set up of today. The industrial conflict between labour and management arises due to the
pursuit of self-interest in the economic life of the individual and the group to which the individual
belongs.

Features/Nature of Industrial Relations

 Industrial relations is an active association among the workers, the managements, organizations of
the workers (i.e. trade unions) and the State.
 Industrial relations are the outcome of employment relationships in an industrial enterprise.
 Individual relations and joint consultations between employers and workers at the work place is the
essence of industrial relations.
 Industrial relations broadly give emphasis on accommodation, adjustment and co-methods of
adjustment and cooperation among employers and their employees
 The Central and the State Governments play a major role in the industrial relations of a country. It
influences and give proper shape to Industrial Relations through laws, rules, regulations.
 lt aims at industrial peace and leads to industrial democracy
 Is an attempt for maintaining harmonious relationship between management and the workers by
solving their problems through the process of collective bargaining.

Objectives of Industrial Relations

1. Development of Healthy Employer-Employees Relations.

 Successful working to adopt collective bargaining

 A willingness to adopt voluntary arbitration
 To have a strong well-organised, democratic and responsible trade unions and employers
associations.
 To provide highly comfortable working environment conditions through voluntary and statutory
means
 2. Maintenance of Industrial Peace

 The appropriate government must have sufficient-power to interfere in the dispute .when it feels it
is necessary in the interest of industry or the nation.
 There must be a provision of bipartite and tripartite forums for the settlement of disputes.
 There must be various codes, standing orders, rules, regulations and procedures to resolve all
disputes in an effective manner.
 Machinery for prevention and settlement of industrial dispute through legislative and administrative
force.

3. Development of Industrial Democracy

 By strongly establishing "Shop Councils and Joint Management Councils at the floor level as well as
at the plant level.
 Try to improve the working and living conditions of the workers through mutual consultation and
understanding.
 To create an environment and climate for mutual trust and faith among the worker and
management through industrial democracy.
 To provide a highly comfortable social and work environment in which a worker could properly
adjust himself and go to his homes with a feeling of restness and stress free

Importance of Industrial Relations

The importance of good industrial relations can be discussed as under

1. Economic Progress.
Good industrial relations help in the economic progress of a country. Good industrial relations can
take care of many economic problems like low profits, low productivity, low wages, poor working
conditions etc

2. Industrial Democracy.
Good industrial relations help in establishing and true industrial democracy. To give equitable rights
and justice to everyone working in the industrial establishment

3. Labour Policies.
Good industrial relations translate these policies in action and help the government in achieving its
targets. The State has to intervene in the labour- management relationship by enacting various
labour policies for the overall benefits of the workers and the progress of the industry.

4. Collective Bargaining.
Collective bargaining is a negotiating process to come to mutual agreement between the
management and trade union. Good industrial relations encourage collective bargaining .as a means
of self-regulation.
5. Strong Unions.
 Strong trade unions are by-products of healthy industrial relations. Good industrial relations give
due recognition to trade unions and encourage them to Participate in all decisions.

6. Maintaining of Discipline.
Good industrial relations boost the discipline and morale of workers, Discipline ensures orderliness,
effectiveness, harmony and economy in the use of industrial resources . Discipline also ensures co-
operation and co-ordination, it motivates the workers to get maximum out of the efforts put.

Functions of Industrial Relation Department

1. Employer-Employee Relations

 A Smart Wage and Salary Administration

 Employee’s career prospects, promotion and transfer plans
 Retirement Benefit and Medical facilities
 Training and development of the employees

2. Labour-Management Relations.

 There exist a strong collective bargaining machinery

 Prevailing of an efficient industrial dispute machinery
 Good provision of welfare measures and fringe benefits.
 A proper system of health & safety as per Factories Act.

3. Industrial Peace and Productivity.

 Try to maintain healthy and improve union management relations.

 To ensure that there is "No Strike and Go Slow Tactics.
 To prevent lockout and layoff
 To secure employee cooperation in improving the productivity.

4. Aspects of Industrial Democracy

 To enhance and improve public relationship

 To ensure formation of Works Committees and Joint-Management councils.
 To bring humanism and professionalism in the industry
 To do the social orientation of the business.

5. Liaison Functions.

 To have a strong liaison with State and Central Government through labour department.
 To develop a strong liaison with local government authorities like labour officer, factory inspector
and industrial safety officer.
  To formulate and implement different healthy industrial relation policies both for the benefit of
employers and the employees.
 To do constant Employees' level of motivation and attitude survey.

Components of Industrial Relations System

In the context of modern industries, characterised by growing sizes, fast technological changes, mounting
competition and changing environments; the concept of industrial relations has assumed a special
significance.

There are three main participants which are actively associated with industrial relations system. They
are:

1. The Workers and their Organisations

2. The Management

3. The Central/State Government

1. The Workers and their Organisations

Workers play an important role in industrial relations. Workers include their working age,
educational background, family background, psychological factors, social background, culture, skills
and attitude towards other workers etc

 As an Agent of the State.

The trade unions are playing the role of state agents in socialist countries like U.S.S. R. These unions
propagate the state policy in raising the productivity.
These unions play the role of controlling group and work together with the management to raise the
productivity.
Trade Unions also play very important role outside the workplace by taking responsibility for
management schemes like.
 Social Insurance
 Social Assistance
 Social Welfare

 As a Partner in the Social Control System.

The representatives of workers sit on the Board of Management and participate in all kinds of
decision making.

 As a Sectional Bargainer.
Under this approach, trade unions represent the interests of their fellow workers before
management and bargain on their behalf.
 2. The Management
It is also known as Employers and their organizations. The management employs the workers, pays
them wages and fringe benefits and regulates the working relations through various rules and
regulations and by enforcing labour laws.

 Exploitative or Authoritative Styles.

Workers are simply treated as a commodity and are fully exploited by the management. It
encourage the growth of revolutionary trade unions which is not desirable in the long term.

 Participative Style of Management.

Under this, Doers' i.e. the employees and Thinkers" i.e. the management become supplement to
each other. It is based on the principle that Do not work on people but work with people.

3. The Central/State Government

In Industrial Relations, Government plays a balancing role as a custodian of the nation and national
interest. In the current scenario, the Central Government as well State Government have emerged
as the largest single employers in the country. It is now playing the role as a regulatory body by
constantly monitoring the activities of labour and management in the field of industrial relations.

Need for an Effective Industrial Relation System

A healthy industrial relation, on the other hand, brings large profits, more goodwill and happiness
for the enterprise. The effectiveness of industrial relations can be visualized from this model.

 To Safe guard the Interest of labour.

Labour and management both play an equal role in the prosperity of an enterprise. The
management must understand this aspect that employees have got an equal right to share
the prosperity of the organization.

 To Raise Productivity.
Productivity represents the proportion between inputs (i.e. raw-material, labour etc.) and
output. A healthy and harmonious work environment is bound to raise the levels of
productivity.

 To Establish and maintain industrial Democracy.

Industrial democracy is setup towards healthy industrial relations. Workers must be given
freedom to expression, promotion and justice.

 To Avoid any type of Industrial dispute.

Healthy Industrial relation leads to encouragement of collective bargaining as means of self-
regulation. Industrial dispute may arise but must be settled with open and positive mind.
  To bring down Strikes, Go Slow tactics, lock outs and Gharaos'.
Strikes and lockouts are shadows on the personality and working of can organization. They
must be reduced to minimum with the help of good human and industrial relations.

 To reduce wastages, labour-turnover and Absenteeism.

When industrial relations are poor, due to low morale of workers there would be more
wastages, labour turnover and high degree of absenteeism. These can be only reduced or
removed by winning the hearts of the people and trying to touch them internally.

 To enhance Morale, Motivation and Co-operation among the Employees.

A healthy environment, good working conditions, personal touch and a professional
approach enhance the morale and motivation of the employees. Once the employees are in
high motivation, they become very co-operative and bring industrial peace and prosperity to
the organization.

Machinery for Maintenance of Good Industrial Relations

Machinery for Prevention and Settlement of Industrial disputes: It includes:

 Legislative and Administrative Machinery

 Trade Union Act 1926
 Industrial Disputes Act 1947
 Industrial Employment (Standing Orders) Act 1946
 Workmen Compensation Act 1923

 Administrative Machinery.
 Works Committees
 Joint Management Councils
 Conciliation Officers
 Board of Conciliation
 Labour Courts
 Industrial Tribunal
 National Tribunal
 Court of Enquiry
 Provision for Voluntary Arbitration.

Industrial Relations Audit

Industrial Relations (IR) Audit means the systematic verification of Job analysis employee morale,
participative management, welfare and social security, safety and health industrial relation, trade unionism
and disputes and their resolutions. Industrial Relations Audit is very useful to achieve the organizational
objectives. It also evaluates programmes evolved for implementing policies such as the selection
programme, training programmes and job evaluation.
Benefits of Industrial Relations Audit
1. It helps to find out the proper contribution of IR department towards the organisation.
2. It provides professional image of the IR department of the organisation.
3. It reduces the cost of industrial relation functions.
4. It motivates the employees and boost their morale.
5. It finds out the problems/disputes of the workers and solve them smoothly.
6. It provides timely legal requirements and counseling.
7. It provides smooth adoption of the changing mindset.
8. It provides systematic job analysis and sound performance appraisal system.
9. It serves as a check on the activities of industrial relations department.
10. It generates understanding between policy-makers and the people who are responsible for
implementing various industrial relations policies.

Industrial Relations Research

Industrial Relations (lR) Research means research in the field of industrial relations. Any careful and
systematic collection of facts in the area of trade unionism, participative management, collective
bargaining, industrial disputes and their resolutions, workers' health, safety and social security measures
etc. will constitute IR research.

Emerging Socio-Economic and Technological Scenario of Industrial Relations

Industrial relation is a 'complex System formed by the interaction of labour, management, industry and the
government. This system gets monitored by the prevailing socio-economic, technological and institutional
factors.

Economic Factors

People work because they want to survive and live a respectful life. Under economic factors are included:

 The nature of economic organizations of the country (like socialist, communist or capitalist).
 The pattern and form of business organisation (like sole proprietorship, partnership or joint stock
company).
 Nature and composition of workforce
 Disparity of wages between different groups of workers.
 Level of unemployment and under-employment.
 The sources of labour supply.
 The sources of demand and supply in the labour market.
 Economic cycles i.e. boom. depression ete.

Social Factors

Social factors include:

 Social conflicts
 Social values and norms.
  Social status (high or low)
 Social psychology and their cultural interactions.
 Social caste and creed.
 Relationship of master-servant or the philosophy of participative management

Psychological Factors

The quality of industrial relations depend upon the perception, attitudes and philosophy of the
management and the trade unions. Some of the psychological factors affecting industrial relations could be:

 Workers attitude toward work and the work situation.

 The level of interest, morale and motivation of the workforce.
 Owners attitude towards workers.
 Perceptions of workers, trade unions and the management.
 Job security relationship with the union and the co-workers.

Political Factors

As Central and State governments regulate the industrial relations, they become a third major force
(besides employers and employees) in determining the quality of industrial relations. Most of the trade
unions are also controlled by political parties, so they influence the state of industrial relations in many
ways.

 The attitude of the government towards working class.

 Implementing labour laws and international laws.
 System of the government and political philosophy.
 The approach of the government (i.e. socialist, capitalist or communist).

Technological Factors

In the long run, technological factors have direct influence on the patterns of industrial relations.
Technological factors influence the industrial relations through.

 Work methods.
 Scientific techniques of production.
 High degree of automation and mechanisation.
 Quality of infra-structure and paper-less offices.
 High degree of modernisation and computerisation.
 Rate of technological change and R& D activities.
 Ability to cope up with emerging technological innovation.

Institutional Factors

Institutional factors influencing the industrial relations are :

 State policy and labour laws.

 Quality of collective bargaining agreements.
  Strength of labour-union inter-relationships.
 Employers organisation and federations.
 Voluntary codes of disciples
 Ethical codes etc.

Global Factors

With the spreading of globalisation concept, the government has to play the role of a facilitator; the trade
unions plays a balanced role of satisfying the demands of workers as well management; The globalisation is
going to have more positive impacts on the state of industrial relations by

 International trade agreements and relations.

 International labour agreements.
 Economic and trade policies of super-powers of the world.
 Global cultural
 Global economic-political ideologies.
 Global conflicts

Objectives of Industrial Relations

The primary objective of industrial relation is to bring sound and healthy relations between employers and
employees. It aims to facilitate higher production and productivity and to safeguard the rights and interests
of both labour and management by ensuring their co-operation.

In general, industrial relations are designed to achieve the following objectives:

(a) To Safeguard the Mutual Interest.

Industrial relations strive to safeguard the interest of labour and management by creating goodwill
and mutual understanding among all those sections in the industry

(b) To Raise Productivity.

Good industrial relations lessen the tendency of frequent absenteeism and high labour turnover.
Thus they raise the productivity of workers to a higher level and inspire them to be regular, sincere,
dedicated and more successful.

(c) To Avoid Industrial Strikes.

Industrial conflicts or strikes can be reduced to a minimum level by developing harmonious relations
between the management and the workers.

(d) To Establish Industrial Democracy.

All individuals working in the industry must get an opportunity to grow their personality to its full
stature for the benefit of the industry as well as their own.
 (e) To Eliminate Industrial Disputes.
Good industrial relations eliminate the possibility of industrial disputes. As far as possible and
practicable, strikes, lockouts and gheraos etc. should not be resorted to. Management must provide
reasonable wages with improved working conditions to promote industrial relations.

(f) Providing Healthy Social Order.

Due to technological advances, social relationship may get imbalanced, disordered and
mal-adjusted. Good and harmonious industrial relation controls and disciplines both the employees
and employers.

(g) To Boost Discipline.

Industrial relations also aim to boost discipline among all the Employees working in the
organisation. It raises their morale and degree of motivation.

(h) Leads to Collective Bargaining.

Collective bargaining is a technique to mutually come to the terms acceptable to both the parties
i.e., the management as well as workers. By negotiating in the environment of mutual trust and
confidence. industrial conflicts are solved through collective bargaining

Conditions for Healthy Industrial Relations

"Good industrial relations depend upon a large number of factors/conditions. Some of the most obvious are

 History of Industrial Relations in an Enterprise.

 Strong Trade Unions.
 Negotiating Skills of Management and Workers.
 Economic Factors.
 Social Factors.
 Psychological Factors.
 Public Policy and Legislation.
 Off the Job Conditions.
 Better Education
 Business Cycles.

Approaches of Industrial Relations

Different theoretical models/approaches to industrial relations given by different scholars are:

1. The System Approach.

2. The Oxford Approach.
3. The Industrial Sociology Approach.
4. The Social Action Model.
5. The Psychological Approach.
6. The Human Relations Approach.
7. The Marxist Approach.
 8. Giri Approach.
9. The Gandhian Approach.

1. The System Approach

Industrial relations system is a sub-system of the wider society or the total social system. It is a
mixture of traditions, customs, actions, reactions and interactions between the parties. An industrial
relations system is an integral and non-separable part of the organization structure. It may be
conceived at different levels-workplace, industrial, regional or national. It basically consists of
totality of power interactions of participants management and trade

2. Oxford Approach
Flanders, the exponent of this approach, considered industrial relations system as a study of the
institutions of job regulations. The institution of job regulation was categorised by him as internal
and external. Internal regulation being code of work rules, internal procedure of joint consultations,
wage structure, grievance handling etc. Trade unions were considered as external regulation. The
rules of the industrial relations system were determined through the rule making process of
collective bargaining.

3. The Industrial Sociology Approach

Industrial sociologists, G. Margerison, holds the view that the core of industrial relations is the
nature and development of the conflict itself. Margerison developed two conceptual levels of
industrial relation-one at intra-plant level and the other outside the firm. At Intra-plant level, there
could be three types of conflicts - distributive, structural and human relations. The major causes of
such conflicts are related to job contentment, work task and technology. To resolve the conflicts,
Margerison suggested collective bargaining, human-relations management analysis and structural
analysis of socio-technical systems. At the second level i.e., outside the firm, the main concern is
with the conflicts not resolved at intra-organisational level.

Industrial Relations are being affected by social factors or consequences like

 Urbanisation.
 Social mobility.
 Housing and Transport Problems.
 Disintegration of family structure.
 Stress and strain.
 Gambling, drinking and other social evils.

4. The Social Action Model

The social action model has its origin in Weberian sociology. The social approach stresses the way in
which an individual influences the social structure and makes the society. This approach attempts to
study the behavioural influences. Behaviour at work gets influenced by the quality of human
relations management and the nature of technology. As industries develop, a new industrial cum
social pattern emerge which provides new behavioural pattern and new techniques of handling
human resources.
5. The Psychological Approach
"Mason Haire" has given the psychological approach to industrial relations. According to him, the
problems in industrial relations arise due to perceptions of the management, unions and the
workers. These perceptions may be about the person, the situation or the issues involved in the
conflict. The perceptions of management and the trade union may differ because the same position
may appear entirely different to the other party.
The amount of satisfaction the workers get from this job depends upon many factors like the nature
of his work, his attitude towards work, working conditions, wages, job security relationship with the
union and the co-workers and the behvaiour of the boss etc.

6. Human Relation Approach

The most important part of any' organization is human being. Machine, material and money are
secondary. "Take care of your employees. They automatically take care of your organisations". Every
human being wants freedom of speech, self-respect, and to enjoy all those facilities for which he is
entitled for. But when an employee is not provided a handsome package of financial and
non- financial incentives and is not properly treated during his stay at the organisation it leads to
tension, conflicts and ill-will. The problem of industrial relation in an industry arises out of tension
which is created because of employer s pressure and worker's reactions and protests.

7. Marxist Approach
Lenin came up with the concept of a Marxist approach in the year 1978, where he emphasized the
social perspective of the organization. This theory perceived that the industrial relations depend
upon the relationship between the workers (i.e., employees or labour) and the owners (i.e.,
employer or capital). There exists a class conflict between both the groups to exercise a higher
control or influence over each other.
The Marxist approach argues that for social change to take place, class conflict is required.
Also known as the ‘Radical Perspective’, the Marxist approach is based on the proposition that the
economic activities of production, manufacturing, and distribution are majorly governed by the
objective of profit.

8. Giri's Approach
Mr V.V Giri who was Labour Minister and later became the President of India was strong supporter
of collective bargaining and mutual negotiations for the settlement of industrial disputes. He was of
this opinion that a Voluntary efforts on the part of management and the trade union for winding up
their differences is a tonic to the industry and any compulsion from outside is bitter medicine." He
was of this firm opinion that "there should be bi-partite machinery in every industry and every unit
of the industry to settle differences from time to time with active encouragement of government
but outside interference should not encroach the industrial peace.
"Giri Approach gave emphasis that industrial peace might be secured through machinery of
collective bargaining.
 9. The Gandhian Approach
Gandhiji has been one of the greatest labour leader of modern India . He approached labour in
completely new and refreshing manner. Gandhiji advocated peaceful co-existence of capital and
labour. He believed in trust, non-violence and non-possession. He had immense faith in the
goodness of man and believed that many of the evils of the modern world have been brought about
by wrong systems and not by wrong individuals.

Gandhian Rules to Resolve Industrial Disputes

Gandhiji advocated following rules to resolve industrial disputes:

 Workers should seek redressal of reasonable demands only through collective bargaining.
 Workers should avoid strikes, as far as possible, in industries of essential services.
 Strikes to be avoided and only resorted to as last measure, only non-violent methods should
be used.
 Workers should take recourse too voluntary arbitration where direct settlement fails.
 Trade unions should seek authority from all workers before organising a strike and remain
peaceful and non-violent during strikes.
 He pleaded mutual respect, recognition of equality and strong labour unions as the
pre-requisites for healthy industrial relation

Further this approach is based on the philosophies of Gandhiji and his fundamental principles like

 Truth
 Non-violence