MODULE - I

 Industrial relations encompasses a set of

phenomena, both inside and outside the
workplace, concerned with determining and
regulating employment relationship
 Relationship between management and

employees or among employees and their

organization that characterize and grow out
of employment.
Approaches Used to Define Industrial Relations (1)
 
(1) Institutional-based definitions:
industrial relations are the sum of institutional processes that
establish and administer the rules regulating workplace
relations
 
(2) Social Psychology-based definitions:
industrial relations are the sum of social psychological
interactions between individuals
 
(3) Class-based definitions:
industrial relations are the sum of institutions, interactions
and processes that are a product of wider social and economic
influences, in particular the class divisions of contemporary
capitalism
© These lecture slides are copyright to Eruditions Publishing and may not be used or reproduced without written permission of the publisher, except in those
institutions and courses where Petzall, Abbott, Timo, Australian Industrial Relations in Asian Context 2E is a prescribed student textbook.
Approaches Used to Define Industrial Relations (2)

Ddefinitions that seek to include all matters contained in the

first three definitions within other terms:
 
(4) Human Resource Management:
contracts of employment (involving trade unions, worker
collectives, labour courts and government agencies), as well as
management of conflict arising out of the personal interactions
of individuals in the workplace, are part of labour management
functions ( i.e. recruitment, selection, training, development,
performance management, and so on)

(5) Employment Relations (or Employee Relations):

contracts of employment (involving trade unions, worker
collectives, labour courts and government agencies), as well as
the management of conflict arising out of the personal
interactions of individuals in the workplace, are part of
workplace relations, together with the normal functions of
Human Resource Management.
 To enhance economic status of worker
 To avoid industrial conflicts and their consequences
 To extend and maintain industrial democracy
 To provide an opportunity to the worker to have a say in the
management decision making
 To regulate production by minimizing conflicts
 To provide forum to the workers to solve their problems
through mutual negotiations and consultations with
management
 To encourage and develop trade union in order to develop
workers collective strength
 IR arise out of employer employee relations
 IR is a web of rules: formed by the interaction of Govt, industry & labor
 IR is multi dimensional: influenced by complex set of institutional.
economic & technological factors
 IR is dynamic and changing: keep pace with employee expectations,
trade unions, employer associations and other economic and social
institutions of society
 IR is characterized by forces of conflict and compromise. Individual
differences and disagreements resolved through constructive means.
 Govt influences and shapes IR: with its laws, rules, agreements
through executive and judicial machinery
 Scope of IR is very wide as it covers grievances, disciplinary measures
ethics, standing orders, collective bargaining, participatory schemes
and dispute settlement mechanism etc
 Interactive and consultative in nature: in resolving
conflict,controversies and disputes between labor and management.
 Management – Union relationship
 Employer – Employee relationship
 Relationship amongst various groups of employees
 Effect of extraneous factors like state, socio-political-
economic factors on workplace relationships
 Approaches to organisations

Unitary Pluralistic Marxist

Authoritarian Co-operation Evolution

Paternalism Conflict Revolution

Approaches to industrial relations

Input Conversion Output

Institutions
Conflict Regulation
and
(differences) (rules)
processes

Human Systems Social action Control of

resource the labour
management process
Wider approaches to industrial relations

Labour market Comparative

 IR is grounded in mutual cooperation, individual treatment,
team work and shared goals.
 Work place conflict is seen as temporary aberration, resulting
from poor management
 Employees who do not mix well with organization culture
 Unions cooperate with the management
 Management’s right to manage is accepted because there is
no ‘we they” feeling
 Underlying assumption is that everyone benefits when the
focus is on common interest and promotion of harmony
 Based on reactive strategy. Direct negotiation with employees
 Participation of Govt, tribunals and unions are not sought or
are seen as being necessary for achieving harmonious
employee relation
 Pluralism is belief in the existence of more than one ruling principle,
giving rise to a conflict of interests.
 The pluralist approach to IR accepts conflict between management
and workers as inevitable but containable through various
institutional arrangements ( like collective bargaining, conciliation
and arbitration etc) and is in fact considered essential for innovation
and growth.
 It perceives organizations as coalitions of competing interests ,
where the management’s role is to mediate among the different
interest groups.
 It perceives trade unions as legitimate representative of employee
interests
 It also perceives stability in IR as the product of concessions and
compromises between management and unions.
 Employees join unions to protect their interests and influence
decision making by the management. Unions thus balance the power
between management and employees. In pluralistic approach a
strong unions is not only desirable but necessary
 Marxists like pluralists also regard conflict as inevitable but see it as
a product of capitalistic society where as pluralist believe that the
conflict is inevitable in all organizations
 For Marxists IR has wider meaning. For them conflict arises not
because of rift between management and workers but because of
the division in the society between those who own resources and
those who have only labor to offer.
 Marxist approach thus focuses on the type of society in which an
organization functions.
 Industrial conflict is thus equated with political and social unrest
 Trade Unions are seen both as labor reaction to exploitation by
capitalists, as-well-as a weapon to bring about a revolutionary social
change. Wage related disputes as secondary
 For them all strikes are political and they regard state intervention
( via legislations and creation of Industrial Tribunals ) as supporting
management’s interests, rather than ensuring a balance between the
competing groups.
 IR - a social sub-system within the econ. &
political systems
 Components
◦ actors
◦ contexts (influences & constraints on decisions &
action e.g. market, technology, demography, industrial
structure)
◦ ideology - beliefs affecting actor views - shared or in
conflict
◦ rules - regulatory elements i.e. the terms & nature of
the employment relationship developed by IR
processes
PSYCHOLOGICAL APPROACH
 Differences in the perceptions of labor and management wrt factors influencing their
relations i.e. wages. Benefits, services and working conditions etc
 Dissatisfaction compels workers to turn aggressive and resort to strike, lockouts and
gherao etc.

SOCIOLOGICAL APPROACH
 Sociological factors such as value system, customs and traditions etyc affect the
relations between labor and management

HUMAN RELATIONS APPROACH

 Human behavior is influenced by feelings, sentiments and attitudes. As per this
approach humans are motivated by variety of social and psychological factors
like economic and non-economic awards to be used.

GIRI APPROACH
 Collective bargaining and joint negotiations be used to settle disputes between labor
and management. Outside interference to be avoided.

GANDHIAN APPROACH
 worker's right to strike but cautioned that this right be exercised in just cause and in a
peaceful and non-violent manner for minimum wages etc like ‘satyagrah’- Non violent
non- cooperation
 EMPLOYEES EMPLOYERS

EMPLOYEE EMPLOYER-EMPLOYEE EMPLOYER

ASSOCIATIONS RELATIONS ASSOCIATION

COURTS
GOVERNMENT &
TRIBUNALS
WORKERS and their ORGANIZATIONS( Trade Unions or Associations )

 Trade unions have a protecting role of safeguarding workers

interests,

 Regulating function of ensuring implementation of statutes / Acts

 Ensuring non-violation of worker’s rights

 Trade Union Act provides Status and Authority for the power vested
in them

 This power is used for negotiating Wage Interests, better benefits and
service conditions, concessions, more amenities and welfare schemes

 Structure of Workers’ organization or Trade unions differs from

country to country
An organization is represented through officials designated in
the organization structure for coordination of activities
relating to:

 Administering employee benefits

 Regulating terms and condition of employment
 Providing welfare and social security benefits
 Coordination is done through graded hierarchical and formal
communication channels of orders and directives
 Style and manner in which employer organizations get work
and regulate the terms and conditions of employment affects
the industrial relations of the unit.
 Govt or state machinery regulates the relationship between
workers’ organizations and employers’ organizations.

 It does it through :
- Statutes and legislations,
- The judiciary- labor courts industrial tribunals
- An executive machinery- that lays down rules, procedures
and
gives awards and monitors them
Dunlop’s model
INTERNAL FACTORS:
 Attitudes of management to employees and unions

 Attitudes of employees to management and unions

 Attitudes of unions to unions to management and employees

 Present and likely future strength of unions

 Effective and agreed procedures for discussing and resolving grievances or handling disputes within the company

 Inter union rivalries in case of more than one union

 Effectiveness and capability of managers and supervisors in resolving grievances and handling disputes.

 Company's strategy wrt expansion, diversification, contraction , stabilization, turnaround

and stagnation etc

 Quality of work life ( QWL), growth and developmental opportunities

 Degree of Autonomy and Empowerment given to employees

;
 EXTERNAL FACTORS:

 Militancy of unions- nationally or locally

 Authority and effectiveness of the employer’s family
 The extend to which bargaining is carried out at national,
local or plant level
 The effectiveness of any national or local procedure
agreements that may exist
 Employment situation nationally or locally
 Legal framework within which IR exists
 Social security is one of the key components of labor welfare
 Labor welfare refers to all such services, amenities and
facilities to the employees that improve their working
conditions as-well-as their standard of living
 Social security benefits provided by an organizations should
protect not only their employees but also their family
members including financial security and health care etc
 Social security envisages that the employee shall be protected
against all types of social risks that may cause undue
hardship to them in fulfilling their basic needs.
 Accidents, job losses, retirement, sickness, death while on
duty-
these are realities of working life and leave a person and his
dependents vulnerable
 Social security is an attempt by the employer and the state io
institute measures that mitigate such social risks
 India being a welfare state has taken up itself the responsibility of
extending various benefits of social security and social assistance to
its citizens.
 Although the constitution of india is yet to recognize social security
as a fundamental right, it does require state to promote the welfare
of the people by providing social, economic and political justice
 Constitution requires companies to make effective provisions for
making effective provisions for securing right to work, to educate
and public assistance in case of unemployment, old age, sickness
and disablement. Securing just and humane conditions of work.
Raise level of nutrition and standard of living, improvement of
public health etc
 A social security division has been set up under the ministrybof
labor and employment.
 In the context of labor , social security aims at reducing risks
against
loss of earnings or earning capacity due to old age,illness or work-
related injuries.
Social security to the workers is provided through 5 major Acts:

1. The Employees State Insurance act, 1948

2. Employees’ provident Fund and Miscellaneous provisions Act
3. The Worker’s Compensation Act
4. The Maternity Benefit Act
5. The payment of Gratuity Act
 In addition there are large number of welfare funds also for
some specific segments
 Major thrust of social security relating to labor is on:
a) Provisions relating to medical facilities, compensation
benefits
and insurance coverage incase if accidents, incapacity, illness
etc..
b) Provisions relating to provident fund and gratuity
 TRADE UNIONS
&
INDUSTRIAL DISPUTES
 Definition: An organization of workers or
employees formed mainly to
_ Negotiate with the employers on various
employment related issues
◦ Improve the terms and conditions at their
workplace
◦ Enhance their status in society
 In most countries, there are laws governing
the formation, membership and
administration of trade unions.
 Industrialization brought about new economic and social order in
societies. TU emerged as a result of industrialization in new social
order
 First workers’ union in India under the leadership of Mr Lokhande was
developed in 1890
 Beginning of labor movement in the modern sense started after the
outbreak of World War I
 Economic. Political and social conditions influenced the growth of trade
union movement in India.
 Establishment of ILO helped the formation of TUs in the country
 In 1920 AITUC( All India Trade Union Congress) was formed- the 1 st All
India trade union
 World War II brought splits in AITUC. Efforts of Indian National
Congress resulted in the formation of INTUC( Indian National Trade
Union Congress)
 Socialists separated from AITUC formed HMS( Hind Mazdoor Sabha) in
1948
 Some other unions were also formed. They were BMS ( Bhartiya Majdoor
Sangh) in1955, HMP( Hind Majdoor Panchayat) in 1965, CITU( Centre of
Indian Trade Union ) in 1970
1. UNITY: Unity is strength

2. EQUALITY: Workers must not be

discriminated wrt caste, creed, sex etc.
Each worker should get equal pay for
equal
work

3. SECURITY: Security of their employment

and their families must be safeguarded
1. Collective bargaining
◦ Represent members to negotiate with employers,
for better wages and conditions of employment
2. Safeguard jobs
◦ Protect jobs of members
3. Cooperate with employers
◦ For the benefits of members, resolve disputes in
a mutually acceptable manner
4. Political activities
- Support pro-union political parties
5. Social activities
- Support members with recreation
facilities and benefits for
unemployment, illness, retirement,
death
1. Craft union
◦ Same craft or occupation
2. General union
◦ For unskilled workers
3. Staff union
◦ Non-manual workers
4. Industry union
◦ Same industry, regardless of skills,
occupation or job
5. House union (company or
enterprise union)
◦ All members are from the same
company regardless of occupation
or job
1. Higher wages and better working conditions
◦ Collective bargaining with employer
2. Job security
◦ More secured with collective agreement
3. Social need
◦ Meet co-workers from other departments or
companies
4. Upgrading of skills
◦ Attend training courses organized by
union
5. Peer pressure
◦ Colleagues are members
6. Self-fulfillment
◦ Serve other members
 Wages & salaries
Policy matter but differences in implementation, so comes the role of trade union
 Working conditions
safeguarding workers health: Lighting & ventilation, sanitation, rest rooms, safety
equipments ( hazards free atmosphere , drinking water, refreshments, working hours, leave
& rest, holidays with pay, job satisfaction, social security benefits and other welfare
measures
 Discipline
Protect workers from victimization by management- transfers, suspensions, dismissals
etc
 Personal policies
Fighting against improper implementation of personnel policies wrt
recruitment, selection, promotion, transfer, training etc..
 Welfare
Solving difficulties of workers through collective bargaining wrt sanitation, hospitals,
quarters, schools, colleges and other basic amenities
 Employer- employee relations
Bureaucratic attitude and unilateral thinking of mgmt may lead to conflicts
Trade unions go for constant negotiations for industrial democracy and peace.
 Negotiating machinery
Based on ‘give and take principle’, negotiations continue till parties reach an
agreement. Protect interests of workers through collective bargainINg
 Safeguarding organizational health
Methods evolved for grievance redressal, techniques adopted to reduce
absenteeism and labor turnover. upgrading skills- attend training courses organized by
unions
ECONOMIC: Improved economic status, shorter working day,
improvement in living and working conditions, better health & safety
standards, upgrading welfare facilities, reducing inequalities- both
internally & externally

POLITICAL: Seeking / obtaining political power through political

affiliations, lobbying activities to influence the cause of labor and
legislations, participating & representing workers on bipartite forums,
developing revolutionary ideologies among workers, protesting
against Govt. decisions

SOCIAL: Initiating & developing workers’ education system, organizing

welfare & recreational facilities, providing monitory and other help
during period of strike and economic distress, running cooperative
welfare schemes and societies, hosing needs/ community development,
organizing cultural functions & social welfare programmes

NATIONAL / INTERNATIONAL LEVEL: Representing workers at the national

level on advisory committees, associating with national federations for
unity & solidarity, Raising funds in case of national / International
calamities or tragedies
 Internally democratic
 Have a strong leadership
 Exhibit a responsibility towards their worker

members
 Committed to promote industrial peace and

harmony
 Inclined towards collective bargaining that

is collaborative and not competitrive

 Possess financial security
 Adaptable to change
 Industrial dispute means any dispute or
difference between employers and
employers, or between employers and
workmen or between workmen and
workmen, which is connected with
employment or non-employment or the
terms of employment .The dispute has to
be between plurality of workman and
employer
 Individual workman cannot raise an
industrial dispute
 1965 amendment to I.D ACT and insertion of
2A.
 Where any employer discharges, dismisses,
retrenches or otherwise terminates the services
of an individual workman, any dispute or
difference between that workman and his
employer…….shall be deemed to be an
industrial dispute notwithstanding that no
other workman nor any union of workmen is a
party to the dispute.
 This definition is not applicable to disputes
short of termination
STRIKES: A strike is spontaneous and concerted refusal of work and
withdrawal of labor from production temporarily. It is a collective
stoppage of work for pressurizing their employers to accept
certain demands.

TYPES OF STRIKES:

SYMPATHETIC STRIKE: To show sympathy with workers in other industries

GENERAL STRIKE: Strike by all or most of the unions in an industry or a region
UNOFFICIAL STRIKE: Strike undertaken without the consent of the unions
SECTIONAL STRIKE: Refusal of a section of a given class of workers to perfor their normal
duties
BUMPER STRIKES: to paralyze the industry firm by firm
SIT DOWN /TOOL DOWN/PEN DOWN: Strike when unions plan strike and workers cease to
perform but do not leave the place of work:
SLOW DOWN STRIKE: Go-slow tactic, workers do not stop working but dot perform at their
normal pace
LIGHTNING STRIKE: Workers may go on strike without notice or at very short notice with an
element of surprise
HUNGER STRIKE: To gain sympathy from public and get noticed by employer workers may
decide to forego food for a specified period. Such non-violent protests generally
bring moral pressure on employers
LOCK-OUTS:
 It is the counterpart of strike.
 It is the weapon available with employer to close down the factory till the workers agree
to resume work on the conditions laid down by employer.
 If it is impossible to meet the demands of workers, employers may decide o go for lock-
out
 An employer may also pull down the shutters so as to bring psychological pressure on
the workers to agree to his conditions or face the closure of unit
GHERAO:
 Gherao means to surround
 Group of workers initiate collective action aimed at preventing members of he
management from leaving the office. This can happen outside the premises too
 Persons who atre under gherao are not allowed to move for a long time, sometime even
without food or water
 National commission on labor has refused to accept it as a form of industrial protest
PICKETING and BOYCOTT
 While picketing workers carry/display signs ,banners and placards( In connection with
dispute), prevent others from entering the place of work and persuade others to join
the strike
 Boycott aims at disrupting the normal functioning of an enterprise, Through forceful
and negative behavioral acts, strikers prevent others not to cooperate with employer
EMPLOYER’S ASSOCIATION:
 Employers may form their unions to collectively oppose the working
class and put pressure on trade unions
LOCKOUT:
 It is the counterpart of strike.
 An employer may close down the place of employment temporarily. It is
very powerful weapon available with employer to pressurize workers till
they agree to resume work on the conditions laid down by employer.
 If it is impossible to meet the demands of workers, employers may
decide o go for lock-out
 An employer may also pull down the shutters so as to bring
psychological pressure on the workers to agree to his conditions or face
the closure of unit
TERMINATION:
 Employer may resort to suspension or disciplinary action leading to
termination of workers on strike. The list of employees so suspended or
dismissed may be circulated to the other employer so as to restrict their
chances of getting employment with other employers.
 Change in the attitude of unions towards management,
Industry, Govt. and economy
 Unions becoming increasingly matured, responsive and
realistic
Gone are the days of frequent strikes, bandhs, gheraoes and
violence
 Unions are reconciled to economic reforms. The accent is on
opposing the adverse impact of reforms and not the reforms
 Discussion among trade union circles is now on issues like
productivity, TQM, Technology, competition, MNCs, exports
etc..
 Unions aware of the Right Sizing and feel the need for suplus
labor fat to be shed
 Days when unions were affiliated with political parties are
gone by. Today thrust is on de- politicization of unions
 Experience of politically free unions is pleasant, reinforcing
the belief that farther the unions are from politics, more
advantageous it is for them
 Workers association in our country is highly fragmented and the
consequence is multiplicity of unions, which weakens the bargaining
strength of employees.
 One of the defects of trade union movement in India has been the
phenomenon of outside leadership. The fault of outside leadership
lies with trade Union Act, 1926 itself. The act permitted outside
participation to the extent of 50% of the strength of office bearers in
a union.
 Trade Unions are at cross roads. Their membership is declining,
Their political support is waning, public sympathy is receding, their
relevance itself is at stake
 Managements on the other hand are on the offensive. They are able
to force unions to accept terms and conditions. Workers,officers and
managers are mercilessly terminated in the name of restructuring,
downsizing etc
 Professionalisation of trade unions movement is another trend
witnessed, they are trying to upgrade their leadership quality. Topics
lie IT, strategic planning, diversity, networking and productivity etc
now form inputs in training programmes organized for union leaders
 Unionization according to industry/region/state
 70,000 registered trade unions , many not regisered
 9 central unions, all affiliated to political parties
 2 % of the union force unionized
 PSUs: Industrial level collective bargaining in
coal/steel, enterprize level elsewhere
 Private sector: Plant level collective bargaining
 Union density according to the size of of industry
 Craft unions in Govt transport sector
 Unionization in India under recession
 Twin battle against Inter Union Competition and
assertive management
 Outside or political leadership
 Multiplicity of trade unions
 Small size of unions
 Low membership
 Uneven growth
 Poor financial position
 Low level of knowledge of labor legislation
 Fear of victimization
 It legalizes the formation of trade unions by allowing employees the
right to form and organize unions and also strengthen bargaining
power of workers
 Act aims to provide law for the registration of trade unions and get

it registered under the act

 Permits any seven persons to form a union

OBJECTIVES
 Lay down conditions governing the registration of trade unions

 Defines obligations of trade unions

 Prescribe rights and liabilities of a registered trade union

STATUS OF A REGISTERED UNION

 It becomes a body corporate

 It gets a common seal

 It can buy and hold movable and immovable property

 It can enter into contracts with others

 It can sue and be sued in its name

REGISTRATION:
A trade union formed with at least 7 members may apply for registration with following
documents
 A copy of the rules of trade union
 Name, occupation and addresses of members
 Name of trade union and address of its office
 Office Bearers of the trade unions
 In case already in operation- submit statement of accounts/assets and liability
statement

OBLIGATIONS:
It should have a name, clearly laid down objective, membership list readily available,
purpose for which funds shall be utilized, members to be the actually working persons ,
Honorary/temporary office bearers, conditions for benefits/fines, conditions under
which rules shall be amended, manner in which office bearers shall be appointed, safe
custody of funds and manner in which trade union shall be dissolved

RIGHTS AND LIABILITIES

 Section 15 of the Act provides for certain obligations and liabilities of registered
unions
 It also stipulates the purpose for which funds can be utilized

THE AMALGAMATION OF TRADE UNIONS :

 Any two or more registered unions may get amalgamated together as one trade union
Ever expanding complex multi product/project companies with diverse and
conflicting interests of workmen and employers, growing labor
consciousness, resulting in strikes and lockouts, lead to the outcome of
Industrial dispute Act, 1947

Main provisions of the Act are:

 Settlement machinery

-Provides suitable machinery for investigation, just, equitable and peaceful settlement
of industrial disputes and aims to provide justice both to employers and workmen
- Collective bargaining, Negotiation
 Aims at promoting security, amity and good relations between employer and
employee or between employers and workmen or among workmen
 Prevent illegal strikes and lockouts and explains the contingencies when
these can be lawfully resorted to or when these can be declared illegal or
unlawful.
 Provide conditions and relief to workmen in the matters of lay-offs,
retrenchment, dismissals and victimization
Last in first out in a retrenchment case or specific reasons in case of others
 Provides conditions under which an industrial unit can be closed down
60 days notice to be given of intention to close down any undertaking
Compensation to workmen in case of closing down
 Get the workmen the right of collective bargaining and promote conciliation
 Lists down unfair labor practices on the part of both parties introduced in
1984
KEY PROVISIONS OF ID ACT:
COLLECTIVE BARGAINING:
It is a technique by which disputes as to conditions of employment are resolved
amicably, by agreement rather than coercion
NEGOTIATION
CONCILIATION AND MEDIATION: It is facilitated negotiation, essential in public
utility services, Binding on parties to the disputes
ARBITRATION:
Voluntary Arbitration: agreement between workman and management, Send
copy to the Govt and conciliation officer, publication of agreement
ADJUDICATION
 Compulsory Adjudication LC, IT, NT
Reference by the
Appropriate Government
Sec. 10(1)
Award Sec. 18(3) of ID Act

S. 2-A, 33-A

Publication of award

Conciliation (if successful Judicial review - Art. 226 or

Settlement) Art. 136
Sec. 18(3) of INDUSTRIAL
The I D act DISPUTES
Voluntary Arbitration – 10-A

Award – 18(2) & 18(3)

Judicial review - Art. 226 or

Art. 136

Collective Bargaining –
If successful – settlement
Sec. 18(1) of ID Act
 Publication is must
 Time duration of 30 days is directory
 Award comes in to operation 30 days after

publication
 Tribunal to recall the award
1. Freedom of association
◦ Workers and employers are free to form their
own associations to represent their interests.
2. Stability of union
◦ Unions have to be stable for collective
bargaining to be effective  union is able to
honor the agreement.
3. Recognition of union by employer
◦ Collective bargaining begins after employer
recognizes the union that claims to represent
the specific group of workers.
4. Good faith
◦ Both parties must be willing to resolve differences
to reach an agreement.
5. Mutual respect
◦ Relationship affected and process becomes tense
and difficult if any party used unfair practices
such as victimization.
6. Supportive legal system
◦ Employment laws to ensure process takes place
in an orderly manner.
 Process depends on these factors:
1. Subject matter to be discussed
2. Persons involved
3. Circumstances under which the discussion is
held.
 A Typical Negotiation Process begins with
each party stating its position.
 As discussion progresses, each party adjusts
its demands to seek a mutually acceptable
agreement.
1. Preparation
◦ Each party must know what it wants.
2. Presentation
◦ Each party presents its case.
3. Exchange and compromise
◦ Parties look for possible adjustment or
compromise.
4. Reaching an agreement
◦ Parties sign a written statement on what have
been agreed.
 Impasse: settlement cannot be
reached
 Impasses may be solved by these

alternatives:
◦ Conciliation
◦ Mediation
◦ Arbitration
 Conciliation
◦ Impartial third party helps the two parties to
reach a mutually acceptable settlement.
◦ Conciliator meets parties separately or together
to exchange information, clarify issues and settle
misunderstanding.
◦ Conciliator does not impose a solution but works
with the parties to enable them to come to an
agreement.
 Arbitration
◦ Third party settles the dispute by making an
independent decision for the two parties.
◦ Some prefer arbitration as the responsibility “for
reaching agreement” is made by a neutral party
(quite often, appointed by the government e.g.
Arbitration Court).
◦ Arbitration gives some people the impression that
they did not give in to the other party but “fought
all the way” to the Arbitration Court.
 Mediation
◦ Impartial third party helps to reach
a mutually acceptable agreement.
◦ Mediator makes recommendations
for the two parties to consider.
◦ Final agreement is made by the two
parties themselves.