lecture notes of industrial relations

7/17/2019 Lecture Notes of Industrial Relations

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Lecture Notes of Industrial Relations (BBA-505)

Lecture No-1

Introduction (Meaning , Scope And Iportance of Industrial Relations)

!"N!#$% "& IR'

Basically, IR sprouts out of employment relation. Hence, it is broader in meaning and wider in

scope. IR is dynamic and developing socio-economic process. As such, there are as many asdefinitions of IR as the authors on the subject. ome important definitions of IR are produced

here.

According to !ale "oder#, IR is a designation of a whole field of relationship that e$ists because

of the necessary collaboration of men and women in the employment processes of Industry%.

Armstrong has defined IR as &IR is concerned with the systems and procedures used by unionsand 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%

In the opinion of '. B. ingh &Industrial relations are an integral aspect of social relations arising

out of employer-employee interaction in modern industries which are regulated by the tate in

varying degrees, in conjunction with organised social forces and influenced by the e$isting

institutions. (his involves a study of the tate, the legal system, and the wor)ers# and employers#organi*ations at the institutional level+ and of the patterns of industrial organisation including

management, capital structure including technology, compensation of the labour force, and a

study of mar)et forces all at the economic level%.

ncyclopedia Britannica defined IR more elaborately as &(he concept of industrial relations has

been e$tended to denote the relations of the state with employers, wor)ers, and other

organisations. (he subject, therefore, includes individual relations and joint consultation between

employers and wor)ers at their places of wor), collective relations between employers and tradeunions+ and the part played by the tate in regulating these relations%.

(hus, IR can now safely be defined as a coin having two faces/ co- operation and conflict. (his

relationship undergoes change from thesis to antithesis and then to synthesis. (hus, the

relationship starting with co-operation soon changes into conflict and after its resolution again

changes into cooperation. (his changing process becomes a continuous feature in industrialsystem and ma)es IR concept as dynamic and evolving one.

INS%RIAL R#LA%I"NS *S #M$L"+## R#LA%I"NS



0ost of us thin) we )now what industrial relations are. (he study of employment and labor

mar)et is what ma)es the subject matter of this vast area of research. It is a field that analy*es the

factors that affect the wor)place. However, it is the wor)place that directly affects our style of

living and even our culture in a lot of ways. (here is another related concept called employee

relations that confuses many because of its similarities with industrial relations. It is a fact that

loo)ing at a wor)place from the perspective of wor)ers unions is no longer relevant in these

times. 1et us see if there is any difference between these two related concepts.

INS%RIAL R#LA%I"NS

(he field of study that covers employment relationships in their entirety is called industrial

relations. In general, it is believed to be the study of relations between the employees and

employers. (here are a multitude of factors at play at the wor)place that shape up the relations

between wor)ers, employers, and the government. (he field of industrial relations came into

e$istence with the advent of the industrial revolution as an important tool to understand the

comple$ relations between employers and employees. (here are many different ways to loo) at

industrial relations as there are the perspectives of wor)ers, employers, government, and the

perspective of the society. If you are a wor)er, you would obviously associate industrial relations

with better wages, safety at wor)place, job security, and training at wor)place. 2n the other

hand, industrial relations for an employer are all about productivity, conflict resolution and

employment laws.

#M$L"+## R#LA%I"NS

3mployee relations# is a concept that is being preferred over the older industrial relations

because of the reali*ation that there is much more at the wor)place than industrial relations could

loo) or cover. In general, employee relations can be considered to be a study of relations between

employees as well as employer and employees so as to find ways of resolving conflicts and to

help in improving productivity of the organi*ation by increasing motivation and morale of the

wor)ers. (he field is concerned with providing information to employees regarding the goals of

the organi*ation so that they have a better understanding of the aims and policies of the

management. mployees are also informed about their poor performances and ways and means

to correct performance. mployee relations also ta)e care of grievances and the problems of the

employees and let them )now all about their rights and what to do in case of discrimination.

A% IS %# I&&#R#N!# B#%##N INS%RIAL R#LA%I"NS AN

#M$L"+## R#LA%I"NS.

4 (hough it was industrial relations that came into e$istence earlier, it is employee relations that

is increasingly being used to refer to wor)place relations these days.



4 5alling union memberships around the world have made people reali*e that relations between

employers and employees are more important than the focus given to these relations by industrial

relations.

4 It is human beings called employees that form the bac)bone of all operations in an organi*ation

and the study of relations between employees and employees and employers are more importantthan the laws and institutions that govern relations at the wor)place.

S!"$# "& IR'

BAS# "N AB"*# #&INI%I"NS "& IR, %# S!"$# "& IR !AN #ASIL+ B##N

#LIN#A%# AS &"LL"S'

6. 1abour relations, i.e., relations between labour union and management.

7. mployer-employee relations i.e. relations between management and employees.

8. (he role of various parties# vi*., employers, employees, and state in maintaining industrialrelations.

9. (he mechanism of handling conflicts between employers and employees, in case conflicts

arise.

%# MAIN AS$#!%S "& INS%RIAL R#LA%I"NS !AN B# I#N%I&I# AS

&"LL"S'

6. :romotion and development of healthy labour ; management relations.

7. 0aintenance of industrial peace and avoidance of industrial strife.

8. !evelopment and growth of industrial democracy.

"B/#!%I*#S "& IR'

(he primary objective of industrial relations is to maintain and develop good and healthy

relations between employees and employers or operatives and management. (he same is sub-

divided into other objectives.

%S, %# "B/#!%I*#S "& IR AR# #SIN# %"'

6. stablish and foster sound relationship between wor)ers and management by safeguarding

their interests.



7. Avoid industrial conflicts and stri)es by developing mutuality among the interests of

concerned parties.

8. <eep, as far as possible, stri)es, loc)outs and gheraos at bay by enhancing the economic statusof wor)ers.

9. :rovide an opportunity to the wor)ers to participate in management and decision ma)ing

process.

=. Raise productivity in the organisation to curb the employee turnover and absenteeism.

>. Avoid unnecessary interference of the government, as far as possible and practicable, in thematters of relationship between wor)ers and management.

?. stablish and nurse industrial democracy based on labour partnership in the sharing of profits

and of managerial decisions.

@. ocialise industrial activity by involving the government participation as an employer.

According to <ri)aldy, industrial relations in a country are influenced, to a large e$tent, by theform of the political government it has. (herefore, the objectives of industrial relations are li)ely

to change with change in the political government across the countries.

Accordingl, 2ir3ald 4as identified four o6ecti7es of industrial relations as listed elo8'

6. Improvement of economic conditions of wor)ers.

7. tate control over industrial underta)ings with a view to regulating production and promotingharmonious industrial relations.

8. ociali*ation and rationali*ation of industries by ma)ing the state itself a major employer.

9. 'esting of a proprietary interest of the wor)ers in the industries in which they are employed.

Lecture No-9

IM$"R%AN!# "& INS%RIAL R#LA%I"N AN MA/"R $AR%I!I$AN%S ININS%RIAL R#LA%I"NS

IM$"R%AN!# "& INS%RIAL R#LA%I"NS

ffective Industrial relations means Industrial peace necessary for better and higher production,

hence, healthy Industrial Relations is the )ey to progress of individuals, management, Industry

and ation.

http://www.mba-mentor.com/importance-of-industrial-relations

http://www.mba-mentor.com/importance-of-industrial-relations



Importance of Industrial Reations are as follows/

• n interrupted production

a. It is the most important benefit of industrial relations.

. It ensures continuity of production.

c. It provides continuous employment to all.

d. 2ptimum use of available resources in order to gain ma$imum possible production.

e. ontinuous flow of income for all.

• Reduction in Industrial ispute

a. ordial Industrial relations helps in reducing industrial disputes, disputes are

reflections of the failure of basic motivation in order secure satisfaction among

employees. ome reflections of industrial unrest includes stri)es, loc)outs, gheraos and

grievances.

: It promotes industrial peace with cordial industrial relations, disputes can be settled

through co-operation.

ig4 orale - Industrial relation improves the morale of employees

a: mployee feels that he is co-owner of the profits of industry.

: High morale induces employees to wor) with high energy as they feel that their interest co-

ordinates with organi*ational interest.

c: In order to maintain good Industrial relations employer need to reali*e and share eCually the

profits of industry generously with employees.

d: Dnity of thought and action against wor)ers and management is main achievement of

industrial peace.

e: ffective industrial relations boost morale of wor)ers which leads to positive effect in

production

Mental re7olution

a. ffective Industrial Relations brings mental revolution among employees which bring

complete overhaul in the outloo) of employees.

b. mployees, employer and government need to wor) out a new relationship in consonance with

spirit of true democracy where each thin)s of themselves as partners in industry.

c. Industrial peace ultimately lies in transformed outloo).



#conoic gro8t4 and e7elopent

It promotes economic growth and development, effective industrial relations lead to increase

efficiency and higher productivity, which ultimately results in economic development.

iscourages unfair practices

ordial industrial relations discourages unfair practices on part of both management and unions.

Industrial relations leads to formation of machineries in order to solve problems confronted by

management, employees and unions through mutual understanding and negotiations to which

both parties are bound, this results in banning of unfair labour practices.

#nactent of statutor pro7ision

Industrial relations enables essential use of certain labour laws in order to protect and promote

the welfare of employees and safeguards interests of all parties against unfair means means or

practices.

%# MAIN $AR%I!I$AN%S IN INS%RIAL R#LA%I"NS AR#'

i mployers

ii mployeesEFor)ers.

iii Government.

mployers have their associations to deal with labour problems and their unions in a collective

way .For)ers are represented by their trade unions. Government tries to regulate the relations

between the two i.e. employees and employers by implementing labour laws.

(hese three variables interact with each other within environment which prevails in industrial

sector at any time. Good industrial relations are the result of.

i Healthy labour and management relations.

ii Industrial peace and settlement of all disputes in such a way that there are no labour problems

li)e stri)es or loc)outs.

iii By labour participation in management.

Lecture No-;,<



%# R"L# "& %# S%A%#

(he state had traditionally played various roles in different countries, most especially in

providing the institutional framewor) for the bilateral relationship between

wor)ersE(rade Dnion and mployersEtheir representatives to encourage a bipartite

relationship. However, many countries have a history of significant and crucial

involvement of the state, and systems of collective bargaining which are highly

centrali*ed e.g.Australia, Fest Germany and some candinavian countries+ in some other

countries li)e Dnited <ingdom the state has traditionally played a minor and non decisive role

in Industrial relations besides the provision of an institutional framewor). However, the

deficiency of theory with regard to the state has produced an over-concentration in

contemporary industrial relations discourse on elements in union policy and the problems

facing unions such as losses of organi*ation, difficulties with regard to the introduction of

technologies at plant level, more competition on the rapidly changing world mar)ets,

and the need to fight mass unemployment. Additional analyses provide generalinformation and guided speculation on the future activities and policies of management and

employers dwards et al 6@>, 1ipset 6@>, 0uller-entsch 6@@.

(he role ascribed to thestate in industrial relations depends on the ideological bent of the state.

In communist countries, no separate role is envisaged for employers and trade unions+ they

operate on the basis of party directive and the state plan. In capitalist countries the approach is

to allow employers and unions reasonable latitude to determine their own affairs within the

framewor) established by the state. (he developing countries, as a result of their e$perience

have had to intervene in industrial relations in the interest of the whole economy. However, as

the state is the prime mover of the total social system, there is no argument as to whether it has arole to play or not Dbe)u, 6@=. (he role of the capitalist state is described in

contemporary te$tboo)s as having a variety of roles and functions/ as legislator, employer,

agency of conflict resolution, economic manager and regulator of industrial relations.

(he general literatures on Industrial relations give scattered information on some of the

historical roles and major general functions of the state. According to "esufu 6@=,%o

far as industrial relations is concerned, state intervention entails all the action, direct or indirect,

by which a government promotes, sustains or participates to influence or determine, the

conditions of employment, and the relations between those directly involved in the

employment contract JemployersEmanagers on one hand, and employeesEtrade unions on the

other%. (he reason for state intervention under could be considered from the following

perspectives Jeconomic+ historical and international imperatives+ the state s dominance as an‟

employer of labour+ and political E social. 2tobo 7KKK noted five areas most freCuently

subjected to state regulations, namely employment and manpowerdevelopment+ wages and

salaries+ union government and administration+ collective bargaining+ and industrial

conflict. However, some of these roles and functions are considered below/



• $ro7ision of Institutional frae8or3 J(he general aim of the state is to provide

the framewor) for the bilateral relationship of the other two actors in the system

i.e. the relationship between the wor)ersEtrade unions and employersEtheir

representatives. (his is with the general aim of regulating conflictual relationships between management and labour at all levels the enterprise, the region and the

whole economy and to achieve a balance by adjustment to the legal environment.

• $ro7ision of !ollecti7e Bargaining Sste J(he state provides the general alternative

or mechanism for settling the general terms of employment by non-political means. (he

general legal framewor) includes some substantive provisions for universal minimum

standards of conditions of employment such as minimum wage, limitation or

standardi*ation of daily or wee)ly wor)ing hours, occupational safety and

health provisions, anti-discrimination regulations, vacations, and protection against

dismissal. All these could be achieved through an effective system of collective

bargaining

• Liiting or a7oiding Industrial conflicts JIn all developed world the state tried to

avoid or limit collective industrial conflicts. Fhere the general right to stri)e had been

legally guaranteed, actions are also ta)en to curb both official and unofficial stri)es, and

sometimes loc)outs, in order to protect the general public from real or imagined

harmful or even disastrous conseCuences. In some countries Dnited <ingdom and

the Dnited states governments are responsible for institutions and mechanisms of

third-party conflict resolution in the private and public sector. :rocedural rules for

mediation, conciliation and even voluntary or compulsory arbitration processes are

e$ternally provided by the state. In some other countries dispute settlement

procedures internally organi*ed by the parties are strongly encouraged and supported by

the state.

• Interpretation of !onflict of rig4t and Interest Jclear distinction is made between

individual and collective conflict of interest i.e. about the interpretation of an

e$isting collective agreement which are in most cases to be solved by peaceful, legal

means including labour courts decisions, and not private grievance procedures. 2n the

other hand the conflict of interest i.e. about the terms of a new contract involvesdifferent methods of conflict resolution including industrial action. In some

countries the state provides strict and legally enforced obligations to )eep the

peace during a period governed by collective contract.

• $articipate in $ulic Sector laour relations Jvarious public agencies are actively

involved in public sector labour relations, because the state and other public authorities



are direct employer of a large percentage of the labour force. (hus public authorities

can e$ert a significance amount of influence not only on a particular sector, but also

on the development of the overall industrial relations system.

(he general observations made above, according to <eller 66, indicate significant

cross-national differences in Cuantitative and Cualitative terms of past and current governmentalinterference. In the long run a clear trend in all advanced capitalist countries may be

observed towards more freCuent and more systematic active government intervention in

the industrial relations system. (he long-term development includes the active legislative

encouragement of collective bargaining in an early period and, at a more recent stage,

more or less active labour mar)et policies and macro-economic strategies designed to

stabili*e growth or to fight unemployment.

Lecture No-5

!ARA!%#RIS%I!S "& INS%RIAL R#LA%I"NS S+S%#M IN INIA

(he establishment of good industrial relations depends upon on the constructive attitude on the part of both management and the union. (he constructive attitude in its turn depends on all the

basic policies and procedures laid down in an organi*ation for the promotion of healthy

industrial relations. It depends on the ability of the employers and trade union to deal with their

mutual problems freely, independently with responsibility. (hey should have their faith incollective bargaining rather than in collective action.

5or better industrial relations it is also necessary that fair labor standards are laid down, there is afeeling of eCuality with which the management should enter into collective bargaining with thelabor and there should be reali*ation on the part of management to promote wor)ersLMN

welfare. (he e$istence of strong, independent, responsible, democratic trade unions, the

promotion of collective bargaining, fair and independent machinery for the peaceful settlement

of industrial disputes is a pre reCuisite.

(he e$istence of good human relations, lac) of any )ind of discrimination is certainly the

essential for healthy industrial relations situations.

It is very difficult to promote and maintain sound industrial relations. ertain conditions should

e$ist for the maintenance of harmonious industrial relations. (hey are/

#=istence of Strong, 8ell organi>ed and eocratic #ploeesnions'

Industrial relations will be sound only when the bargaining power of the employees unions is

eCual to that of management. A strong trade union can protect the employees interest relating to

wages, benefits, job security etc.



#=istence of Sound and "rgani>ed #ploers nions'

(hese associations are helpful for the promotion and maintenance of uniform personnel policies

among various organi*ations and to protect the interest of wea) employers. (hese types of associations are not common for India because there is considerable variance in the policies of

managements in organi*ations.

Spirit of !ollecti7e Bargaining and illingness to Resort to *oluntar "rgani>ation'

(he relationship between employee and employer will be congenial only when the differences

between them are settled through mutual negotiation and consultation rather than throughintervention of the third party. ollective bargaining is a process through which employee issues

are settled through mutual discussions and negotiations through give and ta)e approach. If the

issues are not settled through collective bargaining they should be referred to voluntaryarbitration but not to adjudication in order to maintain congenial relations.

Maintenance of Industrial $eace'

:ermanent industrial peace in an organi*ation is most essential which can be ensured through the

following measures/

6. 0achinery for prevention and settlement of industrial disputes. It included legislative and non-legislative measures. :reventive measures include wor)s committees, standing orders, welfare

officers, shop councils, joint councils and joint management councils. ettlement methods

include voluntary arbitration, conciliation and adjudication.

7. Government should be provided with the authority of settling the industrial disputes when they

are settled between the two parties and also by voluntary arbitration.

8. :rovision for the bipartite and tripartite committees in order to evolve personnel policies, code

of conduct, code of discipline etc.

9. :rovision for the various committees to implement and evaluate the collective bargainingagreements, court orders and judgments, awards of the voluntary arbitration. etc.

&actors !ontriuting for aronious Industrial Relations

a (here is a full acceptance by management of the collective bargaining process and of unionism as an institution. (he company considers a strong union as an asset to the management.

b (he union fully accepts private ownership and operations of the industry+ it recogni*es thatthe welfare of its members depends upon the successful operation of the business.

c (he union is strong, responsible and democratic.



d (he company stays out of the internal affairs of the union+ it does not see) to alienate the

wor)erLMNs allegiance to their union.

e 0utual trust and confidence e$ists between the parties. (here have been no seriousideological incompatibilities.

f either party to bargaining adopts legalistic approach to the solution of problems of

relationship

g egotiations are problem-centered. 0ore time is spent on the day-to-day problems than on

defining abstract principles.

h (here are widespread union-management consultations and highly developed information

sharing.

i Grievances are settled promptly in the local plant, wherever possible. (here is fle$ibility and

informality within the producer.

j (he environment factors do not by themselves cause peace but they create conditions to

develop it. (he attitudes and the policies of the parties, the personality of their leaders and their

techniCues, bring about good relations.

Fe have highlighted some ideal conditions above but in India the relations sour because of political interference. But this is improving to a large e$tent and man hours lost due to stri)es are

getting reduced.

Lecture No-?

A$$R"A!#S "& INS%RIAL R#LA%I"NS

(he three popular approaches to industrial relation are as follows/

6. Dnitary Approach

7. :luralistic Approach

8. 0ar$ist Approach.

1i)e other behavioural subjects, both the scenario of IR and factors affecting it are perceived

differently by different behavioural practitioners and theorists. 5or e$ample, while some perceive

IR in terms of class conflict, others view it in terms of mutual co-operation, yet others understandit related to competing interests of various groups and so.



An understanding of these approaches to HR helps the human resource manager in devising an

effective human resource strategy. Based on these perceptions, the behavioural theorists have

developed some approaches to e$plain the IR dynamics.

Aong t4e, t4e popular approac4es to IR are'

6. Dnitary Approach

7. :luralistic Approach

8. 0ar$ist Approach

(hese are discussed one by one

1: nitar Approac4'

(he Dnitary approach to IR is based on the assumption that every one-be it employee, employer or government-benefits when emphasis is on common interest. Alternatively spea)ing, under

unitary approach, IR is founded on mutual co-operation, team wor), shared goal, and so.

onflict at wor) place, if any, is seen as a temporary aberration resulting from poor managementor mismanagement of employees. 2therwise, employees usually accept and cooperate with

management. onflict in the form of stri)es is disregarded as destructive.

Alwar plant of itcher (ractors represents one such e$ample of unitary approach. onetheless,

unitary approach is criticised mainly on two grounds. 5irst, it is used as a tool for )eepingemployees at bay from unionism. econd, it is also seen as e$ploitative and manipulative.

9: $luralistic Approac4'

In fact, pluralistic approach is a departure from unitary approach of IR. (his approach war

evolved and practiced in mid 6>Ks and early 6?Ks in ngland. 1ater, this approach was

developed by me British scholars in particular by A. 5o$ the approach perceives thatorganisation is a coalition of competing interest groups mediated by the management. At times, it

may so happen that management in its mediating role may pay insufficient attention to the needs

and claims of employees.

In such a situation, employees may unite in the form of trade unions to protect their needs and

claims. As a result, trade unions become the legitimate representatives of employees in the

organisation. (hus, the system of IR gets grounded on the product of concessions and

compromises between management and trade unions.

onflict between employees and management understood as competing interest groups, is

considered as inevitable and, in fact, necessary also. ormally, employees are not that much



forceful in negotiation process as much management is. Hence, employees join trade unions to

negotiate with management on eCual terms to protect their interests.

1i)e unitary approach, pluralistic approach also suffers from certain limitations. (he basicassumption of this approach that, employees and management do not arrive at, an acceptable

agreement do not hold good in a free society. (his is because a society may be free, but power distribution is not necessarily eCual among the competing forces.

(he e$perience of ngland where this approach was involved and developed in mid si$ties andearly seventies faced widespread stri)es substantiates that pluralistic approach is a costly affair,

at least, in short run if not in long-run.

;: Mar=ist Approac4'

1i)e pluralists, mar$ists also view conflict between labour and management as inevitable. But

mar$ists unli)e pluralists, regard conflict as a product of the capitalist society based on classes.

According to mar$ists conflict arises because of division within society in terms of haves i.e.,capitalists and have not#s i.e., labour. (he main objective of capitalists has been to improve

productivity by paying minimum wages to labour. 1abour views this as their e$ploitation by thecapitalists.

(he mar$ists do not welcome state intervention as, in their view, it usually supports

management#s interest. (hey view the pluralistic approach is supportive of capitalism and the

unitary approach as an anathema. (herefore, the labour-capital conflict, according to mar$istapproach, cannot be solved by bargaining, participation and cooperation.

In such situation, trade union comes in picture and is seen as a reaction to e$ploitation by

capitalists and also a weapon to bring a revolutionary social change by changing capitalisticsystem. 5or this, coercive powers such as stri)es, gherao, etc. are e$ercised by the labour againstcapitalists.

uch systems of IR have been very much observed in most of the socialist countries li)e

erstwhile DR. (he mar$ist approach is mainly practised in communist bloc. Hence the scopeof mar$ist approach remains limited to the countries based on socialism.

lecture notes of industrial relations

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