Insustrial Relations

INDUSTRIAL RELATIONS
Prepared By:
Ms. Jaya Shankar
ME Computer Science, MBA
Assistant Professor
SNIT Business School
Adoor

Industrial Relations
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INDUSTRIAL RELATIONS – An Introduction
In the modern industrial society, Industrial Relations have become a complex and delicate
problem. The progress of an industry is not possible without the cooperation of labours and
management. Therefore, it is in the interest of all to create and maintain a good relationship
between labours (employees) and management (employers).
“Industrial Relations involve attempts at arriving at solutions between the conflicting objectives
and values; between the profit motive and social gain; between discipline and freedom; between
authority and industrial democracy; between bargaining and co-operation; and between
conflicting interests of the individual, the group and the community” – Lester
“Industrial Relations is a designation of whole field of relationship that exist because of the
necessary collaboration of men and women in the employment processes of industry” – Dale
Yoder
“Industrial Relations is concerned with the systems and procedures used by unions and
employers to determine the reward for effort and other conditions of employment, to protect the
interests of the employed and their employers and to regulate the ways in which employers treat
their employees” – Armstrong
According to international labor organisation (ILO), industrial relations deal with either
relationship between the state and employers and workers organisations or the relations between
the occupational organisations themselves.
1. Overview of Industrial
Relations

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Industrial Relations:
1) Explains the relationship between employees and management which stem directly or
indirectly from union-employer relationship.
2) Is a relation of individual or group of employee and employer foe engaging themselves in
a way to maximize the productive activities.
3) Is a dispute between employee and employer, employee and employee, employer and
employer which should be connected for employment and non-employment, terms and
condition of employment.
4) An art of living together for the purpose of production.
5) Two parties learn to acquire the skill of adjustment.
6) Deals with the problems when workers themselves are being controlled by employers.
7) Commonly involves three parties: Employee, Employer and Union.
8) Generally refers to laws, duties and employer and labor union obligations in a union work
environment.
9) Is the study of laws, conventions and institutions that regulate the workplace.
10) Concerned with systems, rules and procedures used by employees and unions.
Parties to Industrial Relations:
IMPORTANCE OF INDUSTRIAL RELATIONS
1) Uninterrupted production – Continuity of production is one of the important benefits of
industrial relations. Resources are fully used resulting in maximum possible solution.
Employees Employers
Government Courts and Tribunals
Employee Associations Employer associationsEmployer-Employee
Relations

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2) Reduction in Industrial disputes – Industrial disputes can be reduced, if the industrial
relations are good. This helps in promoting co-operation and increasing production.
3) High morale – Good industrial relations improve the morale of the employees. Every
employee feels that he is the co-owner of the industry. Whereas, the employer realizes
that the gains of industry are not for him along but they should be shared equally and
generously with his workers. This naturally affects in complete unity of thought and
action and hence the production of the industry.
4) Mental revolution – The main objective of Industrial Relation is a complete mental
revolution or industrial peace of employees and employers.
5) Reduced wastage – Industrial relations helps to increase production with minimum
wastage of man, material and machines.
OBJECTIVES OF INDUSTRIAL RELATIONS
1) The main objective of industrial relations is to develop and maintain healthy and good
relations between employers and employees.
2) Provide an opportunity to the workers to participate in management and decision making
process.
3) To avoid industrial conflict and develop harmonious relations.
4) To raise productivity to a higher level.
5) To minimize or eliminate the number of strikes, lockouts and gheraos by providing
reasonable wages, improved living and working conditions.
6) Improvement of economic conditions of workers.
7) Bring control over industrial undertakings with a view to regulating production and
promoting harmonious relations.
8) Rationalisation and Socialisation of industries by making the state itself a major
employer.
9) To safe guard the interest of employer and employee by securing the highest level of
mutual understanding and good will among all the sections in the industry.
10) Provide an opportunity for the workers to participate in management and decision making
process.

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FACTORS AFFECTING INDUSTRIAL RELATIONS
The two important factors which affect Industrial Relations are:
Communication
Communication is an art of passing or receiving information from one person to another. With
the two-way communication that happens between employee and employer, management
becomes aware of problems as and when they arise. All the components in an organisation are
understood through communication, which may be oral, written, graphics or unwritten. Hence,
this acts as the key factor for Industrial Relation.
Unions
Unions play an important role in industrial relations. Unions are a group dedicated for improving
the workers life. On behalf of its members the trade union negotiates with employers for
improvements such as better working conditions, job security and compensation.
Following are the list of some other factors which affects Industrial Relations:
1) Institutional factors
2) Economic Factors
3) Social Factors
4) Technological Factors
5) Psychological Factors
6) Political Factors
7) Enterprise related factors
8) Global Factors
1) Institutional Factors
This factor includes State policy, Labour Laws, Voluntary Codes, Collective Bargaining
Agreements, Labour Unions, Employees federation of India.

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• State policy: These are the rules that the state goes by and which are set by the
government of the country.
• Labor laws: These are the laws regulating labor in India. This helps for the relationship
between workers (employees), employers, trade unions and government.
• Voluntary codes: Specific standards for dealing with workers or other individuals
• Collective bargaining agreements: These agreements allow organized group of workers
and management to negotiate wages.
• Labour Unions (trade unions): is an organization whose membership consists of
workers and union leaders, united to protect and promote their common interest.
• Employers federation of India: `An association of autonomous organization of industry
and set up with purpose of protecting, promoting the interests of employers in area of IR
& labor problems.
2) Economic factors:
These are the factors that help to determine the competitiveness of the environment in which
the industry operates. This includes the level of unemployment in an industry.
3) Social factors:
This Includes items like social groups (caste, joint family etc) social status (high or low).
4) Technological factors:
Work methods, types of technology used, rate of technological change comes under
technological factors. Have a direct influence on wage level, wage level, collective
bargaining process in an organization.
5) Psychological factors:
Psychological factors have an impact on the workers job and also in personal life which
indirectly or directly influences IR systems of an enterprise. These factors include attitude of
owner, awareness of workforce, workers attitude towards their work, their productivity level
and workers motivation level.

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6) Political factors:
Most of the trade unions are controlled by political parties, so IR is largely shaped by the
gravity of involvement of political parties in trade union activities.
7) Enterprise related factors:
These include issues like style of management prevailing in the enterprise, organisational
climate and adaptability of change in policies.
8) Global factors:
Global factors include international relations, global conflicts, economic and trading policies,
international trade agreements and relations.
9) Other factors:
• Labor management relations
• Strike
• Industrial disputes
• Settlement of industrial disputes
ROLE OF STATE IN INDUSTRIAL RELATIONS
Workers and their representatives, management and the government are three entities that shape
a country’s industrial relations system which varies from country to country. In almost all
countries the government exercises a leading role in determining the basic character of the
country’s industrial relations system.
The industrial relations processes and the relationship between employers and employees are
influenced by the government and its agencies through the government’s construction, passing
and implementation of relevant industrial relations policies, law, regulations etc.
The government or its agencies, possibly in consultation with other role players in the industrial

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relations processes determines the legal framework within which industrial relations must
function. These include things such as: Employers, selected employees and trade union
representatives.
The government can also become indirectly or directly involved in the industrial relations
processes when boundaries are overstepped or negotiations go wrong.
The government could become concerned in, settling an industrial relations dispute in court, or
adjusting or amending a policy which is imperfect, outdated outcomes or negotiations.
Role of state
 Improves standard of living: India is a socialist democratic republic state government
which is elected by the citizens of country has certain obligations to work for welfare of
its citizens through a system of legislations.
 Promotes industrial growth: Government makes a continuous effort to increase the
growth of the industry taking into consideration the labour class.
 Acts as an umpire: The role of government as a mediator in case of industrial relations is
clearly visible and accepted by the country. It helps the employers and employees with all
sorts of mechanism of law so that they can handle all the issues bilaterally.
 Protects interest of labour: The government puts an effort to clarify by using effective
industrial relations. It regulates the employers and employees to handle their
disagreements.
 Other roles: Maintaining industrial harmony in the state, supports in expanding
production and output and helps for suitable implementations of legislations.
Industrial Relations Approaches
The state of IR is perceived differently by different people. Some perceives IR in terms to Class
conflict, while some realised it in terms of Mutual Co-operation and others realised it in terms of
Competing Interests of various groups.
There are four popular approaches to industrial relations on the basis of these perceptions. These

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are:
 Unitary Approach
 Pluralistic Approach
 Marxist Approach
 Human Relations Approach
Unitary Approach
The Unitary approach to industrial relations is based on assumption that all the members of an
organisation, either it is an Employer, Employee or Government, have a common set of
objectives, purposes and interests and hence work in unison towards the accomplishment of
shared goals. If any conflict is seen at the workplace, it is temporary, resulting from poor
management or mismanagement of employees.
This approach is based on the theory that overall profitability of the firm could be increased if
everyone in the organisation works collectively and has a common interest towards its
completion thereby establishing the harmonious relations. Using this approach, the
organisational system is in harmony and conflict is unnecessary and exceptional. Managements
supports this view because this legitimates its authority role by projecting the interests of
management and employees as being the same and by emphasizing managements role of
governing in the best interest of organisation as a whole. This view also reassures managers by
confirming that conflict, if exists, is mainly due to the fault of the Government rather than that of
the management. But this approach is also seen as exploitative and manipulative.
Pluralistic Approach
The pluralistic approach is based on the assumption that there is more than one basis of power in
the relationship between employees and the management. Unions act as the central component to
the pluralistic approach that seeks a balance of power between employers and employees. In this
approach, a strong union is not only desirable but necessary. Mediation seeks to find a balance
between what the employees wants and what management suggests it needs. According to

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pluralists, industrial conflict is predictable and it needs to be contained within the social
mechanism of collective bargaining, conciliation and arbitration.
Marxist Approach
Marxists also view conflict between labour and management as unavoidable, similar to pluralists.
But Marxists unlike pluralists, considers conflict as a product of the capitalist society based on
classes. The main objective of capitalists has been to improve productivity by paying minimum
wages to labour.
According to Marxist approach, the labour – capital conflict cannot be solved by bargaining,
participation and cooperation. These situations can be solved with the help of trade unions. Trade
unions act as a weapon to bring a revolutionary social change by changing capitalist system. For
this, strikes, gherao etc are exercised by the labour against capitalists.
Human Relations Approach
The human relations approach is introduced by Elton Mayo, a humanist and believes in the
positive nature of the employees. In this approach, the employees positively listens the human
initiatives from management and responds positively to them and hence no conflict arise. This
approach to industrial relations must be properly understood by HR managers as this offers a
solid foundation for much of the role of human resource management. This approach is very
idealistic when dealing with large group of workers.

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TRADE UNION
Trade union is an organised association of workers from similar fields. Trade unions help
employees in issues like good working environment, fairness of pay, benefits and hours of work.
Labour unions provide a link between employer and employees. Trade unions act as the medium of
communication between the management and workers. Principle functions of trade union are
regulations of relations, settlement of grievances, collective bargaining and negotiations, raising
new demand on behalf of workers.
“A trade union is an association of employees designed primarily to maintain or improve the
conditions of employment of its members” – Lester
“A trade union is such an organisation which is created, voluntarily on the basis of collective
strength to secure the interests of workers” – V.V Giri
The Indian Trade Union Act, 1926, is the principle act which controls and regulates the mechanism
of trade union. The employee who wishes to join a trade union should pay an annual fee, which is
for costs and expenses the trade union has to bear, when it supports industrial action by the workers
and provides services to its members.
FEATURES OF TRADE UNION
 This is an association of either employees or employers or of independent workers.
It consists of:
 Employer’s association
 General labour unions
2. Trade Unionism and
Collective Bargaining

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 Friendly societies
 Unions of intellectual labour
 This is a permanent body which persists throughout the year.
 This protects and promotes economic, political and social interests of its members.
 It achieves its objectives through group effort and collective action.
 This also helps to improve the status of employees in the industry.
PRINCIPLES OF TRADE UNION
 Security of service
 Unity is strength
 Equal pay for equal work
IMPORTANCE OF TRADE UNIONS TO EMPLOYERS AND EMPLOYEES
The employers have started to realise the importance of workers. The employees too have started
to form Trade Unions to protect their interests. The employees have realised that to protect them
from exploitation, unity is very important, hence trade unions have become so important today.
A trade union generally negotiates with employers on behalf of its members, recommending for
improvements such as better working conditions, compensation and job security. These unions
play an important role in industrial relations -- the relationship between employees and
employers.
The Indian Trade Union Act 1926 was passed to provide for the registration of trade unions with
an analysis to render lawful association of workers. The act also defined law relating to
registered trade unions and provided certain protection and privileges to the registered trade
unions.

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Importance to Employees:
• Members of the union tend to have higher wages than non-unionised workers.
• In case of legal matters, trade unions also sometimes act as representatives of
workers.
• The rights of the employees are better protected. For example, they cannot be unjustly
removed from work.
Importance to Employers:
Since the individual rights of workers are better protected and well represented, they tend to be
motivated. This results in higher levels of efficiency and improved productivity.
STRUCTURE OF TRADE UNION
a) On the basis of purpose
 Reformist union
 Business Unionism
 Uplift Unionism
 Revolutionary Union
 Anarchist union
 Predatory Union
 Political Union
 Guerrilla union
b) On the basis of membership structure
 Craft Union
 Industrial union
 General union
 White Collars Union

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On the basis of Purpose On the basis of Membership Structure
Craft Union
Reformist Union Revolutionary Union Industrial Union
Anarchist Union
Business Unionism General Union
Predatory Union
White Collar Union
Uplift Unionism Political Union
Guerrilla Union
a) On the basis of Purpose
1) Reformist Union:
 This helps to retain the present structure of capitalist society.
 This maintains the employee-employer relationship by eliminating the competitive
system of production.
1) Business Unionism: In business unionism smooth and cordial relationship exists
between employer and employee. In this all the conflicts and problems are solved by
collective bargaining. It favours volountry arbitration and avoid strikes.
2) Uplift Unionism: This is also called friendly or ideal unionism which aims to act as an
intellectual, social and moral value of the employees. This puts more stress on education,
health, insurance benefits and welfare measure.
Trade Union

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2) Revolutionary Union:
 This method tries to destroy the existing economic system by revolutionary measure.
1) Anarchist Union: This methods aims at destroying the present economic system by
resorting to revolutionary measure.
2) Predatory Union: Without sticking to any approach this method seeks their
objectives.
3) Political Union: This method gets power through political actions.
4) Guerrilla Union: These are generally non democratic and do not believe in
cooperation with their employees.
b) On the basis of Membership Structure
 Craft Unions: This refers to organising a labour union that includes workers with particular
skill or craft from a particular industry or who may work for different employers at various
locations. Craft unions are thus open for members with definite job skills (include both
semiskilled and skilled workers). For example: Ahmedabad weaver’s Union, The Kanpur
Suti Mill Mazdoor Sabha.
Advantages:
 Craft union links all workers having similar skills and specialisation.
 This is formed to improve working conditions and wage levels.
 Craft union has strong bargaining power.
 Industrial Unions: This is a trade union method in which all workers in one industry
regardless of skill or trade are organised in the same union. It links all skilled workers and
craftsmen in any one industry. For example- Textile Labour Association of Ahmedabad,
The Rashtriya Mill Mazdoor Sangh, Bombay.
 General Unions: General union is a trade union which groups from all industries and
companies, rather than a particular sector or one organisation. For example- Cleaners,

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clerical staff, transport workers together form the group, Indian National Trade Union
Congress (INTUC).
 White Collars Union: These are for professional workers who perform same or similar jobs
in different industries. For example: National Union of Teachers.
ORIGIN AND GROWTH OF TRADE UNIONS
In 19th
century trade unionism originated in Great Britain, continental Europe and United States. In
18th
century smaller associations of workers started appearing in Britain, but they remained short
leaved and random through most of the 19th
century, because of the opposition they encountered
from government and employers groups. At that time unions and unionists were regularly
prosecuted. While union organisers in both countries faced similar problems, their approaches were
quite different: Britain favoured political activism, which lead to the formation of Labour Party in
1906, while American unions followed collective bargaining.
Trade unionism in India developed slowly compared to western nations. The development of trade
union in India happened with the growth of industrialisation. As the movement came to India in 19th
century, worker groups made several attempts to improve their working conditions. Britain
introduced this movement in India to divide employees and employers and to beat local
competition. Attempts were also made to eliminate child labour in India.
The following are the phases of trade unions in India.
 Period up to First World War: (1875 to 1918)
In this period, working and living conditions of the workers were poor and their working hours were
too long and wages were low. Investors were only interested in their profitability and productivity.
The first related action was taken in 1875 under the leadership of Sorabji Shaparji along with some
social workers started the protest to get the attention of Government to the grievous conditions of
woman and child labour in Indian industries. Strikes were not absent in this period. The workers of
Express Mills at Nagpur observed a strike over wage rates, in 1877. The Indian Factories Act was

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approved in 1881 to regulate the working hours and other services in Indian Textile labourers and
employment of child welfare was also prohibited.
In eighties, one of the important incidents was the holding of the labour conference in 1884 in
Bombay under the leadership of a factory worker N.M. Lokhande. To highlight the poor conditions
of workers, a memorandum was submitted to the Second Factory Commission to point out workers
poor conditions, but no improvement was noticed. As a result, a group meeting was held in Bombay
on April 21, 1890 and was attended by about 10,000 workers.
The meeting passed a decision demanding:
 One week off day.
 Reduction in working hours.
 Half an hour’s rest at noon.
 Payment of wages before 15th
of every month.
 Compensation to injuries for a worker on duty.
Based on the meeting the mill owners agreed to grant a weekly holiday for textile workers. Due to
the encouragement of this success, the first Indian trade union, Bombay Mill Hands Association
was formed in 1890, with an immediate aim of agitation for a revision of first Indian Factories Act,
1881, by Shri. N.M. Lokhande. DINABANDHU, the worker’s first newspaper was started by Mr.
Lokhande. The purpose was to place genuine grievances of the workers before the authorities and
also to educate the workers.
Prior to 20th
century, this was the memorable achievement in the trade union movement in India.
The two provinces of Bombay and Madras, had witnessed 24 strikes in the period 1882 to 1890.
A number of unions were formed during this phase:
a) The Amalgamated Society of Railway Servants of India and Burma (For Anglo-Indian
and European railway employees).
b) The BOMBAY Postal Union at Calcutta and Madras, 1907
c) The Kamgar Hitwardhak Sabha, 1909

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d) The Social Service League, 1910.
e) The Printer’s Union of Calcutta, 1995
In reality, these associations were not trade unions. They only paid attention of the public to the
necessity of improving the working conditions in the factories. This also laid foundations for the
establishment of trade unions, which came into existence after the First World War.
 Period between the Two Great Wars: (1918 to 1938)
The leadership of trade unions passed from the hands of social workers to politicians after the
First World War. In 1918 the Madras Textile Labour Union was formed by B.P Wadia. This lead
to the creation of another 14 unions during 1918-19. The active alliance of Mahatma Gandhi
with the Ahmedabad Textile Labour Association gave a new turn to the labour movement by
applying the principle of non-violence. The Government selected some delegates to the first
conference of the International Labour Organisation (ILO) in Washington in 1919 without taking
into account the then existing trade unions. As a result, on 30th
October, 1920 the All India Trade
Union Congress (AITUC) was established as a central organisation of trade unions. The move
was supported by a number of leaders of All India Congress.
The ILO in 1921 adopted a resolution which stressed that the labour should be given full
freedom to form a union. The Trade Union Act was passed in 1926 and a period of regulated
trade unionism started. As a central law, this Act provided a legal status to the registered trade
unions and proved a boon to the trade unionism in India. The existing trade unions were
registered under the Act and tried to get them identified.
By 1929, AITUC was the only central trade union. In 1930, there was a split in AITUC which
lead to the creation of All India Trade Union Federation (A.I.T.U.F) under the leadership of Shri.
N.M Joshi. Later AITUF was renamed as Nation Trade Union Federation (NTUF) in 1933). The
strength of AITUC was reduced with the formation of AITUF. A new organisation named Red
Trade Union (RTU) was also formed in this period. During this period there were some other

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independent organisations like the All India Railwaymen’s Federation (AIRF) and Textile
Labour Association (TLA) of Ahmedabad.
RTUC was merged with AITUC in 1935, and was recognised by then as the central organisation.
In 1937, there were 379 strikes connecting about 6.47 lakh workers. In 1938, the AITUC in its
Nagpur session finally accepted the terms for merger as laid down by the NTUF.
 During and after the Second World War (1939-1947)
The Second World War broke out in September 1939, and created this a new status in the united
trade union movement. The war saw a great shoot in industrial activity as well as an unmatched
rise in demand. Inflation and hyperinflation became so wild that the worker’s real wages dropped
down speedily. To compensate this loss, they demand increase in wages, dearness allowances
and sharing of profit through their labour organisations. But the Governments and employers
were too aggressive to consider these genuine economic demands of the workers sensitively.
The result of this was the formation of trade union in all industries in the country. By 1940-41,
the number of registered trade unions rise up to 727 and membership increased to over 5lakhs.
Again a split took place in 1941and the reformers left the AITUC and formed a new central
labour federation known as the Indian Federation of Labour (IFL). At the time of the birth of
IFL, it had only 100 affiliated unions with a total membership of 3lakhs. By 1944, this increased
up to 222 unions and 4lakh members respectively.
The changes in the national political situation, continued to affect the Indian labour movement.
The political situation forced the communists of India to support the Government on war issue
and the leadership of AITUC which was in the hands if INC, fell into the hands of communists.
During war-time, the trade unions strengthen their position due to the following factors:
 The Government and a number of employers introduced a number of welfare measures to
increase production of war materials and other essential goods and to maintain high
profits.

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 Recognition was awarded by many employers to achieve the support of workers in
production, which gave strength to unions.
 A tripartite Labour Conference was ordered in 1942, for the first time. This helped to
provide a common platform for mutual understanding and discussion between employers
and employees.
The Indian National Trade Union Congress (INTUC) was formed in 1947 as a labour wing of the
Indian National Congress (INC).
 POST INDEPENDENCE PERIOD (1947 till date)
Independence and partition of the country exhausted the expectation of the workers for securing
high wages and better working conditions from the national Government. In order to maintain
the facilities already received by the workers, a series of strikes swept the country in 1947 in
which 165.63laks man-days were lost and 18.41lakh workers were involved.
In post-independence period, various political parties were formed and kept control over various
trade unions. When socialist group broke away from the congress in 1948, formed a new
political party, Praja Socialist party. The trade union leaders working in the INTUC were
supporters of the new political party and formed a new central trade union organisation called the
Hindustan Mazdoor Panchayat (HMP). The HMP and the Indian Federation of Labour merged
together in 1948 and formed Hind Mazdoor Sabha (HMS). In 1949, the revolutionaries and
leftist groups, which did not agree with the principles of both AITUC and HMS left AITUC and
formed United Trade Union Congress (UTUC) on 30th
April 1949.
By 1949, there were four central organisations lead by different political parties. They were
INTUC lead by Congress, AITUC conquered by Communists, HMS affiliated to the Socialist
party and UTUC lead by Revolutionary Socialist party, and this movement is still continuing.
After 1952, many efforts were made for bringing some unity in the movement but all failed. In
1959, a few unions lead by the members of Socialist party dropped out from the HMS and
formed Hind Mazdoor Panchayat, an organisation of Samyuktha Socialist Party. In 1962, with

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the support of Swatantra Party, a new organisation called Confederation of Free Trade Unions
(CFTU) was formed. In 1970, there was again a split in AITUC when the Communists divided
into CPI and CPM. The CPM formed a new central organisation, the Centre of Indian Trade
Union (CITU) and CPI held the AITUC.
In 1972, the Indian National congress split into two groups, and hence INTUC was also divided
in two groups. The ruling Congress continued its control over the INTUC and the organisation
Congress formed a new union, the National Labour Organisation (NLO). Unions in Gujarat and
Kerala are affiliated to NLO. In May 1972, a National Council of Central Trade Unions
(NCCTU) was formed with representatives of INTUC, AITUC and HMS.
After the declaration of emergency, again, the INTUC, AITUC and HMS combined and joined
with the Employers representatives and formed National Apex Body. This body ceased to exist
as soon as the state of Emergency was lifted.
Present state of the Trade Union Movement
Today’s employees are efficient and have changed expectations out of employment relationships.
The Indian Trade unions have now become a permanent feature of the industrial society. Now
they got a legal status and are not ad-hoc bodies or strike committees. In modern industrial
society, the importance of trade unions have been identified which have reduced interest in
political matters.
The unions now have gained a notable status in the labour movement. Unions also participated in
forming policies and ideologies at National and State levels. Due to various reasons, multiplicity
of unions happened in post-independence period.
Delicate changes are observed in the pattern of political unionism. The Changes are:
 Secondary interest is given to labour union activities by political leaders.
 National federations have shown keen interest in long term activities.

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 Trade Unions started functioning as autonomous.
In addition to their normal bargaining activities, unions now have a newly acquired voice and
representative function. Many of them are trying to increase their value by providing a variety of
services to their members, as well as to the community to which they belong. These new
functions of unions, also called ancillary functions can be grouped into the following groups:
 Communication: Many large unions publish newsletter/magazines, with the aim of
clarifying their policy on certain principle issues. For example: The Indian Worker is a
fortnightly bilingual publication of INTUC.
 Welfare activities: A number of trade unions are engaged in various welfare activities,
such as providing housing and schooling facilities for the ward of workers establishing
cooperative societies for promoting thrift among workers and providing consumer items
at discounted prices. For example: The Textile Labour Association Ahmedabad has
attempted to organise self-employed women in SEWA and has even started banking
activities for this purpose.
 Education: Education makes workers aware of their surrounding environment. Unions
try to launch educational program for workers to enhance their knowledge of the work
environment and to inform them about issues regarding their rights and responsibilities,
about procedures and systems that exist in the workplace for rectifying grievances, and
similar issues.
 Training of Workers: Trade unions also provide training to workers in order to enhance
their efficiency and effectiveness. This function has gained greater relevance in the
current scenario when changes in technology are taking place very fast and obsolescence
of skills in a routine phenomenon.

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 Social Work: Besides undertaking activities for worker welfare, many of the trade
unions are even engaged in social work. For example: the Bharatiya Mazdoor Sangh
encourages its workers to undertake social and constructive work, along with day-to-day
union activities.
 Research: Union negotiators require updated information to be collected systematically
and analysed meticulously at the bargaining table. Many unions conduct their own
research having emphasis on practical problems.
UNIONS IN THE ERA OF LIBERALISATION
The era of economic liberalization in India was initiated in the year 1991 during the Prime
Ministership of P.V Narasimha Rao. One of the outcomes of this policy was increase in market
competition for the domestic firms, which were now required to compete not only with other
domestic players, but also with international firms in terms of price, quality and technology.
Firms thus adopted cost-cutting in order to compete in the market by resorting to practices like
downsizing, outsourcing and replacing regular employees with contract employees to save
expenses on workforce. Large scale retrenchments were taking place. Since public sector
organisations could not retrench employees, some of them reduced fresh recruitments and
introduced the scheme of voluntary retirement, also known as the Golden Handshake Scheme.
Examples of such organisations include State Bank of India and the Indian Telephone Industries.
As a result of such initiatives, there has been a huge decline in public sector employment, which
leads to reduction in employment in organized sector. Privatization of State enterprises by the
process of disinvestment has further contributed to decline in employment. The consequences on
workers were many and perhaps the most serious one was decline in job security.
The economic liberalisation process has touched every aspect of the economy. With increasing
demands for more skilled workers, especially in the IT sector, a new class of managers and
skilled workers called knowledge workers are now in demand. For these highly paid workers,
being members of the trade unions is not important. They have needs different from traditional
factory workers and to promote their interests they form their own associations. In recent years,

23
workers of various industries have chosen to form their own independent unions which are not
affiliated to any political party and these function as independent bodies. Examples of such are:
National Co-ordination Committee of Electricity Employees and Engineers, and unions formed
in insurance companies, banks and financial institutions.
TRADE UNION OF EMPLOYERS
Employers and their organisations are an important component of the industrial relations system
of any modern society. Employer’s organisations are a formal body of employers, from the same
or from different sectors, set up with the objective to champion and further the interest of
employers, and advise them to improve the conditions of conducting trade and maintaining
harmonious industrial relations.
Working with a recognised trade union can bring many benefits to the employers. In particular
trade union can help employers to:
 To build trust among the workforce: Provides a mechanism of discussion between
workers and employers. This helps to build commitment and trust among the workforce
and makes sure that problems can be identified and solved fairly and quickly. This helps
to bring important productivity benefits for companies. Trade unions are more efficient
for the employer and better than dealing with workers individually.
 Ensure workplaces are safe: Unionised workplaces are safer workplaces. By ensuring
safe working practices, Trade Unions helps to lower accident rates at work.
 Improve staff retention: Trade unions negotiates on their members on behalf with
employers to find solutions that meet business needs, while ensuring that workers are
treated fairly. Unions considerably improve staff retention and reduce absenteeism by
supporting employers when they are unhappy at work.

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 Make better business decisions: Trade unions helps the employers to make better
decisions.
 Promotes equality: Trade unions actively fight inequity and helps to promote equal
opportunities at work. Union representatives are well located to identify incidences of
inequity, and to work with employers to ensure that anti-discrimination policies are
properly implemented. This helps to make workplaces more attractive to workers by
improving absenteeism, staff retention and productivity. Trade unions also helps for
reducing management time spent for settling grievances.
 Provide access to learning and skills: Helps members to access training and education
is the key priority for unions. With this, higher skilled employees bring productivity
benefits for employers.
 Save money: Timely identification of problems in workplace can lead to significant
savings, by reducing the costs employers face as a result of ill health and reducing staff
turnover.
 Increase productivity: Unions can also help to maintain productivity of the organisation.
Following are the list of some of the Trade Union for Employers
• All India organization of Employers (AIOE)
• Employers Federation of India (EFI)
• Standing Conference of Public Enterprises (SCOPE)
AIOE has been representing the interest of Indian Employers at National and International level
and serving the cause of Indian industry by promoting sound industrial relations and better
understanding between employers and employees on the support of interests.
The Employers’ Federation of India (EFI) was established in 1933, as an association of self-
directed organisations of industry and was set up with the purpose of protecting, promoting and

25
championing the interests of employers mainly in the area of human resources, industrial
relations, labor problems and cognate matters.
Standing Conference of Public Enterprises (SCOPE) is a top professional organisation
representing the Central Government Public Enterprises. It has also some Banks, State
Enterprises and other Institutions as its members.
TRADE UNION OF EMPLOYEES
The reasons for organizing a union may be immediate and specific. The general purposes of an
employee to join in unions are as follows:
• To attain greater bargaining power
• To get legal advice and services
• For personal representation
• For attaining equality
• To attain economic security
• To ventilate the workers grievances to the management
• To inform workers view, aims, dissatisfaction and ideas to the management
• To satisfy their social needs
• To satisfy their psychological needs
• To satisfy their needs for belongingness and secure power
Following are the list of Trade Union for Employees
6 Major Central Trade Unions of India
(1) The Indian National Trade Union Congress (INTUC): The objectives of the union are to
adopt peaceful means for the settlement of labor disputes.

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2) The All India Trade Union Congress (AITUC): This union came into existence in 1920
mainly on the pattern of the British Trade Unions. It serves as the labor forum of Communist
party of India at present. It is considered as the second largest union in India. It is very strong in
West Bengal, Tamil Nadu, Kerala, Andhra Pradesh and Punjab.
(3) The Bharatiya Mazdoor Sangh (BMS): This union was formed as an affiliate to Bhartiya
Jan Sangh Party. During the last couple of years its membership has gone up. This gives it the
third position and the H.M.S. has been pushed down the fourth position.
(4) The Hind Mazdoor Sangh (H.M.S.): It was formed in December 1981 in Calcutta by the
socialists who neither approved INTUC nor A1TUC. The HMS was organized with a view to
keeping its members free from any political or other outside interference. Its members are
generally from industries like railways, cotton textiles, coal mining, engineering and post and
telegraph department. The Praja Socialist party and Samyuktha Socialist party dominated this
union. These parties became constituents of the Janta Party.
(5) The United Trade Union Congress (UTUC): It was formed on 30th April 1949 by those
persons who were dissident socialists. It functions mainly in Kerala, West Bengal, Bihar and
Tamil Nadu. Its political affiliations are with left-wing parties.
(6) The Centre of Indian Trade Unions (CITU): It was formed in 1970. CITU is a National
level Trade Union in India. This is politically affiliated to Communist party of India as its trade
union wing and is a leader of Indian Trade Union movement. Today CITU is one of the biggest
assemblies of workers and classes in India. It has a good presence in West Bengal, Kerala and
Kanpur. They have an average presence in Andhra Pradesh and Tamilnadu.
PROBLEMS AND WEAKNESSES OF TRADE UNION
 Uneven Growth: Both industry wise and area wise the trade unionism in India is
characterized by uneven growth. Trade unions are popular in big industries. The degree of
trade unionism varies widely from industry to industry.

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 Limited membership: The number of trade unions in India has increased noticeably. But
this has been followed by the decline in membership per union.
 Multiplicity of Unions: This is the result of outside leadership and labour laws. The law
permits and gives purity to small unions. As per the Trade Unions Act, 1926, any seven
persons can form a union. There is no limitation on the number of unions to be registered in
one establishment.
 Outside Leadership: Trade unions in India are lead mostly by people who are not workers.
The outsiders include politicians, intellectuals and professionals having no experience of
work in industry. These outsiders continue to overlook the trade unions to advance their
personal interests.
 Financial problems: The financial positions of trade unions are weak since their average
income is very low and insufficient. Under conditions of multiplicity of unions, a union
interested in increasing its membership figure keeps the subscription rate very low. Hence,
the funds with the unions are not adequate and they cannot undertake welfare programs for
their members. Another reason for financial problem is that large amounts of subscription
dues remain unpaid by the workers. Other than this, there is a lack of proper staff and
organisation to collect subscriptions in the union.
ROLE OF TRADE UNION IN INDUSTRIAL RELATIONS
One of the most important roles of trade union is that when there is a dispute in the workplace,
the union acts as a mediator between employers and employees. Problems can be solved through
formal arbitration and grievance procedures. When issues arise at the workplace, the goal is to
secure a “win-win” in which employer and employees feel as if they each attained something
from the deal.
The collective bargaining agreement also protects the employees from being fired without any

28
cause. Collective bargaining helps to save the company. Important goal of trade union is to
ensure that employees are treated fairly, and that they feel comfortable and secure on the job. By
ensuring fair wages and benefits, labour unions help to keep the membership content remaining
constant instead of looking for a quick way to exit the company.
COLLECTIVE BARGAINING
Collective bargaining plays an important role in resolving and preventing industrial disputes.
Collective bargaining is the mediation process that takes place between an employer and a group
of employees when any issues arise. In this, the representatives of both the parties ie; union and
the employer meet and discuss the issues such as bonus, wage, number of working hours and
other employment terms.
Collective bargaining involves:
 Negotiations
 Drafting
 Administration
 Interpretation of documents written by employees, employers, and union representatives.
Importance of collective Bargaining
 Increases the financial strength of unions and management.
 Establishes uniform conditions of employment and hence avoids industrial disputes and
maintains stable peace in the industry.
 Fair settlement of grievances.
 Achieves an efficient operation of the plant.
 Finds a solution to the problem of sickness in industry and make sure about pension
benefit and other fringe benefits.
 It is most important aspect of labour-management relations.
 It helps to build up a system of jurisprudence by introducing civil rights in industry.

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Features of Collective Bargaining
a) It is a group action: Both the parties, employers and employees of settlement of
collective bargaining are represented by their groups. Employers are represented by ite
delegates and employees are represented by their trade union.
b) It is a continuous process: Collective bargaining is a continuous process that goes
between management and trade union for 365 days of the year.
c) It is a bipartite process: Without intervention of any third party, collective bargaining is
a bipartite process.
d) It is a process: Collective bargaining is a process consisting of a number of steps.
e) It is industrial democracy at work: Collective bargaining is based on the principle of
industrial democracy where the labour union represents the workers in discussions with
employer and employees.
f) It is dynamic: Collective bargaining is a new concept and is expanding, growing and
changing.
Collective bargaining process:
1. Preparation: This is the first step of collective bargaining, where choosing a conciliation
team and representatives of both the employer and union is being done. The selected
parties should be skilled in negotiation and labour laws.
2. Discussion: Here, both the parties decide the ground rules that will lead the discussions.
The prime negotiator is from the management team and he leads the discussion. In this
stage, the issues for which the meeting is held are identified.

30
3. Proposal: This is the stage where the chief negotiator begins the conversation making
opening statements and both the parties put forward their initial demands. This stage is
also known as Brainstorming, where each parties give gives their opinion that leads to
arguments and counter arguments.
4. Bargaining: Negotiations begin at this stage and each party tries to win over other.
Negotiations can extend up to days until a final agreement is reached. Sometimes, both
the parties reach a friendly solution soon, but in some cases to settle down the dispute the
third party involves in the negotiations in the form of arbitration and adjudication.
5. Final settlement: This is the final stage of collective bargaining process. Here, a mutual
agreement is made between the two parties in writing, signed by each party to give the
decision a universal acceptance.
Forms of Collective Bargaining
 Based on the working of collective bargaining, it may be
 Single Plant Bargaining
 Multiple Plants Bargaining
 Multiple Employer Bargaining
If the bargaining is between the single employer and the single firm, it is known as single plant
bargaining. This form is happening in United States as well as in India. Multiple plant
bargaining is the one where workers bargain with the common employer through different
unions and it may be between a single firm having several plants and workers employed in all
those plants. Multiple employer bargaining which is the third form is possible both at local and
regional levels. In this, instead of a separate union bargaining with separate employer, all the
unions belonging to the same industry bargain through their federation with the employer’s
federation of that industry.

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 Based on nature and objectives collective bargaining can be:
1. Conjunctive or Distributive Bargaining: In this type, the employer and employee try to
maximise their respective gains based on the principle “my gain is your loss and your
gain is my loss”. The economic issues such as bonus, wages and other benefits are
discussed, where the employer wishes to increase the workload of employees and reduce
the wages whereas the employee wishes to have an increased wage or bonus for his work.
2. Co-operative or Integrative Bargaining: In this, both the employer and employee sit
together and try to resolve the problems of their common interest and reach to a cordial
solution. For example, the management may agree to adopt the efficient methods to
increase production or employees may agree for low wages.
3. Productivity Bargaining: This type is done by employers, where the employees are
given good incentives for the increased productivity and hence they are encouraged and
work hard to reach ahead of the standard level of productivity to gain additional benefits.
In this employer and employee enjoy the benefits in the form of increased production and
increased pay respectively.
4. Composite Bargaining: In this type of bargaining, the employees express their anxiety
over the working conditions, environmental issues, recruitment and training policies etc.
along with the demand for increased wages with the aim to safeguard their interest and
protect the strength of their powers.
Prerequisites for Collective Bargaining
1. String, independent and well organized unions.
2. Recognition of union as bargaining agent.
3. Willingness to adopt a “Give and take approach”
4. Favorable political climate
5. Mutual trust and good faith
6. Absence of unfair labor practices

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7. A problem solving approach rather than a fire-fighting approach
Principles of Collective Bargaining
 For the management
 Rules governing labour should be occasionally examined.
 Management should give proper recognition to trade unions.
 All the clauses of agreements should be accepted in the right spirit.
 For trade unions
 Trade union leaders should think of society’s interest.
 Trade union should have open mind on various issues.
 They should fully support management.
 Trade unions choose strike only when all other methods of settlement have failed.
 There should not be any scope for confusion and misunderstanding.
 For Unions and Management
 Both union and management should have faith in each other.
 Other than compromise there must be an honest effort for solving a problem.
 Both should carefully observe and bear by all the national and state laws which are
applicable in collective bargaining.
 Both should have positive views of the whole process.
Collective Bargaining in India
Performance based wage bargaining: Based on performance wages have to be paid.
Women’s issues: The exclusive growth of women employees may give rise to fresh
challenges to both employers and unions to face many issues.

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Job security/Job insecurity: The loss of jobs due to technological change has always
been a major concern for the unions.
Productivity: Collective bargaining helps for re-approachment between union and
management that recognizes the necessity of co-operating to raise productivity.
Quality of work life: This is related to the need for organized labor and management
to work co-operatively toward the goal of greater productivity. QWL experiments will
continue bargaining across countries.
Managing change through collective bargaining: Collective bargaining is a
procedure by which employment related disputes are resolved cordially, peacefully
and voluntarily by settlement between labor unions and managements.
Collective Bargaining Agreements in India
In India, types of Collective Bargaining Agreements are divided into:
 Bipartite (Voluntary) agreement: These are drawn up in voluntary negotiations
between the employer and trade union. Implementation of this is normally
nonproblamatic because both parties reached the agreement voluntarily.
 Settlements: This is tripartite in nature. This involves the employer, trade union and
conciliation officer. They arise from a particular dispute, which is then referred to an
officer for reconciliation. If the officer feels that the parties viewpoints have really been
reconciled during the reconciliation process, and that an agreement is possible, he may
withdraw himself. If the parties settle an agreement after the officer’s withdrawal, it is
reported back to the officer within a specified time and the matter is settled.
 Consent awards: These are agreements reached while a dispute is pending before a
compulsory adjudicatory authority and incorporated into the authority’s award.
Levels of Collective Bargaining in India
In India Collective Bargaining takes place in three levels:

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 National-level industry bargaining: This is common in core industries such as banks,
steel, coal and oil where the central government plays an important role.
 Industry-cum regional bargaining: This type is peculiar to industries where the private
sector dominates, examples: cotton, jute, textiles, engineering etc.
 Enterprise or Plant level bargaining: in this type there is no uniform collective
bargaining procedure.
FUNCTIONS AND ROLE OF TRADE UNIONS IN COLLECTIVE
BARGAINING
Collective bargaining came to be adopted as a method for achieving trade union objectives after
unions received legal recognition and came to be recognised as valid representatives of workers.
It is a method by which unions protect, improve and safe guard the conditions of the lives of
their members. Under this method, trade union representatives bargain with the employer over
terms and conditions of employment like hours of work, wages, working conditions, incentives
etc. An individual worker is not an influential and effective as a group in negotiating the terms
and conditions of work. Due to this reason collective bargaining came to be recognised as a
useful method adopted by unions to achieve their objectives. Union representatives bargain with
the employer and enter into an agreement, which is known as a collective agreement. The
collective agreement may deal with a single issue or multiple issues.
The important function of trade unions includes bargaining improved wages and allowances and
working conditions of workers through collective bargaining.
Trade unions perform a number of functions in order to achieve its objectives. These functions
can be classified into two categories:
 Militant functions: One set of activities performed by trade unions is the betterment of
position of their members in relation to their employment. The aim is to ensure enough

35
wages, secure better conditions of employment, get better considerations from employers
etc. Generally this can be achieved by collective bargaining. When the unions fail to
fulfill these aims by collective bargaining and negotiations, they adopt an approach and
put up a fight with the management in the form of strike, go slow plans, boycott, gherao
etc. These functions of trade unions are known as militant or fighting functions.
 Fraternal functions: Trade unions also aim at rendering help to its members in times of
need and improving their efficiency.
By collective bargaining trade unions helps to:
 To take up welfare measures for improving the morale of workers.
 To generate self confidence among workers.
 To provide opportunities for promotion and growth.
 To protect women workers against discrimination.
LABOUR PROBLEMS
 Discipline
According to Calhoon (1963), discipline is the force that prompts individuals or groups to
observe rules, regulations, standards and procedures deemed necessary for the organisation.
Tead (1933), defines discipline as the orderly conduct of affairs by the members of the
organisation who adhere to its necessary regulations because they desire to cooperate
harmoniously in forwarding the end which the group has in view, and willingly recognise that to
do this their wishes must be brought into a reasonable unison with the requirements of the group
in action.
i.e: Discipline may be defined as an attitude which aims at including restraint and orderly
behaviour. In an organisation, discipline suggests a state of order that must be adhered to by the
members and a process of modulation of human behavior for desired performance.
It is said to be good when members of organisation willingly follow the rules and regulations of

36
the enterprise. It is said to be bad when subordinates disobey regulations and standards.
Objectives of Industrial Discipline:
 Get co-operation of subordinates within the framework of management’s policy for
fulfilling the target and not purely to enforce authority.
 To reform the offender causing displeasure, preventing others from making the same
mistake.
 To emphasis upon the employers and employees to recognise each other’s right and
obligations.
 To promote constructive criticism between the parties concerned at all levels.
 To maintain discipline in the industry.
 To eliminate all forms of coercion, intimidation and violence in industrial relations.
Maintaining discipline at work ensures the successful attainment of organisational objectives.
There are two broad aspects of discipline:
 Positive Discipline: This implies discipline without punitive actions. It involves creation
of an atmosphere in the organisation whereby employees gladly confirm to the
established rules and regulations. This type is to inculcate self-discipline among
employees, so that they stick to the organisational rules and regulations not due to any
fear of punishment but due to the inherent desire to ensure congruence of individual
objectives with group objectives and harmony in achieving organisational goals.
 Negative Discipline: This is somewhat traditional in approach, under which employees
adhere the rules and regulations in fear of punishment. The punitive actions may be in the
form of fines, penalties and demotion. Employees do not perceive organisational goals as
their own goals and there is a lack of a feeling of oneness with the organisation.
If a management has built up a status for its fairness, objective approach, justice and fairplay, its

37
problem of discipline would be comparatively less. Indiscipline generally refers to the violations
of or non-conformity to formal or informal rules and regulations in an organisation. In the
occasion of indiscipline by the employee it should be endeavour of the management to trace out
the reasons and causes of it. Some of the causes for indiscipline are: unfair practices by
management, policies and procedures of the organisations, absence of code of conduct, lack of
effective leadership, communication barriers and politicised trade unionism. Other reasons may
include intentional delay in disciplinary proceedings, imposition of punitive measures like
transfer to inconvenient place at a short notice, aggressive attitudes of trade unions etc. Whatever
be the cause, indiscipline brings a reverse effect on the morale of the workforce. Hence,
organisations ensure curative measures on the earliest symptoms of indiscipline.
Employees who cannot e self motivated to maintain discipline may require some degree of
extrinsic disciplinary action in the form of penalty or punishment. Whenever an employee is
required to be awarded any penalty, the employer either himself or through a representative,
holds disciplinary enquiry to discover as to whether the proposed penalty or dismissal is
warranted.
Disciplinary actions whether in PSUs or private sector, must confirm the following principles:
 Principle of natural justice: This means that which is founded in equity, in honesty and
right. This principle must guide all enquiries and actions. Principle of natural justice
means that no person should be appointed to conduct an enquiry who himself is interested
in the outcome, either as an aggrieved party or because he is aggressive to the person
proceeded against, or for any other reason.
 Principle of impartiality or consistency: This principle implies that under identical
situations where even the justifying situations are alike, there should be no marked
difference in the action taken.
 Principle of impersonality or consistency: The disciplinary authority should not have a
sadistic pleasure when a recalcitrant employee is brought to book.

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Steps in Disciplinary Procedure
1. Complaint and preliminary enquiry: The disciplinary procedure must be initiated by a
complaint against indiscipline of the employee concerned. Before starting the process of
discipline it is essential to hold a preliminary enquiry to know if an evident case of
indiscipline and misconduct exists or not. The management must depute a responsible
officer of the company to enquire into the misconduct. On examining both sides of the
case, the accused must be chargesheeted. If the offence committed is only of minor
magnitude, the employee may be excused or given warning orally or in writing.
2. Issue of chargesheet: Once the case of misconduct on the part of the concerned
employee is established, the management should proceed to issue a chargesheet to
him/her. A chargesheet can be issued by Appointing Authority or authority higher than
the Appointing Authority or Disciplinary Authority (DA) or by an Authority senior in
rank to the concerned employee, with the specific approval of the authorities.
Chargesheet is generally known as the ‘show cause notice’ because it is just a notice of
the charge on the employee and provides an opportunity to explain his/her conduct. It
needs to be drafted in a plain and simple language which can be understandable easily by
the employee. It should be clear and should give all the details about the charges.
3. Consideration of explanation: In this stage, the explanation of the chargesheet served
should be considered by the Disciplinary Authority as to whether the reply of the charged
employee is satisfactory or not. If the reply is found to be satisfactory, there is no need to
proceed with the disciplinary case and the chargesheet can be withdrawn showing
innocence of the employee. If the DA is not satisfied with the employee’s explanation, it
can proceed with disciplinary enquiry.
4. Suspension pending enquiry: If the charge against the offending employee is of serious
nature, a suspension order may be served on the employee along with the chargesheet. As
per the provisions of the Industrial Employment (Standing Orders) Act, 1946, the

39
suspended employee must to be paid a subsistence allowance equal to one-half of wages
for the first 90 days of suspension and three-fourth of the wages for the remaining period
of suspension. It must be noted that what is grave as a charge would be the sole judgment
of the management, and must be decided in accordance with the Code of Discipline.
5. Holding of enquiry: The enquiry should be in conformity with the principles of natural
justice, i.e; the wrong employee must be given a reasonable opportunity of being heard.
The enquiry officer records his findings in the process of an enquiry. He may also suggest
the nature of the disciplinary action to be taken.
Steps in Domestic enquiry:
i. Preparing and serving the chargesheet
ii. Supervision in serious cases
iii. Obtain reply of chargesheet
iv. Selecting enquiry officer
v. Conducting enquiry proceedings
vi. Holding of enquiry in the free environment
vii. Recording findings
viii. Submitting enquiry officer’s report to the DA
ix. Decision of the DA
x. Communication of the order of punishment
6. Order of punishment: The employer may take disciplinary action against the employee,
when the misconduct of him/her is proved. While doing so the employer may give
consideration to the employee’s previous record, precedents, effects to this action on
other employees, consulting others before awarding punishment rate. If the employee
feels that the enquiry is no proper time and action unjustified he/she must be given a
chance to make an appeal.
7. Appeal: If an employee appeals against the disciplinary action, they should be invited to
a meeting to discuss their reasons of appeal. The person hearing the appeal should be

40
more senior than the person responsible for making the decision to dismiss the
disciplinary sanction in the first instance. As is the case with the disciplinary hearing
itself, the employee must be given the right to be accompanied by a work colleague or a
trade union representative. Following the appeal meeting, the employer should write to
the employee to give them the appeal decision and state that the decision is final.
 Misconduct
Misconduct refers to any improper or unacceptable behaviour by an individual. An act of
misconduct by an employee is prejudicial to the interest of the employer and is likely to damage
its reputation.
Bhatia defines misconduct as a behaviour which is in breach of the accepted and expected norms
of conduct; it presupposes wrongful intention and is not merely an error in judgment.
As per schedule I of the Industrial Employment (Standing Orders) Act, 1946, the following acts
can be treated as workers misconduct:
 Willful insubordination or disobedience
 Theft, fraud and dishonesty in connection with the employers business or property
 Willful damage to or loss of employers goods or property
 Taking or giving bribes or any illegal gratification
 Habitual absence without leave or absence without leave for more than 10days
 Habitual late attendance
 Habitual negligence or neglect of work
 Grievance Handling
Grievance can be defined as, the dissatisfaction that occurs when an employee believes that any
condition affecting the employee is unjust, inequitable, or a hindrance to effective operation.
Britton (1982) proposes that a grievance is any dispute that arises between an employer and
employee, which relates to the implied or explicit terms of an employment agreement.

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D’Cruz (1999) defines grievance as a matter raised by an employee to express dissatisfaction
with management behaviour, and as an attempt to bring out changes.
Michael Jucius, defines grievance as any discontent or dissatisfaction, whether expressed or not,
whether valid or not, and arising out of anything connected with the company that an employee
thinks, believes, or even feels as unfair, unjust or inequitable.
A grievance is an official complaint that is raised by an employee towards an employer within
the workplace. Unexpressed grievance may lead to frustration and detachment, finally affecting
employee performance. Always the discontent or dissatisfaction is not grievance, it may initially
find expression in the form of a complaint. But if such a complaint remains unattended by the
management, an employee would eventually feel a lack of justice or fairness on the part of
management. This would increase his/her dissatisfaction, and eventually such dissatisfaction
would assume the status of a grievance. Several ways are there in which employees can express
their dissatisfaction. It can be absenteeism, indiscipline etc.
Understanding grievance is always a difficult task for the managers. Following are some
common ways which can help for grievance identification:
 Direct Observation: In this method, a manager generally observes any change in the
behaviour of subordinates affecting their performance. Examples may include,
absenteeism, indiscipline, lack of enthusiasm at work etc.
 Gripe Box: The gripe box serves as an innovative way to discover grievances. It is a
facility given to employee to file complaints about anything that is causing
dissatisfaction, maintaining their anonymity. These boxes are kept at important locations
in the organisation remises for the convenience of employees to express their feelings
about any aspect of the organisation.
 Open Door Policy: In this technique employees are encouraged to enter a managers

42
chamber and express their grievances.
 Exit Interview: An exit interview is a useful source of information. These interviews are
the interaction between the departing employee and management.
 Opinion Surveys: Management can also conduct surveys at intervals to judge the areas
in which employees may be having grievances.
Handling Employee Grievance
 Establish whether the grievance needs to be resolved formally or informally.
 Choose an appropriate manager to deal with the grievance.
 Carry out a full investigation and collect all related evidence, sending it to the employee
in advance of the meeting.
 Arrange the grievance meeting, inviting the employee and reminding them of their
statutory right to be accompanied.
 Make sure accurate notes are taken throughout by a person who is not involved in the
case.
 Give the employee the opportunity to explain the details of their grievance and what they
would like the outcome to be.
 Suspend the meeting consider the evidence before making a decision.
 Inform the employee in writing of the decision, explaining how and why the decision was
reached.
 Notify the employee of their right to appeal against the outcome of the grievance
procedure.
Grievance procedure in Indian Industry
The Model Grievance Procedure specifies the details of all the steps that are to be followed while
rectifying grievances.
These steps are:
Step 1: In this step grievance is to be submitted to departmental representative, who is a
representative of management. He has to give his answer within 48 hours.

43
Step 2: If the departmental representative fails to provide a solution, the pained employee can
take his grievance to head of the department. He has to give his decision within 3 days.
Step 3: If the aggrieved employee is not satisfied with the decision of departmental head, he can
take the grievance to the Grievance committee. This committee makes its recommendations to
the manager within 7 days in the form of a report. The final decision of the management on the
report of Grievance Committee must be communicated to the aggrieved employee within 3 days
of the receipt of the report. An appeal for review of the final decision can be made by the worker
if he is not satisfied with it. The management must communicate its decision to the employee
within 7 days.
Step 4: If the grievance still remains unsettled, the case may be referred to voluntary arbitration.
48 hours
3 Days
7 Days
7 Days
Aggrieved Employee
Departmental
Representative
Head of Department
Grievance Committee
Chief Executive
Voluntary
Arbitration
Settlement of Grievance

44
 Labour Turnover
Labour turnover is a common problem in Indian industry. Labour turnover defines the rate at
which employees leave employment. This can be evaluated by relating the number of employees
leaving their employment during a period of time to the total or average numbers employed in
that period.
Labour Turnover = Number of employees leaving during period * 100
Average number employed during period
Labour Turnover Example:
Labour Turnover = Number of employees leaving (15) * 100 = 25%
Average number employed (60)
A high labour turnover figure may cause problems for a firm due to many reasons:
 Increases recruitment costs
 Reflects poor morale in workforce and so low productivity levels
 Increases training costs of new workers
 Loss of productivity while new worker settles in
Causes of Labour turnover
Avoidable causes are
i. Lower Wages: Workers may be dissatisfied with low wages and may leave the
XYZ Ltd. is a manufacturing company. Last year it employed an average of 60 staff. During
last year the business recruited 12 staff to replace 15who left.

45
organisation.
ii. Bad working conditions: Working conditions may be poor and may lead for high
employee turnover.
iii. Dissatisfaction with the job: A worker may be forced to do a job if the preferable job is
not available for the time being. This may lead for employee turnover.
iv. Lack of Medical, Recreational and other facilities: Lack of adequate medical,
recreational facilities may lead for high employee turnover.
v. Improper manpower planning: If the planning of manpower in an organisation is not
proper, that may lead to employee turnover.
Unavoidable causes are
Administrative Causes:
 Massacre of service due to disobedience, indiscipline etc
 Economizing due to shortage of resources, low demand for recession
i. Personal Causes:
 Change for better job
 Death
 Retirement
 Change for better environment
 Change for secured job
 Domestic need and responsibility
 Marriage, especially for women workers
Measurement of Labour Turnover
 Separation Method:
No. of workers left during the period * 100
Average no. of workers in the same period

46
 Replacement Method:
No. of workers replaced during the period * 100
 Flux Method:
No. of workers left + No. of Replacements * 100
 Absenteeism
Each employer expects employees to be present for work as per the timings fixed. The pattern or
habit of an employee missing work without good reason is absenteeism. Any change from the
fixed time reporting results in loss to the organisation.
Types of Absenteeism
 Authorised Absenteeism
 Unauthorised Absenteeism
 Wilful Absenteeism
 Absenteeism caused by circumstances beyond one’s control
Features
 The rate of absenteeism varies from department to department.
 Absenteeism is high among the employees below 25 and above 40 years of age.
 Rate of absenteeism varies from department to department.
 Absenteeism in traditional industries is seasonal.
Causes of Absenteeism
 Low level of wages
 Unhealthy conditions
 Poor welfare facilities
 Inadequate leave facilities
 Unstability with working conditions and job demands
 Inadequate leave facilities
 Alcoholism
Categories of Absenteeism
Entrepreneurs: This category of absenteeism considers that their job is very small for their total
interest.

47
Epicureans: This type does not like to take the jobs which demand initiative, discipline and
responsibility.
Family – oriented: This class is often identified with family activities.
Sick and Old: This category is mostly unhealthy.
Status Seekers: This type enjoys the assigned social status and keen in maintaining it.
Calculation of Absenteeism Rate
Absenteeism can be calculated using the following formula:
 Absenteeism Rate = Number of mandays lost * 100
No. of mandays scheduled to work
 Frequency Rate = Total no. of times in which the leave was availed * 100
Total no. of mandays scheduled to work
 Severity Rate = Total no. of days absent during a period * 100
Total no. of times absent during the period
Some Measures to minimize Absenteeism
 Provision of proper working conditions: Main causes of absenteeism are unhealthy
working conditions. There should be proper facilities at work like canteens, rests rooms
etc so that workers do not feel exhausted at work place.
 Proper selection procedure: Another reason for absenteeism is improper selection,
training and recruitment. When the workers are forced to occupy a space in the job then
they will try to absent.
 Reasonable wage rates: The wages given to the workers should be sufficient in order to
maintain a reasonable standard of living. It should be fixed in view of requirements of
workers.
 Proper Grievance settlement: Sometimes workers may feel that their grievances are not
properly looked into and this may lead to absenteeism. There should be proper grievance
handling mechanism for the workers. If a proper method is there, then the absenteeism
can be minimised.
 Prevention of Accidents: There is a direct relationship between absenteeism and
accidents. If the working environment is safe then occurrence of accidents will be less
and hence absenteeism can be reduced.
 Liberal grant of leave: The strict attitude of management in granting leave may lead to
absenteeism. So the attitude of management should be liberal in granting leave when the

48
workers reason for leave is genuine.
 Cordial relations at work: The stressed relations between supervisors and workers may
also lead to absenteeism. The supervisors should motivate workers for improving their
performance.
 Maintaining Discipline: If the discipline should be properly maintained by the
employees based on the rules and regulations, absenteeism can be reduced.
WORKER’S PARTICIPATION IN MANAGEMENT
Worker’s participation in management is an important ingredient of democracy. The concept of
Worker’s participation in management (WPM) means involvement of non-managerial employees
in the decision making process of the organisation. Worker’s participation is also known as
labour participation or employee participation in management.
According to Keith Davis, WPM refers to the mental and emotional involvement of a person in a
group situation which encourages him to contribute to group goals and share the responsibility of
achievement.
According to Walpole, WPM gives the worker a sense of importance, pride and accomplishment;
it gives him the freedom of opportunity for self- expression; a feeling of belongingness with the
pace of work and a sense of workmanship and creativity.
 Worker’s participation is a system where workers and management share important
informations with each other and participate in decision taking.
 WPM is a system of consultation and communication, either informal or formal, by
which employees of an organisation are kept informed about the affairs of the
undertaking and through which they express their opinion and contribute to the
management decisions.
 WPM implies emotional and mental involvement of employees in the management of the
organisation.
 WPM is considered as a mechanism where workers have a say in the decision.
 WPM is based on Human Relations approach to Management which brought about a new
set of values to labour and management.
Objectives of WPM
 Raise the level of motivation of workers.
 Giving employees a better understanding of their role in the working of industry and
process of production.
 Establish industrial democracy and peace.

49
 Counter balance power of managers.
 Development of leaders from within the organisation.
The implication of WPM is summarized by International Labour organisation as:
i. Workers have ideas which can be useful.
ii. Workers may accept decisions better if they participate in them.
iii. Workers may work harder if they participate in decisions that affect them.
Need for WPM
 Reduced Industrial Unrest: Employee participation cuts the root of industrial conflict.
 Reduced Misunderstanding: WPM helps in eliminating employee’s misunderstanding
about management in industry.
 Increased Organisation Balance: Employee participation leads to increased
understanding in the organisation, hence the result is a balanced organisation.
 Higher Productivity: Productivity of an organisation can be increased only when there
exists fullest cooperation between the employer and employee.
 Increased Commitment: WPM allows individuals to express themselves at the
workplace which leads to increased commitment.
 Industrial Democracy: WPM also serves as a support to political democracy.
 Development of Individuals: WPM provides the employees an opportunity to direct
their initiative and creativity towards the objectives of the growth.
Levels of Management Participation
 Informative participation: This ensures that employees are able to receive information
and express their views relating to the matter of general economic importance.
 Consultative Importance: Here, employees are consulted on the matters of employee
welfare such as work, safety and health.
 Associative Participation: In this method the managers and workers jointly take
decisions.
 Administrative Participation: This method ensures greater share of worker’s
participation in release of managerial functions.
 Decisive Participation: In this decisions are jointly taken on the matters relating to

50
production, welfare etc.
INTERNATIONAL LABOUR ORGANISATION
International labour organisation (ILO) is a tripartite body which gives an equal voice to
Employer, Employee and Government to jointly shape policies and programmes.
ILO aims to promote descent work throughout the world.
ILO is devoted in promoting social justice and internationally recognized human and labour
rights, pursuing its founding mission that social justice is essential to universal and lasting peace.
History of ILO
The ILO was founded in April 1919 mainly in response to humanitarian concern over the
condition of workers who were being exploited with no consideration for their family lives, their
health or their professional and social advancement.
Objectives
 Full employment and rising of living.
 Protection for the health and life of workers in all occupation.
 Assurance of excellent education.
 Facility for child welfare and maternity protection.
 Generate greater opportunity for women and men to secure descent employment and
income.
 Strengthen tripartism and social dialogue.
 Effective recognition of the right of collective bargaining.
Structure of ILO
ILO
International Governing Body International Labour
Labour Conference Office
(ILC)

51
 International Labour Conference (ILC)
Apex body of ILO is ILC. ILO makes labour policies for international labour. The ILC holds its
meeting at a frequency not less than once in a year. The representatives from three groups viz.
the government, employers and employees attend ILC sessions in the ratio 2:1:1. Each
representative has a vote. The representatives from the Government are Mostly ministers,
diplomats or officials.
The conference is permitted to appoint committees to deal with different matters relating to
labour during each session. Examples of such committees are Selection Committee, Credential
Committee, Resolution Committee, Drafting Committee, Finance Committee etc. All committees
are tripartite except the Finance Committee.
The functions performed by the ILC are to:
1. Formulate international labor standards.
2. Fix the amount of contribution to be paid by the member states.
3. Decide budget and submit the same to the Governing Body.
4. Study the labor problems submitted by the Director General and assist
in their solutions.
5. Appoint committees to deal with different problems during its sessions.
6. Elect the president.
7. Select members of the Governing Body.
8. Develop policies and procedures.
9. Seek advisory opinion from International Committee of Justice.
10. Confirm the functions, powers and procedure of Regional Conference.
2. Governing Body:
It is also a tripartite body. It implements decisions of the ILC with the help of the International
Labor Organization. It consists of 56 members in the same ratio of 2:1:1, i.e. 28 representatives
of the Government, 14 of the employers and 14 of the workers. Out of the 28 representatives of
the Government, 10 are appointed by the members of the States of Chief Industrial Importance
and remaining 18 are representatives of the other governments.
Industrial population is the criteria for Industrial importance. India is one of the ten states of
chief Industrial importance. The tenure of the office of this body is 3 years. It meets repeatedly
in a year to take decisions on the programmes of the ILO.
The functions of the Governing Body are to:
1. Co-ordinate work between the ILC and ILO.
2. Prepare agenda for each session of the ILC.
3. Appoint the Director General of the office.
4. Scrutinize the budget.
5. Follow up with member states in regard to implementation of the
conventions and recommendations adopted by the ILC.

52
6. Fix the date, duration, schedule and agenda for the Regional Conferences
7. Seek as and when required, advisory opinion from the International Court of
Justice with the permission of the ILC.
3. International Labor Office:
This is the secretariat of the ILO in Geneva and is the third major organ of the ILO. The
Director General (DG) of the ILO is the Chief Executive Officer of the Secretariat, who is
appointed by the Governing Body. He also serves as the Secretary General of the ILC. His
tenure is for 10 years and extendable by the Governing Body.
The Director General is assisted by two Deputy Director Generals, six Assistant Director
Generals, one Director of the International Institute of Labor Studies, and one Director of the
International Centre for Advanced Technical and Vocational Training, Advisors, Chief of
Divisions from 100 nations.
Following are the main functions of this office:
1. Prepare briefs and documents for agenda of ILC.
2. Assist the Governments of the States to form labor legislation
based on recommendations of the ILC.
3. Bring out publications relating to industrial labor problems of international
nature and interest.
4. Carry out functions related to the observance of the conventions.
5. Collect and distribute information on international labor and social problems.
TECHNOLOGICAL CHANGE IN INDUSTRIAL RELATIONS
Technological change may be defined as “the process by which economies change over time in
respect of the products they produce and the processes used to produce them” (Stoneman, 1983).
These changes may involve any change in process or equipment, with the application of
knowledge and skills which results in an important alteration in the relationship between capital,
labour and raw materials.
Positive Impact of Technological Changes
 Labour savings
 Improves level of earnings
 Higher productivity
 Reduction in cost and increases in benefits
 Product standardization
Negative Impact of Technological Changes
 Occupational adjustment

53
 Idleness
 Allocation of gains
 Resistance to change with the help of Strikes, absenteeism, resignations etc
 Job satisfaction
 Transfer and retraining problems
 Worker and Union reactions
 Creating new jobs to replace old ones
Impact of technological changes leads to:
 Employment Issues: Business alliances, E- recruitment, Jobs become intellectual.
 Management Strategy: Corporate restructuring, planning for change well in advance,
Participation of employees.
 Trade Union response: Fear of losing jobs, Fear of losing comfort in an organisation.
Impact of Technology in Employees
Technology has created new jobs for people, but many believe that the influence of technology
on destroying jobs is more important than creating them. Development of technology has a great
influence in the workplace with increased efficiency, performance and productivity and at the
same time eliminates the risk of human errors.
Some other impacts are as follows:
 Efficiency: Technology can improve the way employees do their jobs. Impact of
technology makes employees more efficient and free from risks. This also strengthens
performance and hence improves job satisfaction. When used efficiently, technology
improves accuracy. For complex tasks such as spreadsheets, reports and presentations,
technology can noticeably reduce the time to create documents.
 Communication: Once used telephone and fax are now replacing laptops and tablets for
communication purpose in the workplace.
 Improve performance and accuracy: Technology makes work process computerized
which improves performance and accuracy by reducing risks.
 More production creates more jobs: With the impact of technology, productivity of the
organisations increases and the companies offers more jobs and better pays.
 Online guidance for employees: Latest technologies provide online guidance for
employees.

54
 Distance Education: A new way to provide training and education to more groups and to
employees in physical distance.
Impact of Technology in Management
Impact of technology will force changes in basic managerial functions. There will be increased
responsibility in management for organisation giving more emphasis on planning, decision
making, control and coordination. Efficient managers get people to accomplish goals and use
materials intelligently to achieve profitability and maintain a competitive advantage. Advances in
technology have enabled automation, globalization and standardization.
Impact of technology can help the managers to plan their human resources. Managers can access
the profiles and work histories of employees in intranet to identify people with the skills needed
to offer expert advice or join a project team.
Communication networks help management of the organisation to access and share the same
data, which was previously available only to people within individual departments. Due to the
impact of technology, management can also use tools like videoconferencing and internet forums
to share data and can carry out joint planning exercises.
Impact of technology helps the management to gather external data from sales teams, branch
offices, suppliers, retail outlets and logistics patters.
Impact of Technology in Trade Union
Trade unions generally are obstacles to technological changes.
Reasons for opposition:
 More difficult to organise workers.
 More difficult to bargain with the management.
 More difficult to represent workers interests.
 More difficult for timely decision making.
 Workers do not show interest in trade union actions and activities.
 Fear of unemployment and loss of membership.
Reasons for positive response:
 Technology internationalizes trade union movement.
 Helps to mobilize workers globally with a speed and effectiveness.
 Allows trade unions to go much beyond its traditional boundaries.
 Provides more visibility and accountability.
 Provides more awareness on union policies, programmes and activities.
 Provides better participation in trade union activities and campaigns.
 Easier for unions to have alliances with other unions domestically and internationally.

55
HUMAN RESOURCE MANAGEMENT AND INDUSTRIAL RELATIONS
Human resource management (HRM) is the overall management of all resources including staff,
workers, executives, top management and even customers and suppliers. Employer and
employees are the two parties involved in HRM. This prepares the policies, objectives,
procedures and programs of human resources and implements them. It is the management that is
exclusively seen as being responsible for organisation efficiency or inefficiency. The
management seeks to establish a cost effective system of labour management.
Whereas, Industrial relations (IR) sees the management, employees, trade unions and
government as being equal partners in shaping the direction of the firm. Proper implementation
of HRM policies results in smooth IR.
Although the two fields, HRM and IR have differing interests, there are many areas where their
interests happen together. Eventually both the fields are concerned with achieving organisational
efficiency by maintaining peace, harmony and work relations in the organisation
 Management Approach:
Following are some principles that are to be followed by the management:
 The principle of co-ordination: The need for people to act together with unity of action,
need for discipline and the exercise of authority.
 The scalar principle: The hierarchy of organisation, the grading of duties, the process of
allocation.
 The functional principle: distinction and the specialisation between different kinds of
duties.
 Traditional Approach:
Traditional approach focuses on efficient activities such as human resource planning, job
analysis, recruitment and selection, maintaining employee relations, performance appraisals,
training and development and compensation management. This also focuses on establishing

56
procedures, policies, contracts and guidelines to drive employee performance and achieve
organisational goals.
The traditional approach aims at encouraging the employees through direct methods such as
incentives, pay, rewards, job simplification. This approach helps the employees to improve
performance.
Another important activity of this approach is monitoring and supervision of the workforce to
ensure compliance to the established rules, procedures, guidelines and contracts.
 Human Relation Approach
Human resource approach is an important approach followed by the management of an
organisation for maintaining smooth industrial relation.
Human resource or employees of an organisation want freedom of speech, of thought of
expression, of movement etc. When employers treat them as inorganic objects, problems arise.
Major problems in industrial relations arise because of employer’s pressures and worker’s
reactions, protests and resistance to these pressures through protective mechanisms in the form of
worker’s organisation, associations and trade unions. Therefore, management realise that efforts
are made to set right the situation. Services of specialists such as psychologists, industrial
engineers, human relations expert and personal managers are used to deal with such problems.
Conflicts cannot be resolved unless the management must learn or know what the basic needs of
the workforce are.

57
STRIKES AND LOCKOUT
A strike is a powerful way to change your workplace and secure better wages and benefits. One
must plan and budget carefully for the strike to be successful. Only members of a recognised
labour union can go on strike. For a nonunion employee, there are other ways to negotiate with
the employer, such as by forming employee committees.
Definitions:
 A strike is a situation in which the employees act in concert for stopping or refusing to
continue work.
 Strike is a refusal of work organised by a body of employees as a form of protest, typically in
an attempt to gain concession from their employer.
 Strike or Labour strike is a work stoppage caused by the mass refusal of employees to work.
 A strike usually takes place in response to employee grievances.
 Strike involves, dropping out of work by any number of workers, employed in a particular
industry, with an aim of creating pressure on the employers, to accept their demands relating
to pay scale, working conditions and trade practices.
 A strike is a refusal to work by employees acting with a common purpose.
 The usual purpose of a strike is to compel an employer to agree to terms and conditions of
employment.
 Strike is a legal action taken by employees against their employer over disputes such as wage
demands.
3. Strikes, Lockout, Lay-
off & Retrenchment

58
 Strike means a pause of work by a body of persons employed in any industry acting in
combination or a concerted refusal or a refusal under a common understanding, of any
number of persons who are or have been so employed to continue to work or to accept
employment.
 The employees, when striking don’t go to work and instead form a picket outside their
workplace so people realise a strike is going on.
Strikes can occur because of the following reasons:
 Salary and incentive problems.
 Dissatisfaction with company policy.
 Withdrawal of any concession or privilege.
 Wrongful discharge or dismissal of workmen.
 Dispute connected with minimum wages.
 Hours of work and rest intervals.
Strikes arise due to:
 Economic condition: This type is meant to improve wages and benefits.
 Labour Practices: This type is to improve working conditions.
Types of Strikes
I. On the basis of Consent of Union:
 Authorised Strikes: Strikes which are called with the consent of the union are authorised
strikes.
 Unauthorised Strikes: Popularly known as, lighting strike or wildcat strike. This type is
an unofficial strike, which is called without giving proper notice to the employer. Such
strikes are prohibited in public utility services under the Industrial Disputes Act, 1947.
II. On the basis of Tactics Used to Halt Work:

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