Industrial Relations

Industrial relations is used to denote the collective relationships between management and the workers.
Traditionally, the term industrial relations is used to cover such aspects of industrial life as trade unionism,
collective bargaining, workers’ participation in management, discipline and grievance handling, industrial disputes
and interpretation of labor laws and rules and code of conduct.

In the words of Lester, "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”.
The National Commission on Labor (NCL) also emphasize on the same concept. According to NCL, industrial
relations affect not merely the interests of the two participants- labor and management, but also the economic
and social goals to which the State addresses itself. To regulate these relations in socially desirable channels is a
function, which the State is in the best position to perform.

In fact, industrial relation encompasses all such factors that influence behavior of people at work. A few such
important factors are below:

Institution: It includes government, employers, trade unions, union federations or associations, government
bodies, labor courts, tribunals and other organizations which have direct or indirect impact on the industrial
relations systems.

Characters: It aims to study the role of workers unions and employers’ federations officials, shop stewards,
industrial relations officers/ manager, mediator/conciliators / arbitrator, judges of labor court, tribunal etc.

Methods: Methods focus on collective bargaining, workers’ participation in the industrial relations schemes,
discipline procedure, grievance redressal machinery, dispute settlements machinery working of closed shops,
union reorganization, organizations of protests through methods like revisions of existing rules, regulations,
policies, procedures, hearing of labor courts, tribunals etc.

Contents: It includes matter pertaining to employment conditions like pay, hours of works, leave with wages,
health, and safety disciplinary actions, lay-off, dismissals retirements etc., laws relating to such activities,
regulations governing labor welfare, social security, industrial relations, issues concerning with workers’
participation in management, collective bargaining, etc.

INTRODUCTION TO INDUSTRIAL RELATIONS

Industrial relations has become one of the most delicate and complex problems of modern industrial society.
Industrial progress is impossible without cooperation of labors and harmonious relationships. Therefore, it is in
the interest of all to create and maintain good relations between employees (labor) and employers
(management).

Concept of Industrial Relations:

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

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

The term industrial relations has a broad as well as a narrow outlook. Originally, industrial relations was broadly
defined to include the relationships and interactions between employers and employees. From this perspective,
industrial relations covers all aspects of the employment relationship, including human resource management,
employee relations, and union-management (or labor) relations. Now its meaning has become more specific and
restricted. Accordingly, industrial relations pertains to the study and practice of collective bargaining, trade
unionism, and labor-management relations, while human resource management is a separate, largely distinct
field that deals with nonunion employment relationships and the personnel practices and policies of employers.

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

GLOSAARY OF IR
Industry:
Industrial Disputes Act 1947 defines an industry as any systematic activity carried on by co-operation between an
employer and his workmen for the production, supply or distribution of goods or services with a view to satisfy
human wants or wishes whether or not any capital has been invested for the purpose of carrying on such activity;
or such activity is carried on with a motive to make any gain or profit. Thus, an industry is a whole gamut of
activities that are carried on by an employer with the help of his employees and labors for production and
distribution of goods to earn profits.

Employer:

An employer can be defined from different perspectives as:-

• a person or business that pays a wage or fixed payment to other person(s) in exchange for the services
of such persons.
• a person who directly engages a worker/employee in employment.
• any person who employs, whether directly or through another person or agency, one or more
employees in any scheduled employment in respect of which minimum rates of wages have been fixed.
As per Industrial Disputes Act 1947 an employer means:-
• in relation to an industry carried on by or under the authority of any department of [the Central
Government or a State Government], the authority prescribed in this behalf, or where no authority is
prescribed, the head of the department;
• in relation to an industry carried on by or on behalf of a local authority, the chief executive officer of
that authority;

Employee: -

• Employee is a person who is hired by another person or business for a wage or fixed payment in
exchange for personal services and who does not provide the services as part of an independent
business.
• An employee is any individual employed by an employer.
• A person who works for a public or private employer and receives remuneration in wages or salary by
his employer while working on a commission basis, piece-rates or time rate.
• Employee, as per Employee State Insurance Act 1948, is any person employed for wages in or in
connection with work of a factory or establishment to which the act applies.

In order to qualify to be an employee, under ESI Act, a person should belong to any of the categories:

o those who are directly employed for wages by the principal employer within the premises or outside in
connection with work of the factory or establishment.
o those employed for wages by or through an immediate employer in the premises of the factory or
establishment in connection with the work thereof
o those employed for wages by or through an immediate employer in connection with the factory or
establishment outside the premises of such factory or establishment under the supervision and control
of the principal employer or his agent.
o employees whose services are temporarily lent or let on hire to the principal employer by an immediate
employer under a contract of service (employees of security contractors, labor contractors, house
keeping contractors etc. come under this category).

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

Labor market:

The market in which workers compete for jobs and employers compete for workers. It acts as the external
source from which organizations attract employees. These markets occur because different conditions
characterize different geographical areas, industries, occupations, and professions at any given time.

INDUSTRAIL Relations system

 An industrial relations system consists of the whole gamut of relationships between employees and
employees and employers which are managed by the means of conflict and cooperation.

A sound industrial relations system is one in which relationships between management and employees (and
their representatives) on the one hand, and between them and the State on the other, are more harmonious
and cooperative than conflictual and creates an environment conducive to economic efficiency and the
motivation, productivity and development of the employee and generates employee loyalty and mutual trust.

Actors in the IR system:

Three main parties are directly involved in industrial relations:

Employers: Employers possess certain rights vis-à-vis labors. They have the right to hire and fire them.
Management can also affect workers’ interests by exercising their right to relocate, close or merge the
factory or to introduce technological changes.

Employees: Workers seek to improve the terms and conditions of their employment. They exchange views
with management and voice their grievances. They also want to share decision making powers of
management. Workers generally unite to form unions against the management and get support from these
unions.

Government: The central and state government influences and regulates industrial relations through laws,
rules, agreements, awards of court ad the like. It also includes third parties and labor and tribunal courts.

SCOPE:

The concept of industrial relations has a very wide meaning and connotation. In the narrow sense, it means
that the employer, employee relationship confines itself to the relationship that emerges out of the day to
day association of the management and the labor. In its wider sense, industrial relations include the
relationship between an employee and an employer in the course of the running of an industry and may
project it to spheres, which may transgress to the areas of quality control, marketing, price fixation and
disposition of profits among others.

The scope or industrial relations is quite vast. The main issues involved here include the following:

1. Collective bargaining

2. Machinery for settlement of industrial disputes

 3. Standing orders

4. Workers participation in management

5. Unfair labor practices

IMPORTANCE OF IR

The healthy industrial relations are key to the progress and success. Their significance may be discussed as under
–

 Uninterrupted production – The most important benefit of industrial relations is that this ensures continuity of
production. This means, continuous employment for all from manager to workers. The resources are fully utilized,
resulting in the maximum possible production. There is uninterrupted flow of income for all. Smooth running of
an industry is of vital importance for several other industries; to other industries if the products are
intermediaries or inputs; to exporters if these are export goods; to consumers and workers, if these are goods of
mass consumption.

Reduction in Industrial Disputes – Good industrial relations reduce the industrial disputes. Disputes are reflections
of the failure of basic human urges or motivations to secure adequate satisfaction or expression which are fully
cured by good industrial relations. Strikes, lockouts, go-slow tactics, gherao and grievances are some of the
reflections of industrial unrest which do not spring up in an atmosphere of industrial peace. It helps promoting
co-operation and increasing production.

 High morale – Good industrial relations improve the morale of the employees. Employees work with great zeal
with the feeling in mind that the interest of employer and employees is one and the same, i.e. to increase
production. Every worker feels that he is a co-owner of the gains of industry. The employer in his turn must
realize that the gains of industry are not for him along but they should be shared equally and generously with his
workers. In other words, complete unity of thought and action is the main achievement of industrial peace. It
increases the place of workers in the society and their ego is satisfied. It naturally affects production because
mighty co-operative efforts alone can produce great results.

 Mental Revolution – The main object of industrial relation is a complete mental revolution of workers and
employees. The industrial peace lies ultimately in a transformed outlook on the part of both. It is the business of
leadership in the ranks of workers, employees and Government to work out a new relationship in consonance
with a spirit of true democracy. Both should think themselves as partners of the industry and the role of workers
in such a partnership should be recognized. On the other hand, workers must recognize employer’s authority. It
will naturally have impact on production because they recognize the interest of each other.

 Reduced Wastage – Good industrial relations are maintained on the basis of cooperation and recognition of
each other. It will help increase production. Wastages of man, material and machines are reduced to the
minimum and thus national interest is protected.

Thus, it is evident that good industrial relations is the basis of higher production with minimum cost and higher
profits. It also results in increased efficiency of workers. New and new projects may be introduced for the welfare
of the workers and to promote the morale of the people at work. An economy organized for planned production
and distribution, aiming at the realization of social justice and welfare of the massage can function effectively
only in an atmosphere of industrial peace. If the twin objectives of rapid national development and increased
social justice are to be achieved, there must be harmonious relationship between management and labor.

OBJECTIVES OF IR

The main objectives of industrial relations system are:-

 To safeguard the interest of labor and management by securing the highest level of mutual understanding and
good-will among all those sections in the industry which participate in the process of production.
 To avoid industrial conflict or strife and develop harmonious relations, which are an essential factor in the
productivity of workers and the industrial progress of a country.

 To raise productivity to a higher level in an era of full employment by lessening the tendency to high turnover
and frequency absenteeism.
 • To establish and promote the growth of an industrial democracy based on labor partnership in the
sharing of profits and of managerial decisions, so that ban individuals personality may grow its full
stature for the benefit of the industry and of the country as well.
• To eliminate or minimize the number of strikes, lockouts and gheraos by providing reasonable wages,
improved living and working conditions, said fringe benefits.
• To improve the economic conditions of workers in the existing state of industrial managements and
political government.
• Socialization of industries by making the state itself a major employer
• Vesting of a proprietary interest of the workers in the industries in which they are employed.

Dunlop's Contribution To Industrial Relations

One of the significant theories of industrial labor relations was put forth by John Dunlop in the 1950s. According
to Dunlop industrial relations system consists of three agents – management organizations, workers and
formal/informal ways they are organized and government agencies. These actors and their organizations are
located within an environment – defined in terms of technology, labor and product markets, and the distribution
of power in wider society as it impacts upon individuals and workplace. Within this environment, actors interact
with each other, negotiate and use economic/political power in process of determining rules that constitute the
output of the industrial relations system. He proposed that three parties—employers, labor unions, and
government-- are the key actors in a modern industrial relations system. He also argued that none of these
institutions could act in an autonomous or independent fashion. Instead they were shaped, at least to some
extent, by their market, technological and political contexts.

Thus it can be said that industrial relations is a social sub system subject to three environmental constraints- the
markets, distribution of power in society and technology.

Dunlop's model identifies three key factors to be considered in conducting an analysis of the management-labor
relationship:

1. Environmental or external economic, technological, political, legal and social forces that impact
employment relationships.
2. Characteristics and interaction of the key actors in the employment relationship: labor, management,
and government.
3. Rules that are derived from these interactions that govern the employment relationship.

Dunlop emphasizes the core idea of systems by saying that the arrangements in the field of industrial relations
may be regarded as a system in the sense that each of them more or less intimately affects each of the others so
that they constitute a group of arrangements for dealing with certain matters and are collectively responsible for
certain results”.

In effect - Industrial relations is the system which produces the rules of the workplace. Such rules are the
product of interaction between three key “actors” – workers/unions, employers and associated organizations and
government

The Dunlop’s model gives great significance to external or environmental forces. In other words, management,
labor, and the government possess a shared ideology that defines their roles within the relationship and provides
stability to the system.

Unitary Perspective

In unitarism, the organization is perceived as an integrated and harmonious system, viewed as one happy family.
A core assumption of unitary approach is that management and staff, and all members of the organization share
the same objectives, interests and purposes; thus working together, hand-in-hand, towards the shared mutual
goals. Furthermore, unitarism has a paternalistic approach where it demands loyalty of all employees. Trade
unions are deemed as unnecessary and conflict is perceived as disruptive.

From employee point of view, unitary approach means that:

• Working practices should be flexible. Individuals should be business process improvement oriented,
multi-skilled and ready to tackle with efficiency whatever tasks are required.
 • If a union is recognized, its role is that of a further means of communication between groups of staff
and the company.
• The emphasis is on good relationships and sound terms and conditions of employment.

• Employee participation in workplace decisions is enabled. This helps in empowering individuals in their
roles and emphasizes team work, innovation, creativity, discretion in problem-solving, quality and
improvement groups etc.
• Employees should feel that the skills and expertise of managers supports their endeavors.

From employer point of view, unitary approach means that:

• Staffing policies should try to unify effort, inspire and motivate employees.
• The organization's wider objectives should be properly communicated and discussed with staff.
• Reward systems should be so designed as to foster to secure loyalty and commitment.
• Line managers should take ownership of their team/staffing responsibilities.
• Staff-management conflicts - from the perspective of the unitary framework - are seen as arising from
lack of information, inadequate presentation of management's policies.
• The personal objectives of every individual employed in the business should be discussed with them and
integrated with the organization’s needs.

Pluralistic-Perspective

In pluralism the organization is perceived as being made up of powerful and divergent sub-groups - management
and trade unions. This approach sees conflicts of interest and disagreements between managers and workers
over the distribution of profits as normal and inescapable. Consequently, the role of management would lean less
towards enforcing and controlling and more toward persuasion and co-ordination. Trade unions are deemed as
legitimate representatives of employees. Conflict is dealt by collective bargaining and is viewed not necessarily as
a bad thing and if managed could in fact be channeled towards evolution and positive change.Realistic managers
should accept conflict to occur. There is a greater propensity for conflict rather than harmony.

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

The implications of this approach include:

• The firm should have industrial relations and personnel specialists who advise managers and provide
specialist services in respect of staffing and matters relating to union consultation and negotiation.

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

• Union recognition should be encouraged and union representatives given scope to carry out their
representative duties

• Comprehensive collective agreements should be negotiated with unions

Marxist Perspective
This view of industrial relations is a by product of a theory of capitalist society and social change. Marx argued
that:

 Weakness and contradiction inherent in the capitalist system would result in revolution and the ascendancy of
socialism over capitalism.

 Capitalism would foster monopolies.

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

 Capitalists and workers would compete/be in contention to win ground and establish their constant win-lose
struggles would be evident.
This perspective focuses on the fundamental division of interest between capital and labor, and sees workplace
relations against this background. It is concerned with the structure and nature of society and assumes that the
conflict in employment relationship is reflective of the structure of the society. Conflict is therefore seen as
inevitable and trade unions are a natural response of workers to their exploitation by capital.

COLLECTIVE BARGAINING

Bargaining Form And Tactics

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

bargaining: It involves haggling over the distribution of surplus. Under it, the economic issues like wages, salaries
and bonus are discussed. In distributive bargaining, one party’s gain is another party’s loss. This is most
commonly explained in terms of a pie. Disputants can work together to make the pie bigger, so there is enough
for both of them to have as much as they want, or they can focus on cutting the pie up, trying to get as much as
they can for themselves. In general, distributive bargaining tends to be more competitive. This type of bargaining
is also known as conjunctive bargaining.

Integrative bargaining:
This involves negotiation of an issue on which both the parties may gain, or at least neither party loses. For
example, representatives of employer and employee sides may bargain over the better training programme or a
better job evaluation method. Here, both the parties are trying to make more of something. In general, it tends
to be more cooperative than distributive bargaining. This type of bargaining is also known as cooperative
bargaining.

Attitudinal restructuring:
This involves shaping and reshaping some attitudes like trust or distrust, friendliness or hostility between labor
and management. When there is a backlog of bitterness between both the parties, attitudinal restructuring is
required to maintain smooth and harmonious industrial relations. It develops a bargaining environment and
creates trust and cooperation among the parties.

Intra-organizational bargaining:
It generally aims at resolving internal conflicts. This is a type of maneuvering to achieve consensus with the
workers and management. Even within the union, there may be differences between groups. For example, skilled
workers may feel that they are neglected or women workers may feel that their interests are not looked after
properly. Within the management also, there may be differences. Trade unions maneuver to achieve consensus
among the conflicting groups.

Characterstics Of Collective Bargaining

 It is a group process, wherein one group, representing the employers, and the other, representing the
employees, sit together to negotiate terms of employment.

 Negotiations form an important aspect of the process of collective bargaining i.e., there is considerable scope
for discussion, compromise or mutual give and take in collective bargaining.

 Collective bargaining is a formalized process by which employers and independent trade unions negotiate
terms and conditions of employment and the ways in which certain employment-related issues are to be
regulated at national, organizational and workplace levels.

• Collective bargaining is a process in the sense that it consists of a number of steps. It begins with the
presentation of the charter of demands and ends with reaching an agreement, which would serve as the
basic law governing labor management relations over a period of time in an enterprise. Moreover, it is
flexible process and not fixed or static. Mutual trust and understanding serve as the by products of
harmonious relations between the two parties.

• It a bipartite process. This means there are always two parties involved in the process of collective
bargaining. The negotiations generally take place between the employees and the management. It is a
form of participation.

• Collective bargaining is a complementary process i.e. each party needs something that the other party
has; labor can increase productivity and management can pay better for their efforts.

• Collective bargaining tends to improve the relations between workers and the union on the one hand
and the employer on the other.
 • Collective Bargaining is continuous process. It enables industrial democracy to be effective. It uses
cooperation and consensus for settling disputes rather than conflict and confrontation.

• Collective bargaining takes into account day to day changes, policies, potentialities, capacities and
interests.

• It is a political activity frequently undertaken by professional negotiators.

Collective Bargaining Process

Collective bargaining generally includes negotiations between the two parties (employees’ representatives and
employer’s representatives). Collective bargaining consists of negotiations between an employer and a group of
employees that determine the conditions of employment. Often employees are represented in the bargaining by a
union or other labor organization. The result of collective bargaining procedure is called the collective bargaining
agreement (CBA). Collective agreements may be in the form of procedural agreements or substantive
agreements. Procedural agreements deal with the relationship between workers and management and the
procedures to be adopted for resolving individual or group disputes.

This will normally include procedures in respect of individual grievances, disputes and discipline. Frequently,
procedural agreements are put into the company rule book which provides information on the overall terms and
conditions of employment and codes of behavior. A substantive agreement deals with specific issues, such as
basic pay, overtime premiums, bonus arrangements, holiday entitlements, hours of work, etc. In many
companies, agreements have a fixed time scale and a collective bargaining process will review the procedural
agreement when negotiations take place on pay and conditions of employment

The collective bargaining process comprises of five core steps:

1. Prepare: This phase involves composition of a negotiation team. The negotiation team should consist of
representatives of both the parties with adequate knowledge and skills for negotiation. In this phase
both the employer’s representatives and the union examine their own situation in order to develop the
issues that they believe will be most important. The first thing to be done is to determine whether there
is actually any reason to negotiate at all. A correct understanding of the main issues to be covered and
intimate knowledge of operations, working conditions, production norms and other relevant conditions is
required.

2. Discuss: Here, the parties decide the ground rules that will guide the negotiations. A process well begun
is half done and this is no less true in case of collective bargaining. An environment of mutual trust and
understanding is also created so that the collective bargaining agreement would be reached.

3. Propose: This phase involves the initial opening statements and the possible options that exist to
resolve them. In a word, this phase could be described as ‘brainstorming’. The exchange of messages
takes place and opinion of both the parties is sought.

4. Bargain: negotiations are easy if a problem solving attitude is adopted. This stage comprises the time
when ‘what ifs’ and ‘supposals’ are set forth and the drafting of agreements take place.
5. Settlement: Once the parties are through with the bargaining process, a consensual agreement is
reached upon wherein both the parties agree to a common decision regarding the problem or the issue.
This stage is described as consisting of effective joint implementation of the agreement through shared
visions, strategic planning and negotiated change.
 Importance Of Collective Bargaining
Collective bargaining includes not only negotiations between the employers and unions but also includes the
process of resolving labor-management conflicts. Thus, collective bargaining is, essentially, a recognized way of
creating a system of industrial jurisprudence. It acts as a method of introducing civil rights in the industry, that
is, the management should be conducted by rules rather than arbitrary decision making. It establishes rules
which define and restrict the traditional authority exercised by the management.

Importance to employees

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

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

• Collective bargaining increases the morale and productivity of employees.

• It restricts management’s freedom for arbitrary action against the employees. Moreover, unilateral
actions by the employer are also discouraged.

• Effective collective bargaining machinery strengthens the trade unions movement.

• The workers feel motivated as they can approach the management on various matters and bargain for
higher benefits.

• It helps in securing a prompt and fair settlement of grievances. It provides a flexible means for the
adjustment of wages and employment conditions to economic and technological changes in the
industry, as a result of which the chances for conflicts are reduced.

Importance to employers

1. It becomes easier for the management to resolve issues at the bargaining level rather than taking up
complaints of individual workers.

2. Collective bargaining tends to promote a sense of job security among employees and thereby tends to
reduce the cost of labor turnover to management.

3. Collective bargaining opens up the channel of communication between the workers and the
management and increases worker participation in decision making.

4. Collective bargaining plays a vital role in settling and preventing industrial disputes.
Importance to society

1. Collective bargaining leads to industrial peace in the country

2. It results in establishment of a harmonious industrial climate which supports which helps the pace of a
nation’s efforts towards economic and social development since the obstacles to such a development
can be reduced considerably.

3. The discrimination and exploitation of workers is constantly being checked.

4. It provides a method or the regulation of the conditions of employment of those who are directly
concerned about them.

Levels of Collective Bargaining

Collective bargaining operates at three levels:

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

Economy-wide (national) bargaining is a bipartite or tripartite form of negotiation between union

confederations, central employer associations and government agencies. It aims at providing a floor for lower-
level bargaining on the terms of employment, often taking into account macroeconomic goals.

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

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

Objectives Of Trade Unions

Trade unions are formed to protect and promote the interests of their members. Their primary function is to
protect the interests of workers against discrimination and unfair labor practices. Trade unions are formed to
achieve the following objectives:

 Representation
Trade unions represent individual workers when they have a problem at work. If an employee feels he is being
unfairly treated, he can ask the union representative to help sort out the difficulty with the manager or employer.
Unions also offer their members legal representation. Normally this is to help people get financial compensation
for work-related injuries or to assist people who have to take their employer to court.

• Negotiation
Negotiation is where union representatives, discuss with management, the issues which affect people
working in an organization. There may be a difference of opinion between management and union
members. Trade unions negotiate with the employers to find out a solution to these differences. Pay,
working hours, holidays and changes to working practices are the sorts of issues that are negotiated. In
many workplaces there is a formal agreement between the union and the company which states that
the union has the right to negotiate with the employer. In these organizations, unions are said to be
recognized for collective bargaining purposes.

• Voice in decisions affecting workers

The economic security of employees is determined not only by the level of wages and duration of their
employment, but also by the management’s personal policies which include selection of employees for
lay offs, retrenchment, promotion and transfer. These policies directly affect workers. The evaluation
criteria for such decisions may not be fair. So, the intervention of unions in such decision making is a
way through which workers can have their say in the decision making to safeguard their interests.

• Member services

During the last few years, trade unions have increased the range of services they offer their members.
These include:

o Education and training - Most unions run training courses for their members on
employment rights, health and safety and other issues. Some unions also help members who
have left school with little education by offering courses on basic skills and courses leading to
professional qualifications.

o Legal assistance - As well as offering legal advice on employment issues, some unions give
help with personal matters, like housing, wills and debt.

o Financial discounts - People can get discounts on mortgages, insurance and loans from
unions.

o Welfare benefits - One of the earliest functions of trade unions was to look after members
who hit hard times. Some of the older unions offer financial help to their members when they
are sick or unemployed.

Functions Of Trade Unions

Trade unions perform a number of functions in order to achieve the objectives. These functions can be broadly
classified into three categories:

(i) Militant functions,

(ii) Fraternal functions

Militant Functions

One set of activities performed by trade unions leads to the betterment of the position of their members in
relation to their employment. The aim of such activities is to ensure adequate wages, secure better conditions of
work and employment, get better treatment from employers, etc. When the unions fail to accomplish these aims
by the method of collective bargaining and negotiations, they adopt an approach and put up a fight with the
management in the form of go-slow tactics, strike, boycott, gherao, etc. Hence, these functions of the trade
unions are known as militant or fighting functions. Thus, the militant functions of trade unions can be summed up
as:

• To achieve higher wages and better working conditions

• To raise the status of workers as a part of industry

• To protect labors against victimization and injustice

Fraternal Functions

Another set of activities performed by trade unions aims at rendering help to its members in times of need, and
improving their efficiency. Trade unions try to foster a spirit of cooperation and promote friendly industrial
relations and diffuse education and culture among their members. They take up welfare measures for improving
the morale of workers and generate self confidence among them. They also arrange for legal assistance to its
members, if necessary. Besides, these, they undertake many welfare measures for their members, e.g., school
for the education of children, library, reading-rooms, in-door and out-door games, and other recreational
facilities. Some trade unions even undertake publication of some magazine or journal. These activities, which
may be called fraternal functions, depend on the availability of funds, which the unions raise by subscription from
members and donations from outsiders, and also on their competent and enlightened leadership. Thus, the
fraternal functions of trade unions can be summed up as:

• To take up welfare measures for improving the morale of workers

• To generate self confidence among workers

• To encourage sincerity and discipline among workers

• To provide opportunities for promotion and growth

• To protect women workers against discrimination

Importance Of Trade Unions

The existence of a strong and recognized trade union is a pre-requisite to industrial peace. Decisions taken
through the process of collective bargaining and negotiations between employer and unions are more influential.
Trade unions play an important role and are helpful in effective communication between the workers and the
management. They provide the advice and support to ensure that the differences of opinion do not turn into
major conflicts. The central function of a trade union is to represent people at work. But they also have a wider
role in protecting their interests. They also play an important educational role, organizing courses for their
members on a wide range of matters. Seeking a healthy and safe working environment is also prominent feature
of union activity.

Trade unions help in accelerated pace of economic development in many ways as follows:

• by helping in the recruitment and selection of workers.

• by inculcating discipline among the workforce

• by enabling settlement of industrial disputes in a rational manner

• by helping social adjustments. Workers have to adjust themselves to the new working conditions, the
new rules and policies. Workers coming from different backgrounds may become disorganized,
unsatisfied and frustrated. Unions help them in such adjustment.
Trade unions are a part of society and as such, have to take into consideration the national integration as well.
Some important social responsibilities of trade unions include:

• promoting and maintaining national integration by reducing the number of industrial disputes

• incorporating a sense of corporate social responsibility in workers

• achieving industrial peace

Reasons For Joining Trade Unions

The important forces that make the employees join a union are as follows:

1. Greater Bargaining Power

The individual employee possesses very little bargaining power as compared to that of his employer. If he is not
satisfied with the wage and other conditions of employment, he can leave the job. It is not practicable to
continually resign from one job after another when he is dissatisfied. This imposes a great financial and emotional
burden upon the worker. The better course for him is to join a union that can take concerted action against the
employer. The threat or actuality of a strike by a union is a powerful tool that often causes the employer to
accept the demands of the workers for better conditions of employment.

Minimize Discrimination
The decisions regarding pay, work, transfer, promotion, etc. are highly subjective in nature. The personal
relationships existing between the supervisor and each of his subordinates may influence the management. Thus,
there are chances of favoritisms and discriminations. A trade union can compel the management to formulate
personnel policies that press for equality of treatment to the workers. All the labor decisions of the management
are under close scrutiny of the labor union. This has the effect of minimizing favoritism and discrimination.

3. Sense of Security
The employees may join the unions because of their belief that it is an effective way to secure adequate
protection from various types of hazards and income insecurity such as accident, injury, illness, unemployment,
etc. The trade union secure retirement benefits of the workers and compel the management to invest in welfare
services for the benefit of the workers.

4. Sense of Participation
The employees can participate in management of matters affecting their interests only if they join trade unions.
They can influence the decisions that are taken as a result of collective bargaining between the union and the
management.

5. Sense of Belongingness
Many employees join a union because their co-workers are the members of the union. At times, an employee
joins a union under group pressure; if he does not, he often has a very difficult time at work. On the other hand,
those who are members of a union feel that they gain respect in the eyes of their fellow workers. They can also
discuss their problem with’ the trade union leaders.

6. Platform for self expression

The desire for self-expression is a fundamental human drive for most people. All of us wish to share our feelings,
ideas and opinions with others. Similarly the workers also want the management to listen to them. A trade union
provides such a forum where the feelings, ideas and opinions of the workers could be discussed. It can also
transmit the feelings, ideas, opinions and complaints of the workers to the management. The collective voice of
the workers is heard by the management and give due consideration while taking policy decisions by the
management.

7. Betterment of relationships
Another reason for employees joining unions is that employees feel that unions can fulfill the important need for
adequate machinery for proper maintenance of employer-employee relations. Unions help in betterment of
industrial relations among management and workers by solving the problems peacefully.

Trade Unionism In India

The trade unionism in India developed quite slowly as compared to the western nations. Indian trade union
movement can be divided into three phases.

The first phase (1850 to1900)

During this phase the inception of trade unions took place. During this period, the working and living conditions
of the labor were poor and their working hours were long. Capitalists were only interested in their productivity
and profitability. In addition, the wages were also low and general economic conditions were poor in industries.
In order to regulate the working hours and other service conditions of the Indian textile laborers, the Indian
Factories Act was enacted in 1881. As a result, employment of child labor was prohibited.

The growth of trade union movement was slow in this phase and later on the Indian Factory Act of 1881 was
amended in 1891. Many strikes took place in the two decades following 1880 in all industrial cities. These strikes
taught workers to understand the power of united action even though there was no union in real terms. Small
associations like Bombay Mill-Hands Association came up by this time.

The second phase (1900 to 1946)

This phase was characterized by the development of organized trade unions and political movements of the
working class. Between 1918 and 1923, many unions came into existence in the country. At Ahmedabad, under
the guidance of Mahatma Gandhi, occupational unions like spinners’ unions and weavers’ unions were formed. A
strike was launched by these unions under the leadership of Mahatma Gandhi who turned it into a satyagrah.
These unions federated into industrial union known as Textile Labor Association in 1920.In 1920, the First
National Trade union organization (The All India Trade Union Congress (AITUC)) was established. Many of the
leaders of this organization were leaders of the national Movement. In 1926, Trade union law came up with the
efforts of Mr. N N Joshi that became operative from 1927. During 1928, All India Trade Union Federation (AITUF)
was formed.

The third phase began with the emergence of independent India (in 1947). The partition of country affected the
trade union movement particularly Bengal and Punjab. By 1949, four central trade union organizations were
functioning in the country:

1. The All India Trade Union Congress,

2. The Indian National Trade Union Congress,

3. The Hindu Mazdoor Sangh, and

4. The United Trade Union Congress

The working class movement was also politicized along the lines of political parties. For instance Indian national
trade Union Congress (INTUC) is the trade union arm of the Congress Party. The AITUC is the trade union arm of
the Communist Party of India. Besides workers, white-collar employees, supervisors and managers are also
organized by the trade unions, as for example in the Banking, Insurance and Petroleum industries.

Trade unions in India

The Indian workforce consists of 430 million workers, growing 2% annually. The Indian labor markets consist of
three sectors:

1. The rural workers, who constitute about 60 per cent of the workforce.

2. Organized sector, which employs 8 per cent of workforce, and

3. The urban informal sector (which includes the growing software industry and other services, not
included in the formal sector) which constitutes the rest 32 per cent of the workforce.

At present there are twelve Central Trade Union Organizations in India:

1. All India Trade Union Congress (AITUC)

2. Bharatiya Mazdoor Sangh (BMS)

3. Centre of Indian Trade Unions (CITU)

4. Hind Mazdoor Kisan Panchayat (HMKP)

5. Hind Mazdoor Sabha (HMS)

6. Indian Federation of Free Trade Unions (IFFTU)

7. Indian National Trade Union Congress (INTUC)

 8. National Front of Indian Trade Unions (NFITU)

9. National Labor Organization (NLO)

10. Trade Unions Co-ordination Centre (TUCC)

11. United Trade Union Congress (UTUC) and

12. United Trade Union Congress - Lenin Sarani (UTUC - LS)

Industrial Relation Policy

Prior to 1991, the industrial relations system in India sought to control conflicts and disputes through excessive
labor legislations. These labor laws were protective in nature and covered a wide range of aspects of workplace
industrial relations like laws on health and safety of labors, layoffs and retrenchment policies, industrial disputes
and the like. The basic purpose of these laws was to protect labors. However, these protectionist policies created
an atmosphere that led to increased inefficiency in firms, over employment and inability to introduce efficacy.
With the coming of globalization, the 40 year old policy of protectionism proved inadequate for Indian industry to
remain competitive as the lack of flexibility posed a serious threat to manufacturers because they had to compete
in the international market.

With the advent of liberalization in1992, the industrial relations policy began to change. Now, the policy was tilted
towards employers. Employers opted for workforce reduction, introduced policies of voluntary retirement
schemes and flexibility in workplace also increased. Thus, globalization brought major changes in industrial
relations policy in India. The changes can be summarized as follows:

• Collective bargaining in India has mostly been decentralized, but now in sectors where it was not so,
are also facing pressures to follow decentralization.

• Some industries are cutting employment to a significant extent to cope with the domestic and foreign
competition e.g. pharmaceuticals. On the other hand, in other industries where the demand for
employment is increasing are experiencing employment growths.

• In the expansionary economy there is a clear shortage of managers and skilled labor.

• The number of local and enterprise level unions has increased and there is a significant reduction in the
influence of the unions.

• Under pressure some unions and federations are putting up a united front e.g. banking.

• Another trend is that the employers have started to push for internal unions i.e. no outside affiliation.

• HR policies and forms of work are emerging that include, especially in multi-national companies, multi-
skills, variable compensation, job rotation etc. These new policies are difficult to implement in place of
old practices as the institutional set up still needs to be changed.

• HRM is seen as a key component of business strategy.

• Training and skill development is also receiving attention in a number of industries, especially banking
and information technology.

Labor Market Related Terms

Labor Market: A labor market is defined as a pool of all potential workers who compete for jobs. It also includes
the employers who compete for workers. Labor markets are based on the supply and demand of labor in a
country or a specific location that are able and willing to work.

Labor Force: Labor force includes all persons classified either as employed or unemployed during a specified
period of time, usually a day or a week. Labor force can be categorized as self-employed, wage and salary
earners, casual workers and unemployed.

Casual Workers: Casual workers are those workers who are generally employed by small entrepreneurs on daily
or weekly basis on a low wage rate. They are not entitled to any paid holiday leave or paid sick leaves.

Unemployed persons: The persons in the labor market who are without work, that is, without paid employment
or self-employment and are currently either available for work or are seeking any work are considered to be
unemployed.

Labor force participation rate: It is the number of persons in the labor force as a percentage of the working-
age population. The working-age population is the population above a certain reference age like15 years old and
over or 15–64, etc.

Employment rate: It is ratio of employed persons to the total labor force. It is the percentage of working age
people who have jobs or are employed.

Unemployment rate: It is the ratio of unemployed people to the total labor force.

Underemployed persons: Workers who are employed, but not in the desired capacity, whether in terms of
compensation, hours, or level of skill and experience. The skills of such persons are underutilized, for example
paying low wages to a highly skilled employee. Underemployment also refers to a situation where a major portion
of labor force is unemployed.

Underemployment rate: It is the ratio of underemployed to either total labor force or total employment.

Labor Market In India

The Indian labor market can be categorized into three sectors:

 Rural workers , who constitute about 60% of the workforce

 Organized of the formal sector, that constitutes about 8% of the workforce; and

 Urban unorganized or informal structure which represents the 32% of the workforce.

The chart below describes the estimated increase in the number of labors from 1977-78 to 2004-05. The labor
force has grown from 276.3 million to 385.5 million between 1977-78 and1993-94 showing an annual growth
rate of 2.1%. During the year 1999-2000, the workforce was estimated to be 407 million. In 2004-05 the labor
market consisted of 430 million workers and has grown up to 500 million in 2006.

Two-third of India’s workforce is employed in agriculture and rural industries. One-third of rural households are
agricultural labor households, subsisting on wage employment. Only about 9 percent of the total workforce is in
the organized sector; the remaining 91 percent are in the unorganized sector, self-employed, or employed as
casual wage laborers. The labor force in year 2006 has grown up to 509.3 million out of which 60% are in
agriculture, 12% are employed in industries and the residual 28% are in services.

Labor force can be divided into four categories: self employed workers, wage and salary earners, casual workers
and unemployed. Of these, self-employed are most loosely connected to labor market because of the possibilities
of work-sharing and work spreading in a self-employed enterprise. Non-contractual casual laborers have the
closest connection to labor market on almost day-to day basis. Same is the case with those unemployed who are
actively seeking work. Contractual and hence stable hired employment (with the same employer and/or in the
same job) on a regular basis is covered in the description wage and salary workers. Persons who are engaged in
their own farm or non- farm enterprises are defined as self employed. The employees in an enterprise can be
either regular salaried/ wage employees or casual wage employees who are normally engaged on a day today
basis. The casual wage workers both in public work and other types of work don’t have any job security or social
security. These workers, either in formal or informal sector or in private households, are informal workers. The
regular salaried/wage employees are those working in others farm or non- farm enterprises and getting in return
salary or wages on a regular basis and not on the basis of daily or periodic renewal of work contract. This
category includes those getting time wage as well as those receiving piece wage or salary and paid apprentices,
both full time and part time. This category of persons may, therefore, include persons engaged regularly on an
hourly basis, temporary workers, out- workers, etc. The table given below classifies labor force across male-
female and rural-urban dimensions. It is clear that

• Self-employment and casual labor statuses are more prevalent among rural than urban labor force and
among female than male workers.

• The Incidence of unemployment is higher in the urban than in the rural labor force with nearly 48 per
cent of the total unemployed persons coming from aggregate urban labor force whose share in total
(rural plus urban) work force is 22 per cent.

• Those reporting wage and salary earning dominate in the urban labor force, their share being around 62
per cent (lines 10 to 12 of Table).

Organized and Unorganized Labor

In India, a major chunk of labor force is employed in the unorganized sector. The unorganized / informal
employment consists of causal and contributing family workers; self employed persons in un-organized sector
and private households; and other employed in organized and unorganized enterprises that are not eligible either
for paid, sick or annual leave or for any social security benefits given by the employer.

According to the results of the National Sample Survey conducted in 1999-2000, total work force as on 1.1.2000
was of the order of 406 million. About 7 % of the total work force is employed in the formal or organized sector
(all public sector establishments and all non-agricultural establishments in private sector with 10 or more
workers) while remaining 93% work in the informal or unorganized sector. The NSS 55th round, 1999-2000 also
covered non-agricultural enterprises in the informal sector in India. As per that survey, there were 44.35 million
enterprises and 79.71 million workers employed thereof in the non-agricultural informal sector of the economy.
Among these 25.01 million enterprises employing 39.74 million workers were in rural areas whereas 19.34
million enterprises with 39.97 million workers in the urban area. Among the workers engaged in the informal
sector, 70.21 million are full time and 9.5 million part times. Percentage of female workers to the total workers is
20.2 percent.
The table below describes major employment trends for the organized and unorganized sector for the years
1983, 1987-88, 1993-94 and 1999-2000. It is evident that throughout this period a large portion of the
workforce in India is found to be employed in the unorganized sector. Out of 397million workers in 1999-2000, it
is estimated that 369 million workers (nearly 93 per cent) are employed in the unorganized segment of the
economy whereas only 28 million workers (7 per cent) are engaged in the organized sector. The share of
unorganized employment in the economy has displayed remarkable steadiness over the years. The share of
informal employment has risen from 92 per cent (nearly 276 million out of 300 million) in 1983 to 93 per cent in
the 1999-2000. It is clear that employment opportunity in the organized sector has remained more or less
stagnant, showing only a marginal increase from 24 million in 1983 to 28 million in 1999-2000.

The largest numbers of informal workers are in agriculture. In fact, 98.84 percent of the employment in
agriculture is informal. In the non-agricultural sector, the highest numbers of informal employees are in retail
trade, construction, land transport, textiles etc.

Thus, the unorganized sector plays a vital role in terms of providing employment opportunity to a large segment
of the working force in the country and contributes to the national product significantly. The contribution of the
unorganized sector to the net domestic product and its share in the total NDP at current prices has been over
60%. In the matter of savings the share of household sector in the total gross domestic saving mainly
unorganized sector is about three fourth. Thus unorganized sector has a crucial role in our economy in terms of
employment and its contribution to the National Domestic Product, savings and capital formation.

Employment In India

The organized sector in India consists of 293.77 thousand industrial establishments. Out of these, 172.34
thousand are public sector enterprises while 121.43 thousand are in private sector. Since 2004, an increase of
1.4% has been recorded in the number of establishments in the organized sector. As on the 31st March, 2005
the total employment in the organized sector was estimated to be 264.58 lakh while in 2004, it was 264.43 lakh.
This means there has been an increase of 0.1% in employment. The public sector employs about 180.7 lakh
persons while the private sector employs 84.52 lakh persons. The negative growth of employment was recorded
in public sector while private sector showed an increasing trend, that is, the employment in public sector
decreased by 1 percent while private sector increased by 2.5 percent.

The branch wise analysis of the public sector data reveals that Central Govt. shows maximum negative growth in
employment followed by Quasi Govt., Local Bodies and State Govt. The same trend continued in 2005 also, in
which the Central Govt. recorded a negative growth of 2.9% followed by Quasi Govt. with a negative growth of
2.2%. The Local Bodies and State Govt. were also subjected to a negative growth of 0.4% and 0.3%
respectively.
State wise analysis reflects that only Punjab and Kerala recorded a decrease of more than 3 percent. Decrease in
employment above 1 percent was observed in Madhya Pradesh Uttar Pradesh, Chandigarh and Andhra Pradesh.
An increase of more than 3 percent in employment was observed in Goa, Himachal Pradesh and Gujarat and 1
percent or more in Pondicherry, Karnataka, West Bengal, Uttaranchal, Assam and Nagaland.
While analyzing the figures zone wise, highest decrease of 1.6 percent was seen in Central Zone followed by 1
percent in Northern Zone and 0.6 percent in Southern Zone whereas the highest increase was 2 percent in
Western Zone followed by 1.1 percent in North-Eastern Zone and 0.9 percent in Eastern Zone in employment.

Women Employment
Women workforce constitutes an integral part of total workforce in India. On 31st march 2004, women
constituted 19 per cent of the total workforce. The participation of women in the labor force has always been
lower than that of men, in the rural as well as urban areas. The work participation rate for women has increased
significantly. In 1981, work participation rate for women was only 19.67 per cent which increased up to 22.73 per
cent in 1991 and 26.68 per cent in 2001. In the women workforce, women from rural areas are greater in
number as compared to the urban women. Amongst rural women workers, a majority is employed in agriculture
and some are employed in cottage industries. In the urban areas, women workers are primarily employed in the
unorganized sectors. As on the 31st March, 2005 a total number of 50.16 Lacs women employees were engaged
in the organized sector, out of which 29.21 lacs (58per cent) in the public sector and 20.95 lacs (42per cent) in
the Private Sector. Employment of women in public sector increased by 1.1 percent and by 2.5 percent in the
private sector during 2004-2005. The zone wise analysis showed an increase of 8 percent in North-Eastern Zone,
followed by Western Zone (5.3per cent), Eastern Zone (3per cent) and Central Zone (1.3per cent) and Northern
Zone (1.2per cent). Only Southern Zone registered a marginal dip of 0.8 percent.

Some Vital Statistics

• The number of women job seekers has increased from 99.3 lacs in 1999 to 106.1 lacs in 2004. Thus the
percentage of women job seekers to the total job-seekers has also increased from 24.6per cent in 1999
to 26.2per cent in 2004.

Table 1: Number of Women Job Seekers

Year Number of Women (in lacs) Percentage to total
1999 99.3 24.6
2000 104.5 25.3
2001 108.8 25.9
2002 106.0 25.9
2003 107.5 26.0
2004 106.1 26.0
•

• Number of Educated Women Job Seekers as on December 2004 was 7537.7 thousand. Educated
Women at the end of 2004 accounted for 25.8per cent of the total educated job-seekers.
 Table 2: Number of Educated Women Job Seekers
Year Number of Women Percentage to total
2000 7911.7 27.1
2001 8525.6 28.1
2002 7921.4 26.8
2003 8032.4 26.6
2004 7537.7 25.8
•

• The state wise analysis reflects that Kerala has the maximum (21.1 lacs) women job-seekers followed
by West Bengal (19.3 lacs) and Tamil Nadu (15.3 lacs) while minimum number of women job-seekers
are in Rajasthan (1.0 lacs).

• The percentage of educated women job seekers among the total women job seekers has gone down
from 73.3per cent to 70.4per cent in 2004.

• The work participation rate for women was 25.68 per cent in 2001. This shows an improvement over
22.73 per cent in 1991 and 19.67 per cent in 1981.

• Women workers constituted 19 per cent of the total organized sector employment in the country, as
compared to 18.4 per cent in the previous year. As on 31st March, 2004, there were about 49.34 lacs
women workers employed in the organized sector (Public and Private Sector).

• As far as industries are concerned, in 2005, the manufacturing industry faced a dip of 1.1per cent in
women employment. On the other hand, other industries reflected an increase in women employment.
An increase of 7.8 per cent was registered in Wholesale and Retail Trade followed by 5.6 per cent in
Mining and Quarrying, 5.5 per cent in Agriculture, Hunting, Forestry & Fishing, 5.2 per cent in
Financing, Insurance Real Estate & Business Services, 1.7 per cent in Electricity, Gas & Water, 1.5 per
cent in Construction, 1.4 per cent in Community, Social and Personal Services and 1.2 per cent in
Transport, Storage & Communications.

EMPLOYEE DISCIPLINE

Effective Discipline

Discipline is the key to success. Theodore Roosevelt has said “With self-discipline almost everything is possible”.
Self discipline makes employee realize what is required at work. Discipline can be positively related to
performance. It is the bridge between goals and accomplishments. Effective discipline should be aimed at the
behavior, and not at the employee personality. This is because the reason for discipline is to improve
performance rather than punishing the employee.

Factors necessary for effective disciplinary system include:

1. Training of supervisors is necessary: Supervisors and mangers need to be trained on when and how
discipline should be used. It is necessary to provide training on counseling skills as these skills are used
while dealing with problem employees. Moreover, discipline decisions taken by trained supervisors are
considered fair by both employees and managers.

2. Centralization of discipline: Centralized means that the discipline decisions should be uniform
throughout the organization. The greater the uniformity, higher will be the effectiveness of discipline
procedure.

3. Impersonal discipline: Discipline should be handled impersonally. Managers should try to minimize the
ill feelings arising out of the decisions by judging the offensive behavior and not by judging the person.
Managers should limit their emotional involvement in the disciplinary sessions.
 4. Review discipline decisions: The disciplinary decisions must be reviewed before being implemented. This
will ensure uniformity and fairness of the system and will minimize the arbitrariness of the disciplinary
system.

5. Notification of conduct that may result in discipline: Actions that lead to misconduct can be listed and
documented so the employees are aware of such actions. This will unable them to claim that they have
not been notified, in advance, regarding the same.

6. Information regarding penalties: The employer should define the penalties and other actions like
warnings, reprimands, discharge and dismissal well in advance. All these action plans must be
communicated to the employees.

7. Discipline shall be progressive: Discipline system should be progressive in nature. In a progressive

discipline approach the severity of actions to modify behavior increases with every step as the employee
continues to show improper behavior. The advantage of this approach is that employees can’t take it for
granted.

8. Documentation: Effective discipline requires accurate, written record keeping and written notification to
the employees. Thus less chance will be left for the employee to say the he “did not know” about the
policy.

9. Discipline should be fair: The disciplinary decision should be fair enough for the employee. Both over-
penalization and under-penalization are considered to be unfair for the problem employee. Moreover, an
internal fairness is to be maintained, that is, two employees who have committed the same offense
should be equally punished.

10. Discipline shall be flexible and consistent: The manager administering discipline must consider the effect
of actions taken by other managers and of other actions taken in the past. Consistent discipline helps to
set limits and informs people about what they can and cannot do. Inconsistent discipline leads to
confusion and uncertainty.

11. Disciplinary action should be prompt: The effective discipline should be immediate. The longer time lag
between the misconduct offense and the disciplinary action will result in ineffectiveness of the discipline.

Approaches to Discipline

Handling employee misconduct is a very critical task to be performed by the senior managers. Misconduct and
other offensive behaviors often lead to decreased levels of productivity as they affect the individual performance
of the employees. To manage discipline among employees, every company opts for a discipline policy which
describes the approach it will follow to handle misconduct.

Broadly defined, there are two approaches to discipline employees. They are:

• Positive Discipline Approach

• Progressive Discipline Approach

Code Of Discipline In Industry

To maintain harmonious relations and promote industrial peace, a Code of Discipline has been laid down which
applies to both public and private sector enterprises. It specifies various obligations for the management and the
workers with the objective of promoting cooperation between their representatives.

The basic objectives of Code of Discipline are to:

 Maintain peace and order in industry.

 Promote constructive criticism at all levels of management and employment.

 Avoid work stoppage in industry

 Secure the settlement of disputes and grievances by a mutually agreed procedure

 Avoiding litigations

 Facilitate a free growth of trade unions

 Eliminate all forms of coercion, intimidation and violations of rules and regulations governing industrial
relations.

The Code is based on the following principles:

• There should be no strike or lockout without prior notice.

• No unilateral action should be taken in connection with any industrial matter.

• Employees should follow go slow tactics

• No deliberate damage should be caused to a plant or property

• Acts of violations, intimidation and coercion should not be resorted

• The existing machinery for the settlement of disputes should be utilized.

• Actions that disturb cordial relationships should be avoided.

To ensure better discipline in industry, management and unions agree on not indulging into various actions.
These actions can b summarized as follows:

Management and Union(s) agree

• that no unilateral action should be taken in connection with any industrial matter and that should be
settled at appropriate level

• that the existing machinery for settlement of disputes should be utilized with the utmost efficiency

• that there should be no strike or lock-out without prior notice

• that neither party will have recourse to coercion, intimidation, victimization or go –slow tactics

• that they will avoid litigation, sit-down and stay-in strikes and lock-outs

• that they will promote constructive co-operation between their representatives at all levels and as
between workers themselves

• that they will establish upon a mutually agreed grievance procedure which will ensure a speedy and full
investigation leading to settlement;

• that they will abide by various stages in the grievance procedure and take no arbitrary action which
would by-pass this procedure; and

Management Agrees

• not to increase work-loads unless agreed upon or settled otherwise

 • not to support or encourage any unfair labor practice such as discrimination and victimization of any
employee

• to take prompt action for settlement of grievances and implementation of settlements, awards, decision
and orders

• to take appropriate disciplinary action against its officers and members in cases where enquiries reveal
that they were responsible for precipitate action by workers leading to indiscipline

Union agrees

• not to engage in any form of physical duress

• not to permit demonstrations which are not peaceful

• that their members will not engage or cause other employees to engage in any union activity during
working hours

• to discourage unfair labor practices such as negligence of duty, damage to property and insubordination

• to take prompt action to implement awards, agreements, settlements and decisions

Factors Guiding Code Of Conduct

The code of discipline and conduct communicates to the employees, the expected behavior and the professional
responsibilities. The significance of code of conduct is that each employee should behave and perform in a way
that preserves the company values and commitments. The code expects employees to conduct business with
integrity and honesty. Moreover, it expects the employer to be an equal opportunity employer.

The Code of Conduct policy of a company is determined on the basis of following factors:

1. Honesty and integrity: The organization expects the employees to observe honesty and integrity and such
conduct should be fair and transparent. The employees should show truthfulness in actions throughout their
tenure in the organization.

2. Disclosure of information: The employees should not disclose the company information to third
parties and other outside organizations. However the employers should reveal the various policies of the
organization to their employees and make them aware about the code of conduct and other policies.

3. Harassment: The work environment should be free from all kinds of harassments, especially sexual
harassments and verbal harassments. No physical harassments like hitting or pushing are acceptable on
part of employees.

4. Outside employment: Employees should not indulge in to any kind of concurrent employment without
the prior knowledge of employer.

5. Conflict of interest: An employee should not indulge into other professions or services or other
interests which might conflict with the interest of the company. This means personal interests should
not overshadow organizational interests.

6. Confidentiality: Employees should protect company’s confidential information. The financial records
and unpublished data should be kept within the organizations and should not be spread outside the
organization.

7. Equal opportunity employer: This factor expects the employer to be an equal opportunity, that is, no
discrimination should be done on the basis of caste, color, race, gender, religion or physical disabilities.
 8. Misusing company resources: Employees should not misuse company resources, intellectual
property, time and other facilities. They are provided to them for business purposes and thus, should be
used in a cost effective way.

9. Health and safety: An employer should provide a safe and healthy work environment to its
employees. Proper cleanliness and lightening should be provided. A health and safety committee can be
set up by the employer consisting of representatives of workers as well.

10. Payment and gifts: The employees should neither accept nor offer any kind of illegal payments,
donations, remuneration and gifts from outsiders.

Grievance In Industry
Grievance means any type of dissatisfaction or discontentments arising out of factors related to an employee’s
job which he thinks are unfair. A grievance arises when an employee feels that something has happened or is
happening to him which he thinks is unfair, unjust or inequitable. In an organization, a grievance may arise due
to several factors such as:

 Violation of management’s responsibility such as poor working conditions

 Violation of company’s rules and regulations

 Violation of labor laws

 Violation of natural rules of justice such as unfair treatment in promotion, etc.

Various sources of grievance may be categorized under three heads: (i) management policies, (ii) working
conditions, and (iii) personal factors

1. Grievance resulting from management policies include:

o Wage rates

o Leave policy

o Overtime

o Lack of career planning

o Role conflicts

o Lack of regard for collective agreement

o Disparity between skill of worker and job responsibility

2. Grievance resulting from working conditions include:

o Poor safety and bad physical conditions

o Unavailability of tools and proper machinery

o Negative approach to discipline

o Unrealistic targets
 3. Grievance resulting from inter-personal factors include

o Poor relationships with team members

o Autocratic leadership style of superiors

o Poor relations with seniors

o Conflicts with peers and colleagues

It is necessary to distinguish a complaint from grievance. A complaint is an indication of employee dissatisfaction

that has not been submitted in written. On the other hand, a grievance is a complaint that has been put in
writing and made formal.

Grievances are symptoms of conflicts in industry. Therefore, management should be concerned with both
complaints and grievances, because both may be important indicators of potential problems within the workforce.
Without a grievance procedure, management may be unable to respond to employee concerns since managers
are unaware of them. Therefore, a formal grievance procedure is a valuable communication tool for the
organization.

Grievance Procedure

Grievance procedure is a formal communication between an employee and the management designed for the
settlement of a grievance. The grievance procedures differ from organization to organization.

1. Open door policy

2. Step-ladder policy

Open door policy: Under this policy, the aggrieved employee is free to meet the top executives of the
organization and get his grievances redressed. Such a policy works well only in small organizations. However, in
bigger organizations, top management executives are usually busy with other concerned matters of the company.
Moreover, it is believed that open door policy is suitable for executives; operational employees may feel shy to go
to top management.

Step ladder policy: Under this policy, the aggrieved employee has to follow a step by step procedure for getting
his grievance redressed. In this procedure, whenever an employee is confronted with a grievance, he presents his
problem to his immediate supervisor. If the employee is not satisfied with superior’s decision, then he discusses
his grievance with the departmental head. The departmental head discusses the problem with joint grievance
committees to find a solution. However, if the committee also fails to redress the grievance, then it may be
referred to chief executive. If the chief executive also fails to redress the grievance, then such a grievance is
referred to voluntary arbitration where the award of arbitrator is binding on both the parties.

GRIEVANCE PROCEDURE IN INDIAN INDUSTRY

The 15th session of Indian Labor Conference held in 1957 emphasized the need of an established grievance
procedure for the country which would be acceptable to unions as well as to management. In the 16th session of
Indian Labor Conference, a model for grievance procedure was drawn up. This model helps in creation of
grievance machinery. According to it, workers’ representatives are to be elected for a department or their union
is to nominate them. Management has to specify the persons in each department who are to be approached first
and the departmental heads who are supposed to be approached in the second step. The Model Grievance
Procedure specifies the details of all the steps that are to be followed while redressing grievances. These steps
are:

STEP 1: In the first step the grievance is to be submitted to departmental representative, who is a
representative of management. He has to give his answer within 48 hours.

STEP 2: If the departmental representative fails to provide a solution, the aggrieved employee can take his
grievance to head of the department, who 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 Grievance Committee. The Grievance 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 three days of the receipt of report. An appeal for revision of
final decision can be made by the worker if he is not satisfied with it. The management must communicate its
decision to the worker within 7 days.

Employee Health and Safety

For smooth functioning of an organization, the employer has to ensure safety and security of his employees.
Health and safety form an integral part of work environment. A work environment should enhance the well being
of employees and thus should be accident free.

The terms health, safety and security are closely related to each other. Health is the general state of well being.
It not only includes physical well being, but also emotional and mental well being. Safety refers to the act of
protecting the physical well being of an employee. It will include the risk of accidents caused due to machinery,
fire or diseases. Security refers to protecting facilities and equipments from unauthorized access and protecting
employees while they are on work.

In organizations the responsibility of employee health and safety falls on the supervisors or HR manager. An HR
manager can help in coordinating safety programs, making employees aware about the health and safety policy
of the company, conduct formal safety training, etc. The supervisors and departmental heads are responsible for
maintaining safe working conditions. Responsibilities of managers:

• Monitor health and safety of employees

• Coach employees to be safety conscious

• Investigate accidents

• Communicate about safety policy to employees

Responsibilities of supervisors/departmental heads:

• Provide technical training regarding prevention of accidents

• Coordinate health and safety programs

• Train employees on handling facilities an equipments

• Develop safety reporting systems

• Maintaining safe working conditions

Legislations governing Occupational Health & safety in India

* Factories act1948
* Mines act 1952
* Dock workers act(Safety, Health & Welfare)1986

Issues in Employee Health & Safety

Organizations frame many approaches to ensure health and safety of their employees. But not all of the
approaches focus on contribution of both work design and employee behavior to safety. An organizational
approach to safety is effective only when both the work design and employee behavior work in coordination
towards it. Many organizational and individual issues emerge in management of employee health and safety.
They can be summarized as follows:

1. Physical Work Settings: The physical settings of work affect the performance of employees to a great
extent. Some of these factors include temperature, noise levels, and proper lighting affect job performance.
Other work setting factors include size of work area, kinds of materials used, distance between work areas,
cubicle arrangement, et al.
 2. Sick Building Syndrome: It is a situation in which employees experience acute health problems and
discomfort due to the time spent in a building (particularly their workplace). Some factors that lead to
sick buildings include poor air quality, inadequate ventilation, improper cleanliness, rodents, stench of
adhesives and glues, et al.

3. Ergonomics: The term comes from the Greek word ergon, which means “work,” and omics which
means “management of.” Ergonomics is the study of physiological, psychological, and engineering
design aspects of a job, including such factors as fatigue, lighting, tools, equipment layout, and
placement of controls. It is the interface between men and machines. Ergonomics is taken into
consideration when designing the workstation for computer operators. Problems of back ache, eye
strain and headache arise due to long working hours spent in front of computers.

4. Engineering of Work Equipments and Materials: Accidents can be prevented in a way by proper
placements of dangerous machines. Moreover design of such machines and equipments also plays an
important role in safety. Providing safety guards and covers on equipments, emergency stop buttons
and other provisions help in reducing the accidents considerably.

5. Cumulative Trauma and Repetitive Stress: Cumulative trauma disorder occurs when same muscles
are used repetitively to perform some task. This results in injuries of musculoskeletal and nervous
system. Employees encounter high levels of mental and physical stress also.

6. Accident Rates and Individuals: An individual approach to safe environment helps in reducing the
accident rates. This is generally because more problems are caused by careless employees than by
machines or employer negligence. A positive attitude towards work environment and other practices
promotes employee safety.

Occupational Health & Safety Management System

The Bureau of Indian Standards has formulated a standard for Occupational health and safety management
systems. This standard is known as IS 18001:2000 Occupational Health and Safety Management System. Any
OHS management system adopted by an organization should incorporate all the requirements specified in this
standard.

Organizations willing to adopt OH&S Management System have to obtain a license for the same. For this purpose,
they have to ensure that they are operating according to the IS 18001:2000 standard. The organization has to
apply at the nearest Regional Office of Bureau of Indian Standards in the prescribed proforma along with a
questionnaire and application fee.

The application has to be signed by the Chief Executive Officer of the organization or any person who has been
assigned by the CEO for this purpose. Also, manual or the documentation of OHS management system is to be
submitted along with the application.

Once an application is received by the regional office of BIS, it is scrutinized for all the requirements. If the
application is complete, it is accepted, otherwise more information is sought from the applicant organization. If
the application is accepted, an adequacy audit takes place and a preliminary visit (pre-audit) is conducted by an
audit team. Immediately after this, initial certification audit takes place on the basis of which an audit report is
prepared by the audit team. If the report comes out to be satisfactory, recommendations for the award of
certifications are made by the team and the certificate is granted to the organization by the concerned
authorities. However if the report does not meet all the requirements, the applicant organization is asked to take
corrective actions after which another audit is conducted.
 Process of OH&S Management System certification

Employee Welfare

Welfare includes anything that is done for the comfort and improvement of employees and is provided over and
above the wages. Welfare helps in keeping the morale and motivation of the employees high so as to retain the
employees for longer duration. The welfare measures need not be in monetary terms only but in any kind/forms.
Employee welfare includes monitoring of working conditions, creation of industrial harmony through infrastructure
for health, industrial relations and insurance against disease, accident and unemployment for the workers and
their families.
Labor welfare entails all those activities of employer which are directed towards providing the employees with
certain facilities and services in addition to wages or salaries

Labor welfare has the following objectives:

1. To provide better life and health to the workers

2. To make the workers happy and satisfied

3. To relieve workers from industrial fatigue and to improve intellectual, cultural and material conditions of
living of the workers.

The basic features of labor welfare measures are as follows:

1. Labor welfare includes various facilities, services and amenities provided to workers for improving their
health, efficiency, economic betterment and social status.

2. Welfare measures are in addition to regular wages and other economic benefits available to workers due
to legal provisions and collective bargaining

3. Labor welfare schemes are flexible and ever-changing. New welfare measures are added to the existing
ones from time to time.

4. Welfare measures may be introduced by the employers, government, employees or by any social or
charitable agency.

5. The purpose of labor welfare is to bring about the development of the whole personality of the workers
to make a better workforce.

The very logic behind providing welfare schemes is to create efficient, healthy, loyal and satisfied labor force for
the organization. The purpose of providing such facilities is to make their work life better and also to raise their
standard of living. The important benefits of welfare measures can be summarized as follows:

• They provide better physical and mental health to workers and thus promote a healthy work
environment

• Facilities like housing schemes, medical benefits, and education and recreation facilities for workers’
families help in raising their standards of living. This makes workers to pay more attention towards
work and thus increases their productivity.

• Employers get stable labor force by providing welfare facilities. Workers take active interest in their jobs
and work with a feeling of involvement and participation.

• Employee welfare measures increase the productivity of organization and promote healthy industrial
relations thereby maintaining industrial peace.

• The social evils prevalent among the labors such as substance abuse, etc are reduced to a greater
extent by the welfare policies.

Labor Welfare Fund

Labor welfare refers to all the facilities provided to labor in order to improve their working conditions, provide
social security and raise their standard of living. Majority of labor force in India is working in unorganized sector.
In order to provide social security to such workers, Government has introduced Labor Welfare Fund to ensure
assistance to unorganized labors. Five different welfare funds, which are governed by different legislations, are
administered by Ministry of Labor. The purpose of these welfare funds is to provide housing, medical care,
educational and recreational facilities to workers employed in beedi industry and non-coal mines and cine
workers.

The five legislations governing welfare funds are as follows:

• The Mica Mines Labor Welfare Fund Act, 1946

• The Limestone and Dolomite Mines Labor Welfare Fund Act, 1972

• The Iron Ore, Manganese Ore and Chrome Ore Mines Labor Welfare Fund Act, 1976

• The Cine Workers’ Welfare Fund Act, 1981

Schemes under welfare funds provide assistance with respective to the following:

• Public health and sanitation

• Housing

• Recreational (including standard of living)

• Social security

• Educational facilities

• Water supply

• Transportation

• Medical facilities (prevention of diseases)

• Social security

o Group Insurance Schemes for Beedi and Cine workers

o Social Security under Mine Workers Welfare Fund

• Family welfare

The welfare funds are raised by government by imposing cess on manufactured beedis, feature films, export of
mica, consumption of limestone & dolomite and consumption and export of iron ore, manganese ore & chrome
ore. An explanation of the cess levied under different legislations is given below:

• Beedi Workers Welfare Cess Act, 1976 provides for levy of cess by way of excise duty on manufactured
beedis from Re.1/- to Rs.5/- per thousand manufactured beedis. This is presently Rs 2 per 1000 beedis
with effect from 28th June 2000.

• The Cine Workers Welfare Cess Act, 1981 provides for duty of cess, at such rate not being less than one
thousand rupees and not exceeding twenty thousand rupees, on every feature film submitted to the
Chairman, Central Board of Film Certification. This is Rs 20000 per feature film of Hindi and English and
for regional films it is Rs 10000 per film with effect from 20th April 2000.
 • The Iron Ore, Manganese Ore & Chrome Ore Mines Labor Welfare Cess Act, 1976 provides for levy and
collection of cess on Iron Ore, Manganese Ore & Chrome Ore between 50p to Re.1/-, Re.1/- to Rs.6/-
and Rs.3/- to Rs.6/- respectively.

• The Limestone and Mines Labor Welfare Fund Act, 1972 provides for the levy and collection of cess on
Limestone and Dolomite as a duty of excise at such rate not exceeding one rupee per metric tone of
limestone & dolomite. The rate of cess on Limestone and Dolomite is Re.1/- with effect from 27th
December 2000.

• Mica Mines Labor Welfare Fund Act, 1946, provides for levy and collection of cess on all mica exported
as duty of Customs not exceeding 6.25% ad valorem. This is 4.5% ad valorem on export with effect
from 1st November 1990.

Employee Welfare Schemes

Organizations provide welfare facilities to their employees to keep their motivation levels high. The employee
welfare schemes can be classified into two categories viz. statutory and non-statutory welfare schemes. The
statutory schemes are those schemes that are compulsory to provide by an organization as compliance to the
laws governing employee health and safety. These include provisions provided in industrial acts like Factories Act
1948, Dock Workers Act (safety, health and welfare) 1986, Mines Act 1962. The non statutory schemes differ
from organization to organization and from industry to industry

STATUTORY WELFARE SCHEMES

The statutory welfare schemes include the following provisions:

1. Drinking Water: At all the working places safe hygienic drinking water should be provided.

2. Facilities for sitting: In every organization, especially factories, suitable seating arrangements are to
be provided.

3. First aid appliances: First aid appliances are to be provided and should be readily assessable so that
in case of any minor accident initial medication can be provided to the needed employee.

4. Latrines and Urinals: A sufficient number of latrines and urinals are to be provided in the office and
factory premises and are also to be maintained in a neat and clean condition.

5. Canteen facilities: Cafeteria or canteens are to be provided by the employer so as to provide hygienic
and nutritious food to the employees.

6. Spittoons: In every work place, such as ware houses, store places, in the dock area and office
premises spittoons are to be provided in convenient places and same are to be maintained in a hygienic
condition.

7. Lighting: Proper and sufficient lights are to be provided for employees so that they can work safely
during the night shifts.

8. Washing places: Adequate washing places such as bathrooms, wash basins with tap and tap on the
stand pipe are provided in the port area in the vicinity of the work places.

9. Changing rooms: Adequate changing rooms are to be provided for workers to change their cloth in the
factory area and office premises. Adequate lockers are also provided to the workers to keep their
clothes and belongings.

10. Rest rooms: Adequate numbers of restrooms are provided to the workers with provisions of water
supply, wash basins, toilets, bathrooms, etc.
NON STATUTORY SCHEMES

Many non statutory welfare schemes may include the following schemes:

1. Personal Health Care (Regular medical check-ups): Some of the companies provide the facility for
extensive health check-up

2. Flexi-time: The main objective of the flextime policy is to provide opportunity to employees to work
with flexible working schedules. Flexible work schedules are initiated by employees and approved by
management to meet business commitments while supporting employee personal life needs

3. Employee Assistance Programs: Various assistant programs are arranged like external counseling
service so that employees or members of their immediate family can get counseling on various matters.

4. Harassment Policy: To protect an employee from harassments of any kind, guidelines are provided for
proper action and also for protecting the aggrieved employee.

5. Maternity & Adoption Leave – Employees can avail maternity or adoption leaves. Paternity leave
policies have also been introduced by various companies.

6. Medi-claim Insurance Scheme: This insurance scheme provides adequate insurance coverage of
employees for expenses related to hospitalization due to illness, disease or injury or pregnancy.

7. Employee Referral Scheme: In several companies employee referral scheme is implemented to

encourage employees to refer friends and relatives for employment in the organization.

INDUSTRIAL DISPUTES

Causes Of Industrial Disputes

The causes of industrial disputes can be broadly classified into two categories: economic and non-economic
causes. The economic causes will include issues relating to compensation like wages, bonus, allowances, and
conditions for work, working hours, leave and holidays without pay, unjust layoffs and retrenchments. The non
economic factors will include victimization of workers, ill treatment by staff members, sympathetic strikes,
political factors, indiscipline etc.

 Wages and allowances: Since the cost of living index is increasing, workers generally bargain for higher
wages to meet the rising cost of living index and to increase their standards of living. In 2002, 21.4% of disputes
were caused by demand

of higher wages and allowances. This percentage was 20.4% during 2003 and during 2004 increased up to
26.2%. In 2005, wages and allowances accounted for 21.8% of disputes.

 Personnel and retrenchment: The personnel and retrenchment have also been an important factor which
accounted for disputes. During the year 2002, disputes caused by personnel were 14.1% while those caused by
retrenchment and layoffs were 2.2% and 0.4% respectively. In 2003, a similar trend could be seen, wherein
11.2% of the disputes were caused by personnel, while 2.4% and 0.6% of disputes were caused by retrenchment
and layoffs. In year 2005, only 9.6% of the disputes were caused by personnel, and only 0.4% were caused by
retrenchment.

 Indiscipline and violence: From the given table, it is evident that the number of disputes caused by
indiscipline has shown an increasing trend. In 2002, 29.9% of disputes were caused because of indiscipline,
which rose up to 36.9% in 2003. Similarly in 2004 and 2005, 40.4% and 41.6% of disputes were caused due to
indiscipline respectively. During the year 2003, indiscipline accounted for the highest percentage (36.9%) of the
total time-loss of all disputes, followed by cause-groups wage and allowance and personnel with 20.4%
and11.2% respectively. A similar trend was observed in 2004 where indiscipline accounted for 40.4% of disputes.

 Bonus: Bonus has always been an important factor in industrial disputes. 6.7% of the disputes were because
of bonus in 2002 and 2003 as compared to 3.5% and 3.6% in 2004 and 2005 respectively.
 Leave and working hours: Leaves and working hours have not been so important causes of industrial
disputes. During 2002, 0.5% of the disputes were because of leave and hours of work while this percentage
increased to 1% in 2003. During 2004, only 0.4% of the disputes were because of leaves and working hours.

Miscellaneous: The miscellaneous factors include

- Inter/Intra Union Rivalry

- Charter of Demands
- Work Load
- Standing orders/rules/service conditions/safety measures
- Non-implementation of agreements and awards etc.

Analysis Of Industrial Disputes

The number of industrial disputes in country has shown slow but steady fall over the past ten years. In 1998, the
total number of disputes was 1097 which fell by more than half to 440 in 2006.It is being estimated that this
trend will continue in 2007 as well. To support this, only 45 cases of disputes have been recorded during the first
four months of 2007. This significant decline is attributed to the serious attempts made by industries to improve
industrial relations with their workers. However, a deeper look at the data reveals that the number of mandays
(i.e., the industrial unit of production equal to the work one person can produce in a day) lost due to disputes has
not come down as significantly. The country, on an average, lost 25.4 million mandays of work annually between
1998 and 2006, which might have affected its industrial output.

More than 2.14 lakh mandays were lost due to work stoppages in 23 industrial disputes during January to March
2007. Though there has been a decline in the number of strikes, the country still witnessed some major strikes
between 2004 and 2006, like those in Honda, Escorts, Apollo, and Skumars factories and in SBI bank.

On analyzing the data sector wise, it is clear that the private sector has witnessed greater number of disputes as
compared to the public sector. In 2005, only 57 disputes were recorded in public sector which resulted in a wage
loss of 79 Crores. In contrast to this, 399 disputes were recorded in the private sector. In the recent past,
maximum number of disputes has been recorded in the manufacturing, agriculture and mining and quarrying
industries.

Strikes
A strike is a very powerful weapon used by trade unions and other labor associations to get their demands
accepted. It generally involves quitting of work by a group of workers for the purpose of bringing the pressure on
their employer so that their demands get accepted. When workers collectively cease to work in a particular
industry, they are said to be on strike.

According to Industrial Disputes Act 1947, a strike is “a cessation of work by a body of persons employed in an
industry acting in combination; or a concerted refusal of any number of persons who are or have been so
employed to continue to work or to accept employment; or a refusal under a common understanding of any
number of such persons to continue to work or to accept employment”. This definition throws light on a few
aspects of a strike. Firstly, a strike is a referred to as stoppage of work by a group of workers employed in a
particular industry. Secondly, it also includes the refusal of a number of employees to continue work under their
employer.

In a strike, a group of workers agree to stop working to protest against something they think is unfair where they
work. Labors withhold their services in order to pressurize their employment or government to meet their
demands. Demands made by strikers can range from asking for higher wages or better benefits to seeking
changes in the workplace environment. Strikes sometimes occur so that employers listen more carefully to the
workers and address their problems.

Causes of strikes:

Strikes can occur because of the following reasons:

• Dissatisfaction with company policy

• Salary and incentive problems

• Increment not up to the mark

 • Wrongful discharge or dismissal of workmen

• Withdrawal of any concession or privilege

• Hours of work and rest intervals

• Leaves with wages and holidays

• Bonus, profit sharing, Provident fund and gratuity

• Retrenchment of workmen and closure of establishment

• Dispute connected with minimum wages

TYPES OF STRIKE

1. Economic Strike: Under this type of strike, labors stop their work to enforce their economic demands
such as wages and bonus. In these kinds of strikes, workers ask for increase in wages, allowances like
traveling allowance, house rent allowance, dearness allowance, bonus and other facilities such as
increase in privilege leave and casual leave.

2. Sympathetic Strike: When workers of one unit or industry go on strike in sympathy with workers of
another unit or industry who are already on strike, it is called a sympathetic strike. The members of
other unions involve themselves in a strike to support or express their sympathy with the members of
unions who are on strike in other undertakings. The workers of sugar industry may go on strike in
sympathy with their fellow workers of the textile industry who may already be on strike.

3. General Strike: It means a strike by members of all or most of the unions in a region or an industry. It
may be a strike of all the workers in a particular region of industry to force demands common to all the
workers. These strikes are usually intended to create political pressure on the ruling government, rather
than on any one employer. It may also be an extension of the sympathetic strike to express generalized
protest by the workers.

4. Sit down Strike: In this case, workers do not absent themselves from their place of work when they
are on strike. They keep control over production facilities. But do not work. Such a strike is also known
as 'pen down' or 'tool down' strike. Workers show up to their place of employment, but they refuse to
work. They also refuse to leave, which makes it very difficult for employer to defy the union and take
the workers' places. In June 1998, all the Municipal Corporation employees in Punjab observed a pen
down strike to protest against the non-acceptance of their demands by the state government.

5. Slow Down Strike: Employees remain on their jobs under this type of strike. They do not stop work,
but restrict the rate of output in an organized manner. They adopt go-slow tactics to put pressure on
the employers.

6. Sick-out (or sick-in): In this strike, all or a significant number of union members call in sick on the
same day. They don’t break any rules, because they just use their sick leave that was allotted to them
on the same day. However, the sudden loss of so many employees all on one day can show the
employer just what it would be like if they really went on strike.

7. Wild cat strikes: These strikes are conducted by workers or employees without the authority and
consent of unions. In 2004, a significant number of advocated went on wildcat strike at the City Civil
Court premises in Bangalore. They were protesting against some remarks allegedly made against them
by an Assistant Commissioner
 Lockouts

A lockout is a work stoppage in which an employer prevents employees from working. It is declared by employers
to put pressure on their workers. This is different from a strike, in which employees refuse to work. Thus, a
lockout is employers’ weapon while a strike is raised on part of employees. Acc to Industrial Disputes Act 1947,
lock-out means the temporary closing of a place of employment or the suspension of work or the refusal by an
employer to continue to employ any number of persons employed by him.

A lockout may happen for several reasons. When only part of a trade union votes to strike, the purpose of a
lockout is to put pressure on a union by reducing the number of members who are able to work.

For example, if a group of the workers strike so that the work of the rest of the workers becomes impossible or
less productive, the employer may declare a lockout until the workers end the strike. Another case in which an
employer may impose a lockout is to avoid slowdowns or intermittent work-stoppages. Occupation of factories
has been the traditional method of response to lock-outs by the workers' movement.

PICKETING
When workers are dissuaded from work by stationing certain men at the factory gates, such a step is known as
picketing. If picketing does not involve any violence, it is perfectly legal. Pickets are workers who are on strike
that stand at the entrance to their workplace. It is basically a method of drawing public attention towards the fact
that there is a dispute between the management and employees.

The purpose of picketing is:

• to stop or persuade workers not to go to work

• to tell the public about the strike

• to persuade workers to take their union's side

GHERAO
Gherao in Hindi means to surround. It denotes a collective action initiated by a group of workers under which
members of the management are prohibited from leaving the industrial establishment premises by workers who
block the exit gates by forming human barricades. The workers may gherao the members of the management by
blocking their exits and forcing them to stay inside their cabins. The main object of gherao is to inflict physical
and mental torture to the person being gheraoed and hence this weapon disturbs the industrial peace to a great
extent.

Analysis Of Strikes and Lockouts

In 1990, 1,825 strikes and lockouts were recorded. As a result, 24.1 million workdays were lost, from which 10.6
million were lost to strikes and 13.5 million to lockouts. More than 1.3 million workers were involved in these
labor disputes. The number and seriousness of strikes and lockouts have varied from year to year. As can be
seen from the below chart, there has been a steep decline in the number of strikes and lockouts. This continuous
decline in strikes and lockouts indicates that the industrial relations in India are improving. There were 227
strikes in 2005, resulting in the loss of 10.81 million man-days, while the number of lockouts stood at 229 with a
loss of 18.86 million man-days. In January-September 2006, there were only 154 strikes and 192 lockouts across
the country, as compared to the statistics of 2005, which resulted in the time loss of 3.16 million man-days and
10.60 million man-days respectively.

The number of strikes and lockouts, taken together, was down by 4.4 per cent in 2005. During 2005, West
Bengal experienced the maximum instances of strikes and lockouts (19216) followed by Kerala (3619) and
Rajasthan (19247). Industrial disturbances were concentrated mainly in manufacturing (textile), financial
intermediation, agriculture and mining and quarrying industries during 2005.

During 2000, 426 strikes and 325 lockouts were observed which resulted in total time-loss of 28.76 million
mandays. Maximum time-loss was caused by 297 lockouts during 2003 which resulted in a time-loss of 27.05
million mandays. As compared to previous years, in 2006 only 13.76 million mandays were lost due to strikes
and lockouts.
 Prohibition of Strikes and Lock-Outs

Employees are prohibited from striking according to the section 22 of Industrial Disputes Act 1947. Employees,
who are working in a public utility service, cannot go on a strike without giving a notice of strike within the six
weeks before striking. They can not go on strike either within fourteen days of providing the strike notice or
before the expiry of the date of strike specified in any such notice. The same rule applies to the employers.
Employers who are carrying on a public utility service can not lockout any of their employees without giving them
a prior notice within six weeks before the lock out or within the fourteen days of giving such a notice. Moreover,
the notice of strike or lockout is to be given in a prescribed manner showing the number of persons involved in
the strike/lockout.

The notice of strike or lockout is not necessary when there is already a strike or lockout going on in the company.
However, a notice should be issued on the day on which the lockout is declared just to intimate the appropriate
authorities about the lockout. The employer is supposed to report the number of notices of strikes received by
him to the appropriate Government or the authority prescribed by the government within the five days of
receiving such notices.

Illegal Strikes and Lock-Outs

A strike or a lock-out is illegal if it is declared in noncompliance with the section 22 (as defined above) of
Industrial Disputes Act 1947, that is, if the notice period is not served or if the strike is held within the fourteen
days of issuing the notice of strike. If a strike or lockout has already taken place and is being referred to a Board,
the continuance of such a strike or lock out is not illegal provided it is in compliance with the provisions of act.
Moreover, a lockout declared in consequence of an illegal strike or a strike declared in consequence of an illegal
lock-out shall not be deemed to be illegal.

Penalty for Illegal Strikes and Lock-outs

A workman who is involved in an illegal strike can be penalized with imprisonment for a term extendable to a
month or with a fine or fifty rupees or both. In similar way, an employer who initiates and continues a lockout is
punishable with imprisonment extendable to a month or with a fine of one thousand rupees or both. According to
Section 25 of Industrial Disputes Act 1947, no person should provide any sort of financial aid to any illegal strike
or lock-out. Any person who knowingly provides such a help in support of any illegal strike or lock-out is
punishable with imprisonment for a term which may extend to six months, or with fine which may extend to one
thousand rupees, or with both.

Measures For Improving Industrial Relations

The following measures should be taken to achieve good industrial relations:

 Strong and Stable Union: A strong and stable union in each industrial enterprise is essential for good
industrial relations. The employers can easily ignore a weak union on the plea that it hardly represents the
workers. The agreement with such a union will hardly be honored by a large section of workforce. Therefore,
there must be strong and stable unions in every enterprise to represent the majority of workers and negotiate
with the management about the terms and conditions of service.
 Mutual Trust: Both management and labor should help in the development of an atmosphere of mutual
cooperation, confidence and respect. Management should adopt a progressive outlook and should recognize the
rights of workers. Similarly, labor unions should persuade their members to work for the common objectives of
the organization. Both the management and the unions should have faith in collective bargaining and other
peaceful methods of settling disputes.

• Workers’ Participation in Management: The participation of workers in the management of the

industrial unit should be encouraged by making effective use of works committees, joint consultation
and other methods. This will improve communication between managers and workers, increase
productivity and lead to greater effectiveness.

• Mutual Accommodation. The employers must recognize the right of collective bargaining of the trade
unions. In any organization, there must be a great emphasis on mutual accommodation rather than
conflict or uncompromising attitude. One must clearly understand that conflicting attitude does not lead
to amicable labor relations; it may foster union militancy as the union reacts by engaging in pressure
tactics. The approach must be of mutual “give and take rather than “take or leave.” The management
should be willing to co-operate rather than blackmail the workers.

• Sincere Implementation of Agreements. The management should sincerely implement the

settlements reached with the trade unions. The agreements between the management and the unions
should be enforced both in letter and spirit. If the agreements are not implemented then both the union
 and management stop trusting each other. An environment of uncertainty is created. To avoid this,
efforts should be made at both ends to ensure the follow up of the agreements.

• Sound Personnel Policies: The following points should be noted regarding the personnel policies. The
policies should be:

o Formulated in consultation with the workers and their representatives if they are to be
implemented effectively.

o Clearly stated so that there is no confusion in the mind of anybody.

o Implementation of the policies should be uniform throughout the organization to ensure fair
treatment to each worker.

• Government’s Role: The Government should play an active role for promoting industrial peace. It
should make law for the compulsory recognition of a representative union in each industrial unit. It
should intervene to settle disputes if the management and the workers are unable to settle their
disputes. This will restore industrial harmony.

• Progressive Outlook: There should be progressive outlook of the management of each industrial
enterprise. It should be conscious of its obligations and responsibilities to the owners of the business,
the employees, the consumers and the nation. The management must recognize the rights of workers
to organize unions to protect their economic and social interests.