INDUSTRIAL RELATIONS AND LABOUR

LEGISLATIONS
BBA – 345
BY, Ramya Kamath
BA,LLB;LLM
Advocate
(Visiting faculty)
Dept of Commerce
MAHE
MEANING OF INDUSTRIAL RELATION
 The relationship between Employer and employee or trade unions is called
Industrial Relation.

 In other words good Industrial Relation means industrial peace which is

necessary for better and higher productions.
DEFINITION OF INDUSTRIAL RELATION

Industrial Relation is that part of management which is concerned with the

manpower of the enterprise – whether machine operator, skilled worker or
manager.
- BETHEL, SMITH & GROUP

Industrial Relation is a relation between employer and employees, employees

and employees and employees and trade unions. -

- Industrial dispute Act 1947

According to J.T. Dunlop, “Industrial relations are the complex

interrelations among managers, workers and agencies of the government”
Features pertaining to Industrial Relations are as under :

1. Industrial Relation do not emerge in vacuum they are born of employment

relationship in an industrial setting. Without the existence of the two
parties, i.e. labor and management, this relationship cannot exist. It is the
industry, which provides the environment for industrial relations.

2. Industrial Relation are characterized by both conflict and co-operations.

This is the basis of adverse relationship. So the focus of Industrial Relations
in on the study of the attitudes, relationships, practices and procedure
developed by the contending parties to resolve or at least minimize
conflicts.
3. As the labor and management do not operate in isolations but are parts of large
system, so the study of Industrial Relation also includes vital environment issues
like technology of the workplace, country’s socio-economic and political
environment, nation’s labor policy, attitude of trade unions workers and employers.

4. Industrial Relation also involve the study of conditions conductive to the labor,
managements co-operations as well as the practices and procedures required to elicit
the desired co-operation from both the parties.

In fact the concepts of Industrial Relations are very broad-based, drawing heavily from
a variety of discipline like social sciences, humanities, behavioral sciences, laws etc.
Objectives of Industrial Relation

 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. appreciate

 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 nurse 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, as far as is possible and practicable, strikes, lockouts and gheraos

by providing reasonable wages, improved living and working conditions, said
fringe benefits.

 To establish government control of such plants and units as are running at a

loss or in which productions has to be regulated in the public interest.
 Improvements in the economic conditions of workers in the existing state of
industrial managements and political government.

 Control exercised by the state over industrial undertaking with a view to regulating
production and promoting harmonious industrial relations.

 Socializations or rationalization of industries by making the state itself a major

employer.

 Proprietary interest of the workers in the industries in which they are employed.
APPROACHES TO EMPLOYEE RELATIONS
Industrial relations is that part of human resource management which
studies the formal relationship of the workers with the administration and
the employers and ensuring a proper mechanism to manage the industrial
disputes and conflicts.

 In the present scenario, the relationship between the employer and the
employees have changed to a great extent what it used to be in the 1900s.
The industries today are becoming more of technology-oriented, which
has generated the need for skilled and educated personnel in the
organizations.
 Different scholars and experts have given various views in the context of
industrial relations.
Perspectives/Approaches of IR
 IR is an varied system composed of group of people and
organizations working with varying viewpoints.

A few approaches to IR are discussed here:

1. Unitary approach
2. Psychological Approach to IR
3. Sociological Approach to IR
4. Human Relations approach to IR
5. Socio - Ethical Approach to IR
6. Gandhian Approach to IR
7. Marxist approach
8. System Approach to IR
1. Unitary Approach
 As the name suggests, the unitary approach can be seen as a method of
bringing together the teamwork, common objective, individual strategy
and mutual efforts of the individuals.
 This theory believes that the conflicts are non-permanent
malformations, which are a result of improper management in the
organization.
 Moreover, if everyone works towards the achievement of the common goals
by maintaining peace and cooperation in the workplace, it will tend to
benefit everyone associated with the organization. It also considered the
organizational conflicts resulting in strikes to be useless and destructive.
The other aims of the unitary approach are as follows:
 To create a productive, effective and harmonious work environment;
 to develops a trustworthy, open, fair and transparent work culture;
 to create a cordial work environment;
 to restrict the role of the tribunals and other government associations like
the trade unions and initiates direct negotiation between the management
and the employees.
2. Psychological Approach – Maison Haire
 The psychologists are of the view that the problem of
industrial relations are deeply rooted in the perception and
the attitude of focal participants.
 The influence of individuals perception on his behavior has
been studied by Mason Harie, he studied the behavior of 2
different groups, namely,
 Union leaders &
 Executives
Condt-
 Photo Test:
In this test, both the groups were asked to rate and interpret the photograph
of an ordinary middle-aged person, and the results were drastically
contrasting. The union leaders perceived the person to be a ‘manager‘
whereas, the executives thought that the person was a ‘union leader‘.

The major interpretations of this test were as follows:

 The general belief of a management representative is entirely different
from that of a labour representative.
 Both the management and labour do not consider each other to be
trustworthy.
 Even each of these groups considers that the other one lacks emotional
and interpersonal attributes.
3. Sociological Approach – G. Maregerison
 Industry is a social world in miniature and the workshop is in reality a
community made up of various individuals and groups
 With differing personalities, educational background, family breeding,
emotions, likes and dislikes and a host of other personal factors, such as
attitudes and behavior.
 These differences in individual attitudes and behavior create problems of
conflict and competition among the members of an industrial society.
 In fact, as industrialization gets momentum, a set of new industrial –
cum- social patterns emerges and in its wake.
4. Human Relations approach – Keith Davis
 The person behind the concept of the human relations approach is Keith
Davis. The organization and the society comprise of human beings who
vary in various aspects as their behaviour, emotions, attitude, mindset and
personality. But, they have come together to achieve common
organizational goals and objectives.

 The concept of human relations approach underlines the need for making
the individuals familiar with the work situations of the organization and
uniting the efforts of the workers. The purpose is to meet the social,
psychological and economic objectives, by enhancing the overall
productivity.
5. Socio - Ethical Approach
 Industrial Relations can be maintained when both the
Labour and management realize their interdependence.
 Labour management relations exist within the social,
economic and political structures of society
 The goal of Labour- management relations may state as
maximum productivity , leading to rapid economic
development, adequate understanding among employers,
workers and the govt., of each other’s role in industry and
willingness among parties to co-operated as partners in the
industrial system
6. Gandhian Approach – Mahathma Gandhiji
 IR are based on fundamental principles of truth and non-
violence
 The worker should seek redressal of reasonable demands
only through collective action
 Strike- peaceful and non- violent method
 Avoid strike
 Avoid formation of union
 Strike- last resort
 Voluntary arbitration
7. Marxist Approach - Karl Marx
 Lenin came up with the concept of a Marxist approach in the year 1978,
where he emphasized the social perspective of the organization.
 This theory perceived that the industrial relations depend upon the
relationship between the workers (i.e., employees or labour) and the
owners (i.e., employer or capital). There exists a class conflict between
both the groups to exercise a higher control or influence over each other.
Condt-
The assumptions of this approach are as follows:
 Industrial relations are a significant and never-ending source of conflicts
under capitalism which cannot be avoided. However, cases of open
disputes are quite unusual.
 Understanding the conceptions of capitalized society, capital
accumulation process and the pertaining social relations, give a better
overview of the industrial relations.
 The Marxist theory assumed that the survival of the employees without
any work is more crucial than the survival of the employer without the
labours.
8. System Approach – John Dunlop
 Dunlop considered IR as a subsystem of society, distinct from, but
overlapping, other subsystems.
 He suggested that the IR system could be divided in to 4 interrelated
elements comprising of
 Certain Actors;
 Certain context;
 an ideology which binds the IR system together &
 A body of rules created to govern the actors at the workplace

The actors are divided into three main groups;

(a) Hierarchy of management
(b) Hierarchy of non-management employees and their
representatives (usually trade union members),and
(c) Specialized government agencies concerned with industrial relation.
Evolution of IR
 Problem of industrial or labor management did not arise when business
organizations were small.
 These developed only when elaborate organizational structures came into
being during the late 19th century, when gigantic industrial empires of
financial tycoons came into existence, followed by the technology of mass
production in the early 20th century.
Evolution of Industrial Relations
 1. Initial Period- 1850 - 1918
 2.colonial Period – War / period of progress
- push to Industrial relations
- awareness amongst people
 3. Post Independence –agrarian economy – poor condition – 11.8% national
GDP
Transformation of IR

 First ---- Great Britain

 1830 ---- France, Belgium & USA
 1850---- Germany, Sweden & Japan
 1870---- Canada & USSR (Russia)
 1890---- other countries including India

 We can see the history of IR in India, with 4 different stages

Stages of IR (History)
 Agrarian economy stage
 It developed during the middle ages (Tribal society)
 Brought change in the views on property.
 Employee-employer relationship was master-servant or
slave type.
 In return no wages but food, old clothes and a small place
to live.
 Cotton and jute- Mumbai and Kolkatta – 1853 ,1855
 Lack of capital
 Industrial policy Resolution – 1956
- to introduce more private capital in industries

Karve Committee – 1955

- Promotion of small scale Industries for rural development

- 2nd Five year plans – emphasised on the physical aspects of investment

Condt-
 Handicrafts stage
 Developed because of the growth of towns & cities.
 Increase in trade and commerce and a decline in the power
of the feudal lords.
 Innovation in the careers of workers i.e., move from
workers to those of employers.
 Craftsman also undertook to teach his craft to some young
men.
Condt-
 Cottage or putting-out stage
 Development of economic system, steam & Power
individuals became employees in new industrial units.
 They also hired the craftsmen to process the raw materials
& collect sold the finished goods.
 The payment is on a piece – work basis for the work.
Condt-
 Factory or the industrial capitalism stage
 Workers were brought together under one roof & strict
discipline was maintained during the process of
production by the employers.
 Quality and the quantity of the product where
guaranteed.
 He did not bothered about the workers conduct or health
after working hours or about how they & their family
when no work was available.
Conditions for successful Industrial Relations:
 Compliance
Good industrial relations depend on the employer and the union having a
complete understanding of the law and its provisions.

 Relationship-Building
Management and unions have a shared goal -- to create an employer-
employee relationship in which employees receive fair treatment and
recognition for their skills and contributions. The difference is that unions
rely on collective activity to achieve this goal and management doesn't.
Collegial and respectful relationships between labor union officials and the
employer's management are necessary for positive industrial relations.
 Grievance Handling
Employee grievances must be addressed in a timely manner, because doing
so promotes positive relationships between employees and their supervisors,
which underlies good industrial relations. Importantly, grievances should be
resolved before they escalate and require resolution through arbitration.

 Knowledge
As the old adage goes, knowledge is power. The more knowledgeable the
management and HR team of a company are about their rights and
responsibilities, the more of an opportunity they have to build a strong
labor-relations strategy. In nonunion environments, this means
understanding the National Labor Relations Act and how it applies in
nonunion locations. For unionized environments, this means
understanding the law and being an expert in the collective-bargaining
agreement that covers the work being done by the company.
 Transparency
In a business context, transparency means being open and clear about business
processes and strategies. This means openly and honestly providing workers
and their representatives with information about strategy and business
planning. By being transparent, management, even in a small company, can
work towards building a partnership with the employees that will help the
business be agile and grow.

 Communication
Everyone at every level of a company can appreciate when their supervisors keep
them informed of what is going on with the business. In union environments,
this might mean keeping the shop stewards or union representatives informed,
but this extra effort can go a long way. By keeping up-to-date, managers, HR,
employees and unions can focus on getting their work done and turn their
attention away from rumors and speculation.
 Consistency
Consistency in applying discipline or handling grievances gives employees
and union representatives confidence in HR and the management. As in all
areas of business, people want to be confident of what to expect and want to
know that when faced with similar circumstances managers and leaders will
act in similar ways. This confidence opens the door for honest and
productive efforts to resolve differences as they arise.
Conditions for poor Industrial Relations:
 IR is often found poor in industrial organizations. Several factors cause poor IR.
 These factors are viewed differently by different groups both within and outside
an organizational context.
 Conditions may be economic, organizational, social, psychological and political .
For example:
While an economist interprets poor IR in terms of demand and supply of (human)
resources factor, a psychologist perceives the same in terms of opposing interests,
and a leader (political) views poor IR in terms of ideological differences between
the parties.
1. Nature of Work:
It is the work only that gives birth to relationship between the employee and
employer. A good work i.e., work interesting to the employee fosters good IR.
The reason being an employee interested in his work remains absorbed in
his/her job. This results in job satisfaction. On the contrary, a work not
interesting to the employee breeds bad or poor IR.

An uninterested work leads to job dissatisfaction and frustration which, in

turn, among other evil effects, causes poor IR between the employee and
employer. Hence, this underlines the need for proper job design and job
assignment among the employees.
2. Dissatisfactory Compensation and Work Conditions:
 Employees work for compensation i.e., wages and salaries. Often,
compensation as low and working conditions as poor viewed by employees
become an important reason for poor IR.
 Employees often demands for equity, i.e., wages equal to what the
employees of other organizations are getting in the region, industry, etc.
 Not fulfillment of such demands is interpreted as employee exploitation by
the management. This worsens relationship between the employees and
management.
3. Dysfunctional Trade Union:
 Essentially, trade unions are meant to protect the interests of its members.
The ongoing trade union system in India is characterized by politicization,
multiplicity, and inter-union rivalry. These often lead trade unions
dysfunctional and ineffective in playing their roles.
 The unions are used as a means to serve the purposes of a few (leaders) rather
than working in the wider interest of the employees. As such, these unions
lack workers faith and trust in their functioning. This breeds discontent
among the employees and their relationship with management also gets
worsen
4. Non-conducive Organisational Climate:
 Organizational climate essentially emphasizes work environment. It
consists of a set of characteristics that describe an organization,
distinguish it from other organizations, are relatively enduring over time,
and influence the behavior of people in it. Organizational climate affects
organizational processes and behavior in more than one ways.
 A conductive and supporting organizational climate helps employees
integrate themselves with organization and enjoy a feeling of confidence
in organization. On the contrary, a non-conductive and unfavorable one
frustrates the same. Instead, it creates mistrust between employees and
organization. Ultimately, mistrust boils down to poor IR.
Demerits of bad industrial relations can be expressed as under:
 Effect on Workers: (i) Loss of wages, (ii) Physical injury or death on account of
violence during labour unrest, (iii) Excesses by employers, (iv) Economic losses, (v)
Bitterness in relations, (vi) Adverse affect on career.

 Effect on Employers / Industrialists: (i) Less production, (ii) Less Profit, (iii) Bad
affect on organisation, (iv) Bad effect on human relations, (v) Damage to machines
and equipments, (vi) Adverse effect on development of companies, (vii) Burden of
fixed expenses.

• Effect on Government: (i) Loss of revenue (less recovery of income tax. sales tax,
etc.) (ii) Lack of order in society, (iii) Blame by different parties.

• Effect on Consumers: (i) Rise in prices, (ii) Scarcity of goods, (iii) Bad affect on
quality of goods.

• Other Effects: (i) Adverse affect on International Trade (Fall in exports and rise in
imports), (ii) Hindrance in Economic Development of the country, (iii) Uncertainty in
economy.
Suggestions to improve :
1. Sound personnel policies
2. Participative management
3. Responsible unions
4. Employee welfare
5. Grievance procedure
6. Constructive attitude
7. Proper communication
8. Education to employees
Conclusion:
 To conclude, it can be said
that almost all sections of the
society suffer loss in one way
or the other due to bad
industrial relations.
 In order to maintain peace in
industrial units it is of utmost
importance that employers
and workers should make
constant endeavor to establish
cordial human relations.