Workers Participation in Management in Indian Industries

Workers’ participation in Management in India was given importance only after

Independence. Industrial Disputes Act, 1947 was the first step in this direction, which
recommended for the setting up of works committees. The joint management councils were
established in 1950 which increased the labour participation in management. Since July 1975
the two-tier participation called shop councils at shop level and Joint councils were
introduced. Workers’participation in Management Bill, 1990 was introduced in Parliament
which provided scope for up liftment of workers.
Reasons for failure of Workers participation Movement in India:
1. Employers resist the participation of workers in decision-making. This is because they feel
that workers are not competent enough to take decisions.
2. Workers’ representatives who participate in management have to perform the dual roles of
workers’ spokesman and a co-manager. Very few representatives are competent enough to
assume the two incompatible roles.
3. Generally Trade Unions’ leaders who represent workers are also active members of
various political parties. While participating in management they tend to give priority to
political interests rather than the workers’ cause.
4. Schemes of workers’ participation have been initiated and sponsored by the Government.
However, there has been a lack of interest and initiative on the part of both the trade
unions and employers.
5. In India, labour laws regulate virtually all terms and conditions of employment at the
workplace. Workers do not feel the urge to participate in management, having an innate
feeling that they are born to serve and not to rule.
6. The focus has always been on participation at the higher levels, lower levels have never
been allowed to participate much in the decision-making in the organizations.
7. The unwillingness of the employer to share powers with the workers’ representatives, the
disinterest of the workers and the perfunctory attitude of the government towards
participation in management act as stumbling blocks in the way of promotion of
participative management.
 Measures for making Participation effective:
1. Employer should adopt a progressive outlook. They should consider the industry as a joint
endeavor in which workers have an equal say. Workers should be provided and
enlightened about the benefits of their participation in the management.
2. Employers and workers should agree on the objectives of the industry. They should
recognize and respect the rights of each other.
3. Workers and their representatives should be provided education and training in the
philosophy and process of participative management. Workers should be made aware of
the benefits of participative management.
4. There should be effective communication between workers and management and effective
consultation of workers by the management in decisions that have an impact on them.
5. Participation should be a continuous process. To begin with, participation should start at
the operating level of management.
6. A mutual co-operation and commitment to participation must be developed by both
management and labour.
Modern scholars are of the mind that the old adage “a worker is a worker, a manager is a
manager; never the twain shall meet” should be replaced by “managers and workers are
partners in the progress of business”

Forms of workers’ participation in management

1. Suggestion schemes: Participation of workers can take place through suggestion scheme.
Under this method workers are invited and encouraged to offer suggestions for improving
the working of the enterprise. A suggestion box is installed and any worker can write his
suggestions and drop them in the box. Periodically all the suggestions are scrutinized by
the suggestion committee or suggestion screening committee. The committee is
constituted by equal representation from the management and the workers. The committee
screens various suggestions received from the workers. Good suggestions are accepted for
implementation and suitable awards are given to the concerned workers. Suggestion
schemes encourage workers’ interest in the functioning of an enterprise.
2. Works committee: Under the Industrial Disputes Act, 1947, every establishment
employing 100 or more workers is required to constitute a works committee. Such a
committee consists of equal number of representatives from the employer and the
employees. The main purpose of this committee is to provide measures for securing and
preserving amity and good relations between the employer and the employees.
 Functions: Works committee deals with matters of day-to-day functioning at the shop
floor level. Works committees are concerned with:
o Conditions of work such as ventilation, lighting and sanitation.
o Amenities such as drinking water,canteens, dining rooms, medical and health services.
o Educational and recreational activities.
o Safety measures, accident prevention mechanisms etc.
o Works committees function actively in some organizations like Tata Steel, HLL, etc
but the progress of Works Committees in many organizations has not been very
satisfactory due to the following reasons:
o Lack of competence and interest on the part of workers’ representatives.
o Employees consider it below their dignity and status to sit alongside blue-collar
workers.
o Lack of feedback on performance of Works Committee.
o Undue delay and problems in implementation due to advisory nature of
recommendations.
3. Joint Management Councils: Under this system Joint Management Councils are
constituted at the plant level. These councils were setup as early as 1958. These councils
consist of equal number of representatives of the employers and employees, not exceeding
12 at the plant level. The plant should employ at least500 workers. The council discusses
various matters relating to the working of the industry. This council is entrusted with the
responsibility of administering welfare measures, supervision of safety and health
schemes, scheduling of working hours, rewards for suggestions etc.

Wages, bonus, personal problems of the workers are outside the scope of Joint
management councils. The council is to take up issues related to accident prevention,
management of canteens,water, meals, revision of work rules, absenteeism, indiscipline
etc. the performance of Joint Management Councils have not been satisfactory due to the
following reasons:

o Workers’ representatives feel dissatisfied as the council’s functions are concerned with
only the welfare activities.
o Trade unions fear that these councils will weaken their strength as workers come under
the direct influence of these councils.
4. Work directors: Under this method, one or two representatives of workers are nominated
or elected to the Board of Directors. This is the full-fledged and highest form of workers’
participation in management. The basic idea behind this method is that the representation
of workers at the top-level would usher Industrial Democracy, congenial employee-
employer relations and safeguard the workers’ interests. The Government of India
introduced this scheme in several public sector enterprises such as Hindustan Antibiotics,
Hindustan Organic Chemicals Ltd etc. However the scheme of appointment of such a
director from among the employees failed miserably and the scheme was subsequently
dropped.
5. Co-partnership: Co-partnership involves employees’ participation in the share capital of
a company in which they are employed. By virtue of their being shareholders, they have
the right to participate in the management of the company. Shares of the company can be
acquired by workers making cash payment or by way of stock options scheme. The basic
objective of stock options is not to pass on control in the hands of employees but
providing better financial incentives for industrial productivity. But in developed
countries, WPM through co-partnership is limited.
6. Joint Councils: The joint councils are constituted for the whole unit, in every Industrial
Unit employing 500 or more workers; there should be a Joint Council for the whole unit.
Only such persons who are actually engaged in the unit shall be the members of Joint
Council. A joint council shall meet at least once in a quarter. The chief executive of the
unit shall be the chairperson of the joint council. The vice-chairman of the joint council
will be nominated by the worker members of the council. The decisions of the Joint
Council shall be based on the consensus and not on the basis of voting.
In 1977 the above scheme was extended to the PSUs like commercial and service sector
organizations employing 100 or more persons. The organizations include hotels, hospitals,
railway and road transport, post and telegraph offices, state electricity boards.

7. Shop councils: Government of India on the 30th of October 1975 announced a new
scheme in WPM. In every Industrial establishment employing 500 or more workmen, the
employer shall constitute a shop council. Shop council represents each department or a
shop in a unit. Each shop council consists of an equal number of representatives from both
employer and employees. The employers’ representatives will be nominated by the
management and must consist of persons within the establishment. The workers’
 representatives will be from among the workers of the department or shop concerned. The
total number of employees may not exceed 12.
Functions of Shop Councils:
1. Assist management in achieving monthly production targets.
2. Improve production and efficiency, including elimination of wastage of man power.
3. Study absenteeism in the shop or department and recommend steps to reduce it.
4. Suggest health, safety and welfare measures to be adopted for smooth functioning of
staff.
5. Look after physical conditions of working such as lighting, ventilation, noise and dust.
6. Ensure proper flow of adequate two way communication between management and
workers.
 Collective Bargaining

The term collective bargaining refers to the process of negotiation that takes place between
workers or labourers and their employers on the terms of their contracts. In most instances, the
labourers are represented by a trade or labour union. This is usually done in order to achieve
certain demands and rights of the labourers, namely those pertaining to working hours,
salaries, working conditions, etc. This form of industrial dispute resolution has been
revolutionary for labour relations in the Indian industries, both private and public. This is
because conflicts in the area of commerce and business are inevitable and it is not practical to
resolve all such disputes through courts. Hence, collective bargaining has become a suitable
alternative to adjudicate industrial disputes.

Definition

According to Article 2 of the Collective Bargaining Convention, 1981 (No. 154) of

the International Labour Organisation, “collective bargaining extends to all negotiations which
take place between an employer, a group of employers or one or more employers’ organisations,
on the one hand, and one or more workers’ organisations, on the other, for

(a) determining working conditions and terms of employment; and/or

(b) regulating relations between employers and workers; and/or

(c) regulating relations between employers or their organisations and workers or workers’
organisations”.

In the case of Ram Prasad Viswakarma v. Industrial Tribunal (1961), it was observed that before
collective bargaining was introduced, labourers found it very difficult to negotiate the terms and
conditions of their contracts. With the arrival of trade unions, collective bargaining became the
norm. It became more convenient as employers only had to negotiate with the representatives of
the labourers instead of engaging with every individual labourer.

The following are the aims and objectives of collective bargaining:

1. Upholding industrial democracy

 2. Ensuring equality and justice for socially and economically backwards groups

3. Protecting the working class from exploitation

4. Meeting the legitimate expectations of labourers regarding the work they have
undertaken

Advantages of collective bargaining

 Being a part of a group helps employees to voice their demands and negotiate better
with their employers. It is harder for employers to dismiss the demands of a unified
large group of employees or a trade union in comparison with individual employees.

 It helps to improve the workplace conditions for employees.

 It makes the rights and obligations of both employers and employees clear.

Disadvantages of collective bargaining

 It is a long complicated process as the union of employees and the employers go back
and forth while negotiating. It is time-consuming and requires both parties to take time
off of their work.

 Another issue that stands as a hindrance to the effectiveness of this process is the
presence of multiple trade unions in India. Sometimes the interunion rivalry gets in the
way of negotiating for better working conditions.

 Most trade unions are also backed by or associated with a political party. Oftentimes,
it is the decision of the party that influences the trade union’s demands.

 There is no way to determine which union represents the employees.

Indian statutes and case laws recognizing collective bargaining

Industrial Disputes Act, 1947

This Act was enacted for the purpose of governing the investigation and settlement of industrial
disputes. According to Section 18 of the Act, any settlement other than a conciliation, which is
arrived at through an agreement by an employer and his employees shall be binding on them.
This essentially means that Section 18 recognises industrial dispute settlement through collective
bargaining.
In the case of Karnal Leather Karamchari Sanghatan v. Liberty Footwear Company (Regd.) and
Ors. (1990), the Supreme Court laid down that the Industrial Disputes Act, 1947 was enacted for
the purpose of securing social justice by means of collective bargaining. The court further stated
that arbitration comes within the purview of statutory tribunals. The workers involved must be
aware of what is presented before the arbitrator and must be able to share their arguments and
claims before him. Even though it is the labour union that helps to resolve the disputes, the
labourers must be involved in the process and suggest remedies.

Trade Union Act, 1926

This Act deals with the registration, rights, liabilities and immunities of a trade union. The most
important function of a trade union is to regulate the relationship between an employer or
management and its employees.

In the case of D.N. Banerjee v. P.R. Mukherjee (1952), Justice Chandra Shekhar Aiyer observed
that due to the increased importance of capital and labour in the modern-day world, they have
organised themselves into groups to settle disputes. This is based on the theory that unity is
strength and collective bargaining is a result of that.

The Industrial Employment (Standing Orders) Act, 1946

‘Standing Order’ in this Act is defined in Section 2(g) as the rules related to matters such as
classification of workmen, attendance, conditions of granting leaves, manner of intimation to
workers about work and wage-related details, etc. As per Section 3 of the Act, the employer must
first submit the draft of the standing order to the Certifying Officer, and must also conform to the
model set for the standing order as far as possible. After that, the Officer forwards copies of the
draft to the trade union or to the workmen. If there is no trade union for seeking objections, the
officer must give both the parties an opportunity of being heard and then certify the standing
order with necessary modifications and send its copies to both parties. Here, it is apparent that the
certifying officer acts as the negotiator and the process of framing a standing order involves both
employer and employees. This provision essentially employs the method of collective
bargaining.
The Constitution of India, 1950

Several provisions enumerated in the Indian Constitution, particularly the fundamental rights and
the directive principles of state policy justify the concept of collective bargaining. Firstly, Article
19 of the Indian Constitution allows every Indian citizen to form an association, which in turn
covers the right to form a trade union as well. In Article 43 A, the state is permitted to make laws
that encourage workers to take part in the management.

Stages of collective bargaining

Forming a union

As per Section 9A of the Trade Unions Act, 1926, the minimum number of employees to
constitute a trade union is seven. Though registration of a union is not compulsory, it definitely
comes with its advantages such as providing adequate representation for workers, using funds for
specific purposes, immunity from civil suits, etc.

Making a charter of demands

In this stage, either the union or the employer may initiate the proceedings of collective
bargaining. The trade union then drafts a charter of demands through several discussions
conducted among all of its members.

Negotiation

The negotiations begin with the submission of the charter of demands. Generally, it is the union
that formally presents proposals for changes in the existing labour agreements in the initial
meeting. Then, the management gets the opportunity to present counter-proposals. This keeps
going on until they can form an agreement. When it becomes impossible for them to reach an
agreement, a third party may be appointed as a mediator or an arbitrator.

Forming an agreement
Once a negotiation becomes successful, the management and the union form a written agreement.
This agreement is called a collective bargaining agreement.

Strikes

In case the negotiation process fails, the union may declare a strike. As per Section 22 of the
Industrial Disputes Act, public utility sector employees must provide six weeks’ notice of a
strike, and may strike fourteen days after providing such notice. Neither the management nor the
union is permitted to take any industrial action while the conciliation is pending, and not until
seven days after the conciliation proceedings conclude, or two months after the legal proceedings
conclude.

Conciliation

The conciliation process begins when the conciliation officer receives a notice of strike. There are
two alternatives that can be taken in this step. As per Section 4 of the Act, during the cooling-off
period, the state government may appoint a conciliation officer for investigating, mediating and
promoting settlement. As per Section 5 of the Act, the second alternative is that the state
government may appoint a Board of Conciliation and it shall be composed of a chairman and
either two or four members. Strikes are not organised during the process of conciliation as
per Sections 22 and 23 of the Act. Section 20 of the Act provides that this step ends with a
settlement or a reference to an industrial tribunal or labour court, and sometimes no settlement is
arrived at.

Arbitration or adjudication by industrial tribunals or labour courts

In case of failure of the conciliation process, the parties could go for either a voluntary or
compulsory arbitration, and the recommendations of the arbitrator may be binding on the
parties. Section 7A of the Act provides for a labour court or industrial tribunal within a state to
adjudicate such disputes. Section 7B of the Act provides for the constitution of national tribunals
to resolve disputes involving questions of national interest. The employer and the employees may
refer the case by a written agreement to a labour court, industrial tribunal or national tribunal for
adjudication or arbitration.

Collective bargaining agreements

A collective bargaining agreement is essentially a legal agreement in written form between an
employer and a trade or labour union representing the employees. It is the agreement that forms
after the process of negotiation between the employer and the union or the workmen. It is an
important stage in the process of collective bargaining that the employer and the union reach
when the negotiation becomes successful.

Types of collective bargaining agreements

In India, there are mainly three types of collective bargaining agreements, which are listed
below:

Bipartite or voluntary agreement

Bipartite agreements are those agreements or settlements formed in voluntary negotiations in the
process of collective bargaining. As per Section 18 of the Industrial Disputes Act, such
agreements are binding on the parties involved.

Settlement

A settlement commonly refers to an agreement of tripartite character as a third party is involved

in arriving at it. This is the agreement that is arrived at by the employer and the employees with
the help of a conciliation officer. If during the process of conciliation, the conciliation officer
feels that there is a possibility of reaching a settlement, he withdraws it himself. After that, the
parties examine the terms of the agreement and report back to the officer within a specified
period.

Consent award

When a dispute is pending before a compulsory adjudicatory authority, the parties can still
negotiate between themselves. The agreement that is formed as a result of such a negotiation shall
also be incorporated into the authority’s award and it gains a binding force.
Elements of a collective bargaining agreement

When trade unions and employers enter into collective bargaining agreements, such agreements
enumerate the various clauses that govern the relationship between the employees represented by
trade unions and employers. The following are some of the clauses that can be found in a
collective bargaining agreement:

 Duration of the settlement

 Settlement terms with respect to matters like wages, benefits, leaves, working hours,
rest hours, allowances, concessions, etc

 Conditions with respect to strikes

 Obligations of the employees

 Obligations of the management

 Penalties for non-compliance with the agreement

 Dispute resolution

Conclusion

To conclude, collective bargaining agreement is an essential step arrived at by the employer and
the employees involved in the process of collective bargaining. This is the first resort that
employers and unions go to for resolving disputes. It is formed as a result of a successful
negotiation of voluntary nature. This helps in resolving disputes without the help of the courts or
tribunals and makes the task of negotiating with employers simpler and more efficient.