Industrial Relation

INDUSTRIAL RELATION MANAGEMENT
Meaning of IR
Industrial relations encompass ‘the processes of regulation and control
over workplace relations, the organization of tasks, and the relations
between employers and their representatives, and employees and their
representatives, and is the sum of economic, social and political
interactions in workplaces where employees provide manual and mental
labor in exchange for rewards allotted by employers, as well as the
institutions established for the purpose of governing workplace relations’.
It is concerned with the relationships between management and workers

and the role of regulatory mechanism in resolving any industrial dispute.
The main concept of industrial relations are;
1. preservation and promotion of economic interest of workers along
with social interest
2. Peace and productivity go hand in hand hence. attempt to reduce
industrial dispute and promotion of peace is a necessity.
3. Employer employee relation should be made healthy and growing
4. Running of the industry, day to day work should be made more
democratic with increasing workers participation
5. Producing products at a very competitive price so that country can
promote export and our economy can improve.
6. Bringing mental revolution in management.
In simple terms Industrial Relations deals with the worker employee

relation in any industry Government has attempted to make Industrial
Relations more health the by enacting Industrial Disputes Act 1947.
To solve the dispute and to reduce the reoccurrence of dispute. This in turn
improves the relations.
Definition: The ILO stated that
Industrial relations deal with either the relationships between the state &
employers and workers organizations or the relationships between the
occupational organizations themselves.
CHARACTERISTICS:
1. Parties in the Industrial Relations Activities:
Basically, two parties-workers and management are involved in the process
of establishing relations. However, the government agencies regulate
/maintain industrial relations.
2. Interactive Process:
Industrial relations arise out interactions between different persons/parties.
They are supervisors, workers trade unions, employers’ associations.
So, interactive process takes place between –
i. Supervisors and industrial workers
ii. Supervisors and group/team members
iii. Management and trade union leaders
iv. Employers’ federations and workers’ unions.
3. Two-Way Communication:
IRs is a two-way communication process. One party gives stimuli, other
party responds to the stimuli. So, the transaction occurring through such
mechanism is either complementary or cross. More the complementary
transactions better will be the industrial relations situations.
4. HRM Practices:
Effective human resource planning system, identification and stimulating
prospective employees, designing the most suitable selection technique to
choose the right kind of people help to organization to get a committed and
willing workforce that want to grow, develop and achieve. Such employees in
the process like to develop better relations with their bosses.
5. Approaches to IRs:
Various approaches contribute to shape IRs pattern in industrial
organizations. These approaches include sociological, psychological, socio-
ethical, human relations, Gandhian, system approaches etc.
6. State Intervention:
State plays a vital role to influence industrial relations situations through its
activities as facilitator, guide, counsellor for both the parties in the industry.
7. Role of Trade Union:
Behavioural manifestations of workers are mostly governed by the trade
unions to which they belong. Hence, trade union’s perception, attitudes
towards management influence workers to form their mind set that
regulates/promotes interaction with the management.
BACKGROUND/ HISTORY OF INDUSTRIAL RELATION IN INDIA:
The history of Industrial Relations in India started way back in 19th
Century. It is very interesting to learn about the history of relations in India
and also in international perspective. Let us discuss the same in detail.
The history of Industrial relations started along with the Industrial
revolution. Industrial revolution is basically focused on transmission of
handmade production towards machine made productions. Textile industry
was the industry which dominated the industrial revolution. This is the time
when concept of Industrial relations evolved for the first time.
Industrial Relations in India

Industrial Relations in India stated long back. In the first phase of 19th
century Indian labours faced very bad situation. The relations between the
employees and employers were like master and servants. Employees were
hired and fired.
During this period the industry (both employees and employers) faced
severe problems like:
 Poor wages
 Poor working condition
 Absence of job security
 Long working hours
 Absence of welfare activities
 Employee strike
 Low productivity
 Absence of skilled labour
In this stage both management and government were trying to find a
solution to these major labour issues. At this same time International
Labour Organization (ILO) has been formed to create peace in the industry
at international level.
Indian government also started its activities to create a harmony in the
industry. In this context an Act was introduced called trade disputes Act
1929. This is how the role of IR started in Indian organizations. Later
Government formed several institutions or committees to solve the issues
related to IR but due to political changes most of them were not so
successful.
In mid of 19th century several disputes were started in the organizations.

Employees started forming association for themselves to protect themselves
from the employer’s unfair labour practices. Employer associations were
also formed to take firm decisions.
To solve these issues the government has taken several steps like setting up
of dispute settling authorities, collective bargaining etc… This over all
activity is taken care by IR department in each organization. This is how
industrial relations evolved in Indian industries.
General causes of industrial disputes strains which results in bad

industrial relations are.
1. Close mindedness of employers and employees one thinking to extract
maximum work with minimum remuneration, other thinking to avoid work
and get more enhancement in pay and wages.
2. Irrational wage, wage system and structure not mutually acceptable
3. Poor working environment, low presence of safety, hygiene conditions
vitiated atmosphere for smooth working
4. Poor human relations, and lack of dexterity on the part of management
personnel.
5. Lack of control over the situations erosion of discipline, which rebounds.
6.Introduction of new technology or automation mechanization,
Computerization etc. without proper consultations, preparations and
discussion with workers and creating climate.
7. Nepotism, unequal workloads, disproportionate wage, and
responsibilities.
8. Adoption of unfair labour practices either by employer or employees and
unions.
9. Unjustifiable profit sharing, and not considering workers as a co-shares
of the gains of the industry.
10. Frequent union rivalries over membership foisting up of fake unions.

11. Strikes lock out, lay off, and resulting retrenchment due to high
handedness on the part of the concerned.
12. Throwing away the agreements and arrived settlements
13. Militancy of the unions
14. Attitude of government and political parties who may indirectly control
some the unions for their own gains or to get a hold on the industry.
INFLUENCING FACTORS OF IR IN INTERPRISE AND CONSEQUENCES:

These interrelated and interdependent factors determine the texture of
industrial relations in any setting. In fact, they act, interact, and reinforce
one another in the course of developing the industrial relations.
1. Institutional Factors:
Under institutional factors are included items like state policy, labour laws,
voluntary codes, collective bargaining agreements, labour unions,
employers’ organisations / federations etc.
2. Economic Factors:
Under economic factors are included economic organisations, (socialist,
communist, capitalist) type of ownership, individual, company — whether
domestic or MNC, Government, cooperative ownership) nature and
composition of the workforce, the source of labour supply, labour market
relative status, disparity of wages between groups, level of unemployment,
economic cycle. These variables influence industrial relations in myriad
ways.
3. Social Factors:
Under social factors items like social group (like caste or joint family) creed,
social values, norms, social status (high or low) — influenced industrial
relations in the early stages of industrialisation. They gave rise to
relationship as master and servant, haves and have-nots, high caste and low
caste, etc. But with the acceleration of industrialisation, these factors
gradually lost their force but one cannot overlook their importance.
4. Technological Factors:
Under technological factors fall items like work methods, type of technology
used, rate of technological change, R&D activities, ability to cope with
emerging trends, etc. These factors considerably influence the patterns of
industrial relations, as they are known to have direct influence on
employment status, wage level, collective bargaining process in an
organisation.
5. Psychological Factors:
Under psychological factors fall items pertaining to industrial relations like
owners’ attitude, perception of workforce, workers’ attitude towards work,
their motivation, morale, interest, alienation; dissatisfaction and boredom
resulting from man-machine interface. The various psychological problems
resulting from work have a far-reaching impact on workers’ job and personal
life, that directly or indirectly influences industrial relation system of an
enterprise.
6. Political Factors:
The political factors are political institutions, system of government, political
philosophy, attitude of government, ruling elite and opposition towards
labour problems. For instance, the various communist countries prior to the
adoption of new political philosophy, the industrial relations environment
was very much controlled by the Government ever since change has altered
considerably like other capitalist economics.
There too, unions are now at the helm of labour activities, the industrial
relations and is marked by labour unrest. Most of the trade unions are
controlled by political parties, so here the industrial relations are largely
shaped by the gravity of involvement of political parties in trade union
activities.
7. Enterprise-Related Factors:
Under enterprise-related factors, fall issues like style of management
prevailing in the enterprise, its philosophy and value system, organisational
climate, organisational health, extent of competition, adaptability to change
and the various human resources management policies.
8. Global Factors:
Under global factors, the various issues included are international relations,
global conflicts, dominant economic-political ideologies, global cultural
milieu, economic and trading policies of power blocks, international trade
agreements and relations, international labour agreements (role of ILO) etc.
Thus, the industrial relations can be viewed as a “Complex System” formed
by the interaction of the industry, the government and the labour which are
monitored by the existing and emerging social economic, institutional and
technological factors. In this context, the observations of Singh are
noteworthy.
EVOLUTION OF INDUSTRIAL RELATION IN INDIA:

It can be studied in two phases:
(i) pre-independence era
(ii) post-independence era
Pre-independence era
 The structure of the colonial economy, the labour policies of colonial
government, the ideological composition of the political leadership, the
dynamics of political struggle for independence, all these shaped the
colonial model of industrial relations in pre-independent India”.
 Then even union movement was an important part of the
independence movement.
 Indian workers did not enjoy any type of freedom of expression or
association.
 Employers were exploiting the workers with poor payment and
miserable working conditions.
 Till the end of first world war there were no trade union movements in
India.
 No efforts were made to pass any type of legislation to protect the
interest of the workers.
 After the end of World War-I the scenario of Industrial relations
changed considerably due to the support of workers of U.K.
 There were many strikes during 1928-29 due to which Govt. of British
India passed Trade Dispute Act 1929 in India but even this act could
not provide any permanent standing machinery for settlement of
disputes.
 Bombay Industrial Relations (BIR) Act was passed and it set up a
permanent machinery through industrial court. But after Second
World War industrial scene in India deteriorated to a much greater
extent.
Post-Independence Scenario:
 In 1947 there was enactment if Industrial Disputes Act 1947 with a
permanent machinery to settle industrial disputes.
 In 1997 “Industrial Truce Resolution” was made which made an
appeal to labour and management to cooperate and maintain
Industrial peace.
During period 1947-56:
 In 1948 Indian Labour Conference (ILC) was formed in lines of ILO
where representative of government, employers and workers were
meeting regularly and making recommendations for different
legislative measures. It was a Tripartite body.
 On the basis of the recommendations made by ILC Indian
Parliament made large number of legislative measures from time to
time.
During 1957-65:
 Some healthy developments took place during this period:-
 Code of Discipline was introduced in 1957.
 Joint Management Councils (MNC) were formulated.
 Concept of workers committee was made popular.
 In this period ILO worked towards achieving voluntary agreement
between labour and management.
During 1962-71:
 There were some set-backs to Industrial relations in India due to
political and social turmoil which took place in India like Chinese
aggression 1962, death of Pandit Jawahar Lal Nehru 1964, Indo-Pak
war 1965 &1971 and split of Indian National Congress in 1989.
 In 1966 National Commission for labour was appointed which gave it
some of the strong recommendation in 1969 like:-
 Formation of Industrial relations commission instead of tribunal.
 Recognition of bargaining agent.
During 1972-76:-
 In 1975 National Emergency was declared and due to which
fundamental rights were crushed.
 Before the declaration of emergency there was lot of industrial unrest.
 ILC could not meet regularly between 1972-76.
 On the basis of 20-point programme in place of National Labour
Commission (NLC), National Apex Body (NAB) and State Apex Body
(SAB) were set-up which were bi-partite representing employers and
employees.
During 1977-80:-
 Janta government took over central govt. from the congress party.
 In 1977 National emergency was taken back.
 In 1977 NLC was revived again.
 In 1978 industrial relation bill was prepared but no act could be
passed.
After 1980’s:-
 Several committees were appointed to suggest measures for reforming
die Industrial Relations System (IRS).
 In the process, tripartism was revived in 1980s.
 Government passed the Trade unions and the Industrial Disputes
(Amendment) Bill, 1988. But, it also proved yet another legislative
disaster.
 In consequence, the tripartite deliberations held at the ILC in 1990
decided three measures to reform IR in India:
 (i) To constitute a bipartite committee of employers and unions to
formulate proposals for a comprehensive legislation;
 (ii) To withdraw the Trade Union and the Industrial Disputes
(Amendment) Bill, 1988
 (iii) To consider the possibility of formulating a bill on workers’
participation in management, 1990. In the 33rd session of ILC,
another bipartite committee was constituted to recommend changes in
the TU and ID Acts. The government introduced a Bill on Workers,
Participation in Management in Parliament in 1990.
 The bill was severely criticised by the left parties. It was even viewed
by some as a deliberate attempt to destroy “autonomous; organised or
militant trade union movement”.
APPROACHES TO INDUSTRIAL RELATION:

 The scenario of IR is perceived differently by different people.
 For some, IR is related to class conflict, other perceive it in terms of
mutual cooperation and still others understand it in terms of
competing interests of various groups.
 HR managers are expected to understand these varying approaches
because they provide the theoretical understanding for much of the
role of HRM.
 The three popular approaches to IR are unitary approach, pluralistic
approach and Marxist approach.
UNITARY APPROACH
• Under unitary approach, IR is grounded in mutual cooperation,
individual treatment, teamwork and shared goals.
• Workplace conflict is seen as a temporary aberration, resulting from
poor management, from employees who do not mix well with the
organization's culture.
• Unions cooperate with the management and the management’s right
to manage is accepted because there is no "we-they" feeling.
• The underline assumption is that everyone benefits when the focus is
on common interest and promotion of harmony.
• Conflict in the form of strikes is not regarded as necessary but
destructive.
• Industrial relations is grounded in mutual cooperation, individual
treatment, teamwork and the sharing of common objectives.
• The underlying assumption is that it is to the benefit of all to focus on
common interests and promote harmony.
• Conflict is regarded as destructive.
Assumptions about trade unions
• a competing and illegitimate source of authority
• an unwarranted intrusion in the workplace
• create conflict where none would otherwise exist
Assumptions about collective bargaining
• creates and institutionalizes unnecessary divisions of interest
• serves to generate workplace conflict rather than resolve it
Assumptions about workplace relations
• management and employees share common interest
• one source of legitimate authority (management)
Assumptions about workplace conflict
• inevitable, aberration, destructive, to be avoided
• caused by poor management, dissidents, agitators or poor
communication
PLURALISTIC APPROACH
• The pluralistic approach totally departs from the unitary approach.
• The pluralistic approach perceives:
1. Organization as coalition of competing interest, where the
management’s role is to mediate amongst the different interest groups.
2. Trade unions as legitimate representatives of employee interests.
3. Stability in IR as the product of concessions and compromises between
management and unions.
• Conflict between the management and workers is understood as
inevitable and in fact, is viewed as beneficial for innovation and growth.
• Employees join unions to protect their interest and influence decision
making by the management.
• Unions thus balance the power between the management and
employees. In the pluralistic approach, therefore, a strong union is not
only desirable but necessary.
• Similarly, society's interests are protected by state intervention through
legislation and industrial tribunals which provide orderly process for
regulation and resolutions of conflict.
• The theories on pluralism were evolved in the mid-sixties and early
seventies when England witnessed a resurgence of industrial conflicts.
• However, the recent theories of pluralism originate from British scholars,
and in particular from Flanders and Fox.
• According to pluralists, industrial conflict is inevitable, and it needs to
contain within the social mechanism of collective bargaining, conciliation
and arbitration.
The pluralist Theory of Flanders(1970)/ Oxford Model
According to him, Conflict is inherent in an industrial system. Hence,
collective bargaining is required as formal system to settle conflicts.
Collective bargaining central to the industrial relations system.
It can be expressed in the form of an equation
• R=f(b) or r =f (c )
Where r = the rules governing industrial relations
b = collective bargaining
c = conflict resolved through collective bargaining

- managers and employees have different objectives
- multiple sources of legitimate authority

- inevitable, caused by different opinions and values, benefit to an
organization
- avoid by accepting trade unions, include in decision-making
Assumptions about the workplace role of trade unions
- not the cause of conflict
- are expression of diverse workplace interests that always exist
- a legitimate part of workplace relations
Assumptions about the role of collective bargaining
- deals with problems on a collective basis
- most efficient means for institutionalizing employment rules
- fairer outcomes by balancing employee and management power
 Trade unions are seen both as labour reaction to exploitation by
capital, as well as a weapon to bring about a revolutionary social
change.
 Concern with wage related disputes are secondary.
 Trade unions focus on improving the position of workers within the

capitalist system and not to overthrow.
 For the Marxist, all strikes are political.
 Besides, Marxists regards state intervention via legislation and the

creation of industrial tribunals as supporting managements’ interest
rather than insuring a balance between the competing groups.
 This view is in contrast to the belief of the pluralists who argue that
state intervention is necessary to protect the overall interest of society.
 Consequently, enterprise bargaining, employee participation,
cooperative work culture, and the like which help ushers in cordial IR
and are not acceptable to Marxists.
 Such initiatives are regarded as nothing more than sophisticated
management techniques designed to reinforce management control
and the continuation of the capitalist system.

- reflects a wider class conflict between capital and labour
- reflects coercion of working class into dominant capitalist values
- inevitable: capital seeks to reduce costs, workers seek fairer price for
labour
- will only cease by revolutionary change in distribution of property and
wealth
Assumptions about trade unions
- should raise revolutionary consciousness of workers
- should not limit action to improving material lot of workers
- union leaders who accommodate management betray the workers
Assumptions about collective bargaining
- merely offers temporary accommodations
- leaves important managerial powers in tact
The System Approach

• The system approach was developed by J. P. Dunlop of Harvard
University in 1958.
• According to this approach, individuals are part of an ongoing but
independent social system.
• The behaviour, actions and role of the individuals are shaped by the
cultures of the society.
• The three elements of the system approach are input, process and
output. Society provides the cue (signal) to the individuals about how
one should act in a situation.
• The institutions, the value system and other characteristics of the
society influence the process and determine the outcome or response
of the individuals.
• The basis of this theory is that group cohesiveness is provided by the
common ideology shaped by the societal factors.
Oxford Approach:
According to this approach, the industrial relations system is a study of
institutions of job regulations and the stress is on the substantive and
procedural rules as in Dunlop’s model.
• Flanders, the exponent of this approach, considers every business
enterprise as a social system of production and distribution, which
has a structured pattern of relationships.
• The “institution of job regulation” is categorized by him as internal
and external – the former being an internal part of the industrial
relations system such as code of work rules, wage structure, internal
procedure of joint consultation, and grievance procedure.
• According to him, collective bargaining is central to the industrial
relations system. The “Oxford Approach” can be expressed in the form
of an equation:
• r = f (b) or r = f (c)
where, r = the rules governing industrial relations
b = collective bargaining
c = conflict resolved through collective bargaining.
• The “Oxford Approach” can be criticised on the ground that it is too

narrow to provide a comprehensive framework for analysing industrial
relations problems.
• It over emphasises the significance of the political process of collective
bargaining and gives insufficient weight to the role of the deeper
influences in the determination of rules.
• Institutional and power factors are viewed as of paramount
importance, while variables such as technology, market, status of the
parties, and ideology, are not given any prominence.
• This narrowness of approach constitutes a severe limitation.
THE INDUSTRIAL SOCIOLOGY APPROACH

 G. Margerison, an industrial sociologist, holds the view that the core
of industrial relations is the nature and development of the conflict
itself.
 Margerison argued that conflict is the basic concept that should form
the basis of the study of industrial relations.
 The author criticised the prevalent approach to industrial relations,
which was more concerned with studying the resolution of industrial
conflict than its generation; with the consequences of industrial
disputes than on their causes.
 According to this school of thought, there are two major conceptual
levels of industrial relations.
 One is the intra-plant level where situational factors, such as job
content, work task and technology, and interaction factors produce
three types of conflict – distributive, structural, and human relations.
 These conflicts are being resolved through collective bargaining,
structural analysis of the socio-technical systems and management
analysis respectively.
 The second level is outside the firm and, in the main, concerns with
the conflict not resolved at the intra organisational level.
 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.
 A new industrial-cum-social pattern emerges a new behaviour pattern
and new techniques of handling human resources.
 Some of the major orientations in the Weberian approach have been to
analyse the impact of techno-economic and politico-organisational
changes on trade union structure and processes, and to analyse the
power of various components of the industrial relations environment –
government, employers, trade unions and political parties.
 Thus the Weberian approach gives the theoretical and operational
importance to “control” as well as to the power struggle to control
work organisations – a power struggle in which all the actors in the
industrial relations drama are caught up.
• Gandhi laid down certain conditions for a successful strike. These are:
• (a) the cause of the strike must be just and there should be no strike
without a grievance;
• (b) there should be no violence; and
• (c) non-strikers or “blacklegs” should never be molested.
• He was not against strikes but pleaded that they should be the last
weapon in the armory of industrial workers and hence should not be
resorted to unless all peaceful and constitutional methods of
negotiations, conciliation and arbitration are exhausted
WORKERS PARTICIPATION IN MANAGEMENT:
International Institute of Labour Studies:

WPM is the participation resulting from the practices which increase the
scope for employees’ share of influence in decision-making at different tiers
of organizational hierarchy with concomitant (related) assumption of
responsibility.
ILO:
Workers’ participation, may broadly be taken to cover all terms of
association of workers and their representatives with the decision-making
process, ranging from exchange of information, consultations, decisions and
negotiations, to more institutionalized forms such as the presence of
workers’ member on management or supervisory boards or even
management by workers themselves (as practiced in Yugoslavia).
The main implications of workers’ participation in management as
summarized by ILO:
• Workers have ideas which can be useful;
• Workers may work more intelligently if they are informed about the
reasons for and then intention of decisions that are taken in a
participative atmosphere
According to Keith Davis, Participation refers to the mental and emotional
involvement of a person in a group situation which encourages him to
contribute to group goals and share the responsibility of achievement.
According to Walpole, Participation in Management gives the worker a
sense of importance, pride and accomplishment; it gives him the freedom of
opportunity for self-expression; a feeling of belongingness with the place of
work and a sense of workmanship and creativity.
Clegg says, “It implies a situation where workers representatives are, to
some extent, involved in the process of management decision making, but
where the ultimate power is in the hands of the management”.
According to Dr. Davis, “it is a mental and emotional involvement of a
person in a group situation which encourages him to contribute to goals and
share responsibilities in them”.
Objectives of Workers Participation in Management
a) To raise level of motivation of workers by closer involvement.
b) To provide opportunity for expression and to provide a sense of
importance to workers.
c) To develop ties of understanding leading to better effort and harmony.
d) To act on a device to counter-balance powers of managers.
e) To act on a panacea for solving industrial relation problems
.
NEED FOR WORKERS PARTICIPATION
 Reduced industrial unrest: Industrial conflict is a struggle between
two organized groups which are motivated by the belief that their
respective interests are endangered by the self-interested behavior of
the other. Participation cuts at this very root of industrial conflict. It
tries to remove or at least minimize the diverse and conflicting
interests between the parties, by substituting in their place,
cooperation, homogeneity of objects and common interests. Both sides
are integrated and decisions arrived at becomes “ours” rather than
“theirs”.
 Reduced misunderstanding: Participation helps dispelling
employee’s misunderstanding about the outlook of management in
industry.
 Increased organization balance: If worker are invited to share in
organizational problems, and to work towards common solutions, a
greater degree of organizational balance occurs because of decreased
misunderstanding of individual and group conflict. Participation leads
to increased understanding throughout the organization. People learn
that others have problems beside themselves.
 Higher productivity: Increased productivity is possible only when
there exists fullest co-operation between labor and management. It
has been empirically tested that poor ‘labor management relations’ do
not encourage the workers to contribute anything more than the
minimum desirable to retain their jobs. Thus, participation of workers
in management is essential to increase industrial productivity.
 Increased Commitment: An important prerequisite for forging greater
commitment is the individual’s involvement and opportunity to
express himself. Participation allows individuals to express themselves
at the work place rather than being absorbed into a complex system of
rules, procedures and systems. If an individual knows that he can
express his opinion and ideas, a personal sense of gratification and
involvement takes place within him. This, in turn, fortifies his
identification with the organization resulting in greater commitment.
 Industrial democracy: Participation helps to usher in an era of
democracy in industry. It is based on the principle of recognition of
the human factor. It tends to reduce class conflict between capital and
labor. It also serves as a support to political democracy.
 Development of Individuals: Participation enhances individual
creativity and response to job challenges. Individuals are given an
opportunity to direct their initiative and creativity towards the
objectives of the group. This facilitates individual growth.
 Less resistance to change: when changes are arbitrarily introduced
from above without explanation, subordinates tend to feel insecure
and take counter measures aimed at sabotage of innovations. But
when they have participated in the decision making process, they
have had an opportunity to be heard. They know what to expect and
why. Their resistance to change is reduced
LEVELS OF PARTICIPATION:
Informative Participation:
This refers to management’s information sharing with workers on such
items those are concerned with workers. Balance Sheet, production,
economic conditions of the plant etc., are the examples of such items. It is
important to note that here workers have no right of close scrutiny of the
information provided and management has its prerogative to make decisions
on issues concerned with workers.
Consultative Participation:
In this type of participation, workers are consulted in those matters which
relate to them. Here, the role of workers is restricted to give their views only.
However, the acceptance and non-acceptance of these views depends on
management. Nonetheless, it provides an opportunity to the workers to
express their views on matters involving their interest.
Associative Participation:
Here, the role of the workers’ council is not just advisory unlike consultative
participation. In a way, this is an advanced and improved form of
consultative participation. Now, the management is under a moral obligation
to acknowledge, accept and implement the unanimous decision of the
council.
Administrative Participation:
In the administrative participation, decisions already taken are implemented
by the workers. Compared to the former three levels of participation, the
degree of sharing authority and responsibility by the workers is definitely
more in this participation.
Decisive Participation:
Here, the decisions are taken jointly by the management and the workers of
an organization. In fact, this is the ultimate level of workers’ participation in
management.
COLLECTIVE BARGAINING:
 Good relations between the employer and employees are essential for
the success of industry.
 In order to maintain good relations, it is necessary that industrial
disputes are settled quickly and amicably.
 One of the efficient methods of resolving industrial disputes and
deciding the employment conditions is Collective Bargaining.
 Collective Bargaining is a process in which representatives of two
groups (employers and employees) meet and try to negotiate an
agreement which specifies the nature of future relationship (pertaining
to employment) between the two.
 According to Beach, ―Collective Bargaining is concerned with the
relations between unions representing employees and employers (or
their representatives). It involves the process of union organization of
employees; negotiation, administration and interpretation of collective
agreements covering wages, hours of work and other conditions of
employment; engaging in concerted economic action; and dispute
settlement procedures.
 According to Dale Yoder, ―Collective Bargaining is the term used to
describe a situation in which the essential conditions of employment
are determined by bargaining process undertaken by representatives
of a group of workers on the one hand and of one or more employers
on the other.
 In the words of Flippo, ―Collective Bargaining is a process in which
the representatives of a labour organization and the representatives of
business organization meet and attempt to negotiate a contract or
agreement, which specifies the nature of employee employer-union
relationship.
 According to Harbinson, collective bargaining is “a process of
accommodation between two institutions which have both common
and conflicting interests.”
 The Asian Regional Conference of ILO held in 1953, asserts that
collective agreements are usually the best measures for the
determination and adjustment of wages and that attempt should be
made as early as possible to develop systems of collective negotiations
based on free associations of employers and workers.
Scope of Collective Bargaining

The scope of collective bargaining is quite vast because of the delicacy of
the employer, employee relationship, changing necessity of the
organization and its employees, changes in the business environment
and competition with in the industry and across industry.
• According to Monappa, the scope of collective bargaining agreements
now covers issues such as wages, bonus, overtime, paid holidays, paid
sick leave, safety wear, production norms, hours of work, performance
appraisal, workers participation in management, hiring, fixing of job
evaluation norms and modernization.
• The scope of collective bargaining varies from organization to
organization and industry to industry depending upon existence of
strong and matured union and its leadership trust and confidence
between union and management, past history and present status of
organization with respect to negotiation and their implementation.
Characteristics of Collective Bargaining

• 1. It is a group action as opposed to individual action and is initiated
through the representatives of workers. On the management side are
its delegates at the bargaining table; on the side of workers is their
trade union, which may represent local plant, the industry
membership or nation-wide membership.
• 2. It is flexible and mobile, and not fixed or static. It has fluidity and
ample scope for a compromise, for a mutual give-and-take before the
final agreement is reached or the final settlement is arrived at.
• It is a bipartite process. The employers and the employees are the
only parties involved in the bargaining process. There is no third party
intervention. The conditions of employment are regulated by those
directly concerned.
• 4. It is a continuous process which provides a mechanism for
continuing and organised relationships between management and
trade unions. “The heart of collective bargaining is the process for a
continuing joint consideration and adjustment of plant problems.”
• . It is industrial democracy at work. Industrial democracy is the
governance of labour with the consent of the governed workers. The
principle of arbitrary unilateralism has given way to that of self
government in industry. Collective bargaining is not a mere signing of
an agreement granting seniority, vacations and wage increases. It is
not a mere sitting around a table, discussing grievances. Basically, it
is democratic: it is a joint formulation of company policy on all
matters which directly affect the workers.
• Collective bargaining is not competitive process but is essentially
a complementary process, i.e. each party needs something that the
other party has, namely, labour can make a greater productive effort
and management has the capacity to pay for the effort and to organize
and guide it for achieving its objectives.
Types of Bargaining
1) Distributive Bargaining: It involves haggling over the
distribution of surplus. Various activities involved in this activity
are wages, salaries, bonus and other financial issues. In this
activity, both the parties face a win/lose situation.
2) Integrative Bargaining: Also known as Interest-Based
Bargaining, issues which are not damaging to either party are
discussed. It is a negotiation strategy in which both the parties
collaborate to find a win-win solution to their problems. This strategy
focuses on developing mutually beneficial agreements based on the
interests of the disputants. Issues brought up may be better job
evaluation procedures, better performance appraisal methods or
training programmes etc.
3) Attitudinal structuring: Attitudinal structuring refers to efforts by
negotiators to shape their opponents' perceptions about the nature of
the issues to be negotiated. By cultivating an atmosphere of
friendliness, mutual respect, trust, and cooperation, negotiators can
encourage their opponents to view issues largely in integrative terms
and participate in joint problem solving. This activity involves shaping
and reshaping some perceptions like trust/distrust,
friendliness/hostility, co-operative/non-cooperative between the
labour and management. When there is a backlog of bitterness
between both the parties, attitudinal structuring is required to
maintain smooth and harmonious industrial relations.
4) Intra-Organisational Bargaining: It is a type of manoeuvring to
achieve consensus among the workers and management. Even within
the union there may be differences between different groups as may
be the case with the management. Intra-organisational consensus is
required for the smooth acceptance of the outcome of Collective
Bargaining.
Objectives of Collective Bargaining:
1) To maintain cordial relations between the employer and employees.
2) To protect the interests of the workers through collective action and
by preventing unilateral actions from being taken by the employer.
3) To ensure the participation of trade unions in industry.
4) To avoid the need for government intervention as collective bargaining
is a voluntary collective process.
5)To promote Industrial democracy.
Importance of Collective Bargaining
• Collective Bargaining not only includes negotiation, administration
and enforcement of the written contracts between the employees and
the employers, but also includes the process of resolving labour-
management conflicts.
• Thus, collective bargaining is a legally and socially sanctioned way of
regulating in the public interest the forces of power and influence
inherent in organized labour and management groups.
Importance of Employees
• Collective Bargaining helps the employees:
• (i) To develop a sense of self-respect and responsibility among the
employees.
• (ii) To increase the strength of the workers. Their bargaining capacity
as a group increases.
• (iii) To increase the morale and productivity of employees.
• (iv) To restrict management‘s freedom for arbitrary action against the
employees. Unilateral actions by the management are discouraged.
• (v) To strengthen the trade union movement.
Importance to Employers
• (i) The workers feel motivated as they can talk to the employers on
various matters and bargain for higher benefits. As a result, their
productivity increases.
• (ii) It is easier for the management to resolve issues at the bargaining
table rather than taking up complaints of employees individually.
• (iii) Collective bargaining promotes a sense of job security among the
employees and thereby tends to reduce cost of labour turnover to
management, employees as well as the society at large.
• (iv) Collective bargaining opens up the channels of communications
between the top and bottom levels of organization which may be
difficult otherwise.
Importance to society
Collective Bargaining helps the society:
(i) To attain industrial peace in the country.
(ii) To establish a harmonious industrial climate which supports the
pace of a nation‘s efforts towards economic and social development
since the obstacles to such development can be largely eliminated or
reduced. As a vehicle of industrial peace or harmony, collective
bargaining has no equal.
(iii) To extend the democratic principle from the political to the
industrial field. It builds up a system of industrial jurisprudence by
introducing civil rights in industry and ensures that management is
conducted by rules rather than by arbitrary decisions.
(iv) To check the exploitation of workers by the management.
(v) To distribute equitably the benefits derived from industry among all
the participants including the employees, the unions, the
management, the customers, the suppliers and the public.
PREPARATION FOR COLLECTIVE BARGAINING:

• Preparation: At the very first step, both the representatives of each
party prepares the negotiations to be carried out during the meeting.
Each member should be well versed with the issues to be raised at the
meeting and should have adequate knowledge of the labor laws.
The management should be well prepared with the proposals of
change required in the employment terms and be ready with the
statistical figures to justify its stand.
On the other hand, the union must gather adequate information
regarding the financial position of the business along with its ability to
pay and prepare a detailed report on the issues and the desires of the
workers.
• Discuss: Here, both the parties decide the ground rules that will guide
the negotiations and the prime negotiator is from the management
team who will lead the discussion. Also, the issues for which the
meeting is held, are identified at this stage.
The issues could be related to the wages, supplementary economic
benefits (pension plans, health insurance, paid holidays, etc.),
Institutional issues(rights and duties, ESOP plan), Administrative
issues (health and safety, technological changes, job security, working
conditions).
• Propose: At this stage, the chief negotiator begins the conversation
with an opening statement and then both the parties put forth their
initial demands. This session can be called as a brainstorming, where
each party gives their opinion that leads to arguments and counter
arguments.
• Bargain: The negotiation begins at this stage, where each party tries
to win over the other. The negotiation can go for days until a final
agreement is reached. Sometimes, both the parties reach an amicable
solution soon, but at times to settle down the dispute the third party
intervenes into the negotiation in the form of arbitration or
adjudication.
• Settlement: This is the final stage of the collective bargaining
process, where both the parties agree on a common solution to the
problem discussed so far. Hence, a mutual agreement is formed
between the employee and the employer which is to be signed by each
party to give the decision a universal acceptance.
Thus, to get the dispute settled the management must follow these
steps systematically and give equal chance to the workers to speak
out their minds.
The Advantages of Collective Bargaining

1. Provides Security To Workers
Since collective bargaining contracts are legally binding agreements,
the employees can be sure of their work conditions. As long as all
terms are followed, the management cannot go back or change any of
the conditions.
2. Prohibits Strikes
This is the security that is provided to the management. Collective
bargaining agreements prevent any employees from striking or not
working to try to get different benefits. Strikes can cause huge
problems within a company, so this is a big draw for management to
use collective bargaining.
3. Gives Employees A Voice
All of the employees that the agreement will affect are allowed to have
a say in the conditions. All voices are heard, which promotes a much
better moral in the workplace. This also ensures that the wants and
needs of the majority are met.
4. Reduces Bias and Favoritism
All too often you hear stories of someone getting additional benefits
simply because of their relationship with their boss or other irrelevant
things. This is greatly reduced, and possibly eliminated, with the use
of collective bargaining. It evens the playing field for all employees.
5. Stabilizes The Business
Without the fear of layoffs, or wage cuts, people feel much more stable
in their job and position at a company. The stability also comes in for
the management because they can easily determine budgets because
all wages and benefits are clearly laid out.
The Disadvantages of Collective Bargaining

1. Not All People Will Agree
Collective bargaining cater to the needs of the many and disregard the
few. The terms in the agreement could negatively affect employees who
have special circumstances or simply do not agree. In this case, these
employees have no say.
2. A Loss of Authority
When employees know exactly how much power management has,
and has a say in the things that they can and cannot do, their role as
the authority figure is greatly diminished. Respect suffers immensely
when collective bargaining is used.
3. Bureaucracy Takes Forever
Collective bargaining involves the use of bureaucratic systems. This
extends the time that it takes to make decisions and implement any
new policies into the work place, causing time and money for the
company.
4. Reduces Managements Hand In Business
Constructive development is hugely hindered when collective
bargaining is use. If a policy or term of the agreement truly needs to
be revised or removed, it is nearly impossible to do so. The contract
are generally multi year, which means that this time has to be waited
before the changes can be made.
5. Equalized Pay Causes Problems
When you make benefits and pay the same across the board you are
begging for issues. Workers who have worked at the company longer
or who are much more skilled than other workers, will feel taken
advantages of with equalized pay that collective bargaining results in.
WAGE AND SALARY ADMINISTRATION:
Meaning of Wage and Salary Administration
• According to D.S. Beach “Wage and Salary Administration refers to
the establishment and implementation of sound policies and practices
of employee compensation.
• According to S.P. Robbins, The term ‘compensation administration’ or
‘wage and salary administration’ denotes the process of managing a
company’s compensation programme. The goals of compensation
administration are to design a cost-effective pay structure that will
attract, motivate and retain competent employees.
• Thus, wage and salary administration aims to establish and maintain
an equitable wage and salary structure and an equitable labour cost
structure.
Objectives of Wage and Salary Administration
• A sound plan of wage and salary administration seeks to achieve the
following objectives:
• (i) To establish a fair and equitable compensation offering similar pay
for similar work.
• (ii) To attract competent and qualified personnel.
• (iii) To retain the present employees by keeping wage levels in nine
with competitive units.
• (iv) To keep labour and administrative costs in line with the ability of
the organisation to pay.
• (v) To improve motivation and morale of employees and to improve
union management relations.
• (vi) To project a good image of the company and to comply with legal
needs relating to wages and salaries.
• (vii) To establish job sequences and lines of promotion wherever
applicable.
• (viii) To minimise chances of favouritism while assigning the wage
rates
Nature / Characteristics of Wage And Salary Administration
1. Employer and employee relationship: The salary/wage is a relationship
between employer and employee, where compensation is provided for the
services rendered by the employee to his employer.
2. Salary and Wages are same: salary and wage is a benefit provided by the
firm to his employees. There is no much difference among them. The only
difference is salary is paid for administrative type of work, Where as wages
are paid for manual type of work.
3. Consideration of Benefit: Salary paid or allowed in the present or previous
year due to the required consideration of benefit.
Principles of Wage and Salary Administration
1. Wage policy should be developed keeping in view the interests of all
concerned parties viz. employer, employees, the consumers and the society.
2. Wage and salary plans should be sufficiently flexible or responsive to
changes in internal and external conditions of the organisation.
3. Efforts should be made to ensure that differences in pay for jobs are
based on variations in job requirements such as skill, responsibility, efforts
and mental and physical requirements.
4. Wage and salary administration plans must always be consistent with
overall organisational plans and programmes.
5. Wage and salary administration plans must be in conformity with the
social and economic objectives of the country like attainment of equality in
income distribution and controlling inflation etc.
6.These plans and programmes should be responsive to the changing local
and national conditions.
7. Wage and salary plans should expedite and simplify administrative
process.
8. Workers should be associated, as far as possible, in formulation and
implementation of wage policy.
9. An adequate database and a proper organisational set up should be
developed for compensation determination and administration.
10. The general level of wages and salaries should be reasonably in line with
that prevailing in the labour market.
11.There should be a clearly established procedure for hearing and
adjusting wage complaints. This may be integrated with the regular
grievance procedure, if it exists.
12. The workers should receive a guaranteed minimum wage to protect them
against conditions beyond their control.
13. Prompt and correct payments to the employees should be ensured and
arrears of payment should not accumulate.
14. The wage and salary payments must fulfill a wide variety of human
needs including the need for self actualisation.
15. Wage policy and programme should be reviewed and revised periodically
in conformity with changing needs. For revision of wages, a wage committee
should always be preferred to the individual judgement, in order to prevent
bias of a manager.
Factors Affecting Wage Rate Decisions
(A) External Factors:
1. Demand and Supply:
The labour market conditions or demand and supply forces operate at the
national and local levels and determine organisational wage structure. When
the demand for a particular type of labour is more and supply is less than
the wages will be more.
On the other hand, if supply of labour is more and demand on the other
hand, is less then persons will be available at lower wage rates also. In the
words of Mescon, ‘the supply and demand compensation criterion is very
closely related to the prevailing pay, comparable wage and ongoing wage
concepts since, in essence, all these remuneration standards are determined
by immediate market forces and factors.
2. Cost of Living:
The wage rates are directly influenced by cost of living of a place. The
workers will accept a wage which may ensure them a minimum standard of
living. Wages will also be adjusted according to price index number. The
increase in price index will erode the purchasing power of workers and they
will demand higher wages. When the prices are stable then frequent wage
increases may not be undertaken.
3. Trade Unions’ Bargaining Power:
The wage rates are also influenced by the bargaining power of trade unions.
Stronger the trade union higher will be the wage rates. The strength of a
trade union is judged by its membership, financial position and type of
leadership. Union’s last weapon is strike which may also be used for getting
wage increases. If the workers are disorganised and disunited then
employers will be successful in offering low wages.
4. Government Legislation:
To improve the working conditions of workers, government may pass a
legislation for fixing minimum wages of workers. This may ensure them a
minimum level of living. In underdeveloped countries bargaining power of
labour is weak and employers try to exploit workers by paying them low
wages. In India, Minimum Wages Act, 1948 was passed to empower
government to fix minimum wages of workers.
5. Psychological and Social Factors:
Psychologically the level of compensation is perceived as a measure of
success in life. Management should take into consideration the
psychological needs of the employees while fixing the wage rates so that the
employees take pride in their work. Sociologically and ethically, the
employees want that the wage system should be equitable, just and fair.
These factors should also be taken into consideration while devising a wage
programme.
6. Economy:
Economy also has its impact on wage and salary fixation. While it may be
possible for some organisations to thrive in a recession, there is no doubt
that economy affects remuneration decisions. A depressed economy will
probably increase the labour supply. This, in turn, should lower the going
wage rate.
7. Technological Development:
With the rapid growth of industries, there is a shortage of skilled resources.
The technological developments have been affecting skill levels at faster
rates. Thus, the wage rates of skilled employees constantly change and an
organisation has to keep its level up to the mark to suit the market needs.
8. Prevailing Market Rates:
No enterprise can ignore prevailing or comparative wage rates. The wage
rates paid in the industry or other concerns at the same place will form a
base for fixing wage rates. If a concern pays low rates then workers leave
their jobs whenever they get a job somewhere else. It will not be possible to
retain good workers for long.
(B) Internal Factors:
1. Ability to Pay:
The ability to pay of an enterprise will influence wage rates to be paid. If the
concern is running into losses then it may not be able to pay higher wage
rate. A profitable concern may pay more to attract good workers. During the
period of prosperity, workers are paid higher wages because management
wants to share the profits with labour.
2. Job Requirements:
Basic wages depend largely on the difficulty level, and physical and mental
effort required in a particular job. The relative worth of a job can be
estimated through job evaluation. Simple, routine tasks that can be done by
many people with minimum skills receive relatively low pay. On the other
hand, complex, challenging tasks that can be done by few people with high
skill levels generally receive high pay.
3. Management Strategy:
The overall strategy which a company pursues should determine the
remuneration to its employees. Where the strategy of the organisation is to
achieve rapid growth, remuneration should be higher than what competitors
pay. Where the strategy is to maintain and protect current earnings,
because of the declining fortunes of the company, remuneration level needs
to be average or even below average.
4. Employee:
Several employees related factors interact to determine his remuneration.
These are:
(i)Performance or productivity is always rewarded with a pay increase.
Rewarding performance motivates the employees to do better in future.
(ii) Seniority:
Unions view seniority as the most objective criteria for pay increases
whereas management prefers performance to effect pay increases.
(iii) Experience:
Makes an employee gain valuable insights and is generally rewarded.
(iv) Potential:
Organisations do pay some employees based on their potential. Young
managers are paid more because of their potential to perform even if they
are short of experience.
STEPS INVOLVED IN DETERMINING WAGE AND SALARY RATES ARE
AS FOLLOWS:
(i) Job Analysis:
A job analysis describes the duties, responsibilities, working conditions and
interrelationships between the job as it is and the other jobs with which it is
associated. Job descriptions are crucial in designing pay systems, for they
help to identify important job characteristics.
(ii) Conduct the Salary Survey:
Compensation or salary surveys play a central role in pricing jobs. Virtually
every employer, therefore, conducts at least an informal survey. Salary
surveys can be formal or informal. Informal telephone surveys are good for
quickly checking on a relatively small number of easily identified and
quickly recognised jobs. Such as when a company’s HR manager wants to
confirm the salary at which to advertise a newly open cashier’s job.
(iii) Group Similar Jobs into Pay Grades:
After the results of job analysis and salary surveys have been received, the
committee can turn to the task of assigning pay rates to each job, but it will
usually want to first group jobs into pay grades.
A pay grade is comprised of jobs of approximately equal difficulty or
importance as determined by job evaluation. Pay grading is essential for pay
purposes because instead of having to deal with hundreds of pay rates, the
committee might only have to focus on say 10 or 12.
(iv) Price Each Pay Grade:
The next step is to assign pay rates to pay grades. Assigning pay rates to
each pay grade is usually accomplished with a wage curve. The wage curve
depicts graphically the pay rates currently being paid for jobs in each pay
grade, relative to the points or rankings assigned to each job or grade by the
job evaluation.
(v) Fine-Tune Pay Rates:
Fine tuning involves correcting out of line rates and developing rate ranges:
(a) Developing Rate Ranges:
Most employers do-not pay just one rate for all jobs in a particular pay
grade. Instead, they develop rate ranges for each grade so that there might
be different levels and corresponding pay rates within each pay grade. The
rate range is usually built around the wage line or curve.
(b) Correcting out of Line Rates:
The average current pay for a job may be too high or too low, relative to
other jobs in the firm. If a rate falls well below the line, a pay rise for that job
may be required. If the rate falls well above the wage line, pay cuts or a pay
freeze may be required.
(vi) Wage Administration Rules:
The development of rules of wage administration has to be done in the next
step.
It is considered advisable in the interest of die concern and the employees
that the information about average salaries and ranges in the salaries of
group should be made known to the employees concerned; for secrecy in
this matter may create dissatisfaction and it may also vitiate the potential
motivating effects of disclosure. Finally, the employee is appraised and the
wage is fixed for the grade he is found fit.
Methods of Wage Payments:
The different methods of wage payments are as follows:
(i) Time Wage System:
This is the oldest method of wage payment. The ‘Time’ is made a basis for
determining wages of a person. The wages are paid according to the time
spent by workers irrespective of their output of work done. The wage rates
are fixed for an hour, a day, a week or a month.
The time spent at work is recorded and wages are paid according to it. For
example, a wage rate of Rs. 15 per day is fixed in a factory. Two workers A
and B attend work for 29 and 25 days respectively. The wages as per time
wage system will be Rs. 435 and 375 for A and B respectively.
Wages are calculated in this method as follows:
Earnings = T x R
Where T stands for time spent and R is the rate of pay.
(ii) Piece Wage System: Under piece system of payment, wages are based
on output and not on time. There is no consideration for time taken in
completing a task. A fixed rate is paid for each unit produced, job completed
or an operation performed. Workers are not guaranteed minimum wages
under this system.
The wages to be paid to a worker can be calculated as follows:
Output x Piece Rate
Types of Piece Rate System:
Piece rate system may be of three types.
1. Straight Piece Rate: In this method one piece rate is fixed and whole
production is paid on this basis.
If a piece rate of Rs. 5 per unit is fixed then the wages will be calculated by
multiplying output by the rate fixed. A worker producing 100 units will get
Rs. 500 (100 x 5). If production is raised to 120 units then wages will be Rs.
600 (120 x 5).
2. Increasing Piece Rate: In this method different rates are fixed for
different levels of production. Higher rates are given when production
increases beyond a certain level. For example, a piece rate of Rs. 1 per unit
may be fixed for production upto 100 units, Rs. 1.25 per unit for output
between 101-150 units and 1.50 per unit for a production beyond 150 units
and so on. There is an incentive to get higher rate for raising production
beyond a certain level.
3. Decreasing Piece Rate: In this method the rate per unit decreases with
increase in output. Re. 1 per unit may be allowed upto a production of 100
units, 0.90 P. per unit for production between 101-150 units, 0.85 P. per
unit for an output beyond 150 units and so on. This method discourages
workers from raising their output because better efforts are rewarded at
lower piece rates.
(iii) Balance or Debt Method:
Balance or debt method is a combination of time and piece wage systems.
The worker is guaranteed a time rate with an alternative piece rate. If the
wages calculated at piece rate exceed time rate the worker gets credit. On
the other hand, if time wages exceed piece wages, the worker is paid time
wage and the deficit is carried forward as debt to be recon-served in future.
CONCEPTS OF WAGES:
(i) Minimum Wage:
Minimum wage is that wage which must be paid whether the company earns
any profit or not. This wage provides not merely for bare sustenance of life,
but also for the preservation of the efficiency of the worker. Minimum wage
may be fixed by an agreement between the management and the workers
but is usually determined through legislation.
This is more so in the unorganised sector where labour is unionised. In the
fixation of minimum wages, besides the needs of workers, other factors like
ability of the concern to pay nature of the jobs etc. are also considered.
(ii) Fair Wage:
Fair wage is that wage which is above the minimum wage but below the
living wage. It can be fixed only by comparison with an accepted standard
wage. Such a standard can be determined with reference to those industries
where labour is well organised and has been able to bargain well with the
employer.
(iii) Incentives
The incentive is a positive motivational influence on a person that helps
improve his performance. Thus, it can be said that all the measures taken
by the management to improve the performance of its employees are
incentives. The incentives can be broadly classified as financial incentives
and non-financial incentives.
Financial Incentives
Financial incentives can be provided on an individual or group basis and
satisfy the monetary and future security needs of individuals. The most
commonly used financial incentives are:
(a) Pay and Allowances
Salary is the basic incentive for every employee to work efficiently for an
organization. Salary includes basic pay, dearness allowance, house rent
allowance, and similar other allowances. Under the salary system,
employees are given increments in basic pay every year and also an increase
in their allowances from time-to-time. Sometimes these increments are
based on the performance of the employee during the year.
(b) Bonus
It is a sum of money offered to an employee over and above the salary or
wages as a reward for his good performance.
(c) Productivity linked Wage Incentives
Many wage incentives are linked with the increase in productivity at
individual or group level. For example, a worker is paid 50 rupees per piece
if he produces 50 pieces a day but if he produces more than 50 pieces a day,
he is paid 5 rupees extra per piece. Thus, on the 51st piece, he will be paid
55 rupees.
(d) Profit-Sharing
Sometimes the employees are given a share in the profits of the
organization. This motivates them to perform efficiently and give their best
to increase the profits of the organization.
(e) Retirement Benefits
Retirement benefits like gratuity, pension, provident fund, leave
encashment, etc. provide financial security to the employees post their
retirement. Thus, they work properly when they are in service.
(f) Stock Options or Co-partnership
Under the Employees Stock Option Plan, the employee is offered the
ordinary shares of the company at a price lower than its market price for a
specified period of time. These are non-standardized offers and shares are
issued as a private contract between the employer and employee. These are
generally offered to management as a part of their managerial compensation
package.
(g) Commission
Some organizations offer a commission in addition to the salary to
employees for fulfilling the targets extremely well. This incentive encourages
the employees to increase the client base of the organization.
(h) Perquisites
Several organizations offer perquisites and fringe benefits such as
accommodation, car allowance, medical facilities, education facilities,
recreational facilities, etc. in addition to the salary and allowances to its
employees. These incentives also motivate the employees to work efficiently.
NON FINANCIAL INCENTIVES

Apart from the monetary and future security needs, an individual also has
psychological, social and emotional needs. Satisfying these needs also plays
an important role in their motivation. Non-financial incentives focus mainly
on the fulfillment of these needs and thus cannot be measured in terms of
money.
(a) Status
With reference to an organization, status refers to the position in the
hierarchy of the organizational chart. The level of authority, responsibility,
recognition, salary, perks, etc. determine the status of an employee in the
organization.
b) Organizational Climate
Organizational climate refers to the environmental characteristics of an
organization that are perceived by its employees about the organization and
have a major influence on their behavior. Each organization has a different
organizational climate that distinguishes it from other organizations.
(c) Career Advancement Opportunity
It is very important for an organization to have an appropriate skill
development program and a sound promotion policy for its employees which
works as a booster for them to perform well and get promoted.
Every employee desires growth in an organization and when he gets
promotion as an appreciation of his work he is motivated to work better.
(d) Job Enrichment
It refers to the designing of jobs in such a way that it involves a higher level
of knowledge and skill, a variety of work content, more autonomy and
responsibility of employees, meaningful work experience and more
opportunities of growth. When the job is interesting, it itself serves as a
source of motivation.
(e) Job Security
Job security provides future stability and a sense of security among the
employees. The employees are not worried about the future and thus work
with more enthusiasm. Owing to the unemployment problem in our country,
job security works as a great incentive for the employees. However, there is
also a negative aspect of this incentive that employees tend to take their job
for granted and not work efficiently.
(f) Employee Recognition Programmes
Recognition means acknowledgment and appreciation of work done by
employees. Recognition in the organization boosts their self-esteem and they
feel motivated. For example, declaring the best performer of the week or
month, displaying their names on the notice board and giving them rewards,
fall under the Employee recognition program.
(g) Employee Participation
Involving the employees in decision making regarding the issues related to
them such as canteen committees, work committees, etc. also helps in
motivating them and inducing a sense of belongingness in them.
(h) Employee Empowerment
Giving more autonomy and powers to subordinates also make them feel that
they are important to the organization and in turn they serve the
organization better.
What are Fringe Benefits?

Fringe benefits are the additional benefits offered to an employee, above the
stated salary for the performance of a specific service. Some fringe benefits
such as social security and health insurance are required by law, while
others are voluntarily provided by the employer.
Examples of optional fringe benefits include free breakfast and lunch, gym
membership, employee stock options, transportation benefits, retirement
planning services, childcare, education assistance, etc.
Features of Fringe Benefits:

 They are supplementary forms of compensation.
 They are paid to all the employees ( unlike incentives which are paid
only to the extra ordinary performers) based on their membership in
the organisation.
 Fringe benefits are indirect compensation because they are extended
as a condition for employment and are not directly related with the
performance.
 These benefits may be statutory or voluntary. For example Provident
funds are statutory but the transportation facility is voluntary.
 These benefits help raise the living standards of the employees
Need for Fringe benefits:
 Employee demand: The employees now a days demand for fringe
benefits rather than pay hikes because of reduction in tax burden on
the employee’s side and in view of galloping price index and cost of
living.
 Trade Unions demand: Various trade union are competing with each
other for getting more and more benefits for there members. If one
union succeeds in persuading the management for a new benefit the
other union will try to convince the management for an additional
benefit.
 Employer’s Preference: Employer may also wish to provide fringe
benefits to the employees in a view of increasing productivity and
motivating the employees.
 As a social security: Fringe benefits are also provided to the
employees to protect them from certain risk such as contingencies of
life like accidents and occupational diseases.
 To improve human relations: Improving human relation is a process
of addressing the needs of the employees and satisfying them. Fringe
benefit satiates employee’s economical, social and psychological needs
Types of Fringe benefits:

1. Payment for Time not worked:
Hours of work: Factory’s Act , 1948 specifies that no adult workers shall
be required to work in factory more than 48 hours a week. In some
organisations number of working hours per week are less than the legal
requirements.
Paid Holidays: According to Factory’s Act, 1948 an adult worker shall have
a weekly paid holiday, normally Sunday. When a worker is deprived of
weekly paid holidays he/ she is to be compensated with the same number of
holidays in the same month. Some organisations offer two weekly paid
holidays.
Shift Premium: Workers working on odd shift are to be compensated with
more than the normal wage rate, generally known as premium.
Holiday Pay: Generally organisations offer double the normal rate to those
workers who work on holidays.
Paid Vacation: Workers in mining , manufacturing and plantation who
have worked for 240 days in year are entitled for paid vacations at a rate of
1 day for every 20 days worked in case of adult workers and 1 day for every
15 days worked in case of child workers.
2. Employee Security:
Physical and job security to the employees should also be provided with a
view to ensure security to the employee and his family members. When the
employee’s services get confirmed, his job becomes secures. Further, a
minimum and continuous wage or salary gives a sense of security to the life.
Retrenchment Compensation: The Industrial Disputes Act, 1947 provides
for the payment of compensation in case if lay off and retrenchment. The
non-seasonal industrial establishment employing 50 or more workers have
to give one month’s advance notice or one month’s wages to all the
employees who are retrenched after one year’s continuous service. The
compensation is paid at the rate of 45 day wage for every completed year of
service. Workers are eligible for compensation as stated above in case of
closing down of undertakings.
Lay Off Compensation: In case of lay off the employees are entitled to lay
off compensation at the rate equal to 50% of the total of the basic wage and
dearness allowance for the period of their lay off except for the weekly
holidays. Lay off compensation can normally be paid up to 45 days a year.
3. Safety and Healthy:

Employee’s safety and health should be taken care in order to protect the
employees against accidents, unhealthy working conditions and to protect
the worker’s productive capacity. In India, Factory’s Act, 1948 stipulated
certain requirements regarding working conditions with a view to provide
safe working environment. These provisions relate to cleanliness, disposal of
waste and effluents, ventilation and temperature, dust and fumes, artificial
humidification, overcrowding, lighting, urinals, drinking water, latrines,
spittoons etc.
Provisions relating to safety measures include fencing of machinery, work on
or near machinery in motion, employment of young persons on dangerous
machines, self acting machines, casing of new machinery,hoists and lifts
excessive weights, lifting machines, chains, ropes explosive or inflammable
dust , gas etc.
4. Workmen’s Compensation:
In addition to safety and health measures, provisions for payments of
compensation has also been made under the Workmen’s Compensation Act,
1923. The Act is intended to meet the contingencies of death and invalidity
of worker due to employment injury and occupational diseases specified
under the Act as the sole responsibility of employer. Under the Act the
amount of compensation depands upon the nature of injury and and
monthly wages of the employee. Dependants of the employee are are eligible
for compensation in case of death of the employee.
5. Heath Benefits:
Sickness benefits: Sickness benefit is roughly 50% of average daily wages
and is payable for 91 days during 2 consecutive benefit period.
Medical benefit: The Employee’s state Insurance Scheme provides full
medical care in the form of medical attendance, treatments, drugs and
injections, specialist consultation, and hospitalization to insured person and
also to members of their families where the facility has been extended to the
families.
Temporary Disablement benefits: TDB is payable to an employee suffers
from employment injury or occupational diseases and is certified to
temporarily incapable of work.
Permanent Disablement Benefit: PDB is payable to an employee who
suffers permanent residual disablement as a result of employment accident
or occupational diseases. The maximum rate of PDB can be equal to TDB.
Maternity Benefits: Maternity benefits is payable to and insured women in
the following cases subject to contributory conditions: – (a) Confinement, (b)
Miscarriage or medical termination of pregnancy (MTP), (c) sickness arising
out of pregnancy.
6. Voluntary Arrangement:
However, most of the large organisations provide health services over and
above the legal requirements to their employees free of cost by setting up
hospitals, clinics, dispensaries, and homeopathic dispensaries. Company’s
elaborate health service programmes includes:
Providing health maintenance services, emergency care, on the job
treatment for minor complaints, health counselings, medical supervision in
rehabilitation, accidents and sickness prevention, health education
programmes, treatment in employee colonies etc.
Medical benefits are extended to employee family members and to the retired
employees and their family members.
Small organisations which cannot setup hospitals provide the medical
services through local hospitals and doctors. Sometimes they provides
reimbursements of medical expenses borne by the employee.
7. Welfare and Recreational facilities:
These benefits include canteens, consumer stores, credit societies, housing,
legal aids, employee counselling, welfare organisation, holiday homes,
educational facilities, transportation, picnics and parties etc.
WORKMEN’S COMPENSATION ACT 1923:
The Workmen Compensation Act 1923, aims to provide workmen
and/or their dependents some relief in case of accidents arising
out of and in the course of employment and causing either death
or disablement of workmen.
Objective and Scope of this Act
• The Employees’ Compensation Act is social security
legislation.
• It imposes statutory liability upon an employer to discharge
his moral obligation towards his employees when they suffer from
physical disabilities and diseases during the course of
employment in hazardous working conditions.
• To help the dependents of the employee rendered destitute
by the ‘accidents’ and from the hardship arising out from such
accidents.
• The Act provides for cheaper and quicker mode of disposal
of disputes relating to compensation through special proceedings
than possible under the civil law.
• The Act extends to the whole of India.
SOCIAL SECURITY
What is the concept of social security?
Social security is the protection that a society provides to individuals and
households to ensure access to health care and to guarantee income
security, particularly in cases of old age, unemployment, sickness,
invalidity, work injury, maternity or loss of a breadwinner.
Social security is "any government system that provides monetary
assistance to people with an inadequate or no income“
Social security may also refer to the action programs of an organization
intended to promote the welfare of the population through assistance
measures guaranteeing access to sufficient resources for food and shelter
and to promote health and well-being for the population at large and
potentially vulnerable segments such as children, the elderly, the sick and
the unemployed.
Four basic categories of Social Security benefits are paid based upon the
record of your earnings: retirement, disability, dependents, and survivors
benefits. These benefits all fall under the Old Age, Survivors And Disability
Insurance Program (OASDI), which is the official name of Social Security.
Retirement Benefits
Workers who have worked in "covered employment" for a sufficient number
of years are eligible for retirement benefits when they retire at age
58/60/65/70.
Disability Benefits
If you haven't reached retirement age but have met the work requirements
and are considered disabled under the Social Security program's medical
guidelines, you can receive benefits roughly equal to what your full
retirement benefits would be.
Dependents Benefits
If you are the spouse of a retired or disabled worker who qualifies for Social
Security retirement or disability benefits, you and your minor or disabled
children may be entitled to benefits based on the worker's earning record.
This is true whether or not you actually depend on your spouse for your
support.
Survivors Benefits
If you are the surviving spouse of a worker who qualified for Social Security
retirement or disability benefits, you and your minor or disabled children
may be entitled to benefits based on your deceased spouse's earnings

record.
Introduction to the Social Security System in India

India’s social security system is composed of a number of schemes and
programs spread throughout a variety of laws and regulations. Keep in
mind, however, that the government-controlled social security system in
India applies to only a small portion of the population.
Furthermore, the social security system in India includes not just an
insurance payment of premiums into government funds (like in China), but
also lump sum employer obligations.
Generally, India’s social security schemes cover the following types of social
insurances:
• Pension
• Health Insurance and Medical Benefit
• Disability Benefit
• Maternity Benefit
• Gratuity
Pension or Employees’ Provident Fund

The Employees’ Provident Fund Organization, under the Ministry of Labor
and Employment, ensures superannuation pension and family pension in
case of death during service. Presently, only about 35 million out of a labor
force of 400 million have access to formal social security in the form of old-
age income protection in India. Out of these 35 million, 26 million workers
are members of the Employees’ Provident Fund Organization, which
comprises private sector workers, civil servants, military personnel, and
employees of State Public Sector Undertakings (PSUs).
The schemes under the Employees’ Provident Fund Organization apply to
businesses with at least 20 employees. Contributions to the Employees’
Provident Fund Scheme are obligatory for both the employer and the
employee when the employee is earning up to Rs 15,000 (US$220) per
month, and voluntary, when the employee earns more than this amount. If
the pay of any employee exceeds this amount, the contribution payable by
the employer will be limited to the amount payable on the first Rs 15,000
(US$220) only.
The Employees’ Provident Fund Organization includes three schemes:
• The Employees’ Provident Fund Scheme, 1952;
• The Employees’ Pension Scheme, 1995; and,
• The Employees’ Deposit Linked Insurance Scheme, 1976.
 The Employees’ Provident Fund (EPF) Scheme is contributed to by the
employer (1.67-3.67 percent) and the employee (10-12 percent).
 The Employee Pension Scheme (EPS) is contributed to by the employer
(8.33 percent) and the government (1.16 percent), but not the
employee.
 Finally, the Employees’ Deposit Linked Insurance (EDLI) Scheme is
contributed to by the employer (0.5 percent) only.
Four main types of pension (all monthly) are offered:
 Pension upon superannuation or disability;
 Widows’ pension for death while in service;
 Children’s pension; and,
 Orphan’s pension.
In addition, there are separate pension funds for civil servants, workers
employed in coal mines and tea plantations in the state of Assam, and for
seamen.
Health Insurance and Medical Benefit
India has a national health service, but this does not include free medical
care for the whole population. The Employees’ State Insurance (ESI) Act
creates a fund to provide medical care to employees and their families, as
well as cash benefits during sickness and maternity, and monthly payments
in case of death or disablement for those working in factories and
establishments with 10 or more employees.
The ESI (Central) Amendment Rules, 2016 – notified on December 22, 2016
– expanded coverage to include employees earning Rs 21,000 (US$313.53)
or less in a month from January 1, 2017; previously, the wage limit for ESI
subscribers was Rs 15,000 (US$223.95) per month. Subsequently, the
Employees’ State Insurance (Central) Amendment Rules, 2017 was notified
on January 20, detailing new maternity benefits for women who have
insurance.
Sickness benefit under ESI coverage is 70 percent of the average daily wage
and is payable for 91 days during two consecutive benefit periods.
Disability Benefit
The Employee’s Compensation Act, 1923, formerly known as the ‘Workmen’s
Compensation Act, 1923’, requires the employer to pay compensation to
employees or their families in cases of employment related injuries that
result in death or disability.\
In addition, workers employed in certain types of occupations are exposed to
the risk of contracting certain diseases, which are peculiar and inherent to
those occupations. A worker contracting an occupational disease is deemed
to have suffered an accident out of and in the course of employment, and
the employer is liable to pay compensation for the same. Injuries resulting in
permanent total and partial disablement are listed in parts I and II of
Schedule I of the Employee’s Compensation Act, while occupational diseases
have been defined in parts A, B, and C of Schedule III of the Employee’s
Compensation Act.
Compensation calculation depends on the situation of occupational
disability:
(a) Death
50 percent of the monthly wage multiplied by the relevant factor (age) or an
amount of Rs 80,000 (US$1,246.20), whichever is more.
(b) Total permanent disablement
60 percent of the monthly wage multiplied by the relevant factor (age) or an
amount of Rs 90,000 (US$1,401.98), whichever is more.
Maternity Benefit
The Maternity Benefit (Amendment) Act, 2017 came into force on April 1,
2017, and increases some of the key benefits mandated under the previous
Maternity Benefit Act of 1961. The amended law provides women in the
organized sector with paid maternity leave of 26 weeks, up from 12 weeks,
for the first two children. For the third child, the maternity leave entitled will
be 12 weeks. India now has the third most maternity leave in the world,
following Canada (50 weeks) and Norway (44 weeks).
The Act also secures 12 weeks of maternity leave for mothers adopting a
child below the age of three months as well as to commissioning mothers
(biological mothers) who opt for surrogacy. The 12-week period in these
cases will be calculated from the date the child is handed over to the
adoptive or commissioning mother.
• In other provisions, the law mandates that every establishment with
over 50 employees must provide crèche facilities within easy distance,
which the mother can visit up to four times a day. For compliance
purposes, companies should note that this particular provision will
come into effect from July 1, 2017.
• The Maternity Benefit (Amendment) Act introduces the option for
women to negotiate work-from-home, if they reach an understanding
with their employers, after the maternity leave ends.
• Under the pre-existing Maternity Benefit Act of 1961, every woman is
entitled to, and her employer is liable for, the payment of maternity
benefit at the rate of the average daily wage for the period of the
employee’s actual absence from work. Apart from 12 weeks of salary,
a female worker is entitled to a medical bonus of US$54.45 (Rs 3,500).
• The 1961 Act states that in the event of miscarriage or medical
termination of pregnancy, the employee is entitled to six weeks of paid
maternity leave. Employees are also entitled to an additional month of
paid leave in case of complications arising due to pregnancy, delivery,
premature birth, miscarriage, medical termination, or a tubectomy
operation (two weeks in this case).
• In addition to the above, the 1961 Act states that no company shall
compel its female employees to do tasks of a laborious nature or tasks
that involve long hours of standing or which in any way are likely to
interfere with her pregnancy or the normal development of the fetus,
or are likely to cause her miscarriage or otherwise adversely affect her
health.
Gratuity
• The Payment of Gratuity Act, 1972 directs establishments with ten or
more employees to provide the payment of 15 days of additional wages
for each year of service to employees who have worked at a company
for five years or more.
• Gratuity is provided as a lump sum payout by a company. In the
event of the death or disablement of the employee, the gratuity must
still be paid to the nominee or the heir of the employee.
• The employer can, however, reject the payment of gratuity to an
employee if the individual has been terminated from the job due to
any misconduct. In such a case of forfeiture, there must be a
termination order containing the charges and the misconduct of the
employee.
• Gratuity is calculated through the formula mentioned below:
• Gratuity = Last Drawn Salary × 15/26 × Years of Service, where
• The ratio 15/26 represents 15 days out of 26 working days in a
month.
• Last Drawn Salary = Basic Salary + Dearness Allowance.
• Years of Service are rounded up or down to the nearest full year. For
example, if the employee has a total service of 10 years, 10 months
and 25 days, 11 years will be factored into the calculation.
• Gratuity is exempt from taxation provided that the amount does not
exceed 15 days’ salary for every completed year of service calculated
on the last drawn salary (subject to a maximum of US$15,467.62 or
Rs 10 lakh). It is important to note that an employer can choose to
pay more gratuity to an employee, which is known as ex-gratia and is
a voluntary contribution. Ex-gratia is subject to tax.
THE EMPLOYEE STATE INSURANCE ACT, 1948

Education and training programme.
Employee’s Education:
In the word of William Flayed, ―Worker Education‖ is an attempt on the part
of organized labour to educate its own members under an educational
system in which the workers prescribe the courses of instructions, select the
teachers and in a considerable measure, furnish the finance.
Features of employees’ education
• i.The scope of workers’ education is much wider than that of trade
union education but is narrower than that of adult education.
• ii. The workers’ education is designed to create trade union
consciousness among workers, besides making them good citizens
and training them to understand their status, rights and
responsibilities.
• iii. In workers’ education, the workers themselves prescribe the
curriculum and select the teachers who have full sympathy with the
working class.
• iv. The institutions providing workers’ education are owned, financed
and managed by the workers.
• v. It is aimed at increasing the bargaining power of trade unions and
making the working
• class more sensible and cooperative.
• vi. It differs from vocational and professional education, for its main
aim is to train a worker for his group advancement and increasing
individual creativity, whereas vocational and professional education
aims at individual development.
• vii. The approach in workers’ education is psychological and
philosophical.
• viii. It includes general education, vocational education, technical
education, social education and training in trade unionism.
The Director General of Employment and Training (DGET) has designed a
number of training procedures are
The Board has developed a need based, three tier training programme for
education officers, workers and teachers. In first state education officer are
trained. The period or training is four months. Then they give training for
different regional centres.
Second stage is to get selected workers trained as worker teachers at the
regional and sub -regional centres by the educational officers. The duration
of training programme is three months.
Workers Education Scheme
Aims and Objectives
• It is important for Industrial peace and Harmony, healthy
Management labour relations.
• Develop Effective trade unions through better trained officials and
more enlightened members.
• Enhance the leadership skills which enables the worker in his
development.
• Increase the total labour mass literacy.
• Better understanding of the problem, with effective solutions
• To fulfil the Organisations requirements through proper responsibility
handling.
• The pre-condition of workers’ education literacy.
• Important consideration at the present stage of developing country.
• To understand the workers’ privileges, rights and obligations.
• Time-to-time training programs to upgrade the workers’ knowledge.
• Minimize the Industrial Accidents and other mishaps on the shop
floor.
• National Commission on Labour, has said that the labour‘s/ workers
education should have the following key areas to be studied:-
 This should employee independent, intelligent and innovative.
 He should be responsible, alert, and self-disciplined.
 Also Guided the National trade union centers to arrange for the
quality
 programs with the Collaboration with some of the universities and
Institutions.
Craftsmen’s Training Programme.
• To promote the efficiency of craftsmen
• To conduct various types of test for selection of craftsmen trainees
• The duration of the course is one to two years
• National trade certificate is issued for successful candidates
Craft Instructors Training.
Education- ITI or diploma is required
Advanced Vocational Training System.
To give training to advanced skill workers &technicians.
Foremans Training.
For the training of foreman an institute was set up
Training is provided to the existing and potential shop foremen and
supervisors in theoretical and managerial skills and workers from industry
in advanced technical skills
Apprenticeship Training Scheme.
• Apprenticeship act,1961
• Develop Effective trade unions through better trained officials and
more enlightened members.
• Enhance the leadership skills which enables the worker in his
development.
• Increase the total labour mass literacy.
• Better understanding of the problem, with effective solutions
• To fulfil the Organisations requirements through proper responsibility
handling.
• The pre-condition of workers’ education literacy.
• Important consideration at the present stage of developing country.
• To understand the workers’ privileges, rights and obligations.
• Time-to-time training programs to upgrade the workers’ knowledge.
• Minimize the Industrial Accidents and other mishaps on the shop
floor.
• National Commission on Labour, has said that the labour‘s/ workers
education should have the following key areas to be studied:-
 This should employee independent, intelligent and innovative.
 He should be responsible, alert, and self-disciplined.
 Also Guided the National trade union centers to arrange for the
quality
 programs with the Collaboration with some of the universities and
Institutions.
Craftsmen’s Training Programme.
• To promote the efficiency of craftsmen
• To conduct various types of test for selection of craftsmen trainees
• The duration of the course is one to two years
• National trade certificate is issued for successful candidates
Craft Instructors Training.
Education- ITI or diploma is required
Advanced Vocational Training System.
To give training to advanced skill workers &technicians.
Foremans Training.
For the training of foreman an institute was set up
Training is provided to the existing and potential shop foremen and
supervisors in theoretical and managerial skills and workers from industry
in advanced technical skills
Apprenticeship Training Scheme.
 Apprenticeship act,1961
 Employers are required to engage apprentices
Part Time Training for Industrial Workers.
To conduct part time evening classes are organized to improve the standards
of working
Vocational Training Programme for Women.
It includes instructor training, basic training and advanced training in

selected trades particularly suitable for women
Employee Grievance
Introduction and Definition of Grievance:
A grievance is any dissatisfaction or feeling of injustice having connection
with one’s employment situation which is brought to the attention of
management. Speaking broadly, a grievance is any dissatisfaction that
adversely affects organizational relations and productivity. To understand
what a grievance is, it is necessary to distinguish between dissatisfaction,
complaint, and grievance.
1. Dissatisfaction is anything that disturbs an employee, whether or not
the unrest is expressed in words.
2. Complaint is a spoken or written dissatisfaction brought to the
attention of the supervisor or the shop steward.
3. Grievance is a complaint that has been formally presented to a
management representative or to a union official.
Causes of Grievances:
Grievances may occur due to a number of reasons:
1. Economic:
Employees may demand for individual wage adjustments. They may feel that
they are paid less when compared to others. For example, late bonus,
payments, adjustments to overtime pay, perceived inequalities in treatment,
claims for equal pay, and appeals against performance- related pay awards.
2. Work environment:
It may be undesirable or unsatisfactory conditions of work. For example,
light, space, heat, or poor physical conditions of workplace, defective tools
and equipment, poor quality of material, unfair rules, and lack of
recognition.
3. Supervision:
It may be objections to the general methods of supervision related to the
attitudes of the supervisor towards the employee such as perceived notions
of bias, favouritism, nepotism, caste affiliations and regional feelings.
4. Organizational change:
Any change in the organizational policies can result in grievances. For
example, the implementation of revised company policies or new working
practices.
5. Employee relations:
Employees are unable to adjust with their colleagues, suffer from feelings of
neglect and victimization and become an object of ridicule and humiliation,
or other inter- employee disputes.
6. Miscellaneous: These may be issues relating to certain violations in
respect of promotions, safety methods, transfer, disciplinary rules, fines,
granting leaves, medical facilities, etc.
Grievance Procedure
Grievance procedure is a Step by step process an employee must follow to
get his or her complaint addressed satisfactorily. In this process, the formal
(written) complaint moves from one level of authority (of the firm and the
union) to the next higher level.
Grievance procedure is a formal communication between an employee and
the management designed for the settlement of a grievance. The grievance
procedures differ from organization to organization.
1. Open door policy
2. Step-ladder policy
Open door policy: Under this policy, the aggrieved employee is free to meet
the top executives of the organization and get his grievances redressed.
Such a policy works well only in small organizations. However, in bigger
organizations, top management executives are usually busy with other
concerned matters of the company. Moreover, it is believed that open door
policy is suitable for executives; operational employees may feel shy to go to
top management.
Step ladder policy: Under this policy, the aggrieved employee has to follow
a step by step procedure for getting his grievance redressed. In this
procedure, whenever an employee is confronted with a grievance, he
presents his problem to his immediate supervisor. If the employee is not
satisfied with superior’s decision, then he discusses his grievance with the
departmental head. The departmental head discusses the problem with joint
grievance committees to find a solution. However, if the committee also fails
to redress the grievance, then it may be referred to chief executive. If the
chief executive also fails to redress the grievance, then such a grievance is
referred to voluntary arbitration where the award of arbitrator is binding on
both the parties.
How to handle an employee grievance?
1) Establish whether the grievance needs to be resolved formally or
informally.
2) Choose an appropriate manager to deal with the grievance.
3) Carry out a full investigation and gather all relevant evidence, sending
it to the employee in advance of the meeting.
4) Arrange the grievance meeting, inviting the employee and reminding
them of their statutory right to be accompanied.
5) Make sure accurate notes are taken throughout by a person who is
not involved in the case.
6) Give the employee the opportunity to explain the details of their
grievance and what they would like the outcome to be.
7) Adjourn the meeting consider the evidence before making a decision.
8) Inform the employee in writing of the decision, explaining how and
why the decision was reached.
9) Notify the employee of their right to appeal against the outcome of the
grievance procedure.
GRIEVANCE PROCEDURE IN INDIAN INDUSTRY
The 15th session of Indian Labor Conference held in 1957 emphasized the
need of an established grievance procedure for the country which would be
acceptable to unions as well as to management. In the 16th session of
Indian Labor Conference, a model for grievance procedure was drawn up.
This model helps in creation of grievance machinery. According to it,
workers’ representatives are to be elected for a department or their union is
to nominate them. Management has to specify the persons in each
department who are to be approached first and the departmental heads who
are supposed to be approached in the second step. The Model Grievance
Procedure specifies the details of all the steps that are to be followed while
redressing grievances. These steps are:
STEP 1: In the first step the grievance is to be submitted to departmental
representative, who is a representative of management. He has to give his
answer within 48 hours.
STEP 2: If the departmental representative fails to provide a solution, the
aggrieved employee can take his grievance to head of the department, who
has to give his decision within 3 days.
STEP 3: If the aggrieved employee is not satisfied with the decision of
departmental head, he can take the grievance to Grievance Committee. The
Grievance Committee makes its recommendations to the manager within 7
days in the form of a report. The final decision of the management on the
report of Grievance Committee must be communicated to the aggrieved
employee within three days of the receipt of report. An appeal for revision of
final decision can be made by the worker if he is not satisfied with it. The
management must communicate its decision to the worker within 7 days.
STEP 4: If the grievance still remains unsettled, the case may be referred to
voluntary arbitration.
Conciliation, Arbitration & Adjudication
Failure of the employees and the employers to sort out their differences
bilaterally leads to the emergence of industrial disputes. The Industrial
Disputes Act, 1947 provides legalistic machinery for settlement of such
disputes by involving the interference of a third party.
The settlement machinery as provided by the Act consists of the three
methods:
1. Conciliation
2. Arbitration
3. Adjudication
1. Conciliation:
In simple sense, conciliation means reconciliation of differences between
persons. Conciliation refers to the process by which representatives of
workers and employers are brought together before a third party with a view
to persuading them to arrive at an agreement by mutual discussion between
them. The alternative name which is used for conciliation is mediation. The
third party may be one individual or a group of people.
In view of its objective to settle disputes as quickly as possible, conciliation
is characterised by the following features:
(i) The conciliator or mediator tries to remove the difference between the
parties.
(ii) He/she persuades the parties to think over the matter with a problem-
solving approach, i.e., with a give and take approach.
(iii) He/she only persuades the disputants to reach a solution and never
imposes his/her own viewpoint.
(iv) The conciliator may change his approach from case to case as he/she
finds fit depending on other factors.
According to the Industrial Disputes Act 1947, the conciliation machinery in
India consists of the following:
1. Conciliation Officer
2. Board of Conciliation
3. Court of Enquiry
A brief description of each of these follows:

Conciliation Officer:
The Industrial Disputes Act, 1947, under its Section 4, provides for the
appropriate government to appoint such number of persons as it thinks fit
to be conciliation officers. Here, the appropriate government means one in
whose jurisdiction the disputes fall.
While the Commissioner /additional commissioner/deputy commissioner is
appointed as conciliation officer for undertakings employing 20 or more
persons, at the State level, officers from central Labour Commission office
are appointed as conciliation officers, in the case of Central government. The
conciliation officer enjoys the powers of a civil court. He is expected to give
judgment within 14 days of the commencement of the conciliation
proceedings. The judgement given by him is binding on the parties to the
dispute.
Board of Conciliation:
In case the conciliation officer fails to resolve the dispute between the
disputants, under Section 5 of the Industrial Disputes Act, 1947, the
appropriate government can appoint a Board of Conciliation. Thus, the
Board of Conciliation is not a permanent institution like conciliation officer.
It is an adhoc body consisting of a chairman and two or four other members
nominated in equal numbers by the parties to the dispute.
The Board enjoys the powers of civil court. The Board admits disputes only
referred to it by the government. It follows the same conciliation proceedings
as is followed by the conciliation officer. The Board is expected to give its
judgment within two months of the date on which the dispute was referred
to it.
In India, appointment of the Board of Conciliation is rare for the settlement

of disputes. In practice, settling disputes through a conciliation officer is
more common and flexible.
2. Arbitration:
Arbitration is a process in which the conflicting parties agree to refer their
dispute to a neutral third party known as ‘Arbitrator’. Arbitration differs
from conciliation in the sense that in arbitration the arbitrator gives his
judgment on a dispute while in conciliation, the conciliator disputing parties
to reach at a decision.
The arbitrator does not enjoy any judicial powers. The arbitrator listens to
the view points of the conflicting parties and then gives his decision which is
binding on all the parties. The judgment on the dispute is sent to the
government. The government publishes the judgment within 30 days of its
submission and the same becomes enforceable after 30 days of its
publication. In India, there are two types of arbitration: Voluntary and
Compulsory.
Voluntary Arbitration:
In voluntary arbitration both the conflicting parties appoint a neutral third
party as arbitrator. The arbitrator acts only when the dispute is referred to
him/her. With a view to promote voluntary arbitration, the Government of
India has constituted a tripartite National Arbitration Promotion Board in
July 1987, consisting of representatives of employees (trade employers and
the Government. However, the voluntary arbitration could not be successful
because the judgments given by it are not binding on the disputants. Yes,
moral binding is exception to it.
Compulsory Arbitration:
In compulsory arbitration, the government can force the disputing parties to
go for compulsory arbitration. In other form, both the disputing parties can
request the government to refer their dispute for arbitration. The judgment
given by the arbitrator is binding on the parties of dispute.
3. Adjudication:
The ultimate legal remedy for the settlement of an unresolved dispute is its
reference to adjudication by the government. The government can refer the
dispute to adjudication with or without the consent of the disputing parties.
When the dispute is referred to adjudication with the consent of the
disputing parties, it is called ‘voluntary adjudication.’ When the government
herself refers the dispute to adjudication without consulting the concerned
parties, it is known as ‘compulsory adjudication.
The Industrial Disputes Act, 1947 provides three-tier machinery for the
adjudication of industrial disputes:
1. Labour Court
2. Industrial Tribunal
3. National Tribunal
A brief description on these follows:
Labour Court:
Under Section 7 of the Industrial Disputes Act, 1947, the appropriate
Government by notifying in the official Gazette, may constitute Labour Court
for adjudication of the industrial disputes The labour court consists of one
independent person who is the presiding officer or has been a judge of a
High Court, or has been a district judge or additional district judge for not
less than 3 years, or has been a presiding officer of a labour court for not
less than 5 years. The labour court deals with the matters specified in the
second schedule of the Industrial Disputes Act, 1947.
These relate to:
1. The property or legality of an employer to pass an order under the
standing orders.
2. The application and interpretation of standing orders.
3. Discharge or dismissal of workers including reinstatement or grant of
relief to workmen wrongfully dismissed.
4. Withdrawal of any statutory concession or privilege.
5. Illegality or otherwise of a strike or lockout.
6. All matters other than those reserved for industrial tribunals.
Industrial Tribunal:
Under Section 7A of the Act, the appropriate Government may constitute
one or more Industrial tribunals for the adjudication of industrial disputes.
Compared to labour court, industrial tribunals have a wider jurisdiction. An
industrial tribunal is also constituted for a limited period for a particular
dispute on an adhoc basis.
The matters that come within the jurisdiction of an industrial tribunal
include the following:
1. Wages, including the period and mode of payment.
2. Compensatory and other allowances.
3. Hours of work and rest periods.
4. Leave with wages and holidays.
5. Bonus, profit sharing, provident fund, and gratuity.
6. Classification by grades.
7. Rules of discipline.
8. Rationalisation.
9. Retrenchment of employees and closure of an establishment or
undertaking.
10. Any other matter that can be prescribed.
National Tribunal:
This is the third one man adjudicatory body appointed by the Central
Government by notification in the Official Gazette for the adjudication of
industrial disputes of national importance. The central Government may, if
it thinks fit, appoint two persons as assessors to advise the National
Tribunal. When a national tribunal has been referred to, no labour court or
industrial tribunal shall have any jurisdiction to adjudicate upon such
matter.
Code of Discipline in Industry

A code of discipline has been laid down to maintain harmonious relations
and promote industrial peace. It applies to both public and private sector
enterprises and aims to secure the settlement of disputes and grievances by
a mutually agreed procedure.
It specifies various obligations for the management and the workers with the
objective of promoting cooperation between their representatives. This code
of discipline requiring the employers and workers to settle disputes making
use of the existing machinery and abstaining from taking direct action was
evolved at the Indian Labor Conference in 1958.
The Code is Applicable to:
1. All Central Organizations of Employers and workers, (except those
under Ministry of Defense, Railways, Ports and Docks.)
2. Insurance industry.
3. The State Bank of India.
4. The Reserve Bank of India.
Committees have set up by a few of these organizations, to screen cases for
dissuading the affiliate members form filing appeals in higher courts in
order to honor the Code of Discipline.
Basic Objectives of the Code of Discipline:
The Basic Objectives of Code of Discipline are to:
1. Maintain peace and order in industry.
2. Facilitate a free growth of trade unions
3. Promote constructive criticism at all levels of management and
employment
4. Eliminate all forms of coercion, intimidation and violations of rules and
regulations governing industrial relations.
5. Avoid stoppage of work in industry.
6. Avoiding litigations
The Code of Discipline Ensures that:
1. There should be no strike or lock-out without prior notice.
2. No deliberate damage should be caused to a plant or property
3. Acts of violations, intimidation and coercion should not be resorted to.
4. Actions that disturb cordial relationships should be avoided
5. No unilateral action should be taken in connection with any industrial
matter.
6. The existing machinery for the settlement of disputes should be utilized.
To ensure better discipline in industry, management and unions agree to
abstain from indulging in violation of rules and regulations.
Actions having Mutual Agreement of Management and Union:
1. that there should be no strike or lock-out without prior notice.
2. that no unilateral action should be taken in connection with any
industrial matter and that should be settled at appropriate level.
3. that they will avoid litigation, sit-down and stay-in strikes and lock-outs
4. that neither party will have recourse to coercion, intimidation,
victimization or go -slow tactics.
5. that the existing machinery for settlement of disputes should be utilized
with the utmost efficiency.
6. that they will formulate a mutually agreed grievance procedure which will
ensure a speedy, fair and comprehensive investigation leading to a time
bound settlement.
7. that they will abide by the various stages in the grievance procedure and
take no arbitrary action which would by-pass this procedure
8. that they will promote constructive co-operation between their
representatives at all levels and as between workers themselves
Actions Agreed to by the Management:
1. not to increase workloads unless agreed upon or settled otherwise.
2. not to support or encourage any unfair labour practice such as
discrimination and victimization of any employee.
3. to take prompt action for settlement of grievances and implementation of
settlements, awards, decision and orders.
4. to take appropriate disciplinary action against its officers and members in
cases enquiries reveal that they were responsible for precipitate action by
workers leading to indiscipline
Actions Agreed to by the Union:
1. Abstain from resorting to violent demonstrations.
2. Not to engage in any form of physical duress.
3. To discourage unfair labour practices such as negligence of duty, damage
to property and insubordination.
4. To take prompt action to implement awards, agreements, settlements and
decisions.
5. Abstain from instigating the employees to engage in any union activity
during working hours.
Provisions in the Code of Discipline:
All central organizations of employees and workers have voluntarily accepted
the ‘Code of Discipline’ applicable in Indian Industry. This code of Discipline
applied both to the public as well as the Private sector.
According to the Code of Discipline, it is Mandatory:
(i) To lay down a regular grievance procedure in every organization.
(ii) Each grievance should be promptly redressed by legal means and
through the normal channels. There should be no direct, arbitrary or
unilateral action on either party.
(iii) To avoid litigation, lock-outs and strikes (sit-down and stay in)
intimidation, victimization or delaying tactics should be avoided.
(iv) Unfair practices like negligence of duty, damage to property and physical
stress should be discouraged.
(v) Management should give workers the freedom to form trade unions.
(vi) Management should promptly implement awards, agreements,
settlements and policy decisions.
(vii) The trade unions should function in a democratic fashion and
discourage violence, casteism, communalism, provincialism, intimidation or
personal deformation in inter-union dealings.
A machinery for implementation and evaluation has been set up at the
center and state level to ensure that the obligations outlined in laws,
agreements and the code of Discipline are observed by both management as
well as labour.
INDUSTRIAL DISPUTES
• An Industrial Dispute may be defined as a conflict or difference of
opinion between management and workers on the terms of
employment.
• When an industrial dispute occurs, both the parties, that is the
management and the workmen, try to pressurize each other.
• The management may resort to lockouts while the workers may resort
to strikes, picketing.
Definition of Industrial Disputes

• According to Section 2(k) of the industrial disputes Act,1947, “Any
disputes or differences between employers and employees, or between
employers and workmen, or between workmen and workmen, which is
connected with the employment or non-employment or the terms of
employment or with the conditions of labour, of any person”.
• Industrial disputes are conflicts, disorder or unrest arising between
workers and employers on any ground. Such disputes finally result in
strikes, lockouts and mass refusal of employees to work in the
organization until the dispute is resolved. Industrial Disputes harm
both parties’ employees and employers and are always against the
interest of both employees and the employers.
Nature of Industrial Dispute
1. There must be difference of opinion or a dispute:
i. Between employers (such as wage-welfare where labour is scarce).
ii. between employers and workmen (such as demarcation disputes).
iii. between workmen and workmen.
2. The subject matter is connected with the employment or non-employment
or the terms of employment or with the conditions of labour of any person,
or it must pertain to any industrial matter.
3. The relationship between the employer and the workman must be in
existence and should be the result of a contract and the workman actually
employed.
Scope of Industrial Dispute
1. Industrial disputes are considered to overcome the disagreement
made between employer and employee in industrial relation.
2. It Acts as a connectivity between firm and the protesters for
inappropriate consequences.
3. Industrial dispute performs the high degree of trust to be made in
order to make propensity for communication made for conflict.
4. To handle the desired situation through lockout, strikes, picketing,
bans etc., which are highly applicable to maintain the situation.
Causes of Industrial Disputes

1. Industrial Factors: The industrial related factors that cause industrial
disputes are:
i. Nature of employment: The employment methods or policies followed
by the organizations in employing an individual may sometimes be the
reasons for the conflict/dispute.
ii. Work and its nature: The type of work, unpleasant working
conditions, on-availability of machinery to do the work, working hours etc.,
may lead to industrial strike.
2. Management attitude towards employees: The management practice
which are not in accordance with legal requirements and which are unfair to
employees are the sources of disputes.
i. Discriminatory labour policies.
ii. Ineffective leadership/supervision.
3. Government machinery: Through government acts as a balance
between the management and workers in setting the disputes, sometimes
government related factors become the causes of industrial disputes.
4. Political interference:
i. Politics influencing the trade union movement.
ii. Political instability.
iii. Strained central-state relations.
iv. Existence of multiple labour laws.
5. Economic cause:
Royal Commission on labour in India says that the reasons for any strike
are entirely or largely the economic reasons.
Prevention of Industrial Disputes
• The consequences of an Industrial dispute will be harmful to the
owners of industries, workers, economy and the nation as a whole,
which results in loss of productivity, profits, market share and even
closure of the plant.
• Hence, Industrial disputes need to be averted by all means. 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.
1. Model Standing Orders: Standing orders define and regulate terms and
conditions of employment and bring about uniformity in them. They also
specify the duties and responsibilities of both employers and employees
thereby regulating standards of their behavior. Therefore, standing orders
can be a good basis for maintaining harmonious relations between
employees and employers.
Under Industrial Dispute Act, 1947, every factory employing 100 workers or
more is required to frame standing orders in consultation with the workers.
These orders must be certified and displayed properly by the employer for
the information of the workers.
2. Code of Industrial discipline:
The code of Industrial discipline defines duties and responsibilities of
employers and workers. The objectives of the code are:
 To secure settlement of disputes by negotiation, conciliation and
voluntary arbitration.
 To eliminate all forms of coercion, intimidation and violence.
 To maintain discipline in the industry.
 To avoid work stoppage.
 To promote constructive co-operation between the parties concerned
at all levels.
3. Works Committee: Every industrial undertaking employing 100 or more
workers is under an obligation to set up a works committee consisting equal
number of representatives of employer and employees. The main purpose of
such committees is to promote industrial relations. According to Indian
Labor Conference work committees are concerned with:-
 Administration of welfare & fine funds.
 Educational and recreational activities.
 Safety and accident prevention
 Occupational diseases and protective equipment.
 Conditions of work such as ventilation, lightening, temperature &
sanitation including latrines and urinals.
 Amenities such as drinking water canteen, dining rooms, medical &
health services.
The following items are excluded from the preview of the work committees.
 Wages and allowances
 Profit sharing and bonus
 Programs of planning and development
 Retirement benefits
 PF and gratuity
 Housing and transport schemes
 Incentive schemes
 Retirement and layoff
4. Joint Management Councils: Just to make a start in labour

participation in management, the govt: suggested in its Industrial
Resolution 1956 to set up joint management councils. 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. JMC should look after
3 main areas:-
• information sharing
• consultative
• administrative
Representation of workers to the JMCs should be based on the nomination
by the representation.
Objectives
• Satisfy the psychological needs of workers
• Improve the welfare measures
• Increase workers efficiency
• Improve the relation and association between workers, managers and
promoters.
JMC deals with matters like:-
• Employee welfare
• Apprenticeship scheme
5.Suggestion Schemes
6.Joint Councils: Joint Councils are set up for the whole unit and deals
with matters relating optimum production and efficiency and the fixation of
productivity norms for man and machine for the as a whole. in every
industrial unit employing 500 and more workers there should be a Joint
Council for the whole unit.
Features
• Members of the council must be actually engaged in the unit.
• The chief executive of the unit will be the chairman of the council and
vice chairman will be nominated by worker members.
• Term of the council will be two years.
• JC shall meet at once in a quarter.
• Decision of the council will be based on consensus and not 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 as a whole.
• Preparation of schedules of working hours and of holidays.
• Adequate facilitates for training.
• Rewards for valuable and creative suggestions received from workers.
7.Collective Bargaining:
• Collective Bargaining is a process in which the representatives of the
employer and of the employees meet and attempt to negotiate a
contract governing the employer-employee-union relationships.
• Collective Bargaining involves discussion and negotiation between two
groups as to the terms and conditions of employment.
8. Labour welfare officer:
• The factories Act, 1948 provides for the appointment of a labour
welfare officer in every factory employing 500 or more workers.
• The officer looks after all facilities in the factory provided for 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.
9.Tripartite bodies:
• Several tripartite bodies have been constituted at central, national and
state levels.
• The India labor conference, standing labor committees, Wage Boards
and Industries Committees operate at the central level. At the state
level, State Labor Advisory Boards have been set up.
• All these bodies play an important role in reaching agreements on
various labor-related issues.
• The recommendations given by these bodies are however advisory in
nature and not statutory.
Machinery for settlement of Industrial Disputes

• 1. Conciliation: Conciliation refers to the process by which
representatives of employees and employers are brought together
before a third party with a view to discuss, reconcile their differences
and arrive at an agreement through mutual consent. The third party
acts as a facilitator in this process. Conciliation is a type of state
intervention in settling the Industrial Disputes. The Industrial
Disputes Act empowers the Central & State governments to appoint
conciliation officers and a Board of Conciliation as and when the
situation demands.
• Conciliation Officer: The appropriate government may, by
notification in the official gazette, appoint such number of persons as
it thinks fit to be the conciliation officer. The duties of a conciliation
officer are:
• a) To hold conciliation proceedings with a view to arrive at amicable
settlement between the parties concerned.
• b)To investigate the dispute in order to bring about the settlement
between the parties concerned.
• c) To send a report and memorandum of settlement to the appropriate
government.
• d)To send a report to the government stating forth the steps taken by
him in case no settlement has been reached at.
• The conciliation officer however has no power to force a settlement. He
can only persuade and assist the parties to reach an agreement. The
Industrial Disputes Act prohibits strikes and lockouts during that
time when the conciliation proceedings are in progress.
2. Arbitration: A process in which a neutral third party listens to the
disputing parties, gathers information about the dispute, and then takes
a decision which is binding on both the parties. The conciliator simply
assists the parties to come to a settlement, whereas the arbitrator listens
to both the parties and then gives his judgement.
• Advantages of Arbitration:
• ð It is established by the parties themselves and therefore both
parties have good faith in the arbitration process.
• ð The process in informal and flexible in nature.
• ð It is based on mutual consent of the parties and therefore helps in
building healthy Industrial Relations.
• Disadvantages:
• ð Delay often occurs in settlement of disputes.
• ð Arbitration is an expensive procedure and the expenses are to be
shared by the labour and the management.
• ð Judgement can become arbitrary when the arbitrator is
incompetent or biased.
• There are two types of arbitration:
• a) Voluntary Arbitration: In voluntary arbitration the arbitrator is
appointed by both the parties through mutual consent and the
arbitrator acts only when the dispute is referred to him.
• b) Compulsory Arbitration: Implies that the parties are required to
refer the dispute to the arbitrator whether they like him or not.
Usually, when the parties fail to arrive at a settlement voluntarily, or
when there is some other strong reason, the appropriate government
can force the parties to refer the dispute to an arbitrator.
3. Adjudication: Adjudication is the ultimate legal remedy for settlement
of Industrial Dispute. Adjudication means intervention of a legal
authority appointed by the government to make a settlement which is
binding on both the parties. In other words adjudication means a
mandatory settlement of an Industrial dispute by a labour court or a
tribunal. For the purpose of adjudication, the Industrial Disputes Act
provides a 3-tier machinery:
a) Labour court
b) Industrial Tribunal
c) National Tribunal
a) Labour Court: The appropriate government may, by notification in the
official gazette constitute one or more labour courts for adjudication of
Industrial disputes relating to any matters specified in the second schedule
of Industrial Disputes Act. They are:
•Dismissal or discharge or grant of relief to workmen wrongfully dismissed.
•Illegality or otherwise of a strike or lockout.
•Withdrawal of any customary concession or privileges.
Where an Industrial dispute has been referred to a labour court for
adjudication, it shall hold its proceedings expeditiously and shall, within the
period specified in the order referring such a dispute, submit its report to
the appropriate government.
b) Industrial Tribunal: The appropriate government may, by notification in
the official gazette, constitute one or more Industrial Tribunals for the
adjudication of Industrial disputes relating to the following matters:
• Wages
• Compensatory and other allowances
• Hours of work and rest intervals
• Leave with wages and holidays
• Bonus, profit-sharing, PF etc.
• Rules of discipline
• Retrenchment of workmen
• Working shifts other than in accordance with standing orders
It is the duty of the Industrial Tribunal to hold its proceedings
expeditiously and to submit its report to the appropriate government within
the specified time.
c) National Tribunal:
The central government may, by notification in the official gazette, constitute
one or more National Tribunals for the adjudication of Industrial Disputes in
• Matters of National importance
• Matters which are of a nature such that industries in more than one
state are likely to be interested in, or are affected by the outcome of the
dispute.
It is the duty of the National Tribunal to hold its proceedings expeditiously
and to submit its report to the central government within the stipulated
time.
STANDING ORDER ACT

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INDUSTRIAL RELATION MANAGEMENT

It is concerned with the relationships between management and workers

In simple terms Industrial Relations deals with the worker employee

Industrial Relations in India

In mid of 19th century several disputes were started in the organizations.

General causes of industrial disputes strains which results in bad

10. Frequent union rivalries over membership foisting up of fake unions.

INFLUENCING FACTORS OF IR IN INTERPRISE AND CONSEQUENCES:

EVOLUTION OF INDUSTRIAL RELATION IN INDIA:

APPROACHES TO INDUSTRIAL RELATION:

Assumptions about workplace relations

Assumptions about workplace conflict

 Trade unions focus on improving the position of workers within the

 Besides, Marxists regards state intervention via legislation and the

Assumptions about workplace relations

The System Approach

• The “Oxford Approach” can be criticised on the ground that it is too

THE INDUSTRIAL SOCIOLOGY APPROACH

 The Social Action Model:

 The social action model has its origin in Weberian sociology.

 The social approach stresses the way in which an individual

 Behaviour at work gets influenced by the quality of human relations

WORKERS PARTICIPATION IN MANAGEMENT:

International Institute of Labour Studies:

Scope of Collective Bargaining

Characteristics of Collective Bargaining

PREPARATION FOR COLLECTIVE BARGAINING:

The Advantages of Collective Bargaining

The Disadvantages of Collective Bargaining

NON FINANCIAL INCENTIVES

What are Fringe Benefits?

Features of Fringe Benefits:

Types of Fringe benefits:

3. Safety and Healthy:

may be entitled to benefits based on your deceased spouse's earnings

Introduction to the Social Security System in India

Pension or Employees’ Provident Fund

THE EMPLOYEE STATE INSURANCE ACT, 1948

It includes instructor training, basic training and advanced training in

A brief description of each of these follows:

In India, appointment of the Board of Conciliation is rare for the settlement

Code of Discipline in Industry

Definition of Industrial Disputes

Causes of Industrial Disputes

4. Joint Management Councils: Just to make a start in labour

Machinery for settlement of Industrial Disputes

STANDING ORDER ACT

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