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It refers to all types of relationships between all the parties concerned with industry. It
explains the relationship between employees and management which stem directly or
indirectly from union-employer relationship. According to Allan Flanders, "the industrial
relations deal with certain regulated or institutionalized relationships in industry”.
Factors influencing IR
Parties involved in IR:- Fundamentally, the term industrial relations refer to organized
relationship between two organized parties representing employers and employees
regarding matters of collective interests.
• Workers (and their informal and formal groups, i.e., trade union, organizations and
their representatives)
• Employers (and their managers and formal organizations like trade and professional
associations)
• The government and legislation and government agencies and independent
agencies. Like the Advisory Conciliation and Arbitration Service.
Objectives of IR
1. The primary objective of industrial relations is to bring sound and healthy relations
between employers and employees
2. To safeguard the interest of workers and the management.
3. To ensure workers' participation in decision-making.
4. To increase the morale and discipline of workers.
5. To bring better understanding and cooperation between employers and workers
6. To establish a proper channel of communication between workers and management
7. To ensure constructive contribution of trade unions
8. To establish and maintain industrial democracy
Significance of IR
Functions of IR
Principle of good IR
1. The willingness and ability of management and trade unions to deal with the
problems freely, independently and with responsibility.
2. Recognition of collective bargaining
3. Desirability of associations of workers & management with the Government while
formulating and implementing policies relating to general economic and social
measures affecting IR.
4. Fair redressal of employee grievances by the management.
5. Providing satisfactory working conditions and payment of fair wage.
6. Introducing a suitable system of employees education and training
7. Developing proper communication system between management and employees.
8. To ensure better working conditions, living conditions and reasonable wages.
9. To develop employees to adapt themselves for technological, social and economic
changes.
10. To make positive contributions for the economic development of the country
Causes of poor IR
The parties to IR
Approaches (Perspective) to IR
3. Marxist Perspective:- Marxism is essentially a method of social enquiry into the power
relationships of society and a way of interpreting social equality. It is primarily oriented
towards the historical development of the power relationships between capital and labour.
4. The Oxford Approach:- This approach is based on the Donovan Commission(1965-68).
According to this the industrial relations system is a study of the institutions job regulations
and the stress is on the substantive and procedural rules as Dunlop’s model.
5. The Industrial Sociology Approach:- According to this school of thought, there are two
major conceptual levels of IR. 1. Intra-plant level and 2. Outside the firm. This approach
rejects the special emphasis given to rule determination by the ‘systems and oxford
models’.
7. The Human Relations Approach:- The Elton Mayo, the proponent of Human Relation
School and later propagated by the Keith Davis, as "the integration of people into a work
situation that motivates them to work together productively, cooperatively and with
economic, psychological and social satisfaction”.
8. The Gandhian Approach:- This approach has faith in goodness of men. It states that all
forms of property and human accomplishments are gifts of the nature and as such, they
belong not to anyone but they are to society.
Trends in Employment
The following are the most common trends in the employment pattern.
The Industrial Employment (Standing Orders) Act, 1946 came into force on April 23, 1946.
The Act applies to the whole of India. The main objectives of the Act, besides maintaining
harmonious relationship between the employers and the employees, are to regulate the
conditions of recruitment, discharge, disciplinary action, leave, holidays, etc. of the workers
employed in industrial establishments.
Requisites of IR
The necessary prerequisites for establishing good industrial relations are as follows:
Trade Union
Sydney and Beatrice Web have defined Trade Unions as a – Continuous association of wage
earners for the purpose of maintaining or improving the conditions of their working lives.
1. Representation
2. Negotiation
3. Voice in Decisions Affecting workers
4. Education and training
5. Legal Assistance
6. Financial discounts 7. Welfare benefits
1. Craft Union: The workers belonging to the same craft, specialized skill or same
occupation can form their trade union irrespective of industry or trade they be employed.
2. Federations: These are national level apex bodies in which plant level unions, craft
unions, industrial union and general unions are affiliated. They are coordinating the affairs
of various unions in their fold.
3. Industrial Union: This type of union encourages workers solidarity and makes
negotiations easy because a single agreement covers all workers of a particular industry.
4. General union: This type is open to all members irrespective of their craft and industry
within a particular city or region.
5. Labour union: In these unions, membership is open to all workers irrespective of their
occupation, skill or industry, the philosophy being that all workers have common status and
a common need for mutual help.
7. White-Collar workers union: Such unions usually comprise office staff or who work off
the shop floor and perform desk jobs or provide service over the counter or any such other
job.
8. Reformist Unions: These unions may be either business unions or revolutionary unions.
i. Business Unions: They are also known as ‘bread and butter unions’ and aim at securing
economic interests of their members and follow the method of collective bargaining to
accomplish their objectives.
ii. Revolutionary Unions: they are opposed to the capitalistic industry and replace it by the
socialistic systems through radical means such as strikes, boycott and gheraos.
9. Friendly or Uplift unions: These unions mainly aim at improving the intellectual, moral
and social life of their members.
The trade unions perform a number of functions in order to achieve the objectives. These
functions can be broadly classified into: Militant functions, fraternal functions
1.Militant functions: One set of activities performed by trade unions leads to the
betterment of the position of their members in relation to their employment. When the
unions fail to accomplish some aims by the method of collective bargaining and
negotiations, they adopt an approach and put up a fight with the management in the form
of go-slow tactics, strike, boycott, etc. Hence these functions of the trade unions are known
as militant or fighting functions.
1. The employees may join the unions to ensure a just and fair dealing by management.
2. Individuals may join the unions in the hope of finding a job through their influence in
the company management.
3. To ensure job security and right pay for the members
4. Improve their bargaining power
5. Minimize discrimination and favoritism
6. Voice their concerns, grievances,, problems in a united manner
Ten necessary conditions for making trade unions more effective are as follows:
1. Compulsory Membership
2. Strong Economic Base
3. Freedom from External Pressures
4. Spirit of Unity
5. Capable Leadership
6. Practical Outlook
7. Democratic Outlook
8. Constructive Outlook
9. Freedom from Politics
10. Aims of Welfare.
1. Outside leadership
2. Low membership
3. Uneven growth of trade unions
4. Multiplicity of trade unions
5. Absence of paid office bearers
6. Weak financial position
7. Lack of interest
8. Lack of public support
9. Limited stress on welfare
1. There should be a strong base to develop the Trade Union by safeguarding the
interest of the members and by achieving the target of production.
2. As most of the unions are influenced by political parties. Hence, there interference
should be eliminated.
3. To make effective unionism there should be one union in one industry.
4. There should be training programs to develop the internal leadership.
5. It will be more effective if office bearers of the Trade Unions are well paid.
Disciplinary Action
A disciplinary action is a reprimand or corrective action in response to employee
misconduct, rule violation, or poor performance. Depending on the severity of the case, a
disciplinary action can take different forms, including:
1. A verbal warning
2. A written warning
3. A poor performance review or evaluation
4.A performance improvement plan
5. A reduction in rank or pay
6. Termination
Steps in disciplinary action
⚫ Step 1: Oral Reprimand
Oral reprimands should be given as soon as a manager or employer notices an
issue with an employee’s performance or behavior. Oral reprimands should be given
tactfully, so that employees understand that reprimands are constructive criticism and not
personal attacks. It may be helpful for employers or managers to design a verbal reprimand
form so that written documentation can be kept of oral reprimands.
⚫ Step 2: Written Warning
If an employee does not respond to a verbal reprimand favorably or begins to
exhibit further behavioral or performance issues, it may be necessary to issue a written
warning. An effective written warning should detail exactly what the undesirable aspects of
the employee’s behavior or performance are, how the employee should correct these
issues, and what will happen if the employee does not correct these issues. Employees
should be given a copy of the written warning that has been signed by a manager, a
witness, and the offending employee.
⚫ Step 3: Final Documentation
If an employee continues to exhibit poor performance after receiving a written
warning, managers should issue final documentation. When final documentation is given,
employees should be shown all other times that reprimands have been given and
documented, while managers pointedly explain how they were instructed to act and how
they failed to meet the expectations. Employees should understand that they may face
termination if the behavior continues, but should still be given a chance to meet the
expectations.
Areas of Grievances
Grievances resulting from working conditions
• Poor physical conditions of workplace
• Lack of proper tools, machines and equipments
• Frequent changes in schedules or procedures
• Rigid production standards
• Improper matching of the worker with the jobs
• Poor relationship with the supervisor
Grievances resulting from mgt policy & practices
⚫ Poor payment
⚫ Lack of job security
⚫ Inadequate benefits such a medical benefits, leave travel concession etc
⚫ Leave facilities
⚫ Seniority
⚫ Transfer
⚫ Promotion
⚫ Lack of career planning and development
⚫ Hostility towards labour union
⚫ Defective leadership style
⚫ Communication gap
Grievances resulting from alleged violations
⚫ Violation of collective bargaining agreement
⚫ Violation of central/State laws
⚫ Violation of common rules
Grievances resulting from alleged violations
⚫ Violation of collective bargaining agreement
⚫ Violation of central/State laws
⚫ Violation of common rules
Grievances resulting from personal maladjustment
⚫ Over ambition
⚫ Excessive self-esteem
How to identify employee grievance
• Direct Observation
• Help Desk
• Grip boxes (suggestion box)
• Open Door Policy
• Exit Interviews
Causes of Grievances (Reasons)
• Economic
• Supervisory
• Employee Relations
• Organisational Change
How to deal with grievances at work
• Create a mechanism
• Listen more than talk
• Inquire and investigate
• Hold a formal meeting
• Set up and communicate the appeal process
Principles of guidelines for grievance handling
1. In handling grievances, a considerable amount of time must be spent in talking to
employees; gathering data from them and passing on various types of information.
2. The manager must seek to develop an attitude towards employees that should be
helpful in gaining their confidence.
3. The procedure adopt by the management in handling the grievances must be
apparent.
4. Grievances should be handled in terms of their total effect on the organisation and
not solely their immediate or individual effect.
Steps in handling grievance
• Acknowledge dissatisfaction
• Define the problem
• Get the facts
• Analyse and Decide
• Follow-up
Grievance handling Procedure
❖ Some of the common pitfalls that management commit in grievance handling relate to:
❖ Stopping the search for facts too soon
❖ Expressing a management opinion before gathering full fact
❖ Failing to maintain proper records
❖ Arbitrary exercise of executive discretion and
❖ Settling wrong grievances: Management attitude matters a lot and care need to be
exercised in handling the delicate subject of grievances.
COLLECTIVE BARGAINING
Salient features of CB
❖ It is a collective process in which representatives of employers and employees
participate mutually
❖ It is flexible and dynamic process wherein no party adopts a rigid attitude
❖ It is a practical way to establish an industrial democracy
❖ It is a good method of promoting industrial jurisprudence
❖ It is a continuous process which can establish regular and stable relationship between
worker’s organization and management
Functions of CB
Principles of CB
The success of collective bargaining is based on certain principles. These principles are to be
followed by the employers and unions. Prof. Arnold.F.Campo has laid down certain
principles for union and management, for management and for union.
❖ CB process should give due consideration to hear the problem on both sides.
❖ Both the management and union should analyze the alternatives to arrive at the best
solution.
❖ There must be mutual respect on both the parties.
❖ Both the union & management must have good faith & confidence in discussion &
arriving at a solution.
❖ In CB both the union and management should observe the laws and regulations in
practice in arriving at a solution.
❖ In all negotiation, the labour should be given due consideration.
Principles for management
❖ Management should think of realistic principles and policies for labour regulations.
❖ The recognitions of a trade union to represent the problems is more essential.
❖ Management should follow a policy of goodwill, and cooperation in CB rather than an
indifferent attitude towards the union.
❖ Management need not wait for trade union to represent their grievances for
settlement.
❖ Management should give due consideration to social and economic conditions of
workers in CB
Forms of CB
1. Conjunctive Bargaining
2. Cooperative Bargaining
3. Distributive Bargaining
4. Integrative Bargaining
On the basis of level (in which CB takes place) it can be classified as:
Industrial Disputes
According to Section 2(k) of the Industrial Disputes Act, 1947 it is defined as, “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”.
An industrial dispute is defined as a conflict or a difference in opinion between
management and workers regarding employment.
Causes of ID
I. Economic Causes: Most of the Industrial Disputes are due to economic causes. Directly or
indirectly economic causes are at the back of industrial disputes. Main economic causes
are as under:
• Dearness allowances
• Low wages
• Workers consider bonus as deferred wage. Demand for payment of bonus
constitutes cause of industrial dispute.
• Demand for better working conditions on the part of workers also contributes to
industrial disputes
• Hours of work is another matter of controversy between employers & workers
Other Causes: (i) Safety of work, (ii) Modernization of machines, (iii) Pension, Gratuity,
Provident Fund and other Beneficiary Schemes, (iv) Medical and accommodation facilities,
(v) Leaves and Leaves with pay, (vi) Share in Profits
II. Managerial Causes: due to wrong policies of the management, disputes get accentuated.
Managerial causes of industrial dispute are as under:
III. Political Causes: Political causes are no less significant than economic and managerial
causes in accounting for industrial disputes. Chief among them are as under:
➢ Influence of Politics
➢ Trade union movement
➢ Strikes against the Government
Other Causes: (1) Government’s inclination to support management. (2) Internal conflicts in
Trade Unions. (3) Resistance to automation. (4) Influence of Communist thinking on
labourers. (5) Effect of non-acceptance of Human Relations
Impact of ID
1.Disruption in Production and Services: The industrial disputes result in huge wastage of
man-days and dislocation of production work. When industrial dispute results in stoppage
of work, supply position of the struck commodity becomes grim and prices of that
commodity shoot up. The position becomes severe if the product is consumer goods of
daily use.
2.On employers: The employers also suffer heavy losses, not only through stoppage of
work, reduction in sale and loss of market due to none or short supply of the product, but
also in the form of huge expenditure on crushing downs the strikes.
3. On workers: The workers are also badly affected in more than one ways. They lose their
wages for the strike period. Sometimes, they lose their employment. They have to incur
debts to meet their day-to-day expenses. The workers are prosecuted, often intimidated,
even victimized or beaten mercilessly by goondas, repressed by police.
4. On society/ public: The public/society too, is not spared. Industrial unrest creates law
and order problem, ceasing a huge additional expenditures out of public exchequer.
5.On national economy: The industrial disputes also affect the national economy adversely
when labour and equipment in the whole or any- part of the industry are rendered idle by
strike or lock-out, national dividend (income) suffers a lot.
Forms of Dispute
1. Strike: it can take place only when there is a cessation of work or refusal to work by the
workmen acting in combination or in a concerted manner. If on the sudden death of a
fellow-worker, the workmen acting in concert refuse to resume work, it amounts to a
strike. Types of strike: (1.Stay-in, sit-down, pen-down strike 2.Go-slow 3.Sympathetic strike
4.Hunger strike 5.Lightning or wildcat strike 6.Work-to-rule)
2.Lockouts: Section 2(1) of the Industrial Disputes Act, 1947 defines ‘lockout’ to mean the
temporary closing of a place of employment or the suspension of work, or the refusal by an
employers to continue to employ any number of persons employed by him, lockout, thus, is
the counterpart of strike. Similarly, temporary suspension of work called lay-off is not lock-
out.
3. Gherao: it means encirclement of the managers to criminally intimidate him to accept the
demands of the workers.
The common mechanisms for settlement of disputes under the Industrial Dispute Act,1947
have been explained in detail below:
3. Voluntary arbitration: it means that the parties who are involved in the dispute willfully
agree to the decision taken by the arbitrator or the board of arbitrators without any outside
compulsion.
4. Labour Courts: The government has set up Labour Courts for dealing with the matters
specified in the Second Schedule of the Industrial Disputes Act 1947.
5. Adjudication: It is just another legal remedy that can be adopted if the necessity arises.
The ultimate remedy for resolving an industrial dispute is by adjudication.
6. Court of inquiry: The remedy in the form of a court of inquiry was first provided by The
Trade Disputes Act, 1929 and was followed by the Industrial Dispute Act, 1947 also
under Section 6.
Adjudication of the industrial dispute will take place by a three-tier system which will be
inclusive of the following:
➢ Labour court: The matters handled by the labour court are provided in the second
schedule of the Industrial Dispute Act, 1947 which consists of:
1. The legality in the order passed by the employer under the orders that are standing
2. The implications of the standing orders
3. Withdrawal of any privilege that a workman is subjected to
4. All matters other than that coming under the purview of the industrial tribunal.
➢ Industrial Tribunal: Broadly the issues handled by the industrial tribunal have been
listed below:
1. Wages of the employee which included the mode of payment of wages also
2. Bonus and provident funds that are provided
3. Working hours of the employees
4. Rationalization
5. Rules associated with the maintenance of discipline in the industry among the
employees.
6. Any other matter which may be considered to be heard and discussed necessarily.
➢ National tribunal: it is formed by the Central Government by an official gazette for
adjudication of the industrial disputes that are considered to be of national importance.
Two people according to the choice of the government are appointed to the role of an
assessor in the national tribunal.
The International Institute for Labour Studies defined WPM as “the participation resulting
from practices which increase the scope for employee’s share of influence in decision-
making at different tiers of organizational hierarchy with concomitant assumption of
responsibility”. It is a humanitarian act, elevating the status of a worker in the society.
Forms of Employee Involvement and Participation Marchington (1995) have identified five
forms of employee involvement and participation:
1. Downward communications: it (team briefing & meetings) take place from managers to
employees in order to inform & ‘educate’ staff so that they accept management plans.
2. Upward problem solving: it is designed to tap into employee knowledge and opinion,
either at an individual level or in small groups. The aims are to increase the stock of ideas in
an organization, to encourage cooperative relationship at work, and to legitimize change.
3. Task participation and job redesign: This process engage employees in extending the
range and type of tasks they undertake. Approaches to job design, such as horizontal job
redesign, job enrichment, vertical role integration and team working may be used.
Works Committees
The Industrial Disputes Act, 1947, provides for the setting up of bipartite Works
Committees as a scheme of workers participation in management, which consists of
representatives of employers and employees. The main aim is to promote measures for
maintaining harmoniums relations in the work place and to sort out differences of opinion
in respect of matters of common interest to employers and employee. It functions are:
Industrial conflict is a term which refers to all expressions of dissatisfaction within the
employment relationship, especially those pertaining to the employment contract, and
the effort bargain. It may be classified in to 2. Formal and informal. Conflict:- A conflict is a
struggle and a clash of interest, opinion, or even principles. A conflict is a struggle or an
opposition.
Conflict management
Conflict management is the process of limiting the negative aspects of conflict while
increasing the positive aspects of conflict. The aim of conflict management is to
enhance learning and group outcomes, including effectiveness or performance in an
organizational setting.
Johari Window:
The Johari Window is a framework for understanding conscious and unconscious bias that
can help increase self-awareness and our understanding of others. It is the creation of two
psychologists, Joseph Luft and Harrington Ingham. It results in four areas of understanding:
• Open area: Anything you know about yourself and are willing to share with others
• Blind area: Anything you do not know about yourself, but that others have become
aware of
• Hidden area: Anything you know about yourself and are not willing to share with
others
• Unknown area: Any aspect unknown to you or anyone else
Labour turnover
Labour turnover can be defined as the overall change in the number of people employed in
a business entity during a particular period. A high labour turnover rate is considered to be
unfavourable for the organization’s stability and can even result in a temporary shutdown
or strike. Causes of labour turnover are:
1. Avoidable Causes:- The factors that are related to the organizational facilities and
working conditions, the ones which the management could modify to retain the workforce
are considered as preventable causes. (No job security, no retirement benefits, etc..)
2. Unavoidable Causes:- The workers are sometimes compelled to depart from the
organization, for the inevitable reasons. Neither the organization nor the employee can
take any step to avoid such circumstances. (Marriage, death, illness, domestic issues, etc..
It extended to the whole of India and regulated Indian labour law so far as that concerns
trade unions as well as Individual workman employed in any Industry within the territory of
Indian mainland. Enacted on 11 March 1947 and It came into force 1 April 1947. It was
replaced by the Industrial Relations Code, 2020. Chapter V-B, introduced by an amendment
in 1976, requires firms employing 300 or more workers to obtain government permission
for layoffs, retrenchments and closures. A further amendment in 1982 (which took effect in
1984) expanded its ambit by reducing the threshold to 100 workers.
It lays down provisions for the health, safety, welfare and service conditions of workmen
working in factories. It contains provisions for working hours of adults, employment of
young persons, leaves, overtime, etc. Major provisions of the act as follows:
❖ Section 11 of the Act provides that every factory shall be kept clean and free from
effluvia arising from any drain, privy or other nuisance.
❖ Section 18 of the Act specifies regarding arrangements for sufficient and pure drinking
water for the workers.
❖ Section 13 of the Act focuses on ventilation and temperature maintenance at workplace.
Every factory should work on proper arrangements for adequate ventilation and
circulation of fresh air.
❖ Section 21 of the Act provides from proper fencing of machinery. And that any moving
part of the machinery or machinery that is dangerous in kind should be properly fenced
The primary objective of enacting this act was safeguarding the labour who are engaged in
unorganized sector and provide the shops and commercial establishments with a legal
framework for regulation. Here are the reasons why the concept of Shop And
Establishment Act License was introduced:
It is a social welfare legislation enacted with the objective of providing certain benefits to
employees in case of sickness, maternity and employment injury. In terms of the provisions
of the ESI Act, the eligible employees will receive medical relief, cash benefits, maternity
benefits, pension to dependants of deceased workers and compensation for fatal or other
injuries and diseases. Facilities covered in the Act as follows:
The Employee's Compensation Act, 1923 (the EC Act) aims to provide financial protection to
workmen and their dependents in case of any accidental injury arising out of or in course of
employment and causing either death or disablement of the worker by means of
compensation.
The Gratuity Act provides for a scheme for the payment of gratuity to employees engaged
in factories, mines, oilfields, plantations, ports, railway companies, shops or other
establishments. The Gratuity Act enforces the payment of "gratuity", a reward for long
service, as a statutory retrial benefit. The gratuity is payable even to an employee who
resigns after completing at least five years of service.
It is an Act to regulate the payment of wages to certain classes of employed persons. The
Payment of Wages Act seeks to ensure that the employers make a timely payment of wages
to the employees working in the establishments and to prevent unauthorized deductions
from the wages.
It is provides for fixing of minimum rates of wages in certain employments. The minimum
wages are prescribed by States through notifications in the State's Gazette under the
Minimum Wages Rules of the specific State.
This act provides for the payment of bonus to persons employed in certain establishments
in India either on the basis of profits or on the basis of production or productivity and is
applicable to every establishment in which 20 or more persons are employed and to all
employees drawing a remuneration of less than Rs 10,000. Those employees who have
worked for less than thirty days are not eligible to receive bonus under the Bonus Act