Industrial Relations.

Introduction:

The term ‘Industrial Relations’ comprises of two terms: ‘Industry’ and ‘Relations’. “Industry” refers to “any productive activity in which an individual (or a group of individuals) is (are) engaged”. By “relations” we mean “the relationships that exist within the industry between the employer and his workmen.”

The term industrial relations explain the relationship between employees and management which stem directly or indirectly from union-employer relationship. 

Industrial relations are the relationships between employees and employers within the organizational settings. The field of industrial relations looks at the relationship between management and workers, particularly groups of workers represented by a union. Industrial relations are basically the interactions between employers, employees and the government, and the institutions and associations through which such interactions are mediated. 

The term industrial relations have a broad as well as a narrow outlook. Originally, industrial relations were broadly defined to include the relationships and interactions between employers and employees. From this perspective, industrial relations cover all aspects of the employment relationship, including human resource management, employee relations, and union-management (or labor) relations. Now its meaning has become more specific and restricted. 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 nonunion employment relationships and the personnel practices and policies of employers.

The relationships which arise at and out of the workplace generally include the relationships between individual workers, the relationships between workers and their employer, the relationships between employers, the relationships employers and workers have with the organizations formed to promote their respective interests, and the relations between those organizations, at all levels. Industrial relations also includes the processes through which these relationships are expressed (such as, collective bargaining, workers’ participation in decision-making, and grievance and dispute settlement), and the management of conflict between employers, workers and trade unions, when it arises.

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Glossary of Industrial Relations:

For better understanding of industrial relations, various terms need to be defined here:

Industry: 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 whether or not any capital has

been invested for the purpose of carrying on such activity; or such activity is carried on with a

motive to make any gain or profit. 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.

Employer: An employer can be defined from different perspectives as:-

A person or business that pays a wage or fixed payment to other person(s) in exchange

for the services of such persons.

A person who directly engages a worker/employee in employment.

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.

As per Industrial Disputes Act 1947 an employer means:-

In relation to an industry carried on by or under the authority of any department of [the

Central Government or a State Government], the authority prescribed in this behalf, or

where no authority is prescribed, the head of the department;

In relation to an industry carried on by or on behalf of a local authority, the chief

executive officer of that authority;

Employee:-

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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.

An employee is any individual employed by an employer.

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.

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:

o 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.

o those employed for wages by or through an immediate employer in the premises of the

factory or establishment in connection with the work thereof

o 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.

o 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).

Employment: The state of being employed or having a job.

Labor Market:

The market in which workers compete for jobs and employers compete for workers. It acts as the

external source from which organizations attract employees. These markets occur because

different conditions characterize different geographical areas, industries, occupations, and

professions at any given time.

Industrial Relation System:

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An industrial relations system consists of the whole gamut of relationships between employees

and employees and employers which are managed by the means of conflict and cooperation.

A sound industrial relations system is one in which relationships between management and

employees (and their representatives) on the one hand, and between them and the State on the

other, are more harmonious and cooperative than conflictual and creates an environment

conducive to economic efficiency and the motivation, productivity and development of the

employee and generates employee loyalty and mutual trust.

Actors in the IR system: Three main parties are directly involved in industrial relations:

1) Employers: Employers possess certain rights vis-à-vis labors. They have the right

to hire and fire them. Management can also affect workers’ interests by exercising

their right to relocate, close or merge the factory or to introduce technological

changes.

2) Employees: Workers seek to improve the terms and conditions of their

employment. They exchange views with management and voice their grievances.

They also want to share decision making powers of management. Workers

generally unite to form unions against the management and get support from these

unions. 

3) Government: The central and state government influences and regulates

industrial relations through laws, rules, agreements, awards of court ad the like. It

also includes third parties and labor and tribunal courts.

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Scope: The concept of industrial relations has a very wide meaning and connotation. In the

narrow sense, it means that the employer, employee relationship confines itself to the

relationship that emerges out of the day to day association of the management and the labor. In

its wider sense, industrial relations include the relationship between an employee and an

employer in the course of the running of an industry and may project it to spheres, which may

transgress to the areas of quality control, marketing, price fixation and disposition of profits

among others.

The scopes of industrial relations are quite vast. The main issues involved here include the

following:

1. Collective bargaining,

2. Machinery for settlement of industrial disputes,

3. Standing orders,

4. Workers participation in management &

5. Unfair labor practices.

Importance of Industrial Relations:

Employers.

Government.

Industrial relations.

Employees.

Trade Unions.

Courts & Tribunals.

Employers’ Associations.

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The healthy industrial relations are keys to the progress and success. Their significance may be

discussed as under – 

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. There is uninterrupted flow of income for all. Smooth running of an

industry is of vital importance for several other industries; to other industries if the

products are intermediaries or inputs; to exporters if these are export goods; to consumers

and workers, if these are goods of mass consumption.

Reduction in Industrial Disputes – Good industrial relations reduces 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

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transformed outlook on the part of both. It is the business of leadership in the ranks of

workers, employees and Government to work out a new relationship in consonance with

a spirit of true democracy. 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. Wastages of man, material

and machines are reduced to the minimum and thus national interest is protected.

Thus, it is evident that good industrial relations are 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. An economy organized for planned production and distribution, aiming at

the realization of social justice and welfare of the massage can function effectively only in an

atmosphere of industrial peace. 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.

Objectives of Industrial Relations:

The main objectives of industrial relations system are:-

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To safeguard the interest of labor and management by securing the highest level of

mutual understanding and good-will among all those sections in the industry which

participate in the process of production.

To avoid industrial conflict or strife and develop harmonious relations, which are an

essential factor in the productivity of workers and the industrial progress of a country.

To raise productivity to a higher level in an era of full employment by lessening the

tendency to high turnover and frequency absenteeism.

To establish and promote the growth of an industrial democracy based on labor

partnership in the sharing of profits and of managerial decisions, so that ban

individuals personality may grow its full stature for the benefit of the industry and of

the country as well.

To eliminate or minimize the number of strikes, lockouts and gheraos by providing

reasonable wages, improved living and working conditions, said fringe benefits.

To improve the economic conditions of workers in the existing state of industrial

managements and political government.

Socialization of industries by making the state itself a major employer

Vesting of a proprietary interest of the workers in the industries in which they are

employed.

Dunlop's Contribution to Industrial Relations:

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One of the significant theories of industrial labor relations was put forth by John Dunlop in the

1950s. According to Dunlop industrial relations system consists of three agents – management

organizations, workers and formal/informal ways they are organized and government agencies.

These actors and their organizations are located within an environment – defined in terms of

technology, labor and product markets, and the distribution of power in wider society as it

impacts upon individuals and workplace. Within this environment, actors interact with each

other, negotiate and use economic/political power in process of determining rules that constitute

the output of the industrial relations system.

He proposed that three parties—employers, labor unions, and government-- are the key actors in

a modern industrial relations system. He also argued that none of these institutions could act in

an autonomous or independent fashion. Instead they were shaped, at least to some extent, by

their market, technological and political contexts.

Thus it can be said that industrial relations is a social sub system subject to three environmental

constraints- the markets, distribution of power in society and technology.

Dunlop's model identifies three key factors to be considered in conducting an analysis of the

management-labor relationship:

1. Environmental or external economic, technological, political, legal and social forces that

impact employment relationships.

2. Characteristics and interaction of the key actors in the employment relationship: labor,

management, and government.

3. Rules that are derived from these interactions that govern the employment relationship.

Dunlop emphasizes the core idea of systems by saying that the arrangements in the field of

industrial relations may be regarded as a system in the sense that each of them more or less

intimately affects each of the others so that they constitute a group of arrangements for dealing

with certain matters and are collectively responsible for certain results”.

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In effect - Industrial relations is the system which produces the rules of the workplace. Such

rules are the product of interaction between three key “actors” – workers/unions, employers and

associated organizations and government

The Dunlop’s model gives great significance to external or environmental forces. In other words,

management, labor, and the government possess a shared ideology that defines their roles within

the relationship and provides stability to the system.

Perspectives of Industrial Relations:

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Unitary Perspective:

In unitarism, the organization is perceived as an integrated and harmonious system, viewed as

one happy family. A core assumption of unitary approach is that management and staff, and all

members of the organization share the same objectives, interests and purposes; thus working

together, hand-in-hand, towards the shared mutual goals. Furthermore, unitarism has a

paternalistic approach where it demands loyalty of all employees. Trade unions are deemed as

unnecessary and conflict is perceived as disruptive.

From employee point of view, unitary approach means that:

Working practices should be flexible. Individuals should be business process

improvement oriented, multi-skilled and ready to tackle with efficiency whatever tasks

are required.

If a union is recognized, its role is that of a further means of communication between

groups of staff and the company.

The emphasis is on good relationships and sound terms and conditions of employment.

Employee participation in workplace decisions is enabled. This helps in empowering

individuals in their roles and emphasizes team work, innovation, creativity, discretion in

problem-solving, quality and improvement groups etc.

Employees should feel that the skills and expertise of managers supports their endeavors.

From employer point of view, unitary approach means that:

Staffing policies should try to unify effort, inspire and motivate employees.

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The organization's wider objectives should be properly communicated and discussed with

staff.

Reward systems should be so designed as to foster to secure loyalty and commitment.

Line managers should take ownership of their team/staffing responsibilities.

Staff-management conflicts - from the perspective of the unitary framework - are seen as

arising from lack of information, inadequate presentation of management's policies.

The personal objectives of every individual employed in the business should be discussed

with them and integrated with the organization’s needs.

Pluralistic-Perspective:

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In pluralism the organization is perceived as being made up of powerful and divergent sub-

groups - management and trade unions. This approach sees conflicts of interest and

disagreements between managers and workers over the distribution of profits as normal and

inescapable. Consequently, the role of management would lean less towards enforcing and

controlling and more toward persuasion and co-ordination. Trade unions are deemed as

legitimate representatives of employees. Conflict is dealt by collective bargaining and is viewed

not necessarily as a bad thing and if managed could in fact be channeled towards evolution and

positive change. Realistic managers should accept conflict to occur. There is a greater propensity

for conflict rather than harmony.

They should anticipate and resolve this by securing agreed procedures for settling disputes.

The implications of this approach include:

The firm should have industrial relations and personnel specialists who advise managers

and provide specialist services in respect of staffing and matters relating to union

consultation and negotiation.

Independent external arbitrators should be used to assist in the resolution of disputes.

Union recognition should be encouraged and union representatives given scope to carry

out their representative duties

Comprehensive collective agreements should be negotiated with unions

Marxist Perspective:

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This view of industrial relations is a by product of a theory of capitalist society and social

change. Marx argued that:

Weakness and contradiction inherent in the capitalist system would result in revolution

and the ascendancy of socialism over capitalism.

Capitalism would foster monopolies.

Wages (costs to the capitalist) would be minimized to a subsistence level.

Capitalists and workers would compete/be in contention to win ground and establish their

constant win-lose struggles would be evident.

This perspective focuses on the fundamental division of interest between capital and labor, and

sees workplace relations against this background. It is concerned with the structure and nature of

society and assumes that the conflict in employment relationship is reflective of the structure of

the society. Conflict is therefore seen as inevitable and trade unions are a natural response of

workers to their exploitation by capital.

Collective Bargaining

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Introduction:

Collective bargaining is process of joint decision making and basically represents a democratic

way of life in industry. It is the process of negotiation between firm’s and workers’

representatives for the purpose of establishing mutually agreeable conditions of employment. It

is a technique adopted by two parties to reach an understanding acceptable to both through the

process of discussion and negotiation.

ILO has defined collective bargaining as, negotiation about working conditions and terms of

employment between an employer and a group of employees or one or more employee,

organization with a view to reaching an agreement wherein the terms serve as a code of defining

the rights and obligations of each party in their employment industrial relations with one another.

Thus collective bargaining:

Is a collective process in which representatives of both the management and employees

participate.

Is a continuous process which aims at establishing stable relationships between the

parties involved.

Not only involves the bargaining agreement, but also involves the implementation of

such an agreement.

Attempts in achieving discipline in the industry.

Is a flexible approach, as the parties involved have to adopt a flexible attitude towards

negotiations.

Bargaining Form and Tactics

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A collective bargaining process generally consists of four types of activities- distributive

bargaining, integrative bargaining, attitudinal restructuring and intra-organizational bargaining.

Distributive bargaining: It involves haggling over the distribution of surplus. Under it, the

economic issues like wages, salaries and bonus are discussed. In distributive bargaining, one

party’s gain is another party’s loss. This is most commonly explained in terms of a pie.

Disputants can work together to make the pie bigger, so there is enough for both of them to have

as much as they want, or they can focus on cutting the pie up, trying to get as much as they can

for themselves. In general, distributive bargaining tends to be more competitive. This type of

bargaining is also known as conjunctive bargaining.

Investigative Bargaining: This involves negotiation of an issue on which both the parties may

gain, or at least neither party loses. For example, representatives of employer and employee sides

may bargain over the better training program or a better job evaluation method. Here, both the

parties are trying to make more of something. In general, it tends to be more cooperative than

distributive bargaining. This type of bargaining is also known as cooperative bargaining.

Attitudinal Bargaining: This involves shaping and reshaping some attitudes like trust or

distrust, friendliness or hostility between labor and management. When there is a backlog of

bitterness between both the parties, attitudinal restructuring is required to maintain smooth and

harmonious industrial relations. It develops a bargaining environment and creates trust and

cooperation among the parties.

Intra- organizational Bargaining: It generally aims at resolving internal conflicts. This is a

type of maneuvering to achieve consensus with the workers and management. Even within the

union, there may be differences between groups. For example, skilled workers may feel that they

are neglected or women workers may feel that their interests are not looked after properly.

Within the management also, there may be differences. Trade unions maneuver to achieve

consensus among the conflicting groups.

Characteristics of Collective Bargaining:

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It is a group process, wherein one group, representing the employers, and the other,

representing the employees, sit together to negotiate terms of employment.

Negotiations form an important aspect of the process of collective bargaining i.e., there is

considerable scope for discussion, compromise or mutual give and take in collective

bargaining.

Collective bargaining is a formalized process by which employers and independent trade

unions negotiate terms and conditions of employment and the ways in which certain

employment-related issues are to be regulated at national, organizational and workplace

levels.

Collective bargaining is a process in the sense that it consists of a number of steps. It

begins with the presentation of the charter of demands and ends with reaching an

agreement, which would serve as the basic law governing labor management relations

over a period of time in an enterprise. Moreover, it is flexible process and not fixed or

static. Mutual trust and understanding serve as the byproducts of harmonious relations

between the two parties.

It a bipartite process. This means there are always two parties involved in the process of

collective bargaining. The negotiations generally take place between the employees and

the management. It is a form of participation.

Collective bargaining is a complementary process i.e. each party needs something that the

other party has; labor can increase productivity and management can pay better for their

efforts.

Collective bargaining tends to improve the relations between workers and the union on

the one hand and the employer on the other.

Collective Bargaining is continuous process. It enables industrial democracy to be

effective. It uses cooperation and consensus for settling disputes rather than conflict and

confrontation.

Collective bargaining takes into account day to day changes, policies, potentialities,

capacities and interests.

It is a political activity frequently undertaken by professional negotiators.

Collective Bargaining Process:

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Collective bargaining generally includes negotiations between the two parties (employees’

representatives and employer’s representatives). Collective bargaining consists of negotiations

between an employer and a group of employees that determine the conditions of employment.

Often employees are represented in the bargaining by a union or other labor organization. The

result of collective bargaining procedure is called the collective bargaining agreement (CBA).

Collective agreements may be in the form of procedural agreements or substantive agreements.

Procedural agreements deal with the relationship between workers and management and the

procedures to be adopted for resolving individual or group disputes.

This will normally include procedures in respect of individual grievances, disputes and

discipline. Frequently, procedural agreements are put into the company rule book which provides

information on the overall terms and conditions of employment and codes of behavior. A

substantive agreement deals with specific issues, such as basic pay, overtime premiums, bonus

arrangements, holiday entitlements, hours of work, etc. In many companies, agreements have a

fixed time scale and a collective bargaining process will review the procedural agreement when

negotiations take place on pay and conditions of employment.

The collective bargaining process comprises of five core steps:

1. Prepare: This phase involves composition of a negotiation team. The negotiation team

should consist of representatives of both the parties with adequate knowledge and skills

for negotiation. In this phase both the employer’s representatives and the union examine

their own situation in order to develop the issues that they believe will be most important.

The first thing to be done is to determine whether there is actually any reason to negotiate

at all. A correct understanding of the main issues to be covered and intimate knowledge

of operations, working conditions, production norms and other relevant conditions is

required.

2. Discuss: Here, the parties decide the ground rules that will guide the negotiations. A

process well begun is half done and this is no less true in case of collective bargaining.

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An environment of mutual trust and understanding is also created so that the collective

bargaining agreement would be reached.

3. Propose: This phase involves the initial opening statements and the possible options that

exist to resolve them. In a word, this phase could be described as ‘brainstorming’. The

exchange of messages takes place and opinion of both the parties is sought.

4. Bargain: negotiations are easy if a problem solving attitude is adopted. This stage

comprises the time when ‘what ifs’ and ‘supposals’ are set forth and the drafting of

agreements take place.

5. Settlement: Once the parties are through with the bargaining process, a consensual

agreement is reached upon wherein both the parties agree to a common decision

regarding the problem or the issue. This stage is described as consisting of effective joint

implementation of the agreement through shared visions, strategic planning and

negotiated change.

Importance of Collective Bargaining:

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Collective bargaining includes not only negotiations between the employers and unions but also

includes the process of resolving labor-management conflicts. Thus, collective bargaining is,

essentially, a recognized way of creating a system of industrial jurisprudence. It acts as a method

of introducing civil rights in the industry, that is, the management should be conducted by rules

rather than arbitrary decision making. It establishes rules which define and restrict the traditional

authority exercised by the management.

Importance to employees:

Collective bargaining develops a sense of self-respect and responsibility among the

employees.

It increases the strength of the workforce, thereby, increasing their bargaining capacity as

a group.

Collective bargaining increases the morale and productivity of employees.

It restricts management’s freedom for arbitrary action against the employees. Moreover,

unilateral actions by the employer are also discouraged.

Effective collective bargaining machinery strengthens the trade unions movement.

The workers feel motivated as they can approach the management on various matters and

bargain for higher benefits.

It helps in securing a prompt and fair settlement of grievances. It provides a flexible

means for the adjustment of wages and employment conditions to economic and

technological changes in the industry, as a result of which the chances for conflicts are

reduced.

Importance to employers:

It becomes easier for the management to resolve issues at the bargaining level rather than

taking up complaints of individual workers.

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Collective bargaining tends to promote a sense of job security among employees and

thereby tends to reduce the cost of labor turnover to management.

Collective bargaining opens up the channel of communication between the workers and

the management and increases worker participation in decision making.

Collective bargaining plays a vital role in settling and preventing industrial disputes.

Importance to society:

Collective bargaining leads to industrial peace in the country

It results in establishment of a harmonious industrial climate which supports which helps

the pace of a nation’s efforts towards economic and social development since the

obstacles to such a development can be reduced considerably.

The discrimination and exploitation of workers is constantly being checked.

It provides a method or the regulation of the conditions of employment of those who are

directly concerned about them.

Levels of Collective Bargaining:

Collective bargaining operates at three levels:

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1. National level,2. Sector or industry level &3. Company/enterprise level.

Economy-wide (national) bargaining is a bipartite or tripartite form of negotiation between union confederations, central employer associations and government agencies. It aims at providing a floor for lower-level bargaining on the terms of employment, often taking into account macroeconomic goals.

Sectorial bargaining, which aims at the standardization of the terms of employment in one industry, includes a range of bargaining patterns. Bargaining may be either broadly or narrowly defined in terms of the industrial activities covered and may be either split up according to territorial subunits or conducted nationally. 

Company/enterprise level bargaining involves the company and/or establishment. As a supplementary type of bargaining, it emphasizes the point that bargaining levels need not be mutually exclusive.

Conclusion:

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Thus, the study makes it clear that industrial relations are key to progress and success. It

facilitates uninterrupted production, reduces industrial disputes, increases moral in the employees

in the organization, it revolutionizes mental state of employees in the organization and also

reduces wastage of resources available.

Collective bargain includes not only negotiation between employers and unions but also includes

the process of resolving labor-management conflicts. Thus collective bargaining is, essentially, a

recognized way of creating a system of industrial jurisprudence. It acts as a method of

introducing civil rights in the industry, that is, the management should be conducting by rules

rather than arbitrary decision making.

Collective bargaining develops a sense of self- respect and responsibility among the employees.

It increases the strength of workforce, thereby, increasing their bargaining capacity as a group.

Collective bargaining leads to industrial peace in the country. It plays a vital role in setting and

preventing industrial disputes.

Bibliography

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Website:

http://industrialrelations.naukrihub.com/collective-bargaining.html

www.google.com

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