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Lecture Notes of Industrial Relations

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Lecture Notes of Industrial Relations (BBA-505)

Lecture No-1
Introduction (Meaning , Scope And Importance of Industrial Relations)

CONCEPT OF 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 as
definitions of IR as the authors on the subject. Some important definitions of IR are produced
here.

According to Dale Yoder’, IR is a designation of a whole field of relationship that exists 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 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”

In the opinion of V. B. Singh “Industrial relations are an integral aspect of social relations
arising out of employer-employee interaction in modern industries which are regulated by the
State in varying degrees, in conjunction with organised social forces and influenced by the
existing institutions. This involves a study of the State, the legal system, and the workers’ and
employers’ organizations 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 market forces all at the economic level”.

Encyclopedia Britannica defined IR more elaborately as “The concept of industrial relations has
been extended to denote the relations of the state with employers, workers, and other
organisations. The subject, therefore, includes individual relations and joint consultation between
employers and workers at their places of work, collective relations between employers and trade
unions; and the part played by the State in regulating these relations”.

Thus, IR can now safely be defined as a coin having two faces: co- operation and conflict. This
relationship undergoes change from thesis to antithesis and then to synthesis. Thus, the
relationship starting with co-operation soon changes into conflict and after its resolution again
changes into cooperation. This changing process becomes a continuous feature in industrial
system and makes IR concept as dynamic and evolving one.
INDUSTRIAL RELATIONS VS EMPLOYEE RELATIONS
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Most of us think we know what industrial relations are. The study of employment and labor
market is what makes the subject matter of this vast area of research. It is a field that analyzes
the factors that affect the workplace. However, it is the workplace that directly affects our
style of living and even our culture in a lot of ways. There is another related concept called
employee relations that confuses many because of its similarities with industrial relations. It is
a fact that looking at a workplace from the perspective of workers unions is no longer
relevant in these times. Let us see if there is any difference between these two related concepts.

INDUSTRIAL RELATIONS

The 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. There are a multitude of factors at play at the workplace that shape up the relations
between workers, employers, and the government. The field of industrial relations came into
existence with the advent of the industrial revolution as an important tool to understand the
complex relations between employers and employees. There are many different ways to look
at industrial relations as there are the perspectives of workers, employers, government, and
the perspective of the society. If you are a worker, you would obviously associate industrial
relations with better wages, safety at workplace, job security, and training at workplace. On
the other hand, industrial relations for an employer are all about productivity, conflict
resolution and employment laws.

EMPLOYEE RELATIONS

‘Employee relations’ is a concept that is being preferred over the older industrial relations
because of the realization that there is much more at the workplace than industrial relations could
look 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 organization by increasing motivation
and morale of the workers. The field is concerned with providing information to employees
regarding the goals of the organization so that they have a better understanding of the
aims and policies of the management. Employees are also informed about their poor
performances and ways and means to correct performance. Employee relations also take care of
grievances and the problems of the employees and let them know all about their rights and what
to do in case of discrimination.

WHAT IS THE DIFFERENCE BETWEEN INDUSTRIAL RELATIONS AND

EMPLOYEE RELATIONS?

• Though it was industrial relations that came into existence earlier, it is employee relations that
is increasingly being used to refer to workplace relations these days.
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• Falling union memberships around the world have made people realize that relations between
employers and employees are more important than the focus given to these relations by
industrial relations.

• It is human beings called employees that form the backbone of all operations in an organization
and the study of relations between employees and employees and employers are more important
than the laws and institutions that govern relations at the workplace.

SCOPE OF IR:

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.

THE MAIN ASPECTS OF INDUSTRIAL RELATIONS CAN BE IDENTIFIED AS

FOLLOWS:

1. Promotion and development of healthy labour — management relations.

2. Maintenance of industrial peace and avoidance of industrial strife.

3. Development and growth of industrial democracy.

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.

THUS, THE OBJECTIVES OF IR ARE DESIGNED TO:

1. Establish and foster sound relationship between workers and management by safeguarding
their interests.
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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.

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. Socialization and rationalization 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.
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Lecture No-2

IMPORTANCE OF INDUSTRIAL RELATION AND MAJOR PARTICIPANTS

IN INDUSTRIAL RELATIONS

IMPORTANCE OF INDUSTRIAL RELATIONS

Effective Industrial relations means Industrial peace necessary for better and higher production,
hence, healthy Industrial Relations is the key to progress of individuals, management, Industry
and Nation.
Importance of Industrial Reations are as follows:

· Un interrupted production

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

b. It ensures continuity of production.
c. It provides continuous employment to all.
d. Optimum use of available resources in order to gain maximum possible production.
e. Continuous flow of income for all.
· Reduction in Industrial Dispute

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

reflections of the failure of basic motivation in order secure satisfaction among
employees. Some reflections of industrial unrest includes strikes, lockouts, gheraos and
grievances.
b. It promotes industrial peace with cordial industrial relations, disputes can be settled
through co-operation.

High morale - Industrial relation improves the morale of employees

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

b. High morale induces employees to work with high energy as they feel that their interest co-
ordinates with organizational interest.
c. In order to maintain good Industrial relations employer need to realize and share equally the
profits of industry generously with employees.
d. Unity of thought and action against workers and management is main achievement of
industrial peace.
e. Effective industrial relations boost morale of workers which leads to positive effect in
production

Mental revolution

a. Effective Industrial Relations brings mental revolution among employees which bring
complete overhaul in the outlook of employees.
b. Employees, employer and government need to work out a new relationship in consonance with
spirit of true democracy where each thinks of themselves as partners in industry.
c. Industrial peace ultimately lies in transformed outlook.
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Economic growth and Development

It promotes economic growth and development, effective industrial relations lead to increase
efficiency and higher productivity, which ultimately results in economic development.

Discourages unfair practices

Cordial 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.

Enactment of statutory provision

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.

THE MAIN PARTICIPANTS IN INDUSTRIAL RELATIONS ARE:

(i) Employers

(ii) Employees/Workers.

(iii) Government.

Employers have their associations to deal with labour problems and their unions in a collective
way .Workers are represented by their trade unions. Government tries to regulate the relations
between the two i.e. employees and employers by implementing labour laws.

These 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
like strikes or lockouts.

(iii) By labour participation in management.

Lecture No-3,4
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THE ROLE OF THE STATE

The state had traditionally played various roles in different countries, most especially in
providing the institutional framework for the bilateral relationship between
workers/Trade Union and Employers/their 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
centralized (e.g.Australia, West Germany and some Scandinavian countries); in some
other countries like United Kingdom the state has traditionally played a minor and non
decisive role in Industrial relations besides the provision of an institutional framework.
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 organization, difficulties with regard to
the introduction of technologies at plant level, more competition on the rapidly
changing world markets, and the need to fight mass unemployment. Additional
analyses provide general information and guided speculation on the future activities and
policies of management and employers (Edwards et al 1986, Lipset 1986, Muller-Jentsch
1988).

The 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
framework established by the state. The developing countries, as a result of their experience
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 a role to play or not (Ubeku, 1985). The role of the capitalist state is
described in contemporary textbooks as having a variety of roles and functions: as
legislator, employer, agency of conflict resolution, economic manager and regulator of
industrial relations.

The general literatures on Industrial relations give scattered information on some of the
historical roles and major general functions of the state. According to Yesufu
(1985),”So 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 –employers/managers on one hand, and
employees/trade unions on the other”. The reason for state intervention under could be
considered from the following perspectives –economic; historical and international
imperatives; the state‟s dominance as an employer of labour; and political / social. Otobo
(2000) noted five areas most frequently 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:
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· Provision of Institutional framework–The general aim of the state is to

provide the framework for the bilateral relationship of the other two actors in the
system i.e. the relationship between the workers/trade
unions and employers/their representatives. This 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.

· Provision of Collective Bargaining System –The state provides the general

alternative or mechanism for settling the general terms of employment by non-political
means. The general legal framework includes some substantive provisions for
universal minimum standards of conditions of employment such as minimum
wage, limitation or standardization of daily or
weekly working 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

· Limiting or avoiding Industrial conflicts–In all developed world the state tried
to avoid or limit collective industrial conflicts. Where the general right to strike had
been legally guaranteed, actions are also taken to curb both official and unofficial
strikes, and sometimes lockouts, in order to protect the general public from real
or imagined harmful or even disastrous consequences. In some countries (United
Kingdom and the United states) governments are responsible for institutions and
mechanisms of third-party conflict resolution in the private and public sector.
Procedural rules for mediation, conciliation and even voluntary or compulsory
arbitration processes are externally provided by the state. In some other
countries dispute settlement procedures internally organized by the parties are
strongly encouraged and supported by the state.

· Interpretation of Conflict of right and Interest–clear distinction is made

between individual and collective conflict of interest (i.e. about the
interpretation of an existing collective agreement) which are in most cases to be
solved by peaceful, legal means including labour courts decisions, and not private
grievance procedures. On the other hand the conflict of interest (i.e. about the
terms of a new contract) involves different methods of conflict resolution
including industrial action. In some countries
the state provides strict and legally enforced obligations to keep the peace
during a period governed by collective contract.

· Participate in Public Sector labour relations –various public agencies are

actively involved in public sector labour relations, because the state and other public
authorities
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are direct employer of a large percentage of the labour force. Thus public
authorities can exert a significance amount of influence not only on a particular
sector, but also on the development of the overall industrial relations system.

The general observations made above, according to Keller (1991), indicate significant
cross-national differences in quantitative and qualitative terms of past and current governmental
interference. In the long run a clear trend in all advanced capitalist countries may be
observed towards more frequent and more systematic active government intervention in
the industrial relations system. The 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 market policies and macro-economic strategies designed to
stabilize growth or to fight unemployment.

Lecture No-5

CHARACTERISTICS OF INDUSTRIAL RELATIONS SYSTEM IN INDIA

The establishment of good industrial relations depends upon on the constructive attitude on the
part of both management and the union. The constructive attitude in its turn depends on all the
basic policies and procedures laid down in an organization 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. They should have their faith
in collective bargaining rather than in collective action.

For better industrial relations it is also necessary that fair labor standards are laid down, there is a
feeling of equality with which the management should enter into collective bargaining with the
labor and there should be realization on the part of management to promote workers’
welfare. The existence 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 requisite.

The existence of good human relations, lack of any kind of discrimination is certainly the
essential for healthy industrial relations situations.

It is very difficult to promote and maintain sound industrial relations. Certain conditions should
exist for the maintenance of harmonious industrial relations. They are:

Existence of Strong, well organized and Democratic EmployeesUnions:

Industrial relations will be sound only when the bargaining power of the employees unions is
equal to that of management. A strong trade union can protect the employees interest relating to
wages, benefits, job security etc.
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Existence of Sound and Organized Employers Unions:

These associations are helpful for the promotion and maintenance of uniform personnel policies
among various organizations and to protect the interest of weak employers. These types
of associations are not common for India because there is considerable variance in the policies
of managements in organizations.

Spirit of Collective Bargaining and Willingness to Resort to Voluntary Organization:

The relationship between employee and employer will be congenial only when the
differences between them are settled through mutual negotiation and consultation rather
than through intervention of the third party. Collective bargaining is a process through which
employee issues are settled through mutual discussions and negotiations through give and take
approach. If the issues are not settled through collective bargaining they should be
referred to voluntary arbitration but not to adjudication in order to maintain congenial relations.

Maintenance of Industrial Peace:

Permanent industrial peace in an organization is most essential which can be ensured through the
following measures:

1. Machinery for prevention and settlement of industrial disputes. It included legislative and non-
legislative measures. Preventive measures include works committees, standing orders, welfare
officers, shop councils, joint councils and joint management councils. Settlement
methods include voluntary arbitration, conciliation and adjudication.

2. 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.

3. Provision for the bipartite and tripartite committees in order to evolve personnel policies, code
of conduct, code of discipline etc.

4. Provision for the various committees to implement and evaluate the collective bargaining
agreements, court orders and judgments, awards of the voluntary arbitration. etc.

Factors Contributing for Harmonious Industrial Relations

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

(b) The union fully accepts private ownership and operations of the industry; it recognizes that
the welfare of its members depends upon the successful operation of the business.

(c) The union is strong, responsible and democratic.

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(d) The company stays out of the internal affairs of the union; it does not seek to alienate the
worker’s allegiance to their union.

(e) Mutual trust and confidence exists between the parties. There have been no serious
ideological incompatibilities.

(f) Neither party to bargaining adopts legalistic approach to the solution of problems of
relationship

(g) Negotiations are problem-centered. More time is spent on the day-to-day problems than on
defining abstract principles.

(h) There are widespread union-management consultations and highly developed information
sharing.
(i) Grievances are settled promptly in the local plant, wherever possible. There is flexibility and
informality within the producer.

(j) The environment factors do not by themselves cause peace but they create conditions to
develop it. The attitudes and the policies of the parties, the personality of their leaders and their
techniques, bring about good relations.

We have highlighted some ideal conditions above but in India the relations sour because of
political interference. But this is improving to a large extent and man hours lost due to strikes are
getting reduced.

Lecture No-6

APPROACHES OF INDUSTRIAL RELATIONS

The three popular approaches to industrial relation are as follows:

1. Unitary Approach

2. Pluralistic Approach

3. Marxist Approach.

Like other behavioural subjects, both the scenario of IR and factors affecting it are perceived
differently by different behavioural practitioners and theorists. For example, while some perceive
IR in terms of class conflict, others view it in terms of mutual co-operation, yet others
understand it related to competing interests of various groups and so.
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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 explain the IR dynamics.

Among them, the popular approaches to IR are:

1. Unitary Approach

2. Pluralistic Approach

3. Marxist Approach

These are discussed one by one

1. Unitary Approach:

The Unitary 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 speaking, under
unitary approach, IR is founded on mutual co-operation, team work, shared goal, and so.

Conflict at work place, if any, is seen as a temporary aberration resulting from poor
management or mismanagement of employees. Otherwise, employees usually accept and
cooperate with management. Conflict in the form of strikes is disregarded as destructive.

Alwar plant of Eitcher Tractors represents one such example of unitary approach.
Nonetheless, unitary approach is criticised mainly on two grounds. First, it is used as a
tool for keeping employees at bay from unionism. Second, it is also seen as exploitative and
manipulative.
2. Pluralistic Approach:

In fact, pluralistic approach is a departure from unitary approach of IR. This approach war
evolved and practiced in mid 1960s and early 1970s in England. Later, this approach was
developed by me British scholars in particular by A. Fox the approach perceives that
organisation 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. Thus, the system of IR gets grounded on the product of concessions
and compromises between management and trade unions.

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

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

forceful in negotiation process as much management is. Hence, employees join trade unions to
negotiate with management on equal terms to protect their interests.

Like unitary approach, pluralistic approach also suffers from certain limitations. The basic
assumption of this approach that, employees and management do not arrive at, an acceptable
agreement do not hold good in a free society. This is because a society may be free, but
power distribution is not necessarily equal among the competing forces.

The experience of England where this approach was involved and developed in mid sixties and
early seventies faced widespread strikes substantiates that pluralistic approach is a costly
affair, at least, in short run if not in long-run.
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3. Marxist Approach:

Like pluralists, marxists also view conflict between labour and management as inevitable. But
marxists unlike pluralists, regard conflict as a product of the capitalist society based on classes.
According to marxists conflict arises because of division within society in terms of haves i.e.,
capitalists and have not’s i.e., labour. The main objective of capitalists has been to
improve productivity by paying minimum wages to labour. Labour views this as their
exploitation by the capitalists.

The marxists do not welcome state intervention as, in their view, it usually supports
management’s interest. They view the pluralistic approach is supportive of capitalism and the
unitary approach as an anathema. Therefore, the labour-capital conflict, according to marxist
approach, cannot be solved by bargaining, participation and cooperation.

In such situation, trade union comes in picture and is seen as a reaction to exploitation by
capitalists and also a weapon to bring a revolutionary social change by changing capitalistic
system. For this, coercive powers such as strikes, gherao, etc. are exercised by the labour against
capitalists.

Such systems of IR have been very much observed in most of the socialist countries like
erstwhile USSR. The marxist approach is mainly practised in communist bloc. Hence the scope
of marxist approach remains limited to the countries based on socialism.
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