Module -1 Industrial Relations
1.1 INTRODUCTION
The term 'Industrial Relations' denotes relationships between
management and workers in the industry. It has roots in the
economic and social changes occurred from time to time. Therefore,
the term should not be restricted to mean merely the relations
between the union and the management, but a vast complex of
relationship between the union and the management, management
and employers, union and employees and between employees
themselves.
However, the major parties to Industrial Relations are the workers
and the management. Both the parties have a common interest in
industry, but many times they are found to be pulling in different
directions, which lead to industrial unrest. Therefore, it has become
necessary to secure co-operation of both the parties to improve
Industrial Relation, which is a pre-condition to growth and stability
of industry.
Meaning of industrial Relation:
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 stems directly or indirectly from
union-employer relationship.
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The term "industrial relations" refers to the complex of human
relationships which emerges in work situations. These situations
bring people together for services which are bought and sold at a
price. Let us examine the concept of industrial relations with the
help of some definitions so as to understand the dimensions of the
subject better.
In a work setting, those who offer their services are workers and
those who utilise these are the employers. Between them there are
interpersonal or individual relationships, and also the relations
between the two groups. Their economic interest primarily brings
workers to work for wages, and the employers hire their services as
a factor contributing to production. Industrial relations in any work
situation go beyond these economic aspects and involves several
elements of human relationships in which one individual interacts
and adjusts with the other, and one group understands and
cooperates with the other. It is equally likely that the relationship
may give rise to friction and conflict of interests.
Definition of Industrial Relations
As per Dale Yoder Industrial relations refers to the relationship
between management and employees, or employees and their
organisation , that arises out of employment.
According to Armstrong __” IR is concerned with the systems and
procedures used by unions and employers to determine the reward
for effort and other conditions of employment, to protect the
interests of the employed and their employers and to regulate the
ways in which employers treat their employees”
 Module -1 Industrial Relations

Thus, Industrial relations refers the relationship that exists between

the employer and employees in the day-to-day working of an 3. Employee-employers relationship: Without the existence of the
organization. minimum two parties, industrial relationship cannot exist such as :

Scope of Industrial Relations:  Workers and their organizations.

Based on above definitions of IR, the scope of IR can easily been
delineated as follows:
1. Labour relations, i.e., relations between labour union and
management.
2. Employer-employee relations i.e. relations between management
and employees.
3. The role of various parties’ viz., employers, employees, and state
in maintaining industrial relations.
4. The mechanism of handling conflicts between employers and
employees, in case conflicts arise.
 Employers or management of the enterprise.
 Government are the three participants or parties in the
industrial relations.
4. It is a product: Industrial relations are the product of economic,
social and political system arising out of the employment in the
industrial field.
5. Development of healthy labour management: The important
purpose of industrial relations is development of healthy labour-
management or employee-employer relations, maintenance
industrial peace, avoidance of industrial strife, development and
growth of industrial democracy etc.

Nature / Features/Characteristics of Industrial Relations

1. Dynamic and Developing Concept: The concept of “Industrial

Relations” is a dynamic and developing concept. It is described as a
relationship between employers and management of the enterprise
and the employees or among employees and their organizations or
employers, employees and their trade unions and the government.

2. It is a set of functional: Industrial relations do not constitute a

simple relationship, but they are a set functional, inter-dependent
complexities involving various factors or various variables such as
economic, political, social, psychological, legal factors or variables.

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Participants/Partners in Industrial Relations

There are three participants/players in industrial relations. They are:

1. Employer and their Associations: Employer plays an important

role in industrial relations. He hires the employees, pay them wages,
provides allowances, he regulates the working relations through
various rules,regulations and laws and at same time expects the
workers to follow them. The bargaining power of the employers is
weakened in comparison to that of trade unions, though they have
high bargaining power when compared to that of employees. So,
they form into associations to equate their bargaining power with
trade union, and these associations protect the employer by putting
pressure on government and trade unions.
2. Workers and their Associations: Workers plays a crucial role in
industrial relation. Worker as a whole includes his working age,
educational background, social and family background,
psychological traits, talents, skills, culture, attitude towards others
work. Workers form into their associations called “Trade Unions” to

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 Module -1 Industrial Relations
get their problems solved. The trade unions work for workers
economic interest through collective bargaining by bringing the
pressure on the management through economic and political
strategies.
3. State/Government: Government plays a balancing role in
industrial relations. Government has its influence on industrial
relations through industrial relations policy, labour policy, labour
law implementation, acting as a mediator in the process of
conciliation and adjudication. Government regulates the behaviour
of both the employer association and workers organizations.
Objectives of IR:
The primary objective of industrial relations is to maintain and
develop good and healthy relations between employees and
employers or operatives and management. The same is sub- divided
into other objectives.
1. Establish and foster sound relationship between workers and
management by safeguarding their interests.
2. Avoid industrial conflicts and strikes by developing mutuality
among the interests of concerned parties.
3. Keep, as far as possible, strikes, lockouts and gheraos at bay by
enhancing the economic status of workers.
4. Provide an opportunity to the workers to participate in
management and decision making process.
5. Raise productivity in the organisation to curb the employee
turnover and absenteeism.
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6. Avoid unnecessary interference of the government, as far as
possible and practicable, in the matters of relationship between
workers and management.
7. Establish and nurse industrial democracy based on labour
partnership in the sharing of profits and of managerial decisions.
8. Socialise industrial activity by involving the government
participation as an employer.
According to Krikaldy, industrial relations in a country are
influenced, to a large extent, by the form of the political government
it has. Therefore, the objectives of industrial relations are likely to
change with change in the political government across the countries.
Accordingly, Kirkaldy has identified four objectives of industrial
relations as listed below:
1. Improvement of economic conditions of workers.
2. State control over industrial undertakings with a view to
regulating production and promoting harmonious industrial
relations.
3. Socialisation and rationalisation of industries by making the state
itself a major employer.
4. Vesting of a proprietary interest of the workers in the industries in
which they are employed.
Note : for further objectives refer class notes
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Importance of Industrial Relation
Uninterrupted production
 The most important benefit of industrial
relations is that this ensures continuity of
production. This means, continuous employment for
all employees who contribute to production process,
ie., from chief executive officer to floor workers to
pantry boy. The resources including raw materials
and time 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 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.
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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
 One of the main objects 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
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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.
Meaning of Industrial Disputes
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According to Section 2 (k) of the Industrial Disputes Act, 1947, the
term ‘industrial dispute’ means “any dispute or difference between
employers and employers or between employers and workmen, or
between workmen and workmen, which is connected with the
employment or non- employment or the terms of employment and
conditions of employment of any person”.
The main causes of Industrial Disputes
(1) Economic causes: Really, the most common causes of industrial
disputes are economic causes. These are as follows:
(a)Wages: The demand for wage increase is the prime most cause of
the industrial disputes. A large number of strikes are being organised
to raise a voice against the rise in prices and cost of living. The real
wages of the workers decline faster and they feel dissatisfied with
their present emoluments and struggle for the improvement in
wages. By having a cursory glance on the history of industrial
disputes; it becomes clear that cause of most of the industrial
disputes was wages. The Indian employer has no clear-cut and
enlightened wage policy. Most of the industrial disputes were the
result of a demand for higher wages.
(b)Dearness allowance and bonus: Increase in cost of living was
the main cause of the demand of dearness allowance by the workers
to equate their wages with the rise of prices. Bonus also plays an
important role as a cause of industrial dispute. Both the quantum and
the method of bonus payment have led to a number of disputes.
There is an increasing feeling among the workers that they should
have a greater share in the profits of the concern and this fact has not
been recognised by the employees and non- acceptance of this fact
has been a source of friction among employers and employees.
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© High industrial profits: During and after the world wars, prices
of the commodities went up and the industrialists earned a huge
profit. In order to get share in the prosperity of the industry it
naturally led to the resentment on their part. The increased profits
also led to the demands of higher wages and bonus. Now in the
changing world, concept of labour has changed considerably. They
think themselves as a partner of the industry and demand their share
in the profits.
(d) Working condition and working hours: The working
conditions in Indian industries are not hygienic. There is not ample
provision of water, heating, lighting, safety etc. Working hours are
also greater. The demand of pallatable working conditions and
shorter hours of work are also responsible for labour disputes.
(e) Modernisation and Automation of Plant and Machinery: The
attempt at modernisation and introduction of automatic machinery to
replace labour has been the major cause of disputes of India.
Workers go on strike, off and on, to resist rationalisation and
automation. A strike in cotton textile industry in Kanpur in 1955 is
an example of such disputes. Workers in Life Insurance Corporation
went on strike recently against introducing computers in the
corporation.
(J) Demand for other facilities: Demand for other facilities for
meeting out their basic needs such as medical, education, housing,
etc. encourage the workers to resort to direct action because such
facilities were denied by the employers.
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(2)Managerial causes of industrial disputes : These causes
include autocratic managerial attitude and defective labour polices
etc.
(a) Denial of recognition to trade unions: Failure on the part of
the employer to recognise the trade unions or to recognise the rival
union for representation, insult of trade union leaders by the
employers are some of the examples of autocratic managerial
attitude worth mentioning as the causes of industrial disputes. The
attitude of employers towards the labour association had never been
sympathetic. They want to divide them and rule.
(b)Defective recruitment policies: The recruitment practices in
Indian industries are defective. Recruitment is generally made by the
contractors who exploit the workers and suppress their individuality.
The defective promotion, demotion, transfer and placement policies
encourage dissatisfaction among workers.
© Irregular lay off and retrenchment: Lay-off and retrenchment
are reasons to be mentioned for encouraging industrial disputes.
Indian employers follow the policy of 'Hire and Fire'. As a matter of
practice, workers are not made permanent for a pretty long time to
deprive them of their legitimate rights.
(d) Defiance of agreements and codes: The employers' regularly
defy the provisions of collectives- bargaining agreements and code
of conduct and code of discipline with a view to harass or exploit the
employees and just encourage strife.
(e) Defective leadership : Inefficient leadership is also one of the
causes of disputes. Leadership from the management and from the
workers are quite incompetent to induce the workers to get them
worked. . Defective management leadership ignored the labour
problems and inefficient labour leadership could not coordinate the
efforts of their fellow members, so disputes arise.
(f) Weak trade unions: In our country, trade unions are weak.
According to labour Commission (1969), only 24% of all workers
 Module -1 Industrial Relations
were members of trade unions. In some undertakings, there is no
union and in some other undertakings, there are more than one
union. Both the situations weaken the trade union movement. The
workers in non-union undertakings resort to direct action instead of
collective bargaining which can be a better course of action if there
is a proper trade union.
3. Social Causes:
Uninteresting nature of work is the main social cause. Factory
system and specialisation have made worker a subordinate to the
machine. Worker has lost sense of pride and satisfaction in the job.
Tensions and conflicts in society break up of joint family system,
growing intolerance have also led to poor employer-employee
relations. Dissatisfaction with job and personal life culminates into
industrial conflicts.
4. Psychological Causes:
Lack of job security, poor organisational culture, non- recognition of
merit and performance, authoritative administration and poor
interpersonal relations are the psychological reasons for
unsatisfactory employer- employee relations.
5. Political Causes:
Political nature of trade unions, multiple unions and inter-union
rivalry weaken trade union movement. In the absence of strong and
responsible trade unions, collective bargaining becomes ineffective.
The union’s status is reduced to a mere strike committee.
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The outsiders who become union leaders by making wild promises
to workers make excessive demands on employers. When employers
do not accept their demands conflicts arise spoiling the employer-
employee relations climate in the country.
Fostering and maintaining good industrial
relation /
How to improve Industrial Relations Situation/
Requisites for good IR
The following measures may be adopted to achieve
better 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:
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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
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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:
 Formulated in
consultation with the workers and their
representatives if they are to be implemented
effectively.
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 Clearly stated so
that there is no confusion in the mind of anybody.
 Implementation of the
policies should be uniform throughout the
organization to ensure fair treatment to each
worker.
o 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.
o 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.

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