MPMIR I SEMESTER

INTRODUCTION TO
INDUSTRIAL RELATIONS
PRESENTED BY

DR. (MRS).URMILA RANI SRIVASTAVA

PROFESSOR
DEPARTMENT OF PSYCHOLOGY FACULTY OF
SOCIAL SCIENCES BANARAS HINDU UNIVERSITY
VARANASI- 221005. Email: urbhu_24@yahoo.co.in
 • S:04 Management of Industrial Relations
Credits 4

• 1. Introduction to industrial relations: Concept, scope,

and components of industrial relations system, brief
overview of industrial relations in India. Technological
change and industrial relations.
• 2. Grievances and discipline: Meaning, nature and causes
of grievances; grievances presentation, procedure for
redressal; meaning of discipline, causes of indiscipline in
industry; discipline enforcement, code of discipline in
industry.
• 3. Trade union movement: Development of trade unionism
in India; structure and functions of trade unions; leadership
issues; problems of multiple unions; employers' organization
in India.
• 4. Industrial conflicts: Causes, forms and methods
of resolution; - mediation, conciliation, arbitration,
adjudication (with reference to Industrial Dispute Act,
1947);collective bargaining; forms and process of
collective bargaining; implementation of collective
bargaining agreements; collective bargaining in India.
• 5. Workers' participation: Concept, objectives;
forms and levels of participation; schemes for
workers' participation in India.
• Recommended Books:

• 1. Bray (2004). Industrial relations: a contemporary

approach. Australia: McGraw Hills
• 2. Manoria, Manoria &Ganlear. (2003). Dynamics of
industrial relations. New Delhi: Himalaya Publishing
House
• 3. Monappa, A. (2000). Industrial relations. New
Delhi: Tata McGraw Hill.
• 4. Sen (2003). Industrial relations in India: Shifting
paradigms. New Delhi: Macmillan India.
• 5. Uzzaman &Sherwani (2000). Industrial relations in
India. Anmol Publication
 UNIT-1
INTRODUCTION TO INDUSTRIAL
RELATIONS:

CONCEPT, SCOPE, AND COMPONENTS

OF INDUSTRIAL RELATIONS

BRIEF OVERVIEW OF INDUSTRIAL

RELATIONS IN INDIA,

TECHNOLOGICAL CHANGE AND

INDUSTRIAL RELATIONS
 INTRODUCTION AND
HISTORICAL BACKGROUND
HISTORICAL BACKGROUND
• Industrial relations constitute one of the most delicate
and complex problems of the modern industrial society.
This phenomenon of a new complex industrial set-up is
directly attributable to the emergence of
‗Industrial Revolution‖.
• This process began in Britain in the 18th century and
from there spread to other parts of the world.
• The Industrial Revolution was a period of
major industrialization and innovation that took
place during the late 1700s and early 1800s.
• The Industrial Revolution began in Great Britain
and quickly spread throughout the world.
• The American Industrial Revolution commonly
referred to as the second Industrial Revolution,
started sometime between 1820 and 1870.
• Industrial Revolution, in modern history, the
process of change from an agrarian and handicraft
economy to one dominated by industry and
machine manufacturing.
 It refers to the great change in the field of
industries when the production of goods by hand
in the houses were replaced with the help of
machines in factories.
• The transformation of industry and the economy in
Britain between the 1780s and the 1850s is called the
‗first industrial revolution‘. The period is from about
1740 to about 1850 in Britain and from 1815 to the
end of the nineteenth century in Europe.
 It revolutionised the techniques and organisation of
production in the later half of the eighteenth century.
• The Industrial Revolution shifted from an agrarian economy to
a manufacturing economy where products were no longer made
solely by hand but by machines.
• This led to increased production and efficiency, lower prices,
more goods, improved wages, and migration from rural areas to
urban areas.
• Technological changes, such as the use of iron and steel, new
energy sources such as coal and steam, and the factory system,
led to a division of labor and specialization, which increased
efficiency.
• Among the most important inventions of the first Industrial
Revolution include the steam engine, the spinning jenny, cotton gin,
and the telegraph. This was followed by the second Industrial
Revolution, which saw the advent of the internal combustion engine,
controlled electricity, and the lightbulb.
• This period saw the mechanization of agriculture and textile
manufacturing as well as a revolution in power, including
steamships and railroads, which affected social, cultural, and
economic conditions.
• The Industrial Revolution marks a major
turning point in history; almost every aspect of
daily life was influenced in some way.
THE PRE-INDUSTRIAL REVOLUTION
PERIOD
• The pre-industrial revolution period was
characterized by a simple process of manufacture,
small scale investment, local markets and small
number of persons employed.

• All this led to close proximity between the

manager and the managed.

• Due to personal and direct relationship between

the employer and the employee it was easier to
secure cooperation of the latter.
• Any grievance or misunderstanding on
the part of either party could be promptly
removed.
• Also, there was no interference by the
State in the economic activities of the
people.
• Under such a set-up industrial
relations were simple, direct and
personal.
• This situation underwent a marked change with
the advent of industrial revolution — size of the
business increased needing investment of
enormous financial and human resources, there
emerged a new class of professional managers
causing divorce between ownership and
management, and relations between the
employer and the employer became estranged
and gradually antagonistic.
• This new set-up rendered the old philosophy of
industrial relation irrelevant and gave rise to
complex, indirect, and impersonal industrial
relations.
• Industry today is neither viewed as a venture
of employers alone nor profit if considered as its
sole objective.
• It is considered to be a venture based on
purposeful cooperation between management
and labour in the process of production and
maximum social good is regarded as its ultimate
end and both management and employees
contribute in their own way towards its success.
• Similarly, labour today is no more an
unorganized mass of ignorant works ready
to obey without resentment or protest the
arbitrary and discretionary dictates of
management.
• The management has to deal with employees
today not as individuals but also as members
of organized social groups who are very
much conscious about their rights and have
substantial bargaining strength.
• Hence, the objective of evolving and maintaining
sound industrial relations is not only to find our ways
and means to solve conflicts to resolve differences
but also to secure the cooperation among the
employees in the conduct of industry.
• But maintaining smooth industrial relation is not an
easy task. Almost all the industrialized countries of the
world face the problem of establishing and
maintaining good management worker
relationships in their industries.
• Each country has sought to find our solution,
depending upon its economic, social and political
environment.
• However, industrial conflict still arises and
therefore establishment and maintenance of
satisfactory industrial relations forms an important
plank in the personnel policies of modern
organization.
•
CONCEPT AND DEFINITION OF
INDUSTRIAL RELATIONS
• The term ‗Industrial Relations‘ comprises
‗Industry‘ and ‗Relations‘

• Industry- Industry means any productive

activity in which an individual is engaged.

• Economically speaking, industry means the

secondary sector where factors of production (land,
labour, capital and enterprise or four M‘s – men,
materials, money and machines) are gainfully
employed for the purpose of production, and where
a business organization exists.
• Industrial Disputes Act 1947 defines an industry
as any systematic activity carried on by co-
operation between an employer and his workmen
for the production, supply or distribution of
goods or services with a view to satisfy human
wants or wishes.
• Thus, an industry is a whole gamut of activities
that are carried on by an employer with the help
of his employees and labors for production and
distribution of goods to earn profits.
• Manufacturing and industry sector known as the
secondary sector, sometimes known as the production
sector includes all branches of human activities that
transform raw materials into products or goods.
• The secondary sector includes secondary processing of
raw materials food manufacturing, textile manufacturing
and industry.
• Relations (also known as labour – management
relations or labour relations) will be treated here as
the study of employee – employer relationship
and the outcome of such relationship.

• ‗Relations‘ means ‗the relations that exist in

the industry between the employer and his work-
force.
(i) Originally, the term stood for employer–employee
relations in industry.
(ii) Later on, when the workers organized
themselves into trade unions and the latter started
dealing with employers, trade union activities also came
to be included under this term.
(iii) Still later, when the relations between employers
and employees came to be vested with public
importance and ceased to be private, the state had to
be involved in such relations. Therefore, the activities
of the state designed to modify, regulate and control
relations between employers and employees also
became a part of industrial relations.
 DEFINITION OF INDUSTRIAL RELATIONS
• Different authors have defined the term industrial
relations in somewhat different way.
• According to Bethel and Others, ―Industrial
relation is that part of management which is concerned
with the manpower of the enterprise whether
machine operator, skilled worker or manager.‖
• Manpower of the enterprise can, thus, be classified
as management and workers or employers and
employees and industrial relations can, thus, be treated
as relations between the employer and the workmen.
• According to V.B. Singh, ―Industrial relations are
an integral aspect of social relations arising out of
employer- employee interaction in modern
industries, which are regulated by the State in
varying degrees, in conjunction with organized social
forces and influenced by prevailing, institutions.
• This involves a study of the State, the legal system,
workers‘ and employers‘ organizations on the
institutional level.
• It is common to use the term ―State‖ rather than the
―Government‖ to describe wide variety of
institutions that regulate IR in most democratic
countries.
• State institutions can establish substantial rules
to resolve the disputes between employer and
employees and makes continuous effort to increase
the growth of the industry by taking into
consideration the labour class.

•
• According to Ordway, Tead and Metcalf,
―Industrial relation is the composite result of
the attitudes and approaches of employers and
employees towards each other with regard to
planning, supervision, direction and
coordination of the activities of an organization
with a minimum of human efforts and frictions
with an animating spirit of cooperation and with
proper regard for the genuine well-being of all
members of that organization.‖
• Attitude refers to the mental state of a person, approach
can be the external expression of such an attitude. Attitudes
are always not obvious and the individual himself may not
always be fully conscious of the attitudes.
• Attitudes must be inferred from tone of verbal
expressions or perhaps from the individual‘s overt
behaviour. Attitude is the mental state of the individual
which prepares him to take a particular, (external)
approach or make him behave in a particular manner.
• Attitudes of both—employer and employees influence
each other and determine natural relationship.
• The following points emerge from the analysis of
the above definitions:
• (1) Industrial relations are the relations which
are the outcome of the ‘employment relationship‘
in an industrial enterprise. It is, thus, employer-
employee relationship in an industry.
• Two parties—employer and workmen are
necessary without which such relationship cannot
exist and it is the industry which provides the
setting for industrial relations.
• (2) Industrial relation is the relation in the industry created
by the diverse and complex attitudes and approaches of
both management and workers in connection with the
management of the industry.

• (3) This relationship emphasizes on the process of

accommodation whereby both the parties develop skills
and methods of adjusting to and cooperating with each
other.

• Industrial relation is not a simple relationship between the

two parties but is a set of functional interdependence
involving a number of factors, say, historical, economic
social, psychological, demographic, technological,
occupational, legal and others etc.
• (5) Every industrial relation creates a complex
of rules and regulations to govern the work-place,
the work- community with the main purpose of
maintaining harmonious relations between the
management and the workmen by solving their
problems through the process of collective
bargaining.
• (6) The Government/State also regulates the
industrial relations in the country. It evolves
influences and shape industrial relations
through laws, rules, agreements, awards of the
courts, and emphasizes on the usages, customs,
traditions, implementation of its policies and
interference through executive and judicial
machinery.
 Industrial Relations – 5 Main Characteristics
• Characteristics of industrial relations include:
• (i) Industrial relations are outcome of employment
relationship in an industrial enterprise.
• (ii) Industrial relations develop the skills and methods
of adjusting to and cooperating with each other.
• (iii) Industrial relations system creates complex rules
and regulations to maintain harmonious relations.
• (iv) The Government involves shaping the industrial
relations through laws, rules, agreements, awards etc.
• (v) The important factors of industrial relations are-
employees and their organizations, employer and their
associations and Government.
• 3. Industrial Relations are characterized by both
conflict and co-operations. IR can now safely be
defined as a coin having two faces: co- operation and
conflict.
• Thus, the relationship starting with co-operation soon
changes into conflict and after its resolution again
changes into cooperation. This changing process
becomes a continuous feature in industrial system
and makes IR concept as dynamic and evolving one.
• 4. The focus of Industrial Relations in on the study of
the attitudes, relationships, practices and procedure
developed by the contending parties to resolve or at
least minimize conflicts.
 OBJECTIVES OF INDUSTRIAL RELATIONS
The primary objective of industrial relations is to maintain
and develop good and healthy relations between
employees and employers or operatives and management
by safeguarding their interests.. The same is sub- divided
into other objectives.
• (ii) To raise productivity to a higher level by arresting
the tendency of higher labour turnover and frequent
absenteeism.
• (iii) To avoid industrial conflicts and develop
harmonious relations between labour and management
for the industrial progress in a country by providing safe
working conditions.
• (iv) To establish and maintain Industrial Democracy,
based on labour partnership, not only by sharing the
gains of the organisation, but also by associating the
labour in the process of decision making so that
individual personality is fully recognized and developed
into a civilized citizen of the country.
• The idea of ‗industrial democracy‘ is that the labour
must have the right to associate with the management in
running the industry.
• Thus, to provide an opportunity to the workers to
participate in management and decision making
process.
• Establish and nurse industrial democracy based on
labour partnership in the sharing of profits and of
managerial decisions.
• (v) To bridge about government control over such
units which are running at losses or where production
has to be regulated in the public interest.
• (vi) To bring down strikes, lockouts, gheraos and other
pressure tactics by providing better wages and improved
working conditions and fringe benefits to the workers.
• (vi) To bring down strikes, lockouts, gheraos and other
pressure tactics by providing better wages and improved
working conditions and fringe benefits to the workers.
 Industrial Relations – Types
• The industrial relations is chiefly concerned with the
management and the workers relations or employer-
employees relations. But its scope is not limited only to this
aspect.
• It also includes labour relations i.e., relations between
workers themselves or between various groups of workers
and public or community relations i.e., relations between
the community or society and the industry.
• Good industrial relations not only indicate the cordial
atmosphere in the industry but also facilitate higher and
quality production and industrial growth.
• Thus, industrial relations include four types of relations:
• (i) Employer-employee relations i.e., relations between
the management and employees. It denotes all management
employer relations except the union- management relations;
• (ii) Labour relations i.e., relations between union and
management
• (ii) Group relations i.e., relations between various
groups of workmen i.e., workmen, supervisors, technical
persons, etc.
• (iv) Community or Public relations i.e., relations
between the industry and the society.
• The last two are generally, not regarded the
subject matter of study under industrial relations.
They form part of the larger discipline—sociology.
• The first two are studied under industrial
relations but these two i.e., labour management
relations and employer-employee relations are
synonymously used.
• Importance of Industrial Relations:
• The healthy industrial relations are key to the
progress and success. Their significance may be
discussed as under –
 Uninterrupted production
 Reduction in Industrial Disputes
 High morale
 Mental Revolution
 Reduced Wastage
Uninterrupted Production
 The most important benefit of industrial relations is that
this ensures continuity of production. This means,
continuous employment for all from manager to workers.
 The resources are fully utilized, resulting in the maximum
possible production.
 Reduction in Industrial Disputes
 Good industrial relations reduce the industrial
disputes. Disputes are reflections of the failure of
basic human urges or motivations to secure
adequate satisfaction or expression which are
fully cured by good industrial relations.
 Strikes, lockouts, go-slow tactics, gherao and
grievances are some of the reflections of
industrial unrest which do not spring up in an
atmosphere of industrial peace.
 It helps promoting co-operation and increasing
production.
 High morale
 Good industrial relations improve the morale of the
employees. Employees work with great zeal with the feeling
in mind that the interest of employer and employees is one
and the same, i.e. to increase production.

 Every worker feels that he is a co-owner of the gains of

industry. The employer in his turn must realize that the
gains of industry are not for him along but they should be
shared equally and generously with his workers.
 In other words, complete unity of thought and
action is the main achievement of industrial
peace.
 It increases the place of workers in the society
and their ego is satisfied.
 It naturally affects production because mighty
co-operative efforts alone can produce great
results.
Mental Revolution
 The main object of industrial relation is a complete
mental revolution of workers and employees. The
industrial peace lies ultimately in a transformed outlook
on the part of both.
 Both should think themselves as partners of the
industry and the role of workers in such a partnership
should be recognized.
 On the other hand, workers must recognize employer‘s
authority. It will naturally have impact on production
because they recognize the interest of each other.
 Reduced Wastage
Good industrial relations are maintained on the basis of
cooperation and recognition of each other. It will help
increase production.
Wastage of man, material and machines are reduced to
the minimum and thus national interest is protected.
• Thus, it is evident that good industrial relations is the
basis of higher production with minimum cost and
higher profits.

• It also results in increased efficiency of workers.

• New and new projects may be introduced for the welfare
of the workers and to promote the morale of the people at
work.
• In conclusion, if the twin objectives of rapid
national development and increased social justice
are to be achieved, there must be harmonious
relationship between management and labor.
 Scope of Industrial Relations
• Protecting the interest of the employees
• Providing reasonable wages to employees
• Providing safe and hygienic working conditions
• Providing social security measures
• Maintaining strong Trade Unions
• Collective bargaining
• Collective settlement, mediation, arbitration and
co-operation between officers and employers‘
associations.
CONSEQUENCES OF GOOD AND BAD
INDUSTRIAL RELATIONS
• The essence of good industrial relation lies in
the bringing up of good labor relations which gives
a forum to understand each other (employer,
employee) properly. It creates co-operative
thinking and working to achieve the goal of the
organization.
• A good industrial relation increases the morale
of employers and goods them to give their
maximum, each think of their mutual interest which
paves way for introduction of new methods,
developments and leading to adoption of modern
technology.
• Profit are shared, workers get their dues in the
organization leading to job satisfaction-which is
needed for good relations.
• Good industrial relation increase production,
improves quality of work and products, efficiency of
workers increased. Cost of production lowered.

• Bad industrial relations leads to industrial unrest

industrial dispute and a downward trend to industries
workers and the nation. Of course the first hit will be
on the employers, who has invested.
• Demerits of bad industrial relations can be
expressed as under:
• (1) Effect on Workers:
• (i) Loss of wages,
• (ii) Physical injury or death on account of violence
during labour unrest,
• (iii) Excesses by employers,
• (iv) Economic losses,
• (v) Bitterness in relations,
• (vi) Adverse effect on career.
• 2) Effect on Employers/Industrialists:
• (i) Less production,
• (ii) Less Profit,
• (iii) Bad effect on organization,
• (iv) Bad effect on human relations
• (v) Damage to machines and equipment
• vi) Adverse effect on development of companies,
• (3) Effect on Government:
• (i) Loss of revenue (less recovery of income tax,
sales tax, etc.),
• (ii) Lack of order in society,
• (iii) Blame by different parties.
• (4) Effect on Consumers:
• (i) Rise in prices,
• (ii) Scarcity of goods,
• (iii) Bad effect on quality of goods.
• (5) Other Effects:
• (i) Adverse effect on International Trade (fall in
exports and rise in imports),
• (ii) Hindrance in Economic Development of the
country,
• (iii) Uncertainty in economy.
• To conclude, it can be said that almost all sections of
the society suffer loss in one way or the other due to
bad industrial relations.
• In order to maintain peace in industrial units it is of
utmost importance that employers and workers should
make constant endeavour to establish cordial human
relations.
 Good Industrial Relations – Benefits to Workers,
Management and Society
• 1. Benefits to Workers
• Sound industrial relations may provide a lot of benefits
to workers in an organization.
• i. It makes the functioning of the industrial activities of
organization smooth and effective and keeps workers‘
deployment process uninterrupted / unaffected.
• ii. It increases production and productivity as workers
find congenial atmosphere to work.
• iii. It creates a climate of cooperation where both labour
and management come close, develop understanding,
solve disputes and grievances mutually.
• iv. It enhances workers‘ wages and allowances, provides
welfare amenities ( housing schemes, medical benefits, and
education and recreation facilities) for enhancing their
standards of living, introduces reward system and satiates the
need, aspiration and expectation of workers.
• v. It makes the employees contented, happy,
satisfied,committed, loyal through formulation of employee-
oriented IR/HR policies, procedures and practices.
• vi. Satisfaction of workers‘ physiological and psychological
needs is possible, as both workers and management personnel
work for growth and development.
• vii. It develops a sense of ‗we-feeling‘
‗togetherness‘, ‗involvement‘ amongst the employees
which drive them to ensure perfection, completeness,
accuracy in all sorts of functional activities and delivery
of world class quality of products and services to
customers.
• viii. Collective bargaining mechanism is accepted as
a tool of settling disputes and grievances of the
employees. Day to day grievances, problems are
sorted out through direct negotiation, discussion and
also through grievance procedure machinery. All
this is possible when harmonious industrial relations
exist.
• x. In an atmosphere of sound industrial relations
workers may find improvement in quality of work
life (QWL), participative system in decision-
making, introduction of quality circles, interest of
management to solve their problems, design of
career planning and development, unbiased
evaluation of performance and action orientation
by management.
• 2. Benefits to Management:
• Management personnel may have an ample
benefits from a healthy industrial relations system.
• Benefits are discussed below:
• i. Industrial conflict becomes less/zero.
• ii. Production (process of creating and
manufacturing goods and services) and productivity
(input-output ratio) tend to be on the higher side as
workers participate in organizational activities
as members of the team and intend to grow with the
growth of the company.
• iii. Since, workers co-operate spontaneously
organization can compete with the competitors and
can grow and develop.

• iv. Customers‘ delightment is possible through

delivery of quality goods and personalized services.

• v. Industrial peace prevails as mutual

understanding, faith and confidence between labour
and management is established and both the parties
avoid conflict.
• vi. Management can make the people dynamic
through creation of change environment and
application of OD mechanism to improve /
develop core areas of human resources-skill,
knowledge, competencies, talent, attitude, aptitudes,
values, beliefs, perception etc.
• Such organizational environment creates a ground
for workers to accept changes to show their worth,
values in a state of dynamism.
• vii. Organization can have a reservoir of talented,
committed human resources.
• 3. Benefits to Society:
• i. Instances of lay off, retrenchment of workers are
remote.
• ii. No adverse behavioural activities are manifested
by the employees in the society as they feel high degree
of QWL.
• iii. Production and distribution system remain
uninterrupted. Supply of goods is ensured. Price is not
increased, rather shows declining trend.
• iv. Climate of lawlessness that arises out of industrial
disputes viz. strike, dharna, closure, lockout does not
prevail in the society.
• v. Societal peace prevails
• It is observed that harmonious industrial relations
benefit workers, employers (management) and
society. Hence, importance of sound industrial
relations cannot be exaggerated, particularly in
the present changing scenario (i.e., change in
economic policies, change in technology, change in
job requirement, change in markets and the like.)
Essential Conditions for Effective Industrial
Relations in the Organization
• Practically, it is very difficult to promote and maintain
effective industrial relations in the organization. But at the same
it is necessary to understand that the effective industrial
relations is the core activity for the success of the organization.
• The basic requirements on which the effective industrial relation
is based are:
• 1. The implementation of sound HR Policies.
• 2. The full top management support.
• 3. The constructive attitude of management and union.
• 4. The existence of strong, well organized and democratic
employees union.
• 5. The uses of fair labour practices and
implementation of labour Acts in the right spirit.
• 6. The distribution of profits in an appropriate
manner.
• 7. Welcome the culture of collective negotiations.
• 8. The proper, appropriate and require training
to all levels.
• 10. The flow of two way communication channels.
• 11. The participation and empowerment of all the
levels employees.
• 12. The constant review of an industrial relations
programme.
 Difference Between Industrial Relations
And Human Relations

• The term ―Industrial Relations is different from

―Human Relations.

• Industrial relations refer to the relations between

the employees and the employer in an industry.

• Human relations refer to a personnel-management

policy to be adopted in industrial organizations to
develop a sense of belongingness in the workers,
improves their efficiency and treat them as human
beings and make a partner in industry.
• Human relations are defined as the relationship
between people, especially in a professional
context.
• It is an integral part of career success and relates to
the treatment of people in a workplace setting.
• Human relations is defined here as the art of using
systematic knowledge about human behavior to
improve personal, job and career effectiveness.
• Industrial relations cover the matters
regulated by law or by collective agreement
between employees and employers.
• On the other hand, problems of human
relations are personal in character and are
related to the behavior of worker where
morale and social elements predominated.
• Human relations approach is personnel
philosophy which can be applied by the
management of an undertaking.
• To sum up the term ―Industrial
Relations is more wide and
comprehensive and the term
―Human Relations is a part of it.
• IR versus HRM
• Accordingly, industrial relations pertains to the
study and practice of collective bargaining,
TRADE unionism, and labor-management
relations, while human resource management is
a separate, largely distinct field that deals with
non-union employment relationships and the
personnel practices and policies of employers.
 CASE STUDY -1

What parties are involved in industrial relations?

• In an engineering factory established in 1945 near
Delhi, the employer and the only recognized trade
union ‗A‘, functioning since the inception of the
factory, have been working hard to ensure a high
level of productivity and profitability of the
enterprise and also a satisfactory level of standard of
living for the workers.
• They have been entering into collective agreements
on matters of mutual interests including the terms
and conditions of employment of workers.
• In 1950, two more trade unions ‗B‘ and ‗C‘ led by
outsiders also came to be formed in the factory.
• These two new unions started placing exorbitant
demands before the management and organized
demonstrations and strikes leading to the impairment
of the smooth functioning of the enterprise.
• The management then approached the Labour
Department with a request to intervene.
• The Labour Department declared the strikes
organized by the two new unions illegal and
convened a meeting of the parties with a view to
providing a solution to the disturbed industrial
relations in the enterprise. Unions ‗B‘ and ‗C‘ did
not participate in the meeting.
• The government then referred the issue before a
tribunal which recognized the status of union ‗A‘ as
the sole bargaining agent and debarred unions ‗B‘
and ‗C‘ from any activity in the enterprise.
 QUESTIONS
• What elements of industrial relations exist in the
enterprise?
• Which are the parties involved in the industrial
relations of the enterprise?
• How have the rules governing the terms and
conditions of employment of workers been
formed in the enterprise?
• How will you identify the role of the government
in the industrial relations of the enterprise
MAJOR COMPONENTS OF
INDUSTRIAL RELATIONS
MAJOR COMPONENTS OF
INDUSTRIAL RELATIONS
The major components of Industrial
Relations are

1. Employees
2. Employers
3. Trade Unions
4. Government
1. Employees

• Employees are a party to IR as they are affected most

by the IR outcomes. An employee is any individual
employed by an employer.
• In an IR system, employees may be grouped into two
categories- those who have been defined as
workers/workmen under the Industrial Disputes Act,
1947 and those who are not covered by this Act.
• Employee is a person who is hired by another person
or business for a wage or fixed payment in exchange for
personal services and who does not provide the services as
part of an independent business.
• A person who works for a public or private employer and
receives remuneration in wages or salary by his employer
while working on a commission basis, piece-rates or time
rate.
• In a factory, the owner or occupier or manager is
considered a principal employer; but in an
establishment or a company, the person who is in
control and supervision of establishment or
company will be the principal employer.
• A ―principal employer‖ as defined under the
Act covers any person responsible for the
supervision and control of the establishment. In
the case of a factory, such person would include the
owner or occupier of the factory or a manager under
the Factories Act, 1948.
• Immediate employer, in relation to employees
employed by or through him, means a person who
has undertaken the execution of the work of the
principal employer on the premises of a factory
or any establishment to which this Act applies.
• He may have undertaken the execution of the
work independently or under the supervision of
the principal employer or his agent.
• Employee, as per Employee State Insurance Act
1948, is any person employed for wages in or in
connection with work of a factory or establishment to
which the act applies.
• In order to qualify to be an employee, under ESI
Act, a person should belong to any of the categories:
• (i) Those who are directly employed for wages by
the principal employer within the premises or outside
in connection with work of the factory or
establishment.
• (ii) Those employed for wages by or through an
immediate employer in the premises of the factory or
establishment in connection with the work thereof
• (iii) Those employed for wages by or through an
immediate employer in connection with the factory or
establishment outside the premises of such factory or
establishment under the supervision and control of
the principal employer or his agent.
• (iv) Employees whose services are temporarily
lent or let on hire to the principal employer by an
immediate employer under a contract of service
(employees of security contractors, labor contractors,
house keeping contractors etc. come under this
category).
• Among the participants to IR, employees are
considered as the most affected one by the IR
system prevalent in an organization.
• Employees with their various characteristics
such as their commitment to the work and the
organization, their educational and social
background, their attitudes towards the
management and so on affect and are affected by
the system of IR.
• Generally, employees perceive IR
as a means to improve their
conditions of employment, voice
against any grievances, exchange
views and ideas with management
and participate in organizational
decision making processes.
• Employees achieve following objectives:
• 1. To redress the bargaining advantage on one-on-
one basis, i.e., individual worker vis-a-vis individual
employer by way of joint or collective actions.
• 2. To secure better terms and conditions of
employment for their members.
• 3. To obtain improved status for the worker in
his/her work.
• 4. To increase democratic mode of decision-
making at various levels.
• - To acquire better knowledge and multi-trade
skills and continuously upgrade them;
• - to develop cooperative attitudes and team spirit;
• - to be quality and cost conscious;
• - to be innovative and resourceful in job- and
employment-related matters;
• - to be self-disciplined;
• The main theme behind the concept of industrial
relation is to recognize the fact that labour is a
human being and not a commodity and,
therefore, it should be treated as living being.
• Every individual differs in mental and
emotional abilities, sentiments and traditions.
Human like treatment only can improve the
relations between the management and the
labour.
• In its absence, the whole edifice of organizational
structure may crumble down.
• Thus, the most important part of any organization is
human being. Machine, material and money are
secondary.
• ―Take care of your employees. They automatically
take care of your organizations‖. Every human being wants
freedom of speech, self-respect, and to enjoy all those
facilities for which he is entitled for.

• But when an employee is not provided a handsome

package of financial and non-financial incentives and is not
properly treated during his stay at the organization it leads to
tension, conflicts and ill-will.
• The problem of industrial relation in an industry arises
out of tension which is created because of employer‘s
pressure and worker‘s reactions and protests.
• Tension among the employees affects their
work culture and output which gradually affects
the entire industry and ultimately it may lead to
spoilage of work culture at national level.
• Therefore management should avoid these
situations and expert services of other
behavioural scientists should be taken if necessary
to deal with such situations.
• To avoid disputes, it is very essential to
understand human behaviour which is pre-
requisite for industrial peace.
• Management must learn and know the basic
needs of the man and should always try to win
the people.
• Because these are the employees who can
run or ruin the business, They Can Make
You Or Can Break You.
• Thus, in conclusion, the employees constitute the most
valuable assets of any organization.
• Neglecting this important source may result in high
cost of production in terms of wages and salaries, benefits
and services, working conditions, increased labour
turnover and absenteeism, growing indiscipline, strike
and walkouts and the like besides deterioration of quality
of goods and strained labour- management relations.
Workers, Labourers and
Employees
• Worker : a person who works. Now this ―work‖ can be anything.
worker is confined to those individuals working in factories and
industries by and large.
• Laborer : a person who does labor work. ―Labor‖ means any work
which requires physical effort. Generally paid on hourly/daily basis as
a wage.
• Employee : a person who works under a payroll of a company.
Generally paid on a monthly basis as a salary. Now employee can be
further divided into as regular/permanent employee & contractual
employee.
• So in a nutshell, Worker is a more generic term under which
Laborers & Employees can be fit into , as both are workers.
• The difference between laborer and worker is
that laborer is one who uses body strength instead of
intellectual power to earn a wage, usually hourly
while worker is a person who performs labor for his
living, especially manual labor.
• Labor is people that you pay and they do a job.
• Employees are intimate members of an
organization that receive both a paycheck and an
emotional stake in a company.
• When someone seen as a labor is being removed,
it is easy and unconscious, as though they were
simply discarding a tool or defective robot.
Removing an employee is harder because you
remove a bit of the culture when you remove a
member.
• An employee is not only contributing to the
culture, they are part of the culture itself. When you
remove an employee, it is good to ask is removing
this employee going to help or hurt the overall
culture of the company?
2. Employer
• The second party to IR is employers.
• Since in the corporate form of organization,
management represents the owners/employers, it
can be treated as the second party to IR.
• The management is an organization is responsible
to various stakeholders including the employees.
• Therefore, employer-employee relationship is
also termed as management-labour relations.
• An employer can be defined from different
perspectives as:-
• (i) A person or business that pays a wage or
fixed payment to other person(s) in exchange for
the services of such persons.
• (ii) A person who directly engages a
worker/employee in employment.
• (iii) Any person who employs, whether directly
or through another person or agency, one or more
employees in any scheduled employment in respect
of which minimum rates of wages have been fixed.
 The Role of Employers and Management
• - Adopting well defined policies on productivity, wages and
human resources management and communicating them to the
workers and union(s);
• - Developing a culture of productivity and quality in the
enterprise and Achieving higher levels of efficiency.

• - Continuously upgrading the technology and production

methods;
• - Creating and sustaining employee motivation and Carrying
out continuous training and development of workers and
managers;
• - Maintaining a regular dialogue with the most representative
union of the employees, and directly with workers;
• - Instituting joint decision-making forums and
creating a conducive environment for them;
• - Empowering employees to make more decisions
about the way they are doing their jobs;
• - Encouraging innovative suggestions from
employees and Ensuring commitment from
employees.

• - Creating productivity awareness and

consciousness among the workers and the union
officials through communication, information
sharing, consultation, etc.
 Employers‘ Associations
• Like employees‘ associations, employers may also
join associations at the local or national level. The
major associations of employers at all-India level
are Federation of Indian Chambers of Commerce
and Industry (FICCI), Confederation of Indian
Industry (CII), Associated Chambers of
Commerce and Industry (ASSOCHAM),
Federation of Indian Export Organizations
(FIEO), etc.
• The Role of Employers' Organizations
• - Disseminating information and knowledge
about new technology, new methods of production,
market conditions, government policies and
regulations, etc.;
• - Acting as a liaison between the employers and
the government in matters affecting the interests of
the member employers;
• - Helping the member employers in
negotiations with the unions about productivity
improvement; and
• - Ensuring that member employers cooperate in
matters of productivity and quality management.
• Represent employers in collective bargaining
at the national or industry level.

• Develop machinery for avoiding disputes.

• Provide feedback on employee relations.

• Advise member organizations on the issues

relating to IR.
3. Government
• Government plays a balancing role as a
custodian of the nation.
• The government exerts its influence on
industrial relations through its labour policy,
industrial relations policy, implementing labour
laws, the process of conciliation and adjudication
by playing the role of a mediator, etc.
• It tries to regulate the activities and behaviour
of both employee‘s organizations and employer
organizations.
• Thus, the three groups of employees, employers
and the government work within the social and
economic environment that prevails at a particular
time. Whatever industrial relations system may be in
vogue, it has in its framework the intricate rules
and regulations which enforce the workplace and
the working community.
• The role of the government has been changing
from time to time in the matter of IR.
• Till 19th century, the governments throughout
the world adopted a policy of laissez faire and left
the IR matters to be settled by the employers and
employees.
• However, with the increasing conflicts between
them even on tiny matters, the governments‘
attitudes changed to some kind of intervention in
IR matters towards the end of 19th century.
• In the present context, everywhere, governments
intervene in the HR system in different ways.
• In India, government has prescribed various laws
dealing with employer-employee relations and set
machinery for resolving conflicts — labour courts,
tribunals at state and national levels.
• These courts and tribunals intervene in the solution of
industrial disputes referred to these.
• While developing IR system, an organization has to
take into account the role played by the government
in IR activities.
 Difference between Court and Tribunal
• While tribunals are formed to deal with
specific matters, courts deal with all types of cases.
• The tribunal can be a party to the dispute,
whereas a court cannot be a party to the dispute.
• Courts decide most disputes and criminal cases.
Tribunals deal with more specialized matters and
are less formal than courts.
• Tribunals are not restricted by the rules of
evidence. That is, they do not have to follow the law
as to what evidence may be used in court.
• Courts are judicial body , and they are
arranged in the hierarchal order and integrated .
They have different jurisdiction for eg-orginial
jurisdiction etc . Supreme court and high court are
the saviour of fundamental rights under article 32
and article 226 respectively .
• Tribunals-
• Tribunal is a quasi-judicial institution that is set up to deal
with problems such as resolving administrative or tax-related
disputes. It performs a number of
functions like adjudicating
disputes, determining rights
between contesting parties,
making an administrative
decision, reviewing an existing
administrative decision and so
forth.
• Under Article 323 B, the Parliament and the state legislatures are
authorized to provide for the establishment of tribunals for the
adjudication of disputes relating to the following matters:
 Taxation
 Foreign exchange, import and export
 Industrial and labour
 Land reforms
 Ceiling on urban property
 Elections to Parliament and state legislatures
 Food stuff
 Rent and tenancy rights
• Some examples of tribunals are - CAT , NGT etc .
4. Trade Unions
• Trade Unions are basically associations of
workers and are formed with the aim of
protecting the workers against exploitation by
their employers and also improving their living
conditions.
• Trade Union means a combination formed for the
purpose of regulating the relations not only
between workmen and employers but also
between workmen and workmen or between
employers and employers.
• Section 2(h) of the trade unions act, 1926 has
defined a trade union as follows:
• ―Trade union means any combination, whether
temporary or permanent, formed primarily for the
purpose of (a) regulating the relations
• (1) Between workmen and employers, or
• (2) Between workmen and workmen, or
• (3) between employers and employers; or
• (b) for imposing restrictive conditions on the
conduct of any trade or business, and includes any
federation of two or more trade unions.‖
• Trade Union is another major component of
industrial relations. Trade Unions are responsible
for maintaining good industrial relations within
an organization.
• Workers throughout the world have understood
the importance of collective bargaining and thereby
the formation of a trade union is inevitable.
• The basic objective of a trade union is to protect
and safeguard the interest of the employees and
create or ensure a good working environment for
its members in the organization.
• The Unions represent the workers on whose behalf
they bargain with the management on various issues
of common interest.
• The Unions represent the workers at the plant level
as well as at State and National level.
• The Unions sometimes use pressure tactics or
threats of strikes and gheraos.
• The unions enter into long term collective
bargaining agreements with the employers on
various issues affecting employer - employee
relations.
• Many state and national policies are implemented
through the unions. Matters relating to wages,
working conditions, welfare schemes, safety, health,
discipline industrial disputes, social security and
training are discussed by the unions with the
employers. It is for the above reasons the unions
form a major component of industrial relations.
•
• Labour unions or trade unions are organizations
formed by workers from related fields that work for
the common interest of its members. They help
workers in issues like fairness of pay, good working
environment, hours of work and benefits. They
represent a cluster of workers and provide a link
between the management and workers.
• The purpose of these unions is to look into the
grievances of wagers and present a collective voice
in front of the management.
• Hence, it acts as the medium of communication
between the workers and management.
• Regulation of relations, settlement of grievances,
raising new demands on behalf of workers,
collective bargaining and negotiations are the other
key principle functions that these trade unions
perform.

The Indian Trade Union Act, 1926, is the

principle act which controls and regulates the
mechanism of trade unions. In India, political lines
and ideologies influence trade union movements.
This is the reason why today political parties are
forming and running trade unions.
• Based on the above definitions, we may derive the
features of trade unions as follows:
• 1. Trade unions are voluntary associations formed by
employees to safeguard their interests through
collective actions.
• 2. Such associations at the level of individual
organizations as well as the apex bodies with which
these may be affiliated fall in the category of trade
unions.
• 3. Since trade unions are voluntary, an employee has
a choice to join or not to join a union. Similarly, a trade
union has choice to affiliate or not to affiliate itself
with an apex body of trade unions.
• The role of trade unions
• - To ensure internal democracy in the union and
leadership among the employees;
• - to make reasonable demands and be willing to
negotiate the management's demands;
• - to develop integrative and co-operative bargaining
relationships with the management;
• - to help the management in identifying the areas for
cost reduction;
• - to motivate employees to be quality and productivity
conscious and help them to acquire multi-trade skills
and continually upgrade them;
• - to create, develop and adopt positive attitudes among the
workers and union officials toward modernization and
rationalization for productivity improvement;
• - to develop jointly with the management the programmes of
worker involvement in productivity improvement and decision-
making and to ensure employee participation at all levels;
• - to recognize the rights and responsibilities of the management
in the adjustment of manpower (sectors, jobs, skills, positions,
responsibility, attitudes, etc.) with a view to productivity
improvement;
• - to avoid work stoppages and other negative tactics that affect
productivity until all other means of settling disputes have been
tried; and
• - to avoid introducing political issues into industrial relations.
• Thus, trade unions aim at not only protecting
and promoting economic, social and political
interests of their members but also
contributing towards betterment of the
community.
 A List of Labour Legislations in India
Sr. No. Domain Legislation
1 Legislation pertaining
The Trade Union Act, 1926 and The Trade Union Amendment Act,

to Industrial Relations 2011

The Industrial Employment (Standing Orders) Act, 1946

The Industrial Disputes Act, 1947

2. Legislation pertaining
The Payment of Wages Act, 1936 and The Payment of Wages
(Amendment) Act, 2005
to wages
The Minimum Wages Act, 1948
The Payment of Bonus Act, 1965
The Equal Remuneration Act, 1976
3. Legislation pertaining
The Factories Act, 1948
to work conditions The Contract Labour (Regulation & Abolition) Act, 1970
The Shops and Establishment Act
The Dock Workers (Regulation of Employment) Act, 1948

The Plantation Labour Act, 1951

The Mines Act, 1952
The Merchant Shipping Act, 1958
The Building & Other Construction Workers (Regulation of
Employment & Conditions of Service) Act, 1996
 A List of Labour Legislations in India
Sr. No.
Domain Legislation
4. Legislation The Maternity Benefit Act, 1961
pertaining to Women The Child Labour (Prohibition & Regulation) Act,
and Children 1986
The Workmen's Compensation Act, 1923 and The
5.
The Payment of Gratuity Act, 1972
Legislation
pertaining to Workmen'sCompensation (Amendment) Act, 2000
social security
The Employees' State Insurance Act, 1948
The Employees' Provident Fund & Miscellaneous
Provisions Act, 1952 and The Employees' Provident
Fund & Miscellaneous Provisions (Amendment) Act,
1996

The Un-organised Workers' Social Security Act, 2008

Source: www.jabour.nic.in. accessed on December 12.

2011.